lessons from practicing at the ptab

S K G F. C O M © 2015 Sterne, Kessler, Goldstein & Fox P.L.L.C. All Rights Reserved.

Patent Office Litigation: Lessons Learned

Deborah Sterling, Ph.D. – Director

Sterne, Kessler, Goldstein & Fox PLLC

January 14, 2016

S K G F. C O M © 2015 Sterne, Kessler, Goldstein & Fox P.L.L.C. All Rights Reserved. 2

PTO Litigation Timeline: Key Issues

Petition Filed

PO Preliminary Response

Decision on Petition

PO Response & Motion to

Amend Claims

Petitioner Reply & Opposition to

MTA

PO Reply to Opp to MTA

Oral Hearing

Final Written

Decision

3 months ≤ 3 months 2-3 months 2-3 months 1 month 1-2 months

Statutory Filing Bar

Real Party in Interest

325(d) Discretion

Joinder

Priority Challenges

Prima Facie Attack (prior art date)

Stays

Motions to Exclude

Estoppel

Federal Circuit Appeal


•  Since September 16, 2012, 3,966 IPR petitions, 406 CBM petitions, and 15 PGR petitions have been filed

•  Averaged 150 petitions per month in 2015 – slightly up over 2014.

The Rise of PTO Litigation (1/8/15)

0

500

1000

1500

2000

2500

3000

3500

4000

Sep-‐12

Dec-‐12

Mar-‐13

Jun-‐13

Sep-‐13

Dec-‐13

Mar-‐14

Jun-‐14

Sep-‐14

Dec-‐14

Mar-‐15

Jun-‐15

Sep-‐15

Dec-‐15

IPR and CBM Filings by Month

Total

Month


PTAB Institution Outcomes (12/3/15)

•  Trial has been instituted in 1,839 IPR proceedings (72.4%) and denied in 700 (27.6%) •  Trial has been instituted in 221 CBM proceedings (69.7%) and has been denied in 96 (30.3%) •  Parties reached a settlement prior to a decision on institution in 449 IPRs and 41 CBMs •  The Board institutes trial for 64.2% of challenged claims in IPRs, and 63.9% of challenged claims in CBMs.

Period Institution Rate

1st - 3rd Quarter FY2013 91.2%

4th Quarter FY2013 82.1% 1st Quarter FY2014 78.5% 2nd Quarter FY2014 81.3% 3rd Quarter FY2014 72.2% 4th Quarter FY2014 71.2% 1st Quarter FY2015 77.7% 2nd Quarter FY2015 68.8% 3rd Quarter FY2015 63.6%

4th Quarter FY2015 62.5%

1st Quarter FY2016 72.6%

Total 72.2%

70%

75%

80%

85%

90%

95%

Mar-‐13

May-‐13

Jul-‐1

3 Sep-‐13

Nov-‐13

Jan-‐14

Mar-‐14

May-‐14

Jul-‐1

4 Sep-‐14

Nov-‐14

Jan-‐15

Mar-‐15

May-‐15

Jul-‐1

5 Sep-‐15

Nov-‐15

Tracking the Cumula@ve Ins@tu@on Rate


PTAB AIA Trial Outcomes Outcome Count Percentage

Final Written Decision Received 684 46.6% Institution Denied 299 20.4% Settled Post-Institution 264 18.0% Settled Prior to Institution 146 9.9% Request for Adverse Judgment 59 4.0% Institution Vacated; Case Terminated 10 0.7% Petitioner Abandoned Petition 4 0.3% Pending 1 0.1% Patent Owner No Response (Claims Cancelled) 1 0.1%


Statutory Filing Bar: Civil Action 35 U.S.C. §315(a):

(1) Inter partes review barred by civil action. An inter partes review may not be instituted if, before the date on which the petition for such review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of a patent

•  Counterclaim challenging the validity of a claim of a patent does not constitute a civil action challenging the validity of a claim of a patent. 35 U.S.C. §315(a)(1)

•  DJ of non-infringement is not a civil action challenging the validity of a claim of a patent [Ariosa, IPR2012-00022]

•  Filed does not mean “filed and served” [Anova, IPR2013-00114]

•  Dismiss DJ action w/o prejudice “leaves parties as if action had never been brought.” [Butamax, IPR2013-00539]


Statutory Filing Bar: 1-Year Bar 35 U.S.C. §315(b):

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner … is served with a complaint alleging infringement of the patent.

•  Though statute does not refer to a “civil action,” this is how the Board has interpreted this section. An ITC action does not qualify, nor does a complaint in an arbitration. See Amkor, IPR2013-00242, Paper 98.


The 1-Year Bar, cont.

•  An IPR directed to amended claims of a reexamined patent, where the original patent was the subject of an infringement complaint served more than a year earlier, is barred. [BioDelivery Services, IPR2013-00315]

•  An IPR triggered by a second infringement complaint filed and served less than a year earlier but after a first infringement complaint for the same patent filed and served more than a year earlier is barred. [Apple, IPR2013-00348]

•  Infringement complaint served more than one year earlier but dismissed without prejudice does not trigger the bar. [Macuato, IPR2012-00004]


Real Party in Interest (RPI) •  Practice Guide states:

•  “what constitutes a real party in interest or privy is a highly fact-dependent question” (77 FR 6884)

•  “actual control or the opportunity to control the previous proceeding is an important clue that such a relationship existed” (77 FR 6884)

•  “[f]actors for determining actual control or the opportunity to control include existence of a financially controlling interest in the petitioner.” (77 FR 6884)

•  “For example, a party that funds and directs and controls an IPR or PGR petition or proceeding constitutes a ‘real party-in-interest,’ even if that party is not a ‘privy’ of the petitioner” (77 FR 48760)


RPI or RIP •  It includes determining the “existence of a financially controlling interest in

the petitioner[,] ... the nonparty’s relationship with the petitioner; the nonparty’s relationship to the petition itself, including the nature and/or degree of involvement in the filing; and the nature of the entity filing the petition.” [ZOLL Lifecor, IPR2013-00606].

•  When an error in identifying RPI was minor “because the current entities are legal successors to their original entities” the PTAB allowed petition to keep its original filing date. [Valeo, IPR2014-01203]

•  Where the Petitioner failed to identify all RPIs and amending filing date

would result in time-barred petition, the PTAB terminated IPR proceedings. [Corning, IPR2014-00440]


325(d) Discretion: Second bites of the apple

•  35 U.S.C. § 325(d): In determining whether to institute or order a proceeding … the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.

•  whether a previous petition was instituted/remains pending;

•  whether the second petition was brought by the same petitioner

•  whether the second petition uses the same or different prior art as the previous petition;

•  whether the second petition challenges the same claims as in the first petition;

•  whether the second petitioner faces a statutory one-year bar under 35 U.S.C. § 315(b);

•  whether the second petition presents new declaration evidence; and

•  whether the second petitioner could have sought joinder with an earlier proceeding.


Joinder: Discretionary •  PO or petition may request joinder via motion, no later than one month after

the institution date of any IPR for which joinder is requested. 37 C.F.R. § 42.122 (b)

•  cannot join if base proceeding terminated [Apple, IPR2013-00354 and IPR2014-00061]

•  party is not required to file motion for joinder simultaneously with petition [Apple, IPR2013-00348]

•  one month time period can be waived for special circumstances [IPR2013-00495 (waived); IPR2013-00584; IPR2014-00061 (not waived)]

•  secondary (understudy) party may assume first chair role if parties settle [IPR2013-00495]

•  Joinder is for joining parties, not issues [SkyHawke, IPR2014-01485]


Priority Challenges: IPRs and Prior Art

In IPRs: •  The Board addressed Petitioner's priority challenge in 63

Institution Decisions and 7 FWDs

•  Out of 63 Institution Decisions:

•  priority challenge successful in 30 cases (48%)

•  priority challenge unsuccessful in 17 cases (27%)

•  Priority challenge moot in 16 cases (25%)

•  The Petitioner was successful in maintaining priority challenge in all 7 FWDs


Priority Challenges: IPRs and Prior Art

•  An attack on a priority claim based on 112, 1st paragraph is not prohibited in an IPR [Rackspace, IPR2014-0058]

•  Priority challenge failed when it relied upon the same 112, 1st paragraph issue that was raised during prosecution and overcome [Prism Pharma, IPR2014-00315]

•  Priority challenge succeeded when it relied upon the same 112, 1st paragraph issue that was raised and overcome during prosecution of a related patent application, but scope of claims in challenged patent were significantly different [Daiichi Sankyo, IPR2015-00291]


Priority Challenges: PGR Eligibility In PGRs: •  Priority chain challenged in one PGR in order to turn patent

from pre-AIA patent to post-AIA patent [see Inguran, PGR2015-00017]

•  Priority challenge successful and PGR instituted

•  Important because patent otherwise not eligible for PGR

•  PGR opens door to 112, 101, etc., in addition to prior art based challenges


Prima Facie Attack: Prior Art Date

To qualify as 102(e) prior art by virtue of an earlier effective filing date, a prior art patent or published application’s claims must have 112, 1¶ support in earlier-filed application

•  PTAB held challenged claims not unpatentable in FWD where petitioner failed to demonstrate claims of 102(e)(1) published application or 102(e)(2) patent had 112, 1¶ support in earlier-filed provisional or nonprovisional application

•  Vmware, IPR2014-01304 and -01305 (102(e)(2))

•  Ariosa, IPR2014-01093 (102(e)(1))

•  PTAB expanding CAFC decision in Dynamic Drinkware v. National Graphics, 2015-1214


Motions to Exclude: Fatal evidentiary gap

•  Prior art not actually prior art--authenticated publication date not shown

•  In TRW Automotive [IPR2014-01347] all grounds relied upon a reference that PO moved to exclude as unauthenticated

•  PTAB excluded reference and petitioner’s case fell apart

•  FWD confirmed all challenged claims


Cannot Appeal Institution Decision •  All Federal Circuit appeals from institution decision, even on standing issues,

dismissed

•  In re Procter and Gamble Co. – mandamus is not a proper vehicle for challenging institution of IPR

•  In re The University of Illinois – statutory scheme precludes the court from hearing an appeal from the Director’s decision to institute

•  In re Versata – statutory provisions applicable to post-grant review contain an identical bar to appellate review of institution determinations

•  All district court appeals from institution decision, even on standing issues, dismissed

•  Mentor Graphics Corp. v. Rea, EDVA – Institution decision is not a final agency action, and is not reviewable by the EDVA. Can appeal to CAFC at conclusion of IPR.

•  Dominion Dealer Solutions, LLC v. Lee, EDVA – Institution decision is not a final agency action, and is not reviewable by the EDVA


Stays: District Court •  District courts are generally granting stays

•  Over 65% of contested motions to stay have been granted •  BUT…Most district courts are waiting until institution before even

considering a motion to stay •  IPR

•  310 stays granted by district courts pending the outcome of an IPR (140 stipulated, 4 sua sponte)

•  88 stays denied by district courts pending the outcome of an IPR (1 stipulated)

•  CBM •  57 stays granted by district courts pending the outcome of a CBM (20

stipulated) •  16 stays denied by district courts pending the outcome of a CBM


Estoppel: Petitioner in Dist. Ct.

•  Estoppel in IPR applies to “prior art consisting of patents or printed publications.” [Redline Detection IRP2013-00106]

•  Some courts may apply estoppel before a FWD [Invensys Sys. v Emerson Elec. (E.D. Tex)]

•  But others may not [National Oilwell Varco v Omron Oilfield & Marine (W.D. Texas)]


Estoppel: at PTAB

•  Petitioner:

•  PTAB denied a second IPR petition under the estoppel provision when the grounds in the second IPR differed from those in the first but the underlying art was the same [Dell, IPR2015-00549]

•  Patent Owner:

•  estoppel under rule 42.73(d)(3) applies only after all appeals have been exhausted [SDI Technologies, Inc. IPR2014-00343]


AIA Appeals to the CAFC

Total Number of Appeals Docketed 451 Appealed from IPR Final Written Decisions 382 Appealed from CBM Final Written Decisions 69 Appeals from Non-Final Decisions 22 Appeals by Patent Owners 301 Appeals by Petitioners 69 Number of Cross Appeals 40 Total Number of Mandamus Petitions 11 Petitions from decisions in IPR proceedings 10 Petitions from decisions in CBM proceedings 1

Impact on the Federal Circuit §  Docketed 104 appeals in 2014, 309 in 2015, and 38 in 2016 (TYD) §  The vast majority of appeals are pursued by patent owners §  Cross appeals represent two appeals based on one decision


AIA Appeals to the CAFC

Cases Submitted to the Federal Circuit 90 Percentages Decided 60 Affirmed 56 93% Affirmed Affirmed Fed. Cir. R. 36 34 Affirmed Non-Precedential 12 Affirmed Precedential 10 Remanded 3 5% Remanded Reversed 1 2% Reversed Dismissed 8 Pending 22

Impact on the Federal Circuit §  Over 90% of appeals decided on the merits have been affirmed §  Over 50% of decisions issued are Rule 36 summary affirmances §  Almost 10% of appeals have been involuntarily dismissed


Outcomes Observations •  Roughly 50% of final decisions are appealed to the Federal Circuit,

and the vast majority of those are by losing patent owners

•  In front of the Federal Circuit, appellants are losing over 90% of the time with Rule 36 affirmances deciding over 50% of cases

•  high affirmance rate is a natural consequence of the highly deferential standard of review applicable to the majority of issues appealed by parties (e.g., substantial evidence, abuse of discretion, arbitrary and capricious)

•  The Court appears to be handling the volume by issuing Rule 36 affirmances and aggressively consolidating related cases

•  The Court appears to be staying on track in issuing opinions within 90 days of oral argument, but a calendaring backlog is emerging


Significant Cases

In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015)

§  Upheld BRI as appropriate claim construction standard §  Institution decision is not appealable, even from final decision §  Board not strictly limited to grounds raised in the petition

Dynamic Drinkware, LLC v. Nat’l Graphics, 800 F.3d 1375 (Fed. Cir. 2015)

§  There is no presumption that a patent is entitled to its priority claim §  Burden of production shifts to establish/rebut prior art status in an IPR, but §  Ultimate burden of persuasion stays with petitioner to prove unpatentability

Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015)

§  PTAB’s determination regarding the filing bar of 315(b) is not appealable

Ethicon Endo v. Covidien, 2016 WL _______ (Fed. Cir. Jan. 13, 2016)

§  It is within the Office’s statutory authority to delegate both the decision to institute and final written decision to the same panel


Questions?

Deborah Sterling, Ph.D., Director [email protected] ▪ 202.772.8501

lessons from practicing at the ptab

Law