It has long been this author’s position that there is no meaningful additional discovery in AIA proceedings but rather only production of specific documents and things which a party can identify. That position was solidified in Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005, Paper 32 (May 29, 2013), designated precedential on May 9, 2016, along with four other PTAB opinions. See entries made May 9, 2016 on Precedential Decisions Worksheet at http://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/decisions.
In Bloomberg, Patent Owner Markets-Alert filed a motion for (1) additional discovery seeking prior art and information considered by Petitioner Bloomberg’s declarant and (2) “information related to licensing and commercial implementation.” Id. at 2. Petitioner Bloomberg opposed. The PTAB granted (1) in part but denied (2).
The opinion begins with a discussion of the AIA, and the need to limit discovery “to lower the cost, minimize the complexity, and shorten the period required for dispute resolution.” Id. It then compares the two standards for granting additional discovery – in the interests of justice for IPRs and good cause for PGRs, including CBMs. Id. at 2-3. Without any mention of the need for fairness, it continues: “Notwithstanding the different standards, the legislative intent for those administrative trial proceedings shares the same principle that each review should be an efficient, streamlined, and cost-effective alternative to district court litigation.” Id. at 3. Contrast this statement with that made by the PTO when the AIA rules were first adopted regarding how the proceedings should be conducted. At that time, according to the PTO, Rules 42.5(a) and (b) gave the Board “wide latitude in administering the proceedings to balance the ideal of precise rules against the need for flexibility to achieve reasonably fast, inexpensive, and fair proceedings.” 77 Fed. Reg.48612, 48616 (Aug. 14, 2012) (emphasis added).
In Bloomberg, the Board reiterated the five Garmin factors set out in IPR2012-0001. See Garmin International, Inc. v. Cuozzo Speed Technologies LLC, Paper 26, at 6-7 (PTAB, Mar. 5, 2013)(also made precedential on May 9, 2016). However, given that the Bloomberg case is a CBM, the Board “slightly modif[ied]”Factors 1 and 2 in view of the lesser required showing, i.e., “for good cause” rather than the “interests of justice” showing required in IPRs. Bloomberg, at 4-5. There’s no suggestion in Bloomberg that the differences in required showings made any difference in the outcome of the case.
Turning to Markets-Alert’s discovery requests relating to documents and things considered by Bloomberg’s declarant, the Board found that Markets-Alert had “sufficiently demonstrate[d] specific factual reasons for expecting that there are other items which the declarant relied on in providing the declaration.” Id. at 6. Those “factual reasons” were statements made by the declarant without citation for support. Id. Thus Bloomberg was ordered to provide “all documents and things considered by Steven R. Kursh in conjunction with the preparation of his declaration, but only to the extent of Dr. Kursh’s recollection. ….” Id. at 12 (emphasis added).
The Board denied all other requests. With respect to those related to licensing and commercial implementation of any specific embodiment of the subject patent or of any technology similar to the patented invention, the Board found “Markets-Alert fail[ed] to provide a specific factual reason or evidence for expecting that the discovery will be ‘useful.’” Id. at 10. In part, this was due to Markets-Alert’s failure to “identify any specific licensing proposals, communications, or commercial implementations ….” Id. In fact, according to the Board, “even if there is a licensing agreement involving the ‘357 patent, Markets-Alert fails to provide adequate explanation or evidence to establish a nexus between the merits of the invention and such a licensing agreement.” Id. at 11. Such an approach to discovery requests – limiting their grant to production of documents and things specifically identified by the requester — certainly provides lower cost, minimizes complexity, and shortens the period required for dispute resolution (the Board’s stated objectives in this now-precedential opinion). However, it ignores the lack of fairness in requiring such a showing without permitting discovery of documents and things surrounding such a license. It also confirms this author’s position that, at least in most cases, the PTAB does not provide meaningful discovery in AIA reviews. Rather it only provides production of already identified documents and things.
What was the final outcome in Bloomberg? Did the PTAB’s decision on Markets-Alert’s discovery requests have any impact on the case? Bloomberg was filed October 15, 2012 and was the fifth CBM case. It was finally decided more than two years ago. See the Final Written Decision, Paper 71 (PTAB, March 26, 2014). The outcome did not turn on discovery. Rather it turned on another hotly debated PTAB practice, i.e., that relating to claim amendments. During trial and notably before it was recognized how difficult amendment of claims during an IPR or CBM would turn out to be, Markets-Alert moved to substitute claims 5-8 for claims 1-4. The Board ultimately granted Markets-Alert’s motion with respect to the cancellation of claims 1-4 but denied the motion with respect to substituting claims 5-8, leaving Markets-Alert empty-handed, so to speak. While Markets-Alert argued that the cancellation of claims 1-4 was intended to be contingent on the Board determining their patentability (which it did not do), the Board rejected that argument. Id. at 11-12. According to the Board, Markets-Alert did not respond to the petition or address the patentability of claims 1-4. Id. at 9. In fact, Markets-Alert had done so in its preliminary response. See Paper 16, filed 1/22/2013. While with hindsight, patent owners now know the Board does not consider arguments made in the preliminary response once an AIA review is instituted, that fact was not at all clear back in 2012. Query the fairness of taking such a harsh position, particularly in such an early case.