Recently, the U.S Court of Appeals for the Federal Circuit held that the retroactive application of inter partes review (“IPR”) proceedings to pre-AIA issued patents is not a violation of the Takings Clause of the Fifth Amendment.  In Celgene Corp. v. Peter, Celgene appealed the Patent Trial and Appeal Board’s (“PTAB”) final written decision invalidating all claims of U.S. Patent No. 6,045,501 and claims 1-9 and 11-32 of U.S. Patent No. 6,315,720 as obvious. Celgene argued that the PTAB erred in invalidating the patents as obvious and that the retroactive application of IPRs to patents filed prior to September 16, 2012 (the effective date of the relevant provisions of the America Invents Act) constituted an unconstitutional taking under the Fifth Amendment. The Federal Circuit rejected this argument and upon review of the merits of the case, affirmed the PTAB’s decision.

First, the Federal Circuit decided whether the constitutional issue could be addressed as it was raised for the first time on appeal. Although, a party generally cannot raise an issue for the first time on appeal, the Federal Circuit has discretion to decide such issues in exceptional circumstances. Here, the Federal Circuit held that Celgene’s argument raised an issue expressly left unresolved by the Supreme Court’s decision in Oil States when it stated, “Oil States does not challenge the retroactive application of inter partes review, even though that was not in place when its patent issued…Finally, our decision should not be misconstrued as suggesting that patents are not property for the purposes of the Due Process Clause or the Takings Clause.” Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S.Ct. 1365, 1379 (2018). The Federal Circuit held that because the issue was unresolved and was purely a question of law, it constituted an exceptional circumstance such that the Federal Circuit had discretion to hear Celgene’s constitutional challenge.

Second, the Federal Circuit turned to the merits of Celgene’s constitutional challenge. Celgene argued a regulatory takings theory, stating that subjecting its pre-AIA patents to a procedure that did not exist at the time the patents were issued unfairly interfered with Celgene’s reasonable investment-backed expectations without just compensation. In response, the PTO argued that a PTAB’s final written decision in an IPR that invalidates a patent is not a taking because the patent was erroneously issued to begin with and thus the patent owner never had a valid property right. The PTO further argued that Celgene’s argument should fail because patents have been subject to reexamination proceedings for decades.

In deciding whether the retroactive application of IPRs to pre-AIA patents constitutes an unconstitutional taking, the Federal Circuit considered “the effect that doing so has on the patent right granted by the PTO, and specifically whether IPRs differ from the pre-AIA review mechanisms significantly enough, substantively or procedurally, to effectuate a taking.” Op. at 27. The Federal Circuit held that the AIA review mechanisms do not differ significantly enough from the pre-AIA review mechanisms so as to effectuate a taking. The Federal Circuit noted that patent validity has always been challengeable in district courts and that for at least the last four decades patents have been subject to reexamination and possible cancellation at the PTO. Although Celgene identified a number of differences between IPRs and reexamination proceedings, the Federal Circuit found these differences to be neither significant nor sufficiently substantive to be considered a taking. The Federal Circuit further noted the many similarities between IPR and reexamination proceedings—such as the fact that in both patents are reviewed on anticipation and obviousness grounds. The Federal Circuit further explained that district court challenges, IPRs and ex parte reexaminations are merely different forms of reexamining a patent and that all serve the purpose of “correcting prior agency error of issuing patents that should not have issued in the first place.” Op. at 32. The Federal Circuit concluded that although “differences exist between IPRs and their reexamination predecessors, those differences do not outweigh the similarities of purpose and substance and, at least for that reason, do not effectuate a taking of Celgene’s patents.” Op. at 36.

The Federal Circuit’s decision in Celgene Corp. v. Peter  issued on July 30, 2019], and the period for seeking appeal to the Supreme Court expires on Oct. 28, 2019.  As such, it is still possible that the Supreme Court will weigh in on the issue of whether retroactive application of IPRs to pre-AIA patents violates the Takings Clause.  It is unclear whether the Supreme Court is more or less likely to grant review of this case, given that the Court expressly carved this Takings issue out of its opinion in Oil States.

While the Federal Circuit’s Celgene decision appears to answer one of several questions left unresolved after the Supreme Court’s decision in Oil States, the decision raises new questions, as well. For example, one question is whether CBM proceedings are distinguishable enough from IPR proceedings (and pre-AIA proceedings) such that they constitute a taking.  In Celgene the Federal Circuit pointed out there has been a consistent expectation amongst patent owners that the PTO could reconsider a patent’s validity on anticipation and obviousness grounds.  But CBM proceedings are different from IPRs, in that they provide an opportunity for patents to be challenged on new grounds – under Section 101 and 112– which were not challenges that previously could be raised in inter partes or ex parte reexaminations. Thus, under the Federal Circuit’s analysis in Celgene, it appears that CBM proceedings could still be considered an unconstitutional taking.

A recent Federal Circuit opinion held that state sovereignty does not shield states from  inter partes review (“IPR”) before the Patent Trial and Appeal Board (the “Board”). Regents of the Univ. of Minn. V. LSI Corp., No. 2018-1559 (Fed. Cir. June 14, 2019) (opinion available here). This decision is another strike against sovereign immunity following a similar Federal Circuit decision in 2018 holding that IPR proceedings were not barred by tribal sovereign immunity. Saint Regis Mohawk Tribe v. Mylan Pharm. Inc., 896 F.3d 1322 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 1547 (2019).

Background

The Regents of the University of Minnesota (“UMN”) own several patents that it asserted against different entities in district court. UMN claimed LSI Corporation (“LSI”) infringed its patents directed to particular types of “read channel” chips (U.S. Patent No. 5,859,601). In a separate case, UMN sued customers using Ericsson Inc. (“Ericsson”) products over patents directed to 4G LTE technology (U.S. Patent Nos. 7,251,768; 7,292,647; 8,588,317; 8,718,185; and 8,774,309).

Both LSI and Ericsson independently challenged the validity of the asserted patents in IPR petitions. Before the Board made any institution decisions, UMN filed a motion to dismiss in each proceeding based on state sovereign immunity. An expanded panel concluded that state sovereign immunity applied in IPR proceedings, but UMN waived its immunity when it filed lawsuits against the petitioners. The LSI and Ericsson cases were consolidated when UMN appealed the Board’s decisions. The Federal Circuit also allowed Gilead Sciences, Inc. to intervene because it was facing the same issue in its IPR petitions.

The Federal Circuit’s Reasoning

After a lengthy discussion of the history of patent review proceedings, the Federal Circuit focused on three factors that made IPRs more like an agency enforcement action—where state sovereign immunity would not apply—rather than a civil suit brought by a private party—which may be barred by state sovereign immunity.

First, although a private party may file the IPR petition, it is an executive branch official who decides to proceed against the sovereign. The decision to institute an IPR proceeding is within the discretion of the Director of the USPTO, not the petitioner. The court also noted the broad ability of any person who is not the owner of the patent to file an IPR petition, even a person lacking constitutional standing, as distinguishing the IPR process from a common-law cause of action.

Second, the Board may proceed even if the petitioner or patent owner declines to participate in the IPR. This suggests it is the agency that is acting and not the parties, which is very different from what would occur in district court, where civil litigation would terminate if the parties ceased to participate in the proceedings.

Third, IPR procedures are different from those in civil litigation. The court listed a few notable differences: the Federal Rules of Civil Procedure do not apply in an IPR; a patent owner may substantively amend its claims during an IPR, but not in civil litigation; and the scope and availability of discovery and live hearings are greatly limited in IPR proceedings.

These factors, combined with the historical purpose of patent review proceedings to allow the USPTO to reevaluate issued patents, led the Federal Circuit to conclude “that [IPR] proceedings are designed to allow the USPTO to harness third parties for the agency to evaluate whether a prior grant of a public franchise was wrong.” Regents of the Univ. of Minn., slip op. at 22. The court compared this to a situation where an agency brings an action based upon information provided by a third party. In such a situation, where it is the federal agency bringing the action against a state sovereign, the court said the state sovereign’s immunity is not implicated.

Additional Views of Circuit Judges Dyk, Wallach, and Hughes

In addition to the opinion of the court, all three judges on the Federal Circuit panel jointly filed additional views to address state sovereign immunity of in rem proceedings. The judges addressed whether such immunity would apply if an IPR proceeding is deemed an adversarial proceeding between private parties. In their view, an IPR is the type of in rem proceeding that Supreme Court precedence suggests would not implicate state sovereign immunity.

The judges distinguished situations where a proceeding seeks personal jurisdiction over a state which is “normally an indignity to the sovereignty of a state,” quoting Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440, 453 (2004). Because in rem proceedings do not require personal jurisdiction, the risk of such indignity to the state is not an issue. The judges noted that not all in rem proceedings are immune from state sovereign immunity claims, such as those involving the state’s real and personal property used solely for governmental purposes, but distinguished patents because of their intangible nature and the inability to physically possess patents.

The judges analogized an IPR proceeding to the bankruptcy proceeding in Tennessee Student Assistance Corp. In that case, the Supreme Court determined the state did not have sovereign immunity when a student sought to have state-funded student loans discharged because of the in rem nature of the bankruptcy proceedings. This was partially based on the fact there were no monetary damages or any affirmative relief from the state in such a bankruptcy proceeding. The Federal Circuit judges considered reevaluating the issuance of a patent to be a similar situation, noting the only possible relief in an IPR is revocation of a previously granted patent. The similarity extended further in that neither proceeding has a statutory requirement compelling the state to participate. Therefore, the judges concluded an IPR is the type of in rem proceeding that should not be barred by state sovereign immunity.

Conclusion

This decision and the decision in Saint Regis foreclose many if not all arguments against IPR based on sovereign immunity. While the court did not explicitly address other post-grant proceedings at the USPTO, the court’s reasoning seems equally applicable to other post-grant proceedings.

The United States Patent and Trademark Office (“USPTO”) published the Office Patent Trial Practice Guide (“Practice Guide”) in 2012 to apprise the public of standard practices before the Patent Trial and Appeal Board (“PTAB” or “Board”) during AIA trial proceedings and to encourage consistency of procedures among panels of the Board. In order to keep the public up to date, the USPTO is releasing updates to the Practice Guide on a section-by-section, rolling basis. The first update to the Practice Guide was released August 2018 and the second update was recently published on July 16, 2019.

The July 2019 update is more extensive than the first update and includes guidance on the following:

Factors that may be considered for additional discovery

In determining when a request for additional discovery will be granted in IPRs and derivation proceedings the Board will apply the “interests of justice” standard and will be guided primarily by the five factors set forth in Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001 (P.T.A.B. Mar. 5, 2013) (Paper 26) (precedential). For PGR and CBM proceedings the Board will apply the “good cause” standard and will be guided primarily by the factors set forth in Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005 (P.T.A.B. May 29, 2013) (Paper 32) (precedential).

The revised claim construction standard

The guidance was updated to reflect the Board’s previous change from “broadest reasonable interpretation” to the Phillips standard. Additionally, the guidance highlighted that the Board will consider prior claim construction determinations in a civil action or ITC proceeding based on a number of non-exclusive factors, including similarities between the records, timeliness of making the claim construction determination of record, and the finality of the claim construction.

The submission of testimonial evidence with a patent owner preliminary response

A patent owner may submit testimonial evidence in the patent owner preliminary response, but any issue of material fact created by the testimonial evidence will be viewed in the light most favorable to the petitioner for purposes of deciding whether to institute a review. Due to the short time period the Board has to reach a decision regarding institution, few petitioners will be granted leave to file a reply. The petitioner will generally have an opportunity to cross examine the declarant after institution, and in reaching the final written decision, the board will weigh the testimonial evidence on a case-by-case basis.

Information to be provided if multiple petitions challenging the same patent are filed at or about the same time

For parallel petitions challenging the same patent, the updated guidance highlighted that multiple petitions by a petitioner are not necessary in the vast majority of cases. Two petitions may sometimes be necessary in rare cases, such as if the patent owner has asserted a large number of claims in litigation or there is a dispute about priority date requiring arguments under multiple prior art references. However, three or more petitions are likely inappropriate. If a petitioner decides to file multiple petitions challenging the same patent, the petitioner should rank the petitions and explain the differences (preferably including a table), why the differences are material, and why the board should exercise its discretion to institute more than one petition. This additional information can be filed in a separate paper from the petition.

Motion to amend practice

The guidance highlighted the USPTO’s pilot program for motion to amend practice and procedures. The program provides the patent owner with additional motion to amend options including (1) requesting preliminary guidance from the Board in its first motion to amend, and (2) filing a revised motion to amend. Further information on current motion to amend practice may be found at the following website: https://www.uspto.gov/patents-application-process/patenttrialandappealboard.

Factors that may be considered by the Board in determining whether to grant a motion for joinder

The factors that the Board may consider in deciding a motion for joinder include why joinder is appropriate, whether a new ground of unpatentability is raised in the second petition, how the cost and schedule of the first proceeding will be impacted if joinder is granted, and whether granting joinder will add to the complexity of briefing and/or discovery. See, e.g., Kyocera Corp. v. Softview LLC, IPR2013-00004 (P.T.A.B. Apr. 24, 2013).

Procedures to be followed when a case is remanded

The Board strives to issue decisions on cases remanded from the Court of Appeals for the Federal Circuit within six months. Parties in remanded trial cases should contact the Board within 10 business days to arrange a conference call with the panel and meet and confer in a reasonable and good faith attempt to propose a procedure on remand. Conference calls with the Board should take place within the first month after the mandate issues.

Procedures for parties to request modifications to the default protective order

A protective order is not entered by default but must be proposed by one or more parties and must be approved and entered by the Board. Parties are encouraged to agree on the entry of a stipulated order, but absent such an agreement, the default protective order included in Appendix B of the 2019 update may be entered by the Board. To request modifications to the default protective order, parties may agree to proposed modifications and the Board will generally accept such proposed changes if they are consistent with the integrity and efficient administration of the proceedings.

When a proceeding before the Board involves the same parties and subject matter as a parallel district court proceeding, parties may propose that the protective order entered by the district court be adopted by the Board. However, all terms of a district court protective order that conflict with Board procedures for filing or otherwise handling confidential information should be removed before the proposed order is submitted to the Board.

The full Trial Practice Guide Update is available from the USPTO website at https://www.uspto.gov/​TrialPracticeGuide3.

The Supreme Court of the United States issued a ruling today in Return Mail, Inc. v. Postal Service, 587 U.S. ___ (2019), holding that the United States Government is not a “person” eligible to petition for covered-business-method (“CBM”) review, inter partes review (“IPR”), or post-grant review (“PGR”) America Invents Act (“AIA”) proceedings before the United States Patent and Trademark Office (“USPTO”).  Justice Sotomayor delivered the opinion for the Court in a 6-3 decision, while Justice Breyer, joined by Justices Ginsburg and Kagan, filed a dissenting opinion.

Return Mail, Inc. owns U.S. Pat. No. 6,826,548 (the “’548 Patent”), which is directed to a method for processing undeliverable mail.  Op. at 5.  In 2006, after declining to license the ’548 Patent for its enhanced address-change service to process undeliverable mail, the Postal Service petitioned for ex parte reexamination of the ’548 Patent.  Op. at 5.  The Patent Office cancelled the original claims, and issued new ones confirming the validity of the ’548 Patent.  Id.  Return Mail then sued the Postal Service in the Court of Federal Claims in order to seek compensation for the Postal Service’s unauthorized use of its invention.  Id.  The Postal Service again challenged the ’548 Patent, this time in a CBM review.  The USPTO cancelled Return Mail’s patent claims, finding that they are directed to ineligible subject matter pursuant to 35 U.S.C. § 101, and a divided panel of the Court of Appeals for the Federal Circuit affirmed.  Id. at 6.  As part of its ruling, the Federal Circuit held that the Government is a “person” eligible to petition for CBM Review.  Op. at 6; see also 35 U.S.C. §§ 311(a), 321 (a) (only a qualifying “person” may petition for CBM review).

The Court reversed, noting that in the absence of an express statutory definition of “person,” the Court “applies a ‘longstanding interpretive presumption that ‘person’ does not include the sovereign,’ and thus excludes a federal agency like the Postal Service.”  Op. at 7 (quoting Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 780-81 (2000)).  In view of the presumption that a statutory reference to a “person” does not include the Government, the majority found that the Postal Service was unable to show that the AIA’s context indicates otherwise.  Op. at 9.  The Court further noted that “excluding federal agencies from the AIA review proceedings avoids the awkward situation that might result from forcing a civilian patent owner (such as ReturnMail) to defend the patentability of her invention in an adversarial adjudicatory proceeding initiated by one federal agency (such as the Postal Service) and overseen by a different federal agency (the Patent Office).”  Op. at 17. Accordingly, the Court held that a federal agency is not a “person” who may petition for post-issuance review under the AIA.  Id.

In dissent, Justice Breyer found that the language of other related patent provisions strongly suggests that the term “person” includes the Government.  The dissent further asked:

Why? Government agencies can apply for and obtain patents; they can maintain patents; they can sue other parties for infringing their patents; they can be sued for infringing patents held by private parties; they can invoke certain defenses to an infringement lawsuit on the same terms as private parties; they can invoke one of the pre-existing administrative procedures for challenging the validity of a private party’s patents; and they can be forced to defend their own patents when a private party invokes one of the three procedures established by the America Invents Act. Why, then, would Congress have declined to give federal agencies the power to invoke these same administrative procedures?

Dissent at 8.

Article III standing has become a contested and often dispositive issue in appeals from the Patent Trial and Appeal Board (PTAB).  For example, as we reported previously, the Federal Circuit has dismissed an inter partes review (IPR) petitioner’s appeal where the petitioner-appellant lost standing by abandoning development of its potentially infringing product.[1]  We also reported that the Federal Circuit dismissed an appeal from an IPR because the petitioner-appellant lacked standing despite its status as a competitor of the patent owner.[2]  Recently, the Federal Circuit addressed the standing requirement for IPR appeals again, this time in regard to a patent owner-appellant, in Sony Corp. v. Iancu, __ F.3d __, 2019 WL 2202968 (Fed. Cir. May 22, 2019).[3]  There, in a relatively straightforward decision, it found a controversy sufficient to satisfy Article III for the patent owner’s appeal despite the fact that the patent at issue had expired.  This decision reinforces the general understanding that patent owners have standing to appeal adverse decisions by the PTAB.

By way of background, Sony is the owner of U.S. Patent No. 6,097,676 (“the ’676 patent”), which expired in August 2017.  The ’676 patent had been challenged before the PTAB in IPR2016-00834 and was also involved in litigation between the petitioners and Sony in the District of Delaware (No. 1:15-cv-00288).  In September 2017, the PTAB entered a Final Written Decision finding the challenged claims unpatentable.  Sony filed a notice of appeal.  Shortly afterwards, the district court litigation was dismissed with prejudice upon stipulation of the parties.  Presumably due to a settlement agreement, the petitioners elected not to participate in the appeal from the PTAB.

The appeal was decided by a majority consisting of Chief Judge Prost and Circuit Judge Dyk.  In a dissenting opinion, Circuit Judge Newman focused solely on the issue of standing.  According to Judge Newman, the appeal should have been dismissed.  The dissent reasoned that there was neither private interest nor public interest in the fate of the ’676 patent because the patent had expired, the IPR petitioners declined to defend the PTAB victory, and the parties had settled the infringement suit in the district court.  Judge Newman acknowledged in her dissent that “a patentee has an indisputable interest in the validity of its patent.”  However, in this case where Sony’s ’676 patent had expired and no relevant litigation was pending, she argued that there was no live case or controversy sufficient to satisfy Article III and that the court’s decision would have no consequence.  According to Judge Newman, “[n]o possibility of present or future case-or-controversy ha[d] been suggested—not by Sony, not by the vanished [petitioners], not by the intervenor Director.”  Notably, neither party had suggested a lack of Article III standing.

The majority summarily dismissed the dissent in a footnote.  It found that the parties to the appeal remained adverse and an Article III controversy was presented because the Director (having intervened) argued that the PTAB’s Final Written Decision should be affirmed, while Sony argued that the PTAB’s decision should be reversed and the claims found patentable.  Regarding the existence of a potential infringement suit, the majority stated that there had been no showing, as required for mootness, that such a controversy did not exist.  The majority noted that its decision “would have a consequence on any infringement that occurred during the life of the ’676 patent,” citing in support to cases that held an expired patent may form the basis of an action for past damages and that an owner can license the rights or transfer title to an expired patent.

The result in this case seems straightforward.  However, the issue of standing in PTAB appeals is certain to come up again in future cases.  It will be interesting to see how standing is addressed in other situations such as those involving exclusive licensees where the issue may not be so clear-cut.

[1] https://www.ptablaw.com/2019/02/28/ipr-petitioner-lost-standing-to-appeal-to-federal-circuit-by-abandoning-development-of-proposed-biosimilar-before-appeal-was-completed/

[2] https://www.ptablaw.com/2019/05/30/competitor-standing-not-sufficient-to-establish-article-iii-standing-for-appeal-of-ptab-decision/

[3] Available at: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1172.Opinion.5-22-2019.pdf

Recently, in AVX Corp. v. Presidio Components, Inc., the Federal Circuit dismissed AVX Corp.’s (“AVX”) appeal of the PTAB’s inter partes review decision for lack of standing. AVX petitioned the PTAB for an inter partes review of the 21 claims of U.S. Patent No. 6,661,639 (“the ’639 patent”). Presidio Components Inc. (“Presidio”) owns the ’639 patent which is directed towards single-layer ceramic capacitors comprising specific features. AVX, a competitor of Presidio, manufactures and sells a range of electronic components, some of which include capacitors. The PTAB issued a final written decision finding claims 13-16 and 18 unpatentable while upholding the remaining claims. AVX appealed the PTAB decision with respect to the claims that were upheld. On appeal, Presidio argued that AVX lacked standing as required by Article III of the Constitution. The Federal Circuit agreed.

Citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 559–60 (1992), the Federal Circuit noted that to have standing under Article III, a party must show an injury-in-fact, a causal connection between the conduct alleged and the injury, and a likelihood that the injury would be redressed by a favorable decision. A party need not have Article III standing to file a petition for inter partes review. While 35 U.S.C. § 319 grants a party a statutory right to appeal a final written decision of the PTAB, that does not necessarily mean that the party will have Article III standing to appeal the decision to the Federal Circuit. The Federal Circuit noted that it has previously rejected the contention that a statutory right to appeal establishes Article III standing. See Op. at 6-7 (citing Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1175 (Fed. Cir. 2017)).

AVX argued that the PTAB’s decision to uphold certain claims injures AVX because the statutory estoppel provision would prevent it from asserting the same invalidity challenges against Presidio if Presidio were to bring claims against AVX in the future. To AVX, the estoppel provision (35 U.S.C. § 315(e)) means that it “is now forever barred from asserting in district court, either in a declaratory judgment action or as a defense or counterclaim in an infringement action, that the upheld claims are invalid for obviousness on the same grounds on which the present IPR was instituted.” See Op. at 8. The Federal Circuit rejected this argument. The Federal Circuit stated that it already rejected the contention that the estoppel provision provides a sufficient basis to establish Article III standing in Phigenix, Inc. v. Immunogen, Inc. The court then declined to decide issues relating to the specific language of § 315(e) as the parties had not briefed the issues. The court declined to decide whether the estoppel provision would have effect even where a petitioner lacked constitutional standing to appeal a PTAB decision and whether the estoppel provision should be interpreted to include preclusion principles.

AVX also made an argument for “competitor standing”, stating that it is injured by the PTAB decision because the decision decreases AVX’s ability to compete against Presidio. Relying on non-patent cases, AVX argued that courts have found “competitor standing” sufficient to challenge certain government actions or decisions. The Federal Circuit rejected this argument, finding that “the rationale for finding standing in those cases does not carry over to support standing in the present context, where AVX has no present or non-speculative interest in engaging in conduct even arguably covered by the patent claims at issue.” See Op. at 9. The Federal Circuit explained that in those cited cases, the government actions threatened economic injury to the challenger through “the ordinary operation of economic forces” such as when the action causes a decrease in prices for competitor goods or causes the market to be opened to additional competitors. Id. at 11. By contrast, the Federal Circuit concluded that the action here is different because it “is the upholding of specific patent claims, which do not address prices or introduce new competitors, but rather give exclusivity rights over precisely defined product features.” Id. at 11.

The Federal Circuit noted that a patent claim could have a harmful competitive effect on a competitor if the competitor was using features claimed by the patent or was planning to do so. However, under the present facts, the Federal Circuit concluded that that is not the case here. The Federal Circuit concluded that AVX has not shown any plans to develop a product or engage in any conduct covered by the ’639 patent. AVX also failed to show that it faces any risk of infringing the claims upheld by the PTAB or that an infringement lawsuit was inevitable. In light of these conclusions, the Federal Circuit dismissed the appeal for lack of standing.

The Federal Circuit’s decision demonstrates that in general being a mere competitor is insufficient to establish Article III standing. A petitioner must provide non-speculative evidence of an injury-in-fact tied to the patent claims at issue. As demonstrated by the cases cited in the opinion, such evidence can potentially include the patent hindering a challenger’s licensing opportunities or a challenger engaging in or having concrete plans to engage in conduct covered by the patent. Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1339 (Fed. Cir. 2008). Importantly, if the injury has not actually occurred, a petitioner must show that the injury is real and imminent. Id. This may be satisfied in various ways. For example, a petitioner may show that the injury is inevitable. In Altaire Pharm., Inc. v. Paragon Bioteck, Inc., 889 F.3d 1274, 1281–84 (Fed. Cir. 2018), the Federal Circuit found the injury (filing of an infringement lawsuit) to be inevitable because a declaratory judgment action had been filed to terminate an agreement between the patentee and competitor, the competitor intended to file an ANDA (which would constitute an act of infringement) and the patent owner refused to stipulate that it would not file an infringement suit against the competitor. See Op. at 14. Under those facts, the Federal Circuit found the injury-in-fact requirement satisfied.

As this case demonstrates, when petitioning the PTAB for inter partes review (and other post-issuance reviews), petitioners should be mindful of the requirements for Article III standing.. If petitioners are not able to identify an actual or imminent injury-in-fact, one must consider the ramifications of the estoppel provisions in the event the petition is granted but one or more claims are ultimately found to be patentable. That is, the appealability or lack thereof of the PTAB’s final written decision is a factor that should be part of the calculus behind a petitioner’s decision to pursue a post-issuance challenge. Petitioners should also be mindful when weighing these considerations that while appellants require Article III standing, an appellee simply defending the PTAB’s judgment is not necessarily subject to the same requirements. See Personal Audio, LLC v. Electronic Frontier Foundation, 867 F.3d 1246 (Fed. Cir. 2017).

An upcoming Precedential Opinion Panel (“POP”) at the Patent Trial and Appeal Board (“PTAB” or “the Board”) may offer improved clarity for petitioners and patent owners when a petitioner relies on non-patent literature in challenging a patent.

Background

Hulu, LLC sought inter partes review (“IPR”) of U.S. Patent No. 5,806,062 (“the ’062 patent”) asserting claims 1–3, 7, 10, 11, 14, and 15 were unpatentable as obvious under 35 U.S.C. § 103. Hulu, LLC v. Sound View Innovations, LLC, IPR2018-01039, Paper 3, at 4 (PTAB May 8, 2018). The ’062 patent is directed to creating data analysis applications using reusable software operators. Hulu’s obviousness challenge was based on a single prior art reference, Sed & Awk, a book published in November 1990 by O’Reilly & Associates, Inc.

The Board denied institution of the IPR after finding Hulu did not provide sufficient evidence that the book was publicly accessible to qualify as prior art. Hulu, LLC v. Sound View Innovations, LLC, IPR2018-01039, Paper 12, at 13 (PTAB December 3, 2018). The Board accepted that the book had a copyright date of 1990 and that the copyright owner was O’Reilly & Associates, Inc., but stated “[a] copyright date does not indicate anything more than the author indicates this is the date the work was fixed in a tangible medium of expression, i.e., first published.” Id. at 11. The Board declined to speculate as to when or whether the book was sufficiently publicly accessible without further evidence, such as the routine practices of the publisher.

Hulu requested reconsideration by the Precedential Opinion Panel (“POP”) to address “whether a well-known publisher’s copyright notice is sufficient evidence of the date of a publication’s public availability for purposes of institution of inter partes review, where the patent owner does not submit any evidence to the contrary.” On April 3, 2019, the request was granted to address a broader version of Hulu’s request. The POP will address the following question: “What is required for a petitioner to establish that an asserted reference qualifies as “printed publication” at the institution stage?” Hulu, LLC v. Sound View Innovations, LLC, IPR2018-01039, Paper 15, at 2 (PTAB April 3, 2019). The POP permitted further briefing by the parties and also authorized amicus curiae to submit briefs.

Status of the Current POP

Briefing for the POP is complete. The following sections summarize the parties’ proposed standards at the institution stage when a petitioner seeks to establish that an asserted reference qualifies as a printed publication.

Sound View Innovations (Patent Owner)

Sound View argues that the “reasonable likelihood that the petitioner would prevail” is a high threshold at the institution stage. Sound View focuses on the ideas that the IPR petition must present the petitioner’s case-in-chief and that there are limited opportunities to supplement the record after the petition.

Sound View bolstered its approach by comparing institution decisions to district court bench trial decisions on motions to dismiss that occur after the plaintiff’s case-in-chief. In such a motion to dismiss, the district court may dismiss the plaintiff’s claims, but it is not allowed to render judgment in favor of the plaintiff. Also, the burdens of production and persuasion rest with the plaintiff to establish its claim, even if the opponent has not yet presented any evidence.

Hulu (IPR Petitioner)

Unsurprisingly, Hulu proposes a lower threshold at the institution stage of an IPR petition. According to Hulu, the petitioner must present a prima facie case that the reference qualifies as a “printed publication,” such as conventional markers on the document that would generally be expected to be found on documents of the same kind. Presenting a prima facie standard would be consistent with the “reasonable likelihood” institution standard for IPRs. When the reference is a book, the standard may be met by providing evidence, such as a copyright notice, edition identifiers regarding changes to the book, indications that the book was published by a commercial publisher, and assignment of an International Standard Book Number. Hulu also argues that a prima facie standard would lessen the workload of the Board at the institution stage and create more consistent institution decisions.

Amicus Curiae

In addition to the parties’ additional briefing, a number of non-parties submitted amicus curiae briefs: the American Intellectual Property Law Association (“AIPLA”); Canon; Google, Microsoft, Arista Networks, and Uber; Unified Patents; and Sandoz.

Canon

Canon, Inc. submitted an amicus curiae brief in support of Hulu. Canon is currently involved in multiple IPR proceedings as the petitioner where a printed publication dispute has been raised by the patent owner.  Canon notes that some evidence regarding public accessibility is difficult, or impossible, to obtain prior to institution. For example, sources with “personal knowledge” of a reference’s publication details are often third-parties (librarians, company employees, etc.), which may refuse to provide such evidence voluntarily.  Canon argues that the POP should not adopt a standard that prevents institution where the evidence may be in the possession of a third-party unwilling to cooperate with the petitioner, as doing so would essentially remove an enormous body of printed publication prior art from use in PTAB proceedings.  Canon also argues that petitions should not be rejected based on evidentiary objections because such pre-institution attacks on publication evidence are attacks on the admissibility of the publication evidence. These attacks, Canon argues, are improper because the rules provide a specific post-institution process for presenting and resolving evidentiary objections.  Canon also notes that a high pre-institution evidentiary threshold is inefficient because printed publication disputes do not occur in the overwhelming majority of cases, and an exacting standard would require extensive and wasteful development of evidence for every use of non-patent prior art, even those that appear in famous journals years before the priority date of the challenged patent.  Canon also argues that providing a declaration from a witness, such as a law librarian who obtained a copy of a reference from third-party library, should be sufficient pre-institution, even if the declarant does not have personal knowledge of the library’s internal practices.

Unified Patents

Unified Patents Inc. submitted an amicus curiae brief in support of neither party. Unified Patents argues that the “threshold showing” requirement for printed publications cannot exceed the reasonable likelihood standard for institution because neither the AIA nor the Office’s regulations require definitive proof that an asserted reference qualifies as a printed publication at the institution stage. This is because the reasonable likelihood standard is different than the preponderance of the evidence standard that applies after institution of trial. Unified Patents argues that the Board should not require definitive proof of public accessibility at the institution stage, but should only require that the petitioner provide evidence sufficient to make a threshold showing of public availability. Any disputed issues of fact should be resolved after proceedings are instituted, where the Board can decide the issue based on a fully developed evidentiary record. Accordingly, Unified Patents argues that the Board should allow both parties to submit additional evidence in support or opposition of the asserted reference so that the Board can determine the issue on a full record. Since the board is not bound by any determination made in the institution decision, it is free to change its mind in the final written decision based on a fully developed evidentiary record.

Google, Microsoft, Arista Networks, and Uber

Google LLC, Microsoft Corporation, Arista Networks, and Uber Techs. Inc. (collectively, “Google”) filed a joint amicus curiae brief in support of neither party.  Google argues that a petitioner relying on a non-patent printed publication should be required to establish the same prima facie case of public accessibility required of examiners during prosecution and reexamination. That is, a petitioner should not be required to produce additional evidence of public accessibility beyond the purported publication date or copyright notice date shown on the face of the reference itself.  Google notes that, because a preliminary response rarely includes evidence challenging public accessibility, the Patent office should not impose a higher evidentiary burden on the petition itself. Google also argues that patent owners should not be able to rely on mere attorney argument—as opposed to actual evidence—to defeat a prima facie case of public accessibility at the institution stage. Google proposes a procedure to apply when a patent owner’s preliminary response includes rebuttal evidence disputing the public availability of a reference. In these scenarios, the petitioner should be allowed to submit additional evidence in a reply, which should be automatically authorized by the Board. Furthermore, Google believes the Board should authorize the petitioner to apply for subpoena if the evidence of public accessibility is in the possession of third-party unwilling to voluntarily produce the evidence. If petitioner’s diligent efforts to obtain the evidence are unsuccessful prior to the 3-month institution deadline, then Google believes the Board should generally favor instituting trial in view of the genuine issue of material fact, which is viewed in the light most favorable to the petitioner solely for purposes of deciding institution.

Sandoz

Sandoz Inc. filed an amicus curiae brief in favor of neither party.  In view of the inconsistent results reached by different panels, Sandoz proposes the following uniform standard (similar to the procedure proposed by Google) for determining what is necessary for a petitioner to establish that an asserted reference qualified as a printed publication at the institution stage:

Facial indicia that an asserted reference was publicly available before the critical date is sufficient evidence of public accessibility as prior art to meet the threshold for institution of inter partes review, where patent owner does not submit evidence to the contrary.

Sandoz Brief at 2.  Under this standard, references such as published books and articles, publications of conference proceedings, nationally distributed drug labels, large company press releases, etc. would be assumed to be publicly accessible as of their facial date absent any evidence from the patent owner to the contrary.  However, more obscure references, such as unpublished academic theses, would require reasonable additional circumstantial evidence of public accessibility in addition to the facial date of the reference, again absent contrary evidence from the patent owner.

American Intellectual Property Law Association

The American Intellectual Property Law Association (“AIPLA”) filed an amicus curiae brief in favor of neither party.  AIPLA argues that the statutory threshold for institution and public accessibility should be consistent. That is, a non-patent reference should qualify as a printed publication for purposes of institution in IPR proceedings when the evidence filed with the petition establishes a reasonable likelihood that the reference was publicly accessible before the critical date. Similarly, for PGRs and CBMs, the evidence filed with the petition must show that the printed publication was more likely than not publicly accessible.  AIPLA also argues that the Board’s consideration of evidentiary issues should be limited at the institution stage, and any factual dispute should be viewed in the light most favorable to the petitioner for purposes of determining whether to institute.  AIPLA refrains from discussing any substantive issues of public accessibility in its brief.

Conclusion

Because many IPR petitions cite non-patent literature as prior art, this POP decision could have far-reaching effects on PTAB practice. If the number of entities filing amicus briefs in this case is any indication, there is significant interest in this topic among those in the field of intellectual property. We too eagerly await a decision by the POP and will provide updates as this issue develops.

Faced with criticism from legislators and patent owners for perceived serial harassment by patent challengers, on May 7, 2019, the Patent Trial and Appeal Board (“the PTAB” or “the Board”) designated two decisions as “precedential” that arguably expand its discretion to deny petitions in PTAB proceedings.

Previously, in General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, Case IPR2016-01357, slip op. at 15–16 (PTAB Sept. 6, 2017) (Paper 19) (precedential), the Board articulated a non-exhaustive list of factors to be considered in determining whether to exercise discretion to deny a petition under § 314(a).  Those factors include the following:

  1. whether the same petitioner previously filed a petition directed to the same claims of the same patent;
  2. whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
  3. whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
  4. the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
  5. whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
  6. the finite resources of the Board; and
  7. the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.

Id. at 16.  The two recent precedential decisions build upon the General Plastic factors and the circumstances that may warrant denial under § 314(a).

First, in Valve Corp. v. Electronic Scripting Prods., Inc., Case IPR2019-00062, -00063, -00084, Paper 11 (PTAB Apr. 2, 2019) (precedential), the PTAB considered whether its discretion under § 314(a) is limited to instances where multiple petitions are filed by the same petitioner.  The PTAB concluded that it was not, and found that follow-on petitions filed by “similarly situated” petitioners may also be denied under § 314(a).  The PTAB explained that “when different petitioners challenge the same patent, we consider any relationship between those petitioners when weighing the General Plastic factors.”  Id. at 9.  Valve and the earlier petitioner, HTC, were co-defendants in district court litigation and were accused of infringing the same claims of the same patent challenged in Valve’s petitions and HTC’s earlier petition.  The PTAB had denied HTC’s petition before Valve filed its own petitions.  The Board concluded that Valve waited until after the denial and then filed its three additional petitions and that Valve had a significant relationship with HTC.  According to the panel, which included Director Iancu, “[t]hese serial and repetitive attacks implicate the efficiency concerns underpinning General Plastic” and agreed with the Patent Owner that Valve’s petitions were “unfair” follow-on petitions.  Id. at 15.

Second, in NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., Case IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential), the PTAB exercised its discretion to deny institution under 35 U.S.C. §§ 314(a) and 325(d) because the grounds in the petition were redundant with the arguments considered during prosecution.  The PTAB also noted that the co-pending district court litigation was scheduled to go to trial in a few months based on the same arguments and evidence advanced in the petition.  In denying institution under § 325(d), the Board explained that the asserted art was a subset of the same prior art that the Examiner applied in rejecting the claims during prosecution and Petitioner’s arguments were substantially similar to the Examiner’s rejections, which Patent Owner overcame during prosecution.  Further, in denying institution under § 314(a), the Board noted that a 5-day jury trial was set to begin on March 25, 2019, whereas a trial before the PTAB on the same asserted prior art would not have concluded until September 2019, and thereby would have failed to provide an effective and efficient alternative to district court litigation.

In view of these designations, it is clear that discretionary bases for denying institution will play a central role in patent owner preliminary responses.  As the PTAB focuses on addressing criticisms regarding serial harassment of patent owners and unfair follow-on petitions that use patent owner responses or institution decisions as a roadmap, prospective petitioners should ensure that petitions are filed as early as possible both in the context of the progression of parallel district court litigation and of the progression of earlier filed PTAB proceedings initiated by similarly situated petitioners.  In most cases, prospective petitioners should file their petitions prior to the filing of the patent owner’s preliminary response in an earlier filed petition to avoid any allegations of gamesmanship.

On April 18, 2019, in Dodocase VR, Inc. v. MerchSource, LLC, No. 2018-1724 (Fed. Cir. Apr. 18, 2019) (nonprecedential), the Federal Circuit affirmed the District Court for the Northern District of California, agreeing that Dodocase VR, Inc. (“Dodocase”) is entitled to a preliminary injunction against MerchSource, LLC (“MerchSource”). The preliminary injunction requires that MerchSource contact the PTAB to withdraw (or at least attempt to withdraw) three post-grant petitions it had filed against Dodocase’s patents. This result was based on a license agreement between the parties concerning the same patents in which MerchSource agreed not to challenge their validity and to resolve any dispute concerning the license in the Northern District of California. Focusing on the forum selection clause, both the District Court and Federal Circuit concluded that Dodocase was likely to prevail in its claim that MerchSource breached that provision.

By way of background, Dodocase is the owner of three patents related to virtual reality headsets: U.S. Patent Nos. 9,420,075 (“the ’075 patent”); 9,723,117 (“the ’117 patent”); and 9,811,184 (“the ’184 patent”).[1] MerchSource is a distributor of consumer products. Dodocase and MerchSource entered into a Master License Agreement (“MLA”) covering the three patents. The MLA included a forum selection clause and choice of law provision stating “[t]he laws of the State of California shall govern any dispute arising out of or under this Agreement . . . . [T]he parties agree that disputes shall be litigated before the courts in San Francisco County or Orange County, California.”

A year later, MerchSource informed Dodocase that MerchSource would no longer pay royalties because it believed that all the relevant patent claims were invalid. Dodocase filed a complaint against MerchSource in the Northern District of California seeking an injunction to prevent MerchSource from breaching the MLA and infringing the patents as well as a declaratory judgment that the patents were valid and enforceable. MerchSource then filed petitions requesting inter partes review (“IPR”) of the ’075 patent and post grant review (“PGR”) of the ’117 and ’184 patents (collectively, “the PTAB petitions”). In response, Dodocase filed a motion for a temporary restraining order and preliminary injunction requesting that the District Court order MerchSource to withdraw the PTAB petitions.

The District Court granted Dodocase’s motion for preliminary injunction and ordered MerchSource to withdraw the PTAB petitions. The District Court found that Dodocase was likely to succeed on the merits of its claim because the forum selection clause mandated that disputes “shall be litigated” in the California courts and PTAB proceedings fell within the scope of the clause. Consequently, Dodocase was likely to succeed in showing that MerchSource breached the forum selection clause by filing its PTAB petitions.

MerchSource appealed arguing, among other things, the District Court erred in finding likelihood of success because the PTAB petitions did not “arise out of” the MLA. The Federal Circuit rejected MerchSource’s argument and found no error in the District Court’s decision. In a prior case, Texas Instruments Inc. v. Tessera, Inc., 231 F.3d 1325 (Fed. Cir. 2000), the Federal Circuit found that a California forum selection clause using the language “arise from, under, out of or in connection with this Agreement,” encompassed International Trade Commission (ITC) proceedings initiated after the license agreement was executed. The court in Texas Instruments Inc. v. Tessera, Inc., explained when the parties negotiated the terms of their licensing agreement, they possessed adequate knowledge of the basic patent law actions and remedies available to litigants, including the available forums and venues. The parties agreed only to California as the forum to resolve disputes. Since ITC actions cannot be brought in California, it followed that the parties did not agree to the ITC as a forum for litigation. “Thus, the governing law clause in [Texas Instruments Inc. v. Tessera, Inc.], as in any patent license agreement, necessarily covers disputes concerning patent issues.”[2]

In affirming the District Court, the Federal Circuit extended the analysis of Texas Instruments Inc. v. Tessera, Inc., to PTAB proceedings. The PTAB proceedings challenging the patentability of the licensed patents after Dodocase sought to enforce the license fell within the scope of the forum selection clause because they “aris[e] out of or under” the terms and performance of the contract. Consequently, forum selection clauses can bar PTAB proceedings in certain circumstances.

But the relief such a forum selection clause provides may be bitter sweet for the patent owner. To date, the PTAB has not recognized forum selection provisions as a defense.[3] And in Dodocase, the remedy is only that MerchSource request termination. There is no requirement that the PTAB actually terminate the proceedings. Given the stage of the proceedings, with Final Written Decisions expected in August 2019, it will be interesting to see how the PTAB reacts to MerchSource’s request.

If the PTAB refuses to terminate the proceedings and finds the claims unpatentable, aside from an appeal on the merits, it appears that Dodocase’s remedy may be limited to MerchSource’s apparent breach of contract. While proving a breach and recovering damages may be of some solace, the prospect of losing the three patents still exists.

In light of this decision, parties should carefully consider using a forum selection clause to prohibit litigation before the PTAB. A broadly drafted forum selection clause in a licensing agreement could summarily dispose of post-grant petitions. However, a patent owner should move quickly when this situation arises given that if the PTAB proceedings advance too far there is no guarantee that the PTAB will terminate them. Parties should also track this case to see how the PTAB reacts and how the Federal Circuit views that reaction should one or more of the PTAB judgments be appealed.

 

[1] Dodocase has since sold and assigned the three licensed patents to DDC Technology, LLC (“DDC”).

[2] Texas Instruments Inc. v. Tessera, Inc., 231 F.3d 1325, 1331 (Fed. Cir. 2000).

[3] See e.g., Esselte Corp. v. DYMO, IPR2015-00781, 2015 WL 5117894 (P.T.A.B. Aug. 28, 2015) (rejecting patent owner’s forum selection clause and assignor estoppel defenses).

On April 16, 2019, the Patent Trial and Appeal Board (“the PTAB” or “the Board”) designated three orders as precedential related to the issue of the incomplete disclosure of “real parties-in-interest” (“RPIs”) at the time of the filing of petitions for post-grant proceedings.  These three relatively recent orders—all issued since January 2019—present a range of factual scenarios and demonstrate a corresponding range of outcomes, from allowing a petitioner to amend their mandatory disclosure of the RPIs to dismissal of the proceeding.

The PTAB’s designations appear to represent an attempt to standardize treatment of the incomplete disclosure of RPIs, including describing tests and various factors to consider when deciding whether the failure is correctable.  But, at the end of the day, the decision appears to turn primarily on whether the failure to disclose by petitioner was done to provide some advantage.

RPI When the Petition Would Be Barred at Filing

Of the three orders, the first order to be issued was in Ventex Co., Ltd. v. Columbia Sportswear N. Am., Inc., Case IPR2017-00651 on January 24, 2019.  In a rather unusual procedural stance, the RPI issue came to the fore following not only institution, but after oral argument.  The Chief Administrative Patent Judge entered a relatively-rare extension to the one-year period for issuing a Final Written Decision, and the panel issued an order seeking further input from the parties regarding possible statutory bar issues in view of the Federal Circuit’s decision in Applications in Internet Time, LLC v. RPX Corporation (the “AIT decision”).

The PTAB began by noting that petitioner “bears the burden of establishing that no real parties in interest or privies were served with a complaint alleging infringement more than one year prior to the filing of Ventex’s petition.”  The PTAB then framed the issue as one of whether the non-identified company Seirus was either a real party in interest or a privy.  Seirus had been the subject of a complaint alleging infringement, which had been filed and served nearly three years prior to the filing of Ventex’s IPR petition.  As such, here, unlike the other two cases discussed below, the lapse in time left no question as to whether omitting Seirus as a party resulted in some advantage to petitioner or harm to patent owner.  Thus, the only issue became determining the nature of the relationship between the petitioner and the potential undisclosed RPI.

The PTAB found that Ventex and Seirus had worked together since 2013, and operated under the terms of a “Supplier Agreement,” which required Ventex to indemnify certain claims against Seirus.  Further, the parties had a manufacturing agreement regarding the specific products which were the subject of the infringement action.  The Board described this relationship as one in which both parties were incentivized to invalidate the same claims for their own continued commercial and financial interests, and further characterized the evidence as suggesting “that Ventex filed this action, in part, to benefit Seirus.”  Further evidence and testimony revealed that Ventex filed the petition based on concern for “its customers.”  The Board found that the evidence suggested that “Ventex filed the Petition, at least in part, on Seirus’s behalf,” and then ultimately held that Seirus was an RPI.

Having found that the Petition was time-barred, the PTAB nevertheless went on to analyze whether Seirus was in privity with Ventex.  Here, in addition to the issues of Ventex and Seirus having aligned interests, the PTAB discussed evidence that suggested that Seirus was making payments to Ventex under the auspices of its manufacturing agreement that were in actuality funding the IPR.  This included an advance under the agreement “coinciding with the first payments to counsel for Ventex for work on the inter partes reviews.”  The PTAB thus held that Ventex was operating as a proxy for Seirus, and that Seirus was in privity with Ventex.

Having determined that Seirus was both an RPI and in privity with Ventex, the panel dismissed the petition and terminated the IPR.

Post-Institution Update to RPIs

On February 13, 2019, the PTAB issued an order in Proppant Express Investments, LLC v. Oren Techs., LLC, Case IPR2017-01917, dealing with the additional disclosure of parties as RPIs both after institution and after the one-year bar had passed.

In this case, the PTAB authorized the patent owner to file a motion to terminate and a motion for additional discovery following the Federal Circuit’s AIT decision.  The panel also offered petitioner Proppant the opportunity to update its mandatory notices to include the potentially undisclosed parties, which Proppant did, noting that the parties had agreed to be bound by IPR estoppel provisions as well.

Unlike in Ventex, the issue here was not whether the parties were RPIs, but whether the late disclosure should have an effect on the filing date of the Petition, and thus on whether it was time-barred.  The panel set out 4 factors which the board looked to on this issue: “(1) attempts to circumvent the § 315(b) bar or estoppel rules, (2) bad faith by the petitioner, (3) prejudice to the patent owner caused by the delay, or (4) gamesmanship by the petitioner.”

The panel determined that at the time of the filing, there were no time-bar issues, and that there had been no allegations of circumvention of estoppel provisions.  The panel further did not find merit in any of the claims of prejudice to the patent owner, stating that contract disputes and other issues involved in district court, as well as the cost of litigating the RPI dispute, were not prejudice of the sort that requires dismissal.

On issues of bad faith and gamesmanship, the panel found that Proppant had acted promptly in updating its notices, noting that Proppant had initially prevailed in its arguments that there was no undisclosed RPI prior to the AIT decision, and that it updated its notices after becoming aware that the PTAB was reconsidering those decisions following AIT.  The panel further held that identification of the additional parties in the mandatory notices “without [admitting] they are in fact real parties-in-interest” was perfectly acceptable, as issues relating to potential conflicts or time-bars, as well as statutory estoppel provisions, were satisfied even in this manner.

After balancing the potential prejudice to petitioner versus the potential prejudice to patent owner, the PTAB allowed the mandatory notices to be updated while maintaining the filing date and denied the motion to terminate.

Pre-Institution Update to IPRs

In the most straightforward of the three precedential decisions, on February 14, 2019, the PTAB issued an order in Adello Biologics LLC v. Amgen Inc., Case PGR2019-00001, holding essentially that the ability to correct mistaken incomplete disclosures as discussed in IPRs was also applicable in PGRs.

In this case, the situation was perhaps simplified in that the omission was in failing to identify a wholly-owned subsidiary, Amneal LLC, of Amneal Inc., which had been identified.  The panel’s simple discussion of harm in these circumstances was that they “decline to infer… that the omission of Amneal LLC suggests ‘gamesmanship or bad faith.’”   The panel noted that the attempt to update the notices did not suggest an attempt to circumvent estoppel rules, and that there was ultimately no prejudice to the patent owner.

Conclusion

While the PTAB may have designated three decisions dealing with real parties-in-interest as precedential, this does not appear to be an overhaul of the law, aside from recognizing the guidance from the Federal Circuit in its AIT decision.  Instead, this appears to be an attempt to standardize RPI issues boiling down to: is there harm to the patent owner or some advantage gained by the petitioner because of the failure to identify all RPIs?