The Federal Circuit reversed a Patent Trial and Appeal Board (“PTAB” or “the Board”) ruling that invalidated three patents in three separate IPR proceedings (IPR2015-00325, IPR2015-00326, and IPR2015-00330).  The patent owner, ATI Technologies, asserted that the inventions in the challenged claims antedated the asserted prior art.  That is, ATI attempted to swear behind the asserted prior art.  The PTAB found that conception had occurred before the primary reference dates, and that constructive reduction to practice occurred on the filing date of each patent.  However, the PTAB found that ATI had not established actual reduction to practice and also had not established diligence from the time of conception to the constructive reduction to practice, i.e., the filing dates.  The PTAB then invalidated the three patents at issue over the asserted grounds.

On appeal, the Federal Circuit, in a precedential decision, reversed the PTAB, finding that ATI had indeed shown diligence from conception to constructive reduction to practice.  Given this finding, the Federal Circuit stated that it did not need to reach the question of actual reduction to practice, and therefore vacated the ruling regarding that issue.

In a prior decision overturning a PTAB ruling about diligence, the Federal Circuit had occasion to clarify that “[a] patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence.”  Perfect Surgical Techniques, Inc. v. Olympus Am., Inc., 841 F.3d 1004, 1009 (Fed. Cir. 2016).  The Federal Circuit in this case found that the PTAB had apparently relied on an incorrect definition of diligence.  As the court summarized:

ATI stated that the PTAB applied an incorrect definition of diligence, and LGE so conceded in its brief before it withdrew from this appeal. The Director instead describes as “boilerplate” the PTAB’s erroneous definition. However, it was not boilerplate, for the PTAB appeared to find a dispositive difference between “continuous reasonable diligence” and “reasonably continuous diligence,” despite the documentary evidence of activity by ATI on “every business day.” We conclude that the PTAB applied the wrong legal standard for diligence. As explained below, under the proper legal standard, the record is clear that ATI exercised the requisite “reasonably continuous diligence.”

(emphasis added).

The evidence that ATI presented was substantial.  An inventor declaration (of some 60 pages) described the work of the various inventors and other employees, and was accompanied by almost 1300 pages of documentary records including metadata, document logs, and folder histories.  As the declaration explains, employees were required to save their work in a revision control system (Perforce) that tracked changes being made and associated metadata.  The declaration further explained that for the inventors and many other project managers/designers, the work that they performed from late 2001 to the end of 2003 was almost exclusively for the R400 project that led to the claimed inventions.  Based on the metadata, the declaration asserted that “at least one person on the R400 project team worked on the R400 design every non-holiday business day from early 2002 (when we conceived of the invention) until November 20, 2003 (the effective filing date of the ’871 patent).”

Despite neither the PTAB nor the petitioner having raised any questions about the documentary exhibits establishing diligence during the trial and at the final hearing, the Board found that ATI had not shown diligence because “ATI fails to provide evidence that is specific both as to facts and dates for each of the three critical periods.”  The PTAB’s reasoning was that the R400 project was modified after the conception date to include an optional feature not claimed, and that ATI failed to provide a reasonable way for the PTAB to determine whether unexplained lapses had not occurred.

The Federal Circuit faulted the PTAB for not providing any details about any apparent unexplained lapse, for not asking any questions about such alleged lapses, and for not requesting additional information regarding corroboration.  The Federal Circuit cited to long-held principles of diligence, namely that “It must be reasonable, under all the circumstances of the particular case in question,” and that “reasonable diligence does not involve uninterrupted effort, nor the concentration of [an inventor’s] entire energies upon [a] single enterprise.”

For parties attempting to antedate references, this decision highlights the value of providing extensive documentary support, and showing as much activity as possible.  For parties attempting to defeat antedating of a reference, this decision highlights the importance of cross-examining witnesses and identifying concrete holes in a party’s story of diligence.

Between March 7 and April 5, 2019, the Patent Trial and Appeal Board (“the PTAB” or “the Board”) designated a series of decisions as either “precedential” or “informative.”  As part of its revised standard operating procedures (SOP2), the PTAB may designate an otherwise routine decision as precedential—a binding authority in subsequent matters involving similar facts or issues.  While anyone may nominate a decision to be designated as precedential, the nominated decision must undergo a multi-level review process involving a screening committee, an executive judge’s committee, and the Director of the Patent & Trademark Office (“the PTO”).  An informative opinion is not binding authority, but may provide useful guidance regarding various issues including, but not limited to, norms on recurring issues, guidance on issues of first impression, and guidance on PTAB rules and practices.  Such designations provide useful guidance to parties in PTAB proceedings and are intended to simplify and streamline proceedings to further enhance post-grant proceedings as an alternative to district court litigation.

As we have previously discussed, parties and attorneys involved in PTAB proceedings should be aware that the PTAB has its own set of precedential decisions, and the PTAB is required to follow its precedential decisions.  In fact, there are currently seventy-eight precedential decisions listed on the PTO’s website.  In the past six weeks, the PTAB has designated six decisions as precedential and three decisions as information.

Most recently, the PTAB designated as precedential its decision in Huawei Device Co., Ltd. v. Optis Cellular Tech., LLC, Case IPR2018-00816, Paper 19 (PTAB Jan. 8, 2019), which provides further insights on procedures and standards for submitting new evidence on rehearing.  Specifically, the PTAB explained that “[i]deally, a party seeking to admit new evidence with a rehearing request would request a conference call with the Board prior to filing such a request so that it could argue ‘good cause’ exists for admitting the new evidence.  Alternatively, a party may argue ‘good cause’ exists in the rehearing request itself.”  The takeaway message from this decision is that any party seeking to submit new evidence as part of a request for rehearing should request a conference call with the Board to satisfy the good cause requirement.

In another precedential decision, Amazon.com, Inc. v. Uniloc Luxembourg S.A., Case IPR2017-00948, Paper 34 (Jan. 18, 2019), the PTAB clarified the grounds that can be raised against substitute claims under AIA § 316(d).  This decision expands the scope of PTAB proceedings because motions to amend can now be challenged on grounds other than anticipation and obviousness, e.g., subject matter eligibility, written description, enablement, and definiteness.  Specifically, in Amazon.com, the patent owner filed a contingent motion to amend if the PTAB were to find the patent owner’s existing claims unpatentable. The PTAB not only determined that the existing claims were unpatentable, but also found that the patent owner’s substitute claims were directed to non-statutory subject matter and therefore patent ineligible.  The patent owner requested a rehearing, arguing that the PTAB was not permitted to consider whether the substitute claims constitute statutory subject matter. However, the PTAB held that the law did not preclude the PTAB or the petitioner from considering the patentability of amended claims under other grounds and thereby exerted its authority to deny addition of substitute claims based on grounds other than anticipation or obviousness.  The takeaway message from this decision is that patent owners should be judicious and carefully consider the scope of claims filed in motions to amend, and petitioners should consider challenges to substitute claims on other grounds in addition to anticipation and obviousness.

Both DePuy Synthes Prods., Inc. v. Medidea, L.L.C., Case IPR2018-00315, Paper 29 (Jan. 23, 2019), and K-40 Elecs., LLC v. Escort, Inc., Case IPR2013-00203, Paper 34 (May 21, 2014), relate to live testimony at oral argument and were designated precedential.  In K40 Electronics, the PTAB granted the patent owner’s motion to have the inventor present live testimony at the oral arguments.  The PTAB noted that the inventor’s live testimony would be “case-dispositive” because the patent owner had relied on a declaration of the inventor to antedate two references used by the petitioner to challenge the patent in dispute.  The declaration served to establish a prior reduction to practice.  The PTAB explained that the inventor’s demeanor was critical to evaluating the inventor’s credibility, and that a fact witness’ demeanor is more indicative of credibility than the demeanor of an expert witness.  Further, the PTAB explained that the decision did not establish a “de facto” rule permitting live testimony at oral hearings and was limited to circumstances to be decided on a case-by-case.  In DePuy Synthes Prods, the other precedential decision involving live testimony, the PTAB rejected a request to allow an inventor’s live testimony because the inventor had not yet provided declaratory evidence and live testimony would have impermissibly presented new evidence.  The takeaway message from these decisions is that limited live testimony may be allowed, but the Board must be convinced that the live testimony will not introduce new evidence and is necessary for judging credibility based on the witness’ demeanor.

In Proppant Express Investments, LLC v. Oren Techs., LLC, Case IPR2018-00914, Paper 38 (Mar. 13, 2019), as discussed in detail here, the PTAB addressed same party and issue joinder and clarified that § 315(c) allows discretionary same-party joinder and new issue joinder, and described policies to contain that discretion.  The takeaway message from this decision is that both patent owners and patent challengers should appreciate the PTAB’s focus on eliminating gamesmanship in patent litigation.

In Lectrosonics, Inc. v. Zaxcom, Inc., Case IPR2018-01129, 01130, Paper 15 (Feb. 25, 2019), the PTAB clarified the requirements and burdens under AIA § 316(d).  One takeaway message from this decision is that a substitute claim proposed in a motion to amend will meet statutory claim scope requirements “if [the substitute claim] narrows the scope of at least one claim of the patent…in a way that is responsive to a ground of unpatentability involved in the [IPR] trial.” Lectrosonics at 5–6.  Further takeaway messages are that the petitioner may submit additional testimony and evidence with an opposition to a motion to amend and that in a sur-reply it may only respond to arguments made in a patent owner’s reply and related declarant testimony, and may only submit new evidence in the form cross-examination testimony of any reply declarants.  Id. at 9.

In designating Chevron Oronite Co. LLC v. Infineum USA L.P., Case IPR2018-00923, Paper 9 (Nov. 7, 2018) and Deeper, UAB v. Vexilar, Inc., Case IPR2018-01310, Paper 7 (Jan. 24, 2019) as informative, the PTAB put petitioners on notice that it will increasingly exercise its discretion to deny institution where there are an insufficient number of proposed grounds/challenges to claims that are believed to meet the reasonable likelihood standard.  Thus, the key takeaway message for petitioners is to present petitions with reasonably strong arguments for most or all challenged claims, to reduce or eliminate weak arguments from petitions, and possibly break up challenges into multiple petitions.  The key takeaway message for patent owners is to present arguments in the preliminary response that highlight the weaknesses in the petitioner’s arguments against a large number of the challenged claims so that reasonable likelihood standard can only be met by a small subset.  Patent owners should also argue that the PTAB’s time and resources would not be efficiently used if trial is instituted because so many of the claims would likely survive the challenge.

In designating Ex parte Smith, 2018-000064 (Feb. 1, 2019) as informative, the PTAB applied the 2019 Revised Patentable Subject Matter Eligibility Guidance (hereinafter “SME Guidance”) to reverse an examiner’s rejection of claims as being directed to patent ineligible subject matter.  The PTAB explained that while most of the recited claim limitations were directed to a judicial exception of a fundamental economic practice, the claims recited additional limitations that “integrated the judicial exception into a practical application” under the SME Guidance Step 2A-Prong 2, and that these limitations provided a specific technological improvement over prior derivatives trading systems based on explanations in the specification regarding the advantages thereof.  The key takeaways from Ex parte Smith are the importance of drafting specifications that explain the technological advantages associated with the claim limitations, explaining that the particular solutions to technological problems are not merely inherent, and crafting arguments that take into account such disclosures and the SME Guidance.

In view of the recent flurry of precedential and informative decision designations, parties in AIA proceedings should keep abreast of the PTAB’s guidance in these decisions and carefully consider whether any may affect their proceedings.

On March 8, 2019, in Personal Web Technologies, LLC v. Apple, Inc., No. 2018-1599 (Fed. Cir. Mar. 8, 2019) the Federal Circuit reversed the Patent Trial and Appeals Board’s (the “Board” or “the PTAB”) cancellation of U.S. Patent No. 7,802,310 (“the ’310 patent”) based on inherent obviousness in an inter partes review (“IPR”).   Another in a growing series of reversals for improper inherent obviousness findings, Personal Web further highlights the disconnect between the Federal Circuit’s edicts on inherent obviousness and the USPTO’s and district courts’ misapplications of that doctrine.[i]  While the Federal Circuit has repeatedly and consistently decreed that inherent obviousness is a narrow doctrine with a high burden to be met,[ii] the PTAB continues to rely on the inherent obviousness doctrine as a gap-filling tool without satisfying the proper standards and evidentiary showings.  Lack of proper guidance in the Manual of Patent Examining Procedure (“MPEP”) and USPTO training materials likely exacerbates this disconnect.

Personal Web owns the ’310 patent which is directed to controlling access and delivery of data by naming data items based on a content-generated name rather than a user-generated name. The processing system uses a function to generate and assign a unique identifier based on the data item’s contents. The content-based identifiers are listed in a database along with the corresponding authorized users. When new data is transferred from a first computer to a second computer, the system prevents duplicates by comparing the incoming identifiers to existing content-based identifiers.  The system determines whether a user is authorized to access the data item by referencing the database of identifiers and corresponding authorized users.

In September 2013, Apple filed a petition requesting an IPR of the ’310 patent on obviousness grounds. The Board instituted the IPR in March 2014. Apple claimed the ’310 patent was obvious over Woodhill in view of Stefik. Woodhill discloses a backup and restore system which divides files into 1 MB binary objects, assigns each object a “Binary Object Identification” corresponding to the object’s contents, and records the name and backup information in a “Binary Object Identification Record.” Stefik discloses an authentication system for controlling access to digital works by storing in a repository each digital work’s unique identifier and associated usage rights.

Although Woodhill did not expressly disclose the claim limitation “causing the content-dependent name of the particular data item to be compared to a plurality of values,” the Board adopted the inherent obviousness conclusion of Apple’s expert.  According to the Board and Apple’s expert, the Woodhill system necessarily must be able to compare its local files to the Binary Object Identification Record in order to restore data.[iii]

The Federal Circuit rejected the Board’s reliance on inherency in reaching its conclusion of obviousness. Quoting PAR Pharm., Inc. v. TWI Pharm., Inc., 773 F.3d 1186 (Fed. Cir. 2014), the court explained that “[i]nherency . . . may not be established by probabilities or possibilities . . . . The mere fact that a certain thing may result from a given set of circumstances is not sufficient . . . . Rather, a party must show that the natural result flowing from the operation as taught would result in the performance of the questioned function.”[iv] The Federal Circuit explained the while it was possible that Woodhill’s system used an unstated Binary Object Identifier lookup table, mere possibility is not enough. Personal Web suggested, an “equally plausible, if not more plausible,”[v] understanding of Woodhill: that Woodhill’s system uses conventional user-generated file names to locate files. As further support for this understanding, the Federal Circuit pointed to Woodhill’s disclosure that its system “obtains from the user the identities of the current and previous versions of the file (comprised of binary objects) which needs to be restored.”[vi] Accordingly, the Federal Circuit reversed the Board’s finding of obviousness because the Board’s reliance on inherency was improper given that there was no evidence that the claimed lookup table existed in the prior art. Additionally, the Federal Circuit considered the parties’ remaining arguments and found them unpersuasive.

The confusion associated with this area of the law that is highlighted by these reversals by the Federal Circuit is also clearly represented in and likely propagated by the guidance that the USPTO provides to patent examiners.  In the most recent edition of the MPEP, which was revised in January 2018, the analysis for inherent anticipation and inherent obviousness is described jointly and without distinction between the two doctrines. According to MPEP 2112, Requirements of Rejection Based on Inherency; Burden of Proof, “[t]he inherent teaching of a prior art reference, a question of fact, arises both in the context of anticipation and obviousness. . . . In relying upon the theory of inherency, the examiner must provide a basis in fact and/or technical reasoning to reasonably support the determination that the allegedly inherent characteristic necessarily flows from the teachings of the applied prior art.”[vii] Despite reversals by the Federal Circuit in over a dozen inherent obviousness cases before January 2018, the USPTO has failed to provide guidance to examiners on the proper analysis.  As evidenced by the number of Federal Circuit decisions reversing the Board, it is clear that the Board continues to propagate such errors.

In Honeywell Int’l Inc. v. Mexichem Amanco Holding S.A. DE C.V., 865 F.3d 1348 (Fed. Cir. 2017), the Federal Circuit explained, “[w]hat is important regarding properties that may be inherent, but unknown, is whether they are unexpected. All properties of a composition are inherent in that composition, but unexpected properties may cause what may appear to be an obvious composition to be nonobvious.”[viii] Honeywell Int’l Inc. highlighted that a difference between inherent obviousness and inherent anticipation is inherent obviousness must be examined against the backdrop of the Graham factors.[ix]  On the other hand, MPEP 2112.01(II) only provides the following guidance: “‘Products of identical chemical composition can not have mutually exclusive properties.’ In re Spada, 911 F.2d 705, 709, 15 USPQ2d 1655, 1658 (Fed. Cir. 1990). A chemical composition and its properties are inseparable. Therefore, if the prior art teaches the identical chemical structure, the properties applicant discloses and/or claims are necessarily present. Id.”

In practice, and despite over a dozen reversals by the Federal Circuit, the USPTO continues to use this boilerplate in obviousness analyses where neither cited reference teaches the claimed invention, but rather a combination of multiple references is cited as suggesting the claimed invention if those references are combined and modified.  Taking this doctrine a step further, U.S. examiners often combine the inherent obviousness doctrine with the routine optimization doctrine to assert that even when the claimed elements are not found in any combination of the multiple cited references, it would be routine to combine and optimize various elements chosen from the multiple references in order to arrive at what is claimed and, upon doing so, all of the resultant properties, advantages, and results are inherent.  In doing so, the USPTO and district courts bootstrap to conclude inherency where none exists.

For example, in Millennium Pharm., Inc. v. Sandoz Inc., 862 F.3d 1356 (Fed. Cir. 2017), the Federal Circuit explained that “[t]he district court’s error stems from its determination that Millennium should have compared the glycerol bortezomib ester,” which was not “specifically disclosed, prepared, or tested in the [prior art]” and that, instead, “the district court should have treated bortezomib as the closest prior art compound, and acknowledged the unrebutted evidence that the D-mannitol ester of bortezomib exhibited unexpected results compared with bortezomib.” Millennium Pharm., Inc., 862 F.3d at 1369.  The Federal Circuit held that “‘[t]he applicant is not required to create [and test] prior art, nor to prove that his invention would have been obvious if the [actually existing] prior art were different than it actually was’” to rebut an allegation of inherent obviousness.  Id. (quoting In re Geiger, 815 F.2d 686, 690 (Fed. Cir. 1987)).  Conflicting with the Federal Circuit’s explanation of the law of inherent obviousness in Millennium Pharm., the MPEP provides the following guidance to examiners: “Where the claimed and prior art products are identical or substantially identical in structure or composition, or are produced by identical or substantially identical processes, a prima facie case of either anticipation or obviousness has been established. In re Best, 562 F.2d 1252, 1255, 195 USPQ 430, 433 (CCPA 1977).” M.P.E.P. 2112.01(I).  And in response to arguments explaining that the USPTO has failed to establish that the claimed elements or properties are inherently present, the boilerplate response from patent examiners is that “[t]he arguments of counsel cannot take the place of evidence in the record.”  M.P.E.P. 2145(I).

Additionally, the MPEP Requirements of Rejection Based on Inherency does not include the full inherent obviousness standard.  In Personal Web, the Federal Circuit highlighted that “[i]nherency . . . may not be established by probabilities or possibilities . . . . The mere fact that a certain thing may result from a given set of circumstances is not sufficient.” However, the MPEP section governing rejections based on inherency contains no similar language. Rather, this language is found in the section providing guidance for the 35 U.S.C. § 112 written description analysis (MPEP 2163: Guidelines for the Examination of Patent Applications Under the 35 U.S.C. 112(a)).  To properly guide examiners and reduce the number of improper rejections based on inherent obviousness, MPEP section 2112 should be updated to include this language or, better yet, a new and separate section dedicated to the proper analysis of inherent obviousness should be provided.

By updating the USPTO training materials (including training and resources for administrative patent judges) and the MPEP to reflect the Federal Circuit’s distinction between inherent obviousness and inherent anticipation, it would be possible to greatly reduce erroneous decisions both during prosecution and at the Board.  Clearer guidelines and an emphasis on applying the doctrine narrowly as intended can reduce the number of improper rejections under this doctrine. Until then, we expect to see continued reversals of claim rejections and cancellations premised on improper inherent obviousness analyses.

[i]           See, e.g. L.A. Biomedical Research Inst. at Harbor-UCLA Med. Ctr. v. Eli Lilly & Co., 849 F.3d 1049, 1067 (Fed. Cir. 2017) (“[T]he Board erroneously concluded that arresting or regressing fibrosis is an inherent effect of any regimen exceeding 45 days regardless of the dosage”); Vivint, Inc. v. Alarm.com Inc., 741 F. App’x 786, 792 (Fed. Cir. 2018) (“We therefore conclude that the Board’s finding that the terminal identifier limitation is inherently disclosed in Johnson was not supported by substantial evidence.”); Honeywell Int’l Inc. v. Mexichem Amanco Holding S.A. DE C.V., 865 F.3d 1348, 1355 (Fed. Cir. 2017) (“[T]he Board here, in dismissing properties of the claimed invention as merely inherent, without further consideration as to unpredictability and unexpectedness, erred as a matter of law.”); Southwire Co. v. Cerro Wire LLC, 870 F.3d 1306, 1311 (Fed. Cir. 2017) (“We conclude that the Board erred in relying on inherency without finding that Summers necessarily would achieve a 30% reduction in pulling force, but rather finding that it merely renders that limitation obvious.”); In re Durance, 891 F.3d 991, 1001 (Fed. Cir. 2018) (vacating and remanding because “[t]he Patent Office’s discussion of inherency also resulted in moving target rejections for Durance to traverse.”); Hill-Rom Servs., Inc. v. Matal, 716 F. App’x 996, 1004 (Fed. Cir. 2017) (“To the extent the PTO argues that these statements imply that the Board found that Kummer’s unmodified diagnostic tool is a master module, or that Zeltwanger inherently discloses a master module, we reject that argument.”); Rovalma, S.A. v. Bohler-Edelstahl GmbH & Co. KG, 856 F.3d 1019, 1025 (Fed. Cir. 2017) (“[T]he Board found that a person of ordinary skill “would have at least inherently completed the ‘selecting’ steps” and apparently determined that the other steps would have been obvious in view of Rovalma’s submissions. Id. But it did not explain the evidentiary basis for those determinations . . . .”); In re Imes, 778 F.3d 1250, 1255 (Fed. Cir. 2015)  (rejecting the Board’s finding that “streaming video or, as construed, continuous video transmission” is inherent in “sending out an e-mail message with a video file attached does not disclose” because it is not necessarily present); PAR Pharm., Inc. v. TWI Pharm., Inc., 773 F.3d 1186 (Fed. Cir. 2014) (“While it may be true that a reduction in particle size naturally results in some improvement in the food effect, the district court failed to conclude that the reduction in particle size naturally results in ‘no substantial difference’ in the food effect.”); Millennium Pharm., Inc. v. Sandoz Inc., 862 F.3d 1356, 1367 (Fed. Cir. 2017) (finding the district court clearly erred in holding “that the claims were obvious because they were the inherent result of an allegedly obvious process, viz., lyophilizing bortezomib in the presence of the bulking agent mannitol.”).

[ii]           PAR Pharm., Inc., 773 F.3d at 1195.

[iii]          Personal Web Techs., LLC v. Apple, Inc., No. 2018-1599, at *8 (Fed. Cir. Mar. 8, 2019) (citing Apple’s petition).

[iv]          Id. (emphasis in original) (citations omitted).

[v]           Id.

[vi]          Id. (citing Woodhill at 17:28–32).

[vii]         MPEP 2112 (internal quotations omitted); see also U.S. Patent & Trademark Office, 35 U.S.C. 102 & 103 Workshop: USPTO Examiner Training 89 (2018) [hereinafter PTO training material].

[viii]         Honeywell Int’l Inc., 865 F.3d at 1355.

[ix]          Id.; see also Daniel P. O’Brien & W. Murray Spruill, Does Inherency Have a Place in Determinations of Obviousness?, 32 Biotechnology Law Report 3, 7 (2013) (“A prima facie case of obviousness that relies on inherency requires the examiner to put forth a reasoned explanation within the Graham framework as to why the inherent element was present in the prior art based on knowledge available at the time of invention.” (citing W.L. Gore & Assoc. v. Garlock Inc., 721 F.2d 1540, 1555 (Fed. Cir. 1983))).

Last week, the first Precedential Opinion Panel (“POP”) entered a decision examining the scope of joinder available under 35 U.S.C. § 315(c). Proppant Express Investments, LLC v. Oren Techs., LLC, Case IPR2018-00914, Paper 38 (Mar. 13, 2019). The POP made two determinations about the statutory authority of the Patent Trial and Appeal Board (“the Board”) regarding joinder: (1) the Board has discretion to allow same-party joinder and (2) the statute permits joinder of new issues to an existing proceeding. Although the Board had the statutory authority, the POP said the facts of the case did not merit exercising its discretion to allow joinder. We have posted previously on this case and the POP (available here), but a brief summary of the procedural history will aid understanding as to why the POP denied joinder in this case.

Proppant Express challenged Oren Technologies’ U.S. Patent 9,511,929 (“the ’929 patent”) by filing a petition for inter partes review (“IPR”) in 2017. The Board instituted the IPR, but found the petitioner did not adequately support its challenge of claim 4 of the ’929 patent. Proppant Express filed a second IPR in 2018 to correct its challenge of claim 4. Because the second IPR petition was filed after the one-year bar of 35 U.S.C. § 315(b), Proppant Express sought to use an exception to the one-year bar provided in § 315(c) to join the second IPR to the first IPR. The Board denied the motion for joinder and Proppant Express sought review from the POP.

Same-Party Joinder

The first issue before the POP was whether a petitioner may be joined to a proceeding in which it is already a party. Focusing on the statutory language, the POP determined joinder of “any person” in 35 U.S.C. § 315(c) includes a person already a party in a proceeding. The POP recognized the potential for gamesmanship if a per se rule were adopted. A petitioner could wait until an institution decision on an earlier petition to use it as a strategic roadmap to prepare a stronger second petition against the same patent. Similarly, a patent owner could wait to add claims to a district court infringement lawsuit to take advantage of the one year bar on IPR petitions. The POP addressed these concerns by noting that “Congress provided discretion in § 315(c) and not a per se rule one way or the other.” Id. at 11. The POP did not give an exhaustive list of factors to consider, but stated “the Board will exercise this discretion only in limited circumstances—namely, where fairness requires it and to avoid undue prejudice to a party.” Id. at 4. The existence of a time bar under § 315(b) would be one such factor, and to illustrate when such discretion is appropriate, the POP noted two scenarios. A patent owner’s late addition of newly asserted claims in a co-pending litigation may raise concerns of fairness and prejudice, while a petitioner’s mistakes or omissions would not.

Issue Joinder

Further interpreting § 315(c) to address its second issue, the POP determined the Board has statutory authority to join new issues to an existing proceeding. The POP based its decision on both statutory interpretation and legislative history to determine that joinder of a second IPR petition need not be limited to the same issues as the first proceeding. However, similar to the same-party joinder, “the Board will exercise its discretion to allow a time-barred party to join new issues to an existing proceeding only in limited circumstances.” Id. at 15.

One consideration weighing against such discretion is when the petitioner’s own conduct caused the need for joinder. Here, Proppant Express sought to use joinder to correct an erroneous challenge in the first IPR petition. The POP declined to “effectively vitiate the time limitation of § 315(b) and obviate the careful balance the statute and legislative history contemplate” by allowing joinder on these facts. Id. at 20.

Conclusion

The USPTO contemplated the POP would “establish binding agency authority concerning major policy or procedural issues.” This first POP decision has exemplified that purpose by clarifying § 315(c) to allow same-party joinder and new issue joinder, while simultaneously describing the agency policies to contain that discretion. Both patent owners and patent challengers should appreciate the POP’s focus on eliminating gamesmanship in patent litigation.

On March 5, 2019, the USPTO hosted a rare and special event in recognition and celebration of female inventors and the contributions of women in science, technology, engineering, and mathematics (“STEM”). The celebration commenced with opening remarks from Laura A. Peter, Deputy Director of the USPTO, followed by keynote speeches from Congresswoman Martha Roby, Secretary of Commerce Wilbur L. Ross, and USPTO Director Andrei Iancu. In the spirit of Women’s History Month, the speakers commemorated a long list of women innovators and their technological contributions that have, unbeknownst to many, infiltrated everyday life and continue to play a significant role in the advancement of the sciences.

The highlight reel of female innovators and influencers included the following:

  • Clara Barton (1821-1912) – In 1854, Clara Barton was hired as a clerk at the USPTO, becoming one of the first women to receive a federal government clerkship at a salary equal to her male colleagues. After leaving the Patent Office in 1857, she returned as a copyist in 1860 to advocate for women in public service.
  • Margaret E. Knight (1838-1914) – Knight designed a machine which folded and glued paper to create a flat-bottomed paper bag, an invention still used today. When a male colleague, Charles Annan, tried to patent the invention as his own, Knight filed a patent interference lawsuit. Annan unsuccessfully argued that a woman “could not possibly understand the mechanical complexities.” Knight won and was awarded the patent in 1871.
  • Josephine Cochrane (1839-1913) – Inventor of the first commercially successful automatic dishwasher. Cochrane was posthumously inducted into the National Inventors Hall of Fame in 2006 for her invention.
  • Maria Beasley (1847-1904) – Beasley successfully designed at least 15 inventions, including a foot warmer, an anti-derailment device for trains, a barrel-making machine, and an improved life-saving raft. Despite her remarkable achievements, the 1880 US Census listed Beasley as an “unemployed housewife.”
  • Mary Anderson (1866-1953) – Following a 1902 visit to NYC, during which Anderson rode on a trolley car where the driver had to open to front window panes to see through the bad weather, she designed the first effective model of windshield wipers, now standard equipment in every car.
  • Sarah Breedlove/Madam C.J. Walker (1867-1919) – The first child born in her family after the Emancipation Proclamation, Walker developed a line of hair care products specifically designed for African American hair. With her expanding business and influence, Walker became the first female self-made millionaire in the United States.
  • Hedy Lamarr (1914-2000) – A movie star who developed a “secret communication system.” By manipulating radio frequencies, the invention formed an unbreakable code to prevent classified messages from being intercepted by enemy personnel. The invention would galvanize the digital communications boom, forming the technical backbone that makes cellular phones, fax machines, and other wireless operations possible.

A ribbon-cutting ceremony followed the keynote speeches, designating the USPTO auditorium in the Madison building as the renamed “Clara Barton Auditorium” in honor of one of the recognized influencers. Noting that this is the first public space at the USPTO campus to be named on behalf of a woman, Director Iancu proclaimed, to much applause, “it’s about time.” He and Secretary Ross also spoke to the need for more patent applications naming female inventors and applicants. Citing the USPTO’s recent February 2019 report, “Progress and Potential: A profile of women inventors on U.S. patents,”[1] the speakers noted that women still comprise only a small minority of patent inventors. Although the first woman to receive a U.S. patent was in 1809 (Mary Kies, for her method of weaving straw and silk to make hats), as of 2016, the share of patents that list at least one woman as an inventor was only 21%. Director Iancu also addressed the promising growth of the number of female employees at the USPTO itself, with women now constituting about 45% of the workplace as a whole and 40% of senior or managerial positions.

The celebration then shifted to a panel discussion to delve into the specific challenges that women in STEM face and how to overcome those obstacles. Deputy Secretary of Commerce Karen Kelley moderated, with distinguished panelists consisting of The Honorable Pauline Newman of the Federal Circuit, Veronika Folz (rocket scientist and Director at Northrop Grumman), Susann Keohane (IBM Global Research Leader and holder of over 175 patents), and Nicole Black (Harvard PhD student and inventor for start-up PionEar). The major takeaways from the panel discussion included a call to action for men and women alike to encourage interest in technology and the sciences for children (particularly young girls), and for women to “lean in” to discussions at the table with male colleagues, while recognizing and calling out the contributions of fellow females. For women in STEM and those related professions in particular, despite the known challenges and obstacles in the field, the message was crystal clear: “stick with it, because we need you.”

[1] Available at https://www.uspto.gov/sites/default/files/documents/Progress-and-Potential.pdf.

On February 7, 2019, the Federal Circuit dismissed an appeal because the IPR petitioner, Momenta Pharmaceuticals, essentially “lost” its constitutional standing when – prior to completing its appeal to the Federal Circuit – it abandoned development of its proposed biosimilar after failed Phase 1 clinical trials. Momenta Pharm., Inc. v. Bristol-Myers Squibb Co., No. 2017-1694, 2019 WL 470177 (Fed. Cir. Feb. 7, 2019). The Federal Circuit determined that Momenta’s change in circumstances removed any concrete interest in the result to support standing.

This decision raises a lot of questions about in what other factual scenarios a party could “lose” its standing to appeal an unfavorable decision.  For example, what if an accused infringer charged with patent infringement voluntarily takes its product off of the market during the pendency of the litigation, and in the interim, files an IPR petition?  Does standing cease to exist because the accused infringer essentially agreed to a temporary injunction?  What steps does a biosimilar developer need to take to maintain standing when litigation and product development continue in parallel?

Background

Bristol-Myers Squibb Company (“BMS”) owns U.S. Patent No. 8,476,239 (“the ’239 patent”) claiming an immunosuppressive agent used in treatment of immune system disorders such as rheumatoid arthritis called abatacept. BMS markets abatacept under the brand name Orencia®. Momenta Pharmaceuticals, Inc. (“Momenta”) was developing a biosimilar counterpart to Orencia® and challenged the ’239 patent by filing an IPR in July 2015. The Patent Trial and Appeal Board sustained patentablility of the ’239 patent and Momenta appealed the decision.

The Appeal to the Federal Circuit

Momenta challenged the merits of the IPR decision, but found itself defending its ability to bring the appeal instead. BMS moved to dismiss the appeal, stating Momenta lacked constitutional standing after Momenta’s proposed biosimilar failed its Phase 1 clinical trials and was withdrawn after the IPR decision. This raised issues of whether Momenta had a concrete interest in the appeal.

Momenta argued its continued interest in developing a biosimilar to Orencia® should be adequate to support standing. Momenta had been developing several biosimilar products as part of a joint development agreement with Mylan, including M834 (the biosimilar to Orencia®). Press releases submitted to the court indicated Momenta had exited its participation in the joint development of M834 to focus on other biosimilar products. After the court issued an Order to Show Cause as to why the appeal should not be dismissed as moot, Momenta stated it still had standing because it was jointly responsible for sharing the substantial costs of the joint development and the business decision to pursue a biosimilar to Orencia® hinged on the pending appeal of the IPR. Because Momenta was no longer developing M834 itself, Momenta claimed an economic interest in potential royalties of any Mylan-developed biosimilar to Orencia®. On December 10, 2018, BMS notified the court that Momenta’s SEC filing indicated Momenta had terminated its collaboration agreement with Mylan with respect to M834.

To support its continued standing to appeal, Momenta argued a relaxed standard for standing when the right to appeal is created by statute. The right to appeal an IPR decision is statutorily created by 35 U.S.C. § 319, stating “[a] party dissatisfied with the final written decision of the Patent Trial and Appeal Board . . . may appeal the decision,” without mentioning any of the traditional constitutional standing requirements. Citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), the court recognized Congress’s power to create rights that alter standing requirements, but distinguished between altering redressability and immediacy—which a statute may change—and the requirement to have a concrete and particularized interest in the outcome—which a statute cannot eliminate. Momenta, at 6.

Even under a relaxed standing requirement, Momenta must still show a concrete and particularized interest in the appeal. Momenta’s investment of millions of dollars in its development of M834 does not show an “actual or imminent” harm now that development has ceased; there is no potentially infringing activity. Id. at 7. The court found Momenta’s arguments of possible future royalties from Mylan to be too speculative. Id. at 8–9. Therefore, Momenta no longer had a legally protected interest in the validity of the ’239 patent.

Momenta also argued it had standing when the IPR proceedings began and its standing should continue through the review of those proceedings. The court rejected this argument on mootness grounds. The Court found that while Momenta’s infringing actions when developing its biosimilar may have been sufficient for standing in an Article III court, events during the proceedings can cause claims to become moot. Id. 10–11. The lack of any potential infringement now means “Momenta no longer has the potential for injury, thereby mooting the inquiry.” Id. at 11.

For a similar reason, the court also rejected Momenta’s claims that IPR estoppel under 35 U.S.C. § 315(e) would create an injury-in-fact. Momenta would be prevented from later challenging invalidity based on any grounds it raised or could have raised in the IPR, but the court stated any estoppel that may apply to Momenta is irrelevant after ceasing any potentially infringing activity. Id. at 8.

With no potentially infringing activity in the present and no concrete plans that may infringe in the future, Momenta’s challenge to the ’239 patent became moot. The Federal Circuit dismissed the appeal.

On January 24, 2019, the PTAB denied institution of inter partes review (“IPR”) in Deeper, UAB v. Vexilar, Inc., Case IPR2018-01310 (PTAB Jan. 24, 2019) (Paper 7). The PTAB exercised its discretion to deny institution despite finding that Deeper demonstrated a reasonable likelihood of success in prevailing as to two of the twenty-three claims it challenged.

Deeper filed a petition requesting review of claims 1-23 of U.S. Patent No. 9,628,592 (“the ’592 patent”). The claims of the ’592 patent are directed to a water regimen detecting device that detects fish and uses WIFI to communicate with a user. Deeper asserted four grounds of unpatentability based on obviousness. Every claim was challenged on two grounds of unpatentability.

Upon considering the evidence, the PTAB held that Deeper failed to demonstrate claims 1-21 were obvious over the prior art references. Deeper relied on conclusory, unsupported testimony to prove obviousness. Deeper’s expert provided no analysis or evidence to support his conclusions. However, the PTAB concluded that Deeper demonstrated a reasonable likelihood of prevailing in its obviousness challenge to claims 22 and 23. The PTAB found that Deeper sufficiently explained how the additional limitations of claims 22 and 23 were taught by the prior art.

Despite finding a reasonable likelihood of success as to two of the claims, the PTAB, relying on 35 U.S.C. § 314(a), declined to institute IPR. Section 314(a) provides that an IPR may not be instituted “unless the Director determines that the information presented in the petition…shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” In light of the Supreme Court’s recent decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), when the PTAB institutes IPR of a challenged patent, it must decide the patentability of all of the claims challenged by the petitioner (you can read more about the decision in this post) . However, the Supreme Court further noted that “[Section] 314(a) invests the Director with discretion on the question whether to institute review…” Id. at 1356.

Here, the PTAB reasoned that “even when a petitioner demonstrates a reasonable likelihood of prevailing with respect to one or more claims, institution of review remains discretionary.” See Paper 7 at 42. The PTAB went on to explain that when exercising its discretion, it is guided by the statutory requirement, “to consider the effect of any regulations on the efficient administration of the Office and the ability of the Office to timely complete proceedings, 35 U.S.C. § 316(b), as well as the requirement to construe our rules to ‘secure the just, speedy, and inexpensive resolution of every proceeding.’” Id. (citing 37 C.F.R. § 42.1(b)). The PTAB also noted that the USPTO’s recent June 5, 2018 guidance provides that, when deciding whether to institute IPR under 35 U.S.C. § 314(a), it may consider the number of claims and grounds that meet the reasonable likelihood standard.  Based on this reasoning, the PTAB exercised its discretion to deny institution, concluding that instituting review on all twenty-three claims on all four grounds based on evidence directed to only two of the challenged claims would not be an efficient use of the PTAB’s time and resources. See id. at 43.

Petitioners should be cognizant of this decision. Following the Supreme Court’s decision in SAS Institute Inc. v. Iancu, the PTAB appears to be much more mindful of the breadth of challenges being asserted and whether institution would be an efficient use of the PTAB’s time. Because institution of IPR now requires the PTAB to decide the patentability of all of the claims challenged by the petitioner, overly broad challenges may lead to the denial of a petition. Thus, going forward petitioners should carefully consider the claims they wish to challenge as well as the grounds of unpatentability they wish to assert.

The United States government is currently in a partial shutdown due to a lapse in appropriated funding for a portion of the federal government.  The partial shutdown began on December 22, 2018, and is currently in its fifth week.  Two government organizations affected by the shutdown are (i) the Department of Commerce, which includes the United States Patent and Trademark Office (USPTO), and (ii) the Judiciary, which includes the U.S. Court of Appeals for the Federal Circuit.

Despite the partial government shutdown, the USPTO is currently open for business as normal because the agency has access to prior-year fee collections.  The USPTO website[1] states that these funds enable it to continue normal operations “for a few weeks.”  Likewise, the “United States Department of Commerce Plan for Orderly Shutdown Due to Lapse of Congressional Appropriations” (updated December 22, 2018; hereinafter, “the Shutdown Plan”)[2] states that the USPTO anticipates that it will have sufficient funds to continue operations for a “brief period,” during which all USPTO employees will be excepted under the Shutdown Plan.  If these non-appropriated funds are exhausted before the partial government shutdown comes to an end, the USPTO would then execute the Shutdown Plan, which calls for the agency to retain only a small staff to perform functions such as receiving new applications and any other examination, post-examination, post-issuance, and PTAB or TTAB filings; receiving payments related to such filings; and maintaining IT infrastructure.  Specifically, only 113 of the USPTO’s 12,593 employees (on-board as of November 18, 2018) would then be excepted under the Shutdown Plan, almost all of which fall under “exception category 5”—i.e., they are necessary to protect life or property.

As for the federal courts, the U.S. Courts website has published four announcements regarding operation of the Judiciary during the shutdown.  The original statement at the beginning of the shutdown on December 22, 2018, estimated that the federal courts could remain open and continue operations for “approximately three weeks, through Jan. 11, 2019,” by using court fee balances and other funds not dependent on a new appropriation (i.e., “no-year” funds).[3]  An update published on January 7, 2019, stated that the Administrative Office of the U.S. Courts had revised its original estimate and set a goal of sustaining paid operations through January 18, 2019, by requesting that courts delay or defer non-mission critical expenses.[4]  Another update was published on January 16, 2019, and included a new estimate that federal courts can sustain funded operations through January 25, 2019.[5]  The additional week of funding was attributed to “aggressive efforts to reduce expenditures,” but the announcement warned that “at some point in the near future, existing funds will run out if new appropriated funds do not become available.”  The most recent update was published on January 22, 2019, and the Administrative Office of the U.S. Courts now estimates that funded operations can be sustained through January 31, 2019, with the Judiciary continuing to explore ways to conserve funds so that it can sustain paid operations through February 1, 2019.[6]  However, this latest announcement declares that “[n]o further extensions beyond Feb. 1 will be possible.”  The announcement notes that most of the measures used to achieve the extensions—i.e., deferring non-critical operating costs and utilizing court filing fees—are “temporary stopgaps,” and the Judiciary will face deferred payment obligations after the shutdown ends.

The U.S. Court of Appeals for the Federal Circuit—of particular interest to IP practitioners—has thus far operated as normal.  On the eve of the government shutdown, the Federal Circuit issued a Notice indicating that, in the event of a federal government shutdown, the court would remain open for business and be fully staffed to provide all normal judicial business functions until further notice.[7]  Subsequently, on December 28, 2018, the Federal Circuit issued an Order that provided for the continuation of court operations, stating that “[t]hrough non-appropriated funds, the federal judiciary can remain open and continue normal operations for a limited period during the partial shutdown.”[8]  The December 28, 2018 Order stated that all cases scheduled for oral argument from January 7 through 11, 2019, including those involving government counsel, would proceed as scheduled.  The Federal Circuit has since issued an updated Order on January 18, 2019, ordering that the Federal Circuit will remain open and operational and that “[o]ral arguments will continue to be heard as scheduled.”[9]  The Federal Circuit’s February 2019 sitting is scheduled for February 4 through 8, 2019.[10]  Interestingly, unlike the prior December 28, 2018 Order that provided for the Federal Circuit to be “fully staffed to provide all normal judicial business functions,” the January 18, 2019 Order only provides for “sufficient staff necessary to perform all functions necessary to support the exercise of the judicial power in the resolution of cases under Article III.”  Nonetheless, practitioners should be advised that, absent a grant of either a motion for extension of time or a motion to stay in a particular case, all Federal Circuit filing deadlines remain in effect until further order of the court.

[1] https://www.uspto.gov/uspto-operating-status

[2] https://www.commerce.gov/sites/default/files/2018-12/DOC%20Lapse%20Plan%20-%20OMB%20Approved%20-%20Dec%2017%2C%202018.pdf; Link provided in a Department of Commerce blog post published December 22, 2018 at https://www.commerce.gov/news/blog/2018/12/shutdown-due-lapse-congressional-appropriations

[3] https://www.uscourts.gov/news/2018/12/22/judiciary-operating-during-shutdown

[4] https://www.uscourts.gov/news/2019/01/07/judiciary-operating-limited-funds-during-shutdown

[5] https://www.uscourts.gov/news/2019/01/16/judiciary-continue-funded-operations-until-jan-25

[6] https://www.uscourts.gov/news/2019/01/22/judiciary-has-funds-operate-through-jan-31

[7] Announcement: http://www.cafc.uscourts.gov/announcements/notice-regarding-operations-during-possible-federal-government-shutdown; Notice: http://www.cafc.uscourts.gov/sites/default/files/announcements/2018/Notice-PossibleShutdown-12212018.pdf

[8] Announcement: http://www.cafc.uscourts.gov/announcements/order-regarding-continued-court-operations-during-partial-federal-government-shutdown; Order: http://www.cafc.uscourts.gov/sites/default/files/announcements/2018/Order-ShutdownContinuedOperations-12282018.pdf

[9] Announcement: http://www.cafc.uscourts.gov/announcements/updated-order-regarding-continued-court-operations-during-partial-government-shutdown; Order: http://www.cafc.uscourts.gov/sites/default/files/announcements/Order-ShutdownContinuedOperations-01182019.pdf

[10] http://www.cafc.uscourts.gov/argument/upcoming-oral-arguments; http://www.cafc.uscourts.gov/argument/calendar-of-sessions

On December 12, 2018, the U.S. Patent and Trademark Appeal Board (PTAB) ruled in favor of Mylan in its inter partes review (IPR) proceedings. It found all claims of Sanofi’s Lantus formulation patents (U.S. Patent Nos. 7,476,652 and 7,713,930) unpatentable as obvious on numerous grounds, and held that despite over $2 billion in annual sales, commercial success evidence was insufficient and weak in light of Sanofi’s blocking patents.

Lantus (insulin glargine 100 Units/mL) is a long-acting insulin used to treat adults with type 2 diabetes and adults and pediatric patients with type 1 diabetes for the control of high blood sugar. Sanofi sells the product in vials (Lantus) and as a disposable injection pen (Lantus SoloSTAR®).

Mylan filed a 505(b)(2) New Drug Application (NDA) for generic versions of Lantus and Lantus SoloSTAR, co-developed with Biocon, and it is under active review by the U.S. Food and Drug Administration.  In October 2017, Sanofi initiated patent infringement litigation against Mylan’s NDA in the United States District Court for the District of New Jersey that includes these two formulation patents listed as covering Lantus, as well as other patents listed as covering the Lantus SoloSTAR injection pen. On June 9, 2017, Mylan filed two IPR petitions challenging Sanofi-Aventis’s U.S. Patent No. 7,476,652 (IPR2017-01528) and U.S. Patent No. 7,713,930 (IPR2017-01526), related to Sanofi’s Lantus® (insulin glargine injection).  Both petitions were instituted on December 13, 2017.  On September 10, 2018, Mylan filed ten additional IPR petitions challenging five additional Sanofi patents related to pen-type injectors, U.S. Patent No. 8,603,044 (IPR2018-01675 and IPR2018-01676); U.S. Patent No. 8,679,069 (IPR2018-01670); U.S. Patent No. 8,992,486 (IPR2018-01677[1], IPR2018-01678, IPR2018-01696, IPR2019-00122); U.S. Patent No. 9,526,844 (IPR2018-01680, IPR2018-01682 and IPR2018-01696); and U.S. Patent No. 9,604,008 (IPR2018-01684).  None of these additional petitions has been instituted to date.

With regard to U.S. Patent No. 7,476,652 (“the ’652 patent”), the PTAB found all claims to be unpatentable based on six grounds of invalidity.  The claims of the ’652 patent are principally directed to the combination of insulin glargine with at least one surfactant selected from polysorbates and poloxamers in an acidic formulation.  With regard to U.S. Patent No. 7,713,930 (“the ’930 patent”), the PTAB found all claims to be unpatentable based on eight grounds of invalidity.  The claims of the ’930 patent are principally directed to the combination of insulin glargine with at least one surfactant selected from esters and ethers of polyhydric alcohols in an acidic formulation.  The patents’ specification asserted that the applicants had surprisingly found that adding surfactants to the insulin solution or formulation increases the stability of acidic insulin preparations that resist aggregation for several months under temperature stress.

Given that it was undisputed that insulin glargine was known in the prior art, e.g., as evidenced by the label of the earlier marketed Lantus product, and Mylan submitted evidence that multiple prior art publications suggested adding the claimed surfactants to insulin glargine, the PTAB found that, by a preponderance of evidence, the various combinations of prior art references taught all of the elements of the ’652 patent claims.  The PTAB found that because the ’652 and ’930 patent specifications explained that insulins had a known tendency to aggregate in the presence of hydrophobic surfaces that come into contact with insulin formulations, and because the prior art taught many examples of successful stabilization of insulins and other peptides against aggregation by adding nonionic surfactants, a person of ordinary skill in the art would have had a reasonable expectation of success.  The PTAB dismissed Patent Owner’s arguments regarding the unpredictability of protein formulations and potential negative consequences in view of the many successful examples of nonionic surfactants helping stabilize other insulins and proteins.

With regard to Sanofi’s proffered evidence of U.S. sales growing from $1.1 billion at its introduction to approximately $2.6 billion in 2017, which accounted for approximately 33% of all sales of long-acting injectable insulin and/or insulin analog therapies, the PTAB noted that Sanofi failed to account for the blocking patents covering the insulin glargine compound, which would have blocked competitors from commercializing a product that embodied “the same technologies” and “provided strong disincentives for others to develop and commercialize” the technology described in the ‘652 patent.  The PTAB noted that Sanofi’s commercial success expert did not investigate whether there was a blocking patent, much less account for it in his analysis.  Following the Federal Circuit’s line of pharmaceutical cases finding that commercial success of FDA-approved products was of minimal probative value and insufficient to justify a conclusion of non-obviousness when blocking patents blocked competition, most recently articulated in Acorda Therapeutics, Inc. v. Roxane Labs., Inc., 903 F.3d 1310, 1339 (Fed. Cir. 2018)[2], the PTAB held that the evidence of commercial success was weak in light of Sanofi’s blocking patents precluding others from market entry prior to the patents covering insulin glargine expiring.

Accordingly, the PTAB concluded that Mylan had satisfied its burden of demonstrating, by a preponderance of the evidence, that each claim of the ’652 and ’930 patents would have been obvious over the various combinations of prior art references.  Given the PTAB’s recognition that Sanofi presented evidence of commercial success while ignoring the existence of its blocking patents, it will be interesting to see if Sanofi applies a different strategy in presenting objective indicia of non-obviousness in defending against the ten additional IPR petitions.

[1] Dismissed in favor of filing new petition number IPR2019-00122 to correct a clerical error.

[2] See also Merck & Co. v. Teva Pharmaceuticals USA, Inc., 395 F.3d 1364, 1377 (Fed. Cir. 2005)(patent barring entry supported a finding commercial success evidence was weak); Galderma Labs, LP v. Tolmar, Inc., 737 F.3d 731, 740–41 (Fed. Cir. 2013) (finding “[w]here ‘market entry by others was precluded due to blocking patents, the inference of non-obviousness of the asserted claims, from evidence of commercial success, is weak”).

The Patent Trial and Appeal Board (“the PTAB” or “the Board”) is preparing for its first instance of the newly created Precedential Opinion Panel (POP). Proppant Express Invs., LLC v. Oren Techs., LLC, IPR2018-00914, Paper 24 (PTAB Dec. 3, 2018).  Interested parties may have had a busy holiday season, because initial briefing was due on December 28, 2018, to address three questions:

  1. Under 35 U.S.C. § 315(c) may a petitioner be joined to a proceeding in which it is already a party?
  2. Does 35 U.S.C. § 315(c) permit joinder of new issues into an existing proceeding?
  3. Does the existence of a time bar under 35 U.S.C. § 315(b), or any other relevant facts, have any impact on the first two questions?

Procedural History

Proppant Express and Oren Technologies have been litigating Oren Technologies’ U.S. Patent 9,511,929 (“the ’929 patent”) related to vessels used in hydraulic fracturing. Oren Technologies sued Proppant Express for patent infringement in February 2017. Proppant Express challenged the validity of the ’929 patent by inter partes review (“IPR”) on September 18, 2017. Proppant Express filed an additional IPR petition challenging the same patent on April 16, 2018, and sought to join the new petition to the existing IPR proceeding. The Board denied the joinder and denied institution as a time-barred petition. Proppant Express Invs., LLC v. Oren Techs., LLC, IPR2018-00914, Paper 21 (PTAB Nov. 8, 2018).

The Board’s decision turned on the interpretation and interaction of 35 U.S.C. § 315(b) and (c). Section 315(b) bars institution of an IPR petition filed more than one year after being served a complaint alleging infringement, but it has an exception for joinder. Section 315(c) allows discretionary joining of a party to an instituted IPR. The Board interpreted “join as a party” to not allow joining of new issues—whether raised by the same party or another party. Id. at 4–5. Under this interpretation, the Board denied the request to join that petition, making the second petition time-barred. Proppant Express filed a motion for rehearing and sought review from the POP.

Background on the Precedential Opinion Panel (POP)

The U.S. Patent and Trademark Office (“USPTO”) created the POP in its PTAB Standard Operating Procedures 2 (Revision 10) [SOP2 is available here] as a way “to establish binding agency authority concerning major policy or procedural issues.” Any member of the Board or any party to the proceeding may recommend an issue for POP review. A party seeking POP review follows the regular procedures to make a request for rehearing, but additionally sends an email to Precedential_Opinion_Panel_Request@uspto.gov. The email contains a brief description of the issue(s) the POP should review by including one of the following paragraphs:

Based on my professional judgment, I believe the Board panel decision is contrary to the following decision(s) of the Supreme Court of the United States, the United States Court of Appeals for the Federal Circuit, or the precedent(s) of the Board: (provide cites to specific decisions)

Based on my professional judgment, I believe the Board panel decision is contrary to the following constitutional provision, statute, or regulation: (cite the specific provision, statute, or regulation)

Based on my professional judgment, I believe this case requires an answer to one or more precedent-setting questions of exceptional importance (set forth each question in a separate sentence).

If the request for POP review is granted, the Director of the USPTO convenes a panel, notifying the parties and public of the issues to be resolved, and the composition of the panel. The Director may allow additional briefing—including amicus briefs—and may include an oral hearing. Unlike other PTAB decisions, POP decisions are precedential unless designated as routine or informative.

The POP in the Present Case

The POP review in Proppant Express exemplifies the new procedures. The panel members for the POP are those described in the SOP2: the Director of the USPTO, the Commissioner of Patents, and Chief Administrative Patent Judge. The POP recognized that PTAB decisions have disagreed on the proper interpretation of § 315(c), making a precedential decision on the topic ripe. The POP allowed additional briefing by the parties, and authorized amicus briefs as well, both due December 28, 2018. The parties will discuss the need for an oral hearing in their briefing, and the POP has authorized responses to the briefs to be filed on January 14, 2019.

Hopefully this case will demonstrate how the new POP review procedures can resolve unsettled issues at the PTAB and bring more consistency among its decision makers. We will provide updates to this developing area of IPR law and review procedures.