The PTAB, on November 27, 2018, released the public version of Unified Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 29 (P.T.A.B. Oct. 11, 2018), finding membership in petitioner’s company plus only an interest in the outcome of the IPR fails to satisfy the AIT analysis for a real party-in-interest (“RPI”).

Realtime Adaptive Streaming, LLC (“Patent Owner”) argued the petition to institute IPR should be denied because Unified Patents, Inc. (“Petitioner”) failed to identify its members as RPIs. Petitioner is a for-profit entity that collects subscription fees from many of its member companies and uses the fees to, to among other things, file IPR petitions at its sole discretion. Patent owner alleged petitioner’s members are RPIs since the members are “beneficiaries of this petition and have a preexisting, established relationship with Petitioner.”[i] The PTAB rejected patent owner’s “benefits-plus-relationship standard.” It explained that while the RPI analysis starts with the nature and degree of the relationship between petitioner, the members, and the filing of the IPR, to end the inquiry there “would be premature and cut short the RPI analysis set out in AIT.”[ii]

Earlier this year, the Federal Circuit in Applications in Internet Time, LLC v. RPX Corporation, 897 F.3d 1336 (Fed. Cir. 2018) [hereinafter AIT], found that “[d]etermining whether a non-party is a ‘real party in interest’ demands a flexible approach that takes into account both equitable and practical considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner.”[iii]

In vacating the PTAB’s decision in AIT, the Federal Circuit highlighted numerous instances of circumstantial evidence that indicated SalesForce.com was a real party in interest, including: SalesForce.com was RPX’s client; their boards of directors shared a common member; SalesForce.com made large payments to RPX shortly before RPX filed the IPR petition; RPX was aware of the AIT lawsuit; RPX and SalesForce.com engaged in numerous communications leading up to the filing of the IPRs; RPX advertised  that its interests were “100% aligned” with its clients; RPX advertised that it provided patent infringement “insurance” services to its clients; and RPX served as an “an extension of the client’s in-house legal team.”[iv]

In Unified Patents, the PTAB compared the many factual differences between petitioner RPX in AIT and Petitioner Unified Patents, Inc. Although both Petitioner and RPX are for-profit companies that also file IPRs to serve their clients, none of the other factors from AIT were present in Unified Patents. Patent Owner did not present evidence that any of Petitioner’s members controlled, directed, or directly financed the proceeding, nor that Petitioner’s actions appeared tailored to benefit any specific member. “[M]ost significantly, there is no evidence that any member desires review of the []patent but is time-barred from filing an IPR—a fact that was crucial in AIT.”[v]

Consequently, a party is not automatically an RPI solely based on membership to a for-profit company that files IPRs to serve the members. Although this arrangement may result in a relationship between the parties and some benefit to the members, patent owners must provide additional circumstantial evidence indicating that a member is a RPI. Under this fact intensive analysis other potentially relevant considerations are communications between the petitioner and the unnamed party regarding the IPR or underlying infringement suit; the unnamed party’s knowledge of petitioner’s intent to file the IPR; corporate relationship, aside from membership, such as shared officers or board members; significant payments from the unnamed party to the petitioner shortly before the IPR is filed; attorney-client relationship; and, the unnamed party desires review of the patent, but is barred from filing an IPR.

[i] Unified Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 29, at 12 (P.T.A.B. Oct. 11, 2018).

[ii] Id. at 15.

[iii] AIT, 897 F.3d at 1351.

[iv] Id. at 1351-1357

[v] Unified Patents, Inc., IPR2018-00883, at 16.

The United States Patent and Trademark Office (“USPTO” or the “Office”) recently proposed new AIA trial procedures aimed at boosting the success rate of patent owner motions to amend.[1]  The new procedures, if made effective, would allow patent owners to preview the Board’s analysis of a motion to amend and to then revise their position to address deficiencies identified by the Board.

The proposed procedure contemplates that a motion to amend may involve up to six party briefs and two panel opinions.  As per current amendment practice, the patent owner would first file a motion to amend, and the petitioner would have an opportunity to oppose that motion.  Under the proposed changes, the panel would then issue a preliminary opinion on the merits of the patent owner’s motion.  If the preliminary opinion indicates that the motion is likely to be denied, the patent owner would be permitted to either reply to that preliminary opinion or submit a revised motion to amend, presumably shoring up any deficiencies identified by the Board.  The petitioner could then file an opposition to the revised motion, and the parties would have opportunities to file subsequent replies and sur-replies.  The USPTO’s proposed briefing schedule for the new procedure is shown below.

The proposed changes are intended to give patent owners a more meaningful opportunity to amend claims during an AIA trial.  Beginning in 2016, the USPTO undertook a study to determine the outcomes of motions to amend, including the number of motions filed, the number of motions that reached a final decision, the disposition of motions that requested substitute claims, and the reasons provided for denying entry of substitute claims. The data reveals that of the 3928 AIA trials conducted through March 31, 2018 (including both completed AIA trials and pending AIA trails), patent owners filed motions to amend in nearly 10% (361) of the trials, a percentage that appears to be growing. The Board ruled on a motion to amend requesting to substitute claims in 62% (189) of the 305 completed AIA trials with amendment motions as of March 31, 2018. Of the 189 motions to amend requesting to substitute claims that the Board decided, the Board denied the motion to amend in a staggering 90% (171) of the trials—most often, finding that the amended claims failed to comply with 35 U.S.C. §§ 102, 103, or 112.[2]

The results of the USPTO’s study, along with feedback from the public, including some concerns regarding the grant rate of claim amendments in AIA trial proceedings, prompted the development of the new amendment practice. The USPTO believes that the revised procedures—which are more favorable to patent owners than current procedures—may level the playing field between patent owners and petitioners and provide a more balanced amendment process.

The USPTO is also seeking comments from the public regarding whether it should engage in rulemaking to allocate the burden of persuasion with respect to the patentability of amended claims as suggested by the Federal Circuit in its decision in Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 20170 (en banc). Specifically, the USPTO requests feedback on whether it should allocate that burden as set forth in the order in Western Digital Corp. v. SPEX Techs., Inc., Case IPR2018-00082 (Paper 13 at 4) (PTAB April 25, 2018), which provides that “the burden of persuasion will ordinarily lie with the petitioner to show that any proposed substitute claims are unpatentable” and that the “Board itself also may justify any finding of unpatentability by reference to evidence of record in the proceeding.”

The USPTO also noted that it anticipates implementing a pilot program shortly after the comment deadline for the Request for Comments, ending on December 14, 2018. The pilot program is currently estimated to run for at least one year, with the possibility for an extension. Once it begins, the pilot program is expected to include all new AIA trials that are instituted.

 

[1] The Request for Comments was published in the Federal Register on October 29, 2018 and is available here: https://www.gpo.gov/fdsys/pkg/FR-2018-10-29/pdf/2018-23187.pdf.

[2] An update to the study on motions to amend through March 31, 2018 is available at https://go.usa.gov/xUJgB.

When a non-patent literature (NPL) reference is used to challenge a patent, a key issue to be resolved is whether the NPL reference is a “printed publication” under 35 U.S.C. § 102. Several prior posts have addressed this question, such as here and here.

The Federal Circuit recently, on November 6, weighed in yet again on what it means to be a “printed publication,” this time in Acceleration Bay v. Activision Blizzard (in a consolidated appeal from a dozen different IPRs concerning three different patents).

The PTAB had found that Lin – a technical report available at a web site hosted by UC San Diego’s Computer Science and Engineering department – was not publically available.  (See slip opinion at 11-15.)  Lin was uploaded to the web site prior to the critical date, a fact not challenged on appeal.  The web site indexed technical reports by author or year.  The web site also featured an advanced search form that appeared to allow a user to search keywords for author, title, and abstract fields.  However, a systems administrator for the web site testified that he did not know how the search worked, how key words were generated, and that it was not the department’s practice to verify advance search capabilities for title and abstract when a new article was uploaded.  (Id. at 13.)

Additionally, the patent owner had provided evidence that a recent search (well after the critical date) for keywords in the title and abstract of Lin failed to return any search results.  This evidence was also coupled with testimony from the system administrator that the web site is “pretty much the same” between the critical date and the present, and the site is “running the same software.”  (Id. at 13.)

In view of these facts, the Federal Circuit found that the PTAB’s opinion was supported by substantial evidence.  The Court (as well as the PTAB) noted that “public accessibility” requires more than technical accessibility.  (Id. at 12.)  The test for public accessibility (said the Court) is not “has the reference been indexed?”  Rather, the “ultimate question is whether the reference was ‘available to the extent that persons interested and ordinarily skilled in the subject matter or art, exercising reasonable diligence, can locate it.’”  (Id. at 14.)

The PTAB concluded that although Lin was indexed by author and year, it was not meaningfully indexed.  The Federal Circuit agreed.  The Court found that the case was not analogous to In re Lister, 583 F.3d 1307 (Fed. Cir. 2009), where a reference was found to be publicly available where databases the reference was included in supported keyword searching of the title.  In Lister, the Court said “[a] reasonably diligent researcher with access to a database that permits the searching of titles by keyword would be able to attempt several searches using a variety of keyword combinations,” which supported public availability.  (Id. at 13.)  Based on the evidence of record, the Court concluded that was not the case with Lin.

In affirming the PTAB’s decision, the Court appears to have given significant weight to the factual findings of the PTAB.  Specifically, the PTAB had found that based on the evidence presented, indexing was provided only by year and author name, which it concluded was not meaningful indexing for purposes of public accessibility as it pertains to NPL prior art.  The PTAB specifically found that the keyword searching of other fields—i.e., title and abstract—purportedly available from the web site was not functional.  The Court indicated that it “will not disturb the Board’s weighing of the evidence” that the record did not support a finding that a person of ordinary skill in the art in 1999 could have located Lin using the CSE Library website’s search function.  (Id. at 13.)

The takeaway from this case is that, when using NPL references, it is the petitioner’s burden to show that the reference qualifies as a printed publication.  That means, in particular, that the petitioner should be able to establish (preferably with declarations from one or more fact witnesses) that a given NPL reference was meaningfully indexed.  Another takeaway is that the petitioner should consider alternative explanations of how a person of ordinary skill would have been able to locate a reference.  If an academic journal article had cited to the Lin reference, then that article could have alternatively been offered as evidence that a skilled artisan had a roadmap to find the reference.  While the petitioner may have thought the keyword searching capability was sufficient when it filed the petition, the alternative roadmap theory could have helped when the patent owner challenged the keyword search capability.

The case is also a good reminder to verify important facts.  Specifically, this case is a reminder not to rely on a keyword search capability of a website without first testing it (being mindful of the relevant legal date for public accessibility).

The PTAB will soon implement a change in its claim construction standard in post-issuance reviews, moving from the broadest reasonable interpretation (“BRI”) standard to the standard articulated in the Federal Circuit’s opinion, Phillips v. AWH Corp.[1]  We previously covered this on our blog here. The effects of the change may be significant in some respects, such as potentially creating issue preclusion in district court based on a final PTAB decision.  In view of this harmonization in claim construction standards, this article examines the potential application of preclusion principles based on PTAB decisions.

The starting point is the Supreme Court’s opinion in B&B Hardware.[2]  There, the Court addressed whether an administrative decision on an issue could be given preclusive effect with regards to litigation of the same issue in district court.  The Court decided that, “so long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.”[3]  In other words, when the analysis is the same, issue preclusion may apply.  This decision was given in the context of the Lanham Act’s likelihood of confusion standard used for both trademark registration at the TTAB and trademark infringement in Article III courts.  The factors listed supporting the Court’s decision were that (1) nothing in the Lanham Act explicitly barred the application of issue preclusion, (2) the differences that do exist between the TTAB and Article III courts do not affect the overall outcome, and (3) there was no reason to doubt the quality, extensiveness, or fairness of the TTAB’s procedures.  Applying this template to the PTAB’s new Phillips standard, it is conceivable that the Court would arrive at the same conclusion, at least for final decisions as they pertain to claim construction.

First, although the AIA contains explicit estoppel provisions for IPR, PGR, and CBM proceedings, there is nothing in the text of the statute that bars issue preclusion from applying. Further, the Supreme Court has identified a rebuttable presumption in favor of the application of preclusion principles: “issue preclusion is available unless it is ‘evident’… that Congress does not want it.”[4]  Given that the AIA lacks text showing intent by Congress to bar issue preclusion and rebut the presumption in favor of its application, this factor arguably supports issue preclusion attaching to PTAB decisions.

Second, the factors that will be considered in PTAB procedures and district court procedures are by definition the same, at least for claim construction under the USPTO’s newly adopted rule change.  The UPSTO has also stated many times that its intent is to use the same standard as district courts.  Thus, in the context of claim construction, it would appear that this factor may support the application of issue preclusion.  Certainly other issues that are affected by the presumption of validity that applies in district court, but not the PTAB, and the corresponding differences in the standards of proof in proving invalidity and unpatentability, may not be subject to issue preclusion as these differences may affect the outcome.  But for issues such as claim construction, these differences likely have no effect and thus may not pose a bar to the application of preclusion.

Finally, there is little reason to believe that the Court would find that PTAB procedures are fundamentally poor, cursory, or unfair.  PTAB procedures are quite similar to the TTAB procedures considered in B&B Hardware.[5]  Both proceedings are decided by skilled Administrative Judges, have written procedural rules, offer discovery, and use the Federal Rules of Evidence.  Both decisions are also appealable to the Federal Circuit.[6]  Significantly, the Court identified the use of Rule 26 of the Federal Rules of Civil Procedure as a persuasive example of similarity to Article III procedures.[7]  The Supreme Court’s decision in Oil States arguably supports this conclusion for PTAB reviews, as the Court noted that there are similarities between inter partes review and adversarial litigation in Article III courts.[8]

This application of preclusion has the potential to limit a party’s ability to raise issues pertaining to claim construction in district court after a final PTAB decision takes effect.[9]  But aside from the application of issue preclusion, this result could also affect strategies in other aspects of parallel district court and PTAB proceedings.  For example, in a stay analysis, the application of issue preclusion to claim construction could result in final PTAB decisions having greater potential to simplify the issues that would otherwise need to be litigated in Article III courts.  But this presupposes that the stay is sought prior to a Markman decision in district court.  Thus, stays may be somewhat easier to obtain following the change in claim construction standards depending on the timing in which they are sought.  But this also puts petitioners at a potential disadvantage as they attempt to balance the constructions they seek in district court to avoid infringement with those that may be used to attack a patent before the PTAB.  Additionally, a patent owner or petitioner may wish to appeal a final PTAB decision in order to contest an adverse claim construction ruling that it otherwise would not have appealed had the PTAB’s earlier BRI standard been used.  In sum, in formulating their strategies in both district court and before the PTAB, parties would be well-advised to consider the potential application of issue preclusion and its effects.

 

[1] See 415 F.3d 1303 (Fed. Cir. 2005)

[2] 135 S.Ct 1293 (2015).

[3] Id. at 1310.

[4] Id. at 1306.

[5] Id.

[6] Id.

[7] Id. at 1309.

[8] Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S.Ct. 1365, 1378 (2018).

[9] Future articles will examine the effect of non-final claim constructions, such as those made before settlement and the potential for preclusion under those circumstances, as well as other potential situations in which preclusion may apply.

On October 11, 2018, the United States Patent and Trademark Office (USPTO) announced a change in the claim construction standard used for inter partes review (IPR), post-grant review (PGR) and covered business method (CBM) review.  For these proceedings, the claim construction standard will be changed from the broadest reasonable interpretation (BRI) standard to the standard used in federal district courts, which follow Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) and its progeny.  Additionally, the USPTO will now consider any prior claim construction determinations from corresponding civil actions, or proceedings before the International Trade Commission (ITC), that are timely made of record in an IPR, PGR, or CBM.

The new standard will be in effect for all petitions filed on or after November 13, 2018.  The change will not apply to existing IPR, PGR, and CBM proceedings or ex parte prosecution.

The USPTO states that the change in standard will “lead to greater uniformity and predictability” between judicial forums, and increase efficiencies for both the USPTO and the parties.  This rule change comes after several months of comments from the public following a notice of proposal in May 2018, previously described on our blog, of which “[t]he majority of the comments were supportive of changing the claim construction standard along the lines set forth in the proposed rule.”

Considering that this new standard will be in effect for all petitions filed on or after November 13, 2018, there is a narrow window, now open, within which to file a petition seeking review of claims that will be interpreted under the current BRI standard.  While applying the BRI standard, as compared with the Phillips standard, may have little, if any, effect in some cases, it is, at least for the next month, an important consideration.

Another strategic consideration to assess until the effective date of the change is whether filing a petition before the effective date could be beneficial in connection with a parallel district court action because there would not be a record created at the USPTO of claim construction under the Phillips standard.  That is, it may provide some flexibility, if the claim construction from the PTAB is not in your favor, to argue differently in the district court action based on the different standard applied by the PTAB.

A summary from the USPTO regarding the rules change is available at https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/procedures/ptab-issues-claim-construction.

The full text of the new rule is available at https://www.federalregister.gov/documents/2018/10/11/2018-22006/changes-to-the-claim-construction-standard-for-interpreting-claims-in-trial-proceedings-before-the.

In its recent decision Data Engine Technologies LLC v. Google LLC, No. 17-1135 (Fed. Cir. Oct. 9, 2018), the Court of Appeals for the Federal Circuit affirmed-in-part and reversed-in-part the district court’s ruling on Google’s Fed. R. Civ. P. 12(c) Motion for Judgment on the Pleadings that all asserted claims of U.S. Patent Nos. 5,590,259 (“the ’259 patent”); 5,784,545 (“the ’545 patent”); and 6,282,551 (“the ’551 patent”) (the ’259, ’545, and ’551 patents collectively referred to as the “Tab patents”); and 5,303,146 (“the ’146 patent”) are directed to patent-ineligible subject matter under 35 U.S.C. § 101.

A. The Tab Patents

The Court characterized the Tab patents as claiming “a method of implementing a notebook-tabbed interface, which allows users to easily navigate through three-dimensional electronic spreadsheets.”  Op. at 3.  The claimed method “includes user-familiar objects, i.e., paradigms of real-world objects which the user already knows how to use,” such as notebook tabs.  Id. at 4 (quoting ’259 patent at 6:52-58).  In addition, the Court highlighted contemporaneous articles submitted by Data Engine Technologies (“DET”) during prosecution, which touted that Quattro Pro, the first commercial embodiment of the claimed invention, “revolutionized three-dimensional electronic spreadsheets.”  See Id. at 5-6.

The district court had considered claim 12 of the ’259 patent as representative of all asserted claims of the Tab patents.

(i) Claim 12 of the ’259 Patent

At step 1 of Alice, the Court determined that claim 12 of the ’259 patent is not directed to an abstract idea, but is rather “directed to a specific method for navigating through three-dimensional electronic spreadsheets.”  Op. at 13.  The Court explained that the Tab patents solved a technological problem of designing user-friendly electronic spreadsheets in a particular way “by providing a highly intuitive, user-friendly interface with familiar notebook tabs for navigating the three-dimensional worksheet environment.”  Op. at 13.  This improvement “allowed computers, for the first time, to provide rapid access to and processing of information in different spreadsheets, as well as easy navigation in three-dimensional spreadsheets.”  Op. at 13-14.

Turning to the claim language, the Court explained that the claimed “method does not recite the idea of navigating through spreadsheet pages using buttons or a generic method of labeling and organizing spreadsheets,” but “[r]ather, the claims require a specific interface and implementation for navigating complex three-dimensional spreadsheets using techniques unique to computers.”  Op. at 15.  The Court then undertook an analysis comparing and contrasting Claim 12 of the ’259 patent to other Federal Circuit decisions addressing patent eligibility, summarized in the chart below:

The Court concluded its analysis of claim 12 of the ’259 patent by addressing Google’s argument that “humans have long used tabs to organize information.”  Op. at 20.  The Court explained:

“It is not enough, however, to merely trace the invention to some real-world analogy.  The eligibility question is not whether anyone has ever used tabs to organize information.  That question is reserved for §§ 102 and 103.  The question of abstraction is whether the claim is ‘directed to’ the abstract idea itself.  [] We must consider the claim as a whole to determine whether the claim is directed to an abstract idea or something more.  Google fails to appreciate the functional improvement achieved by the specifically recited notebook tabs in the claimed methods.  The notebook appearance of the tabs was specifically chosen by the inventors because it is easily identified by users.  . . . Rather, the notebook tabs are specific structures within the three-dimensional spreadsheet environment that allow a user to avoid the burdensome task of navigating through spreadsheets in separate windows using arbitrary commands.”

Op. at 20.

(ii) Claim 1 of the ’551 Patent

The Court separately addressed claim 1 of the ’551 patent, holding that unlike representative claim 12 of the ’259 patent, claim 1 of the ’551 patent is directed to patent-ineligible subject matter.  In its briefing, DET had separately (albeit, briefly) argued that claims 1, 3, and 10 of the ’551 patent “add features that are individually inventive concepts,” and that claim 1 “provides the advantage of allowing the user to recall the spreadsheet using a single command, though the computer may store the pages separately.”  Brief for Plaintiff-Appellant Data Engine Technologies LLC at 48.  In response, Google argued that “[t]he need to compile multiple documents so that they can be easily accessed at once is not a technological problem, and the claim’s solution to that age-old problem is not inventive,” and “[t]he claim simply gathers all of the spreadsheet pages in one place, just like the physical notebook on which the claims are expressly based.”  Brief of Appellee Google at 32.

Under step 1 of Alice, the Court concluded that the claim is “directed to the abstract idea of identifying and storing electronic spreadsheet pages.”  Op. at 21.  The Court noted that “DET concedes that, unlike claim 12 of the ‘259 patent, claim 1 of the ‘551 patent is ‘directed at something a bit more general,” and does not recite the “specific implementation of a notebook tab interface.”  Op. at 21.  Under step 2 of Alice, after a “searching review,” the Court found that “[c]laim 1 merely recites partitioning cells to be presented as a spreadsheet, referencing in one cell of a page a formula referencing a second page, and saving the pages such that they appear as being stored as one file.”  Op. at 22.

B. The ‘146 Patent

The Court explained that the ’146 patent is “directed to methods that allow electronic spreadsheet users to track their changes.”  Previously, users had to “resort to manually creating separate copies of the underlying model, with the user responsible for tracking any modifications made in the various copies,” and the ’146 patent solves this problem by providing an electronic spreadsheet system “having a preferred interface and methods for creating and tracking various versions or ‘scenarios’ of a data model.”  Op. at 9 (citing ’146 patent at col. 2, ll. 53-56 and 61-63).  The district court considered independent claims 1 and 26 of the ‘146 patent representative.

Under step 1 of Alice, the Court found that, at “their core, these claims recite tracking changes in a spreadsheet by: (1) creating a base version of a spreadsheet, (2) creating a new version of the spreadsheet, and (3) determining which cells of data have changed by comparing the new and base versions.”  Op. at 23.  “The concept of manually tracking modifications across multiple sheets is an abstract idea,” and the “mere automation of this process does not negate its abstraction.”  Op. at 23.  The Court found that these claims are “akin to those we held ineligible in Content Extraction,” holding that “the asserted claims of the ‘146 patent are directed to the abstract idea of collecting, recognizing, and storing the recognized data in memory.”  Op. at 23-24.

The Court also concluded that the asserted claims of the ‘146 patent do not recite an inventive concept under Alice step 2, noting that the claims “do not recite anything ‘more than simply stat[ing] the [abstract idea] while adding the words ‘apply it.’”  Op. at 24 (quoting Alice, 134 S. Ct. at 2357).

C. Takeaways

First, as highlighted by the Court’s analysis of the Tab patents, the entire prosecution history is fair game for a Fed. R. Civ. P. Rule 12(c) motion for judgment on the pleadings.  Here, the Court explained that “[o]n a motion for judgment on the pleadings, however, the court may consider ‘matters of public record,’” noting that the district court failed to take into account the Quattro Pro articles praising the invention that were cited during prosecution.  Op. at 14, n.2.

Second, the Court’s separate analysis of claim 1 of the ’551 patent underscores the importance of addressing all asserted claims in a patent-eligibility analysis, and to consider any meaningful distinctions between the claims when it comes to the representative claim analysis.  Here, the Court found that claim 1 of the ’551 patent was in fact directed to something “more general” than representative claim 12 of the ’259 patent.

Third, this decision provides yet another useful data point when considering the patent-eligibility of claims directed to graphical user interfaces.  Notably, the Court relied heavily on evidence from the Tab patents’ specifications, as well as the prosecution history, to conclude that claim 12 of the ’259 patent provided a technological improvement that “allowed computers, for the first time, to provide rapid access to and processing of information in different spreadsheets, as well as easy navigation in three-dimensional spreadsheets.”  Op. at 13-14.  Such evidence was sufficient—at least for a Rule 12(c) motion—to reverse the district court’s holding with respect to claim 12 of the ’259 patent.

A Federal Circuit opinion issued September 13, 2018, has affirmed a decision by the Patent Trial and Appeal Board (“PTAB” or “the Board”) that claims of U.S. Patent No. 8,714,977 (“the ’977 patent”) covering certain dental implants are unpatentable. The ’977 patent, assigned to Nobel Biocare Services AG (“Nobel”), was challenged by Instradent USA, Inc. and related parties (“Instradent”) in an inter partes review (“IPR”) filed August 20, 2015. The PTAB instituted trial on 7 of the 9 challenged (and not disclaimed) claims, and ultimately concluded that 6 of the 7 instituted claims were unpatentable based on prior art whose public accessibility had been challenged before both the PTAB and the International Trade Commission (“ITC”). A request for rehearing before the PTAB was denied.

This is far from the first time we have written about the necessity for IPR petitioners to demonstrate that asserted references qualify as prior art printed publications. However, such inquiries as applied by the PTAB are typically very fact intensive, and as such, clear lessons on how evidence is weighed in such cases before the PTAB are sometimes difficult to find. In this case, different conclusions were reached regarding the prior art status of the same reference on largely similar, but not identical, evidence before the PTAB and the International Trade Commission. This situation may give some insight to petitioners and patent owners alike.

Prior to the filing of the IPR petition, the ’977 patent was the subject of a Section 337 investigation before the ITC and was also asserted in a district court case which was stayed pending the ITC investigation. The Initial Determination in the ITC investigation found the claims of the ’977 patent anticipated by a 2003 Product Catalog (“Catalog”) published by a company acquired by Nobel and asserted to be distributed by at least one of the patent’s inventors. Following Nobel’s petition for review regarding whether the Catalog constituted prior art under 35 U.S.C. § 102(b), the ITC determined that the Catalog was not shown by clear and convincing evidence to be publicly accessible prior to the critical date of the ’977 patent.

The ITC Commission Opinion contained a lengthy analysis of whether the Catalog was shown to be prior art under §102, considering evidence such as: (a) the copyright date and printed date of the Catalog, (b) contemporaneous sales overseas of the products described in the Catalog, (c) a prior art journal disclosing some product models from the Catalog, but not necessarily the model relied upon for anticipation, (d) whether the Catalog was shown at a trade show held before the critical date, (e) whether and when the Catalog was distributed to doctors who attended training courses, (f) emails between patent counsel and an inventor during prosecution of the ’977 patent, and (g) the disclosure of the Catalog in an IDS disclosure filed in the prosecution of the ’977 patent. Upon consideration of this evidence, the Commission Opinion stated that it had not been shown by clear and convincing evidence that the Catalog was a printed publication as of the critical date of the patent. The ITC’s determination was affirmed by the Federal Circuit by a Rule 36 judgment.

Following the hearing in the ITC investigation, but before the Initial Determination was issued, Instradent filed its IPR petition. The IPR was instituted as to a §102 ground of anticipation by the Catalog and a §103 ground of obviousness over two other references. As such, similar to the path of the ITC investigation, the IPR was also largely focused on the prior art status of the Catalog, with Nobel receiving authorization to file a Sur-Reply concerning the public accessibility of the Catalog, to which Instradent filed a Sur-Sur-Reply. By the time of the Final Written Decision in the IPR, the Commission Opinion finding the Catalog to not be prior art had been issued by the ITC and was pending appeal to the Federal Circuit.

Although the ITC Commission Opinion found the Catalog not to be shown to be prior art, the Board stated that it was “not bound by the ITC’s fact finding or conclusions.” In coming to the opposite conclusion regarding the availability of the Catalog and its status as §102(b) prior art, the PTAB noted that the ITC has different standards of review (clear and convincing evidence) than proceedings before the PTAB (preponderance of evidence), and stated that the Board had “more evidence on this issue than what was before the ITC.”

Regarding the evidence of the prior art status of the Catalog, the IPR Petition itself relied on evidence that was generally the same as that before the ITC, namely: a) the use of the Catalog in training courses, b) the journal disclosing implants described in the Catalog, c) the IDS disclosing the Catalog during prosecution of the ’977 patent, and d) a brief by the Commission Investigative Staff arguing that the Catalog was publicly accessible. The PTAB in its institution decision stated that this met a sufficient “threshold showing” of availability, but that its availability as of the critical date would require addressing during trial.

Following institution, Instradent submitted two third-party witness declarations, a copy of a website from the Internet Archive indicating that the company did have a catalog prior to the critical date, and emails from one of the inventors of the ’977 patent. In rendering its decision that the Catalog was available before the critical date, the PTAB both made different determinations than the ITC regarding common evidence (such as finding deposition testimony taken from an inventor for the ITC investigation to lack credibility) and relied on the new evidence before it. For example, the two new declarations stated that a copy of the Catalog was obtained at a trade show held before the critical date.

It seems clear that it is the quality of supporting evidence, rather than the quantity, that is most useful to demonstrate the printed publication status of asserted art. Seven categories of evidence before the ITC were insufficient, as none went to the specific question of whether the actual asserted reference was available prior to the critical date. The copyright date, for example, was possibly probative of the year the Catalog was published, but not the month. The sale of the products described in the Catalog was not evidence of the publication of the Catalog itself. Description of the products in contemporaneous journals, potential distribution of the Catalog where testimony failed to establish the timing, and other evidence which also made the publication more likely, at least from a common sense point of view, were also insufficient.

Instead, it took declarations from two individuals describing the same event of acquiring the specific Catalog from a specific trade show held before the critical date to establish to the Board’s satisfaction that the reference was a printed publication under §102(b). Indeed, the Federal Circuit, in affirming the Board’s decision, focused not only on the third-party declarations, but on the credibility of the declarants and the corroboration of their testimony: by each other, by testimony of an inventor, and by production of the physical copy of the Catalog they asserted to be acquired prior to the critical date. While such a showing will not be necessary in all cases, evidence regarding the circumstances associated with, but not directly regarding, the publication of a reference may not be enough—even when it is offered in a multitude of forms.

The PTAB has broad discretion under 35 U.S.C. § 325(d) to deny institution if “the same or substantially the same prior art or arguments previously were presented to the Office.” Several are aware that the PTAB commonly exercises its discretion to deny “follow-on” petitions that seek to challenge the validity of a patent that has already been the subject of an inter partes review proceeding. However, it is important to know what the PTAB considers when deciding whether to deny institution under section 325(d).

When evaluating whether to exercise discretion, when the same or substantially the same prior art or arguments previously were presented to the Office under section 325(d), the PTAB has weighed common factors, such as:

(a) the similarities and material differences between the asserted art and the prior art involved during examination; (b) the cumulative nature of the asserted art and the prior art  evaluated during examination; (c) the extent to which the asserted art was evaluated during examination, including whether the prior art was the basis for rejection; (d) the extent of the overlap between the arguments made during examination and the manner in which Petitioner relies on the prior art or Patent Owner distinguishes the prior art; (e) whether Petitioner has pointed out sufficiently how the Examiner erred in its evaluation of the asserted prior art; and (f) the extent to which additional evidence and facts presented in the Petition warrant reconsideration of the prior art or arguments.

See Becton, Dickinson & Co. v. B. Braun Melsungen AG, Case IPR2017-01586, slip op. at 17–88 (PTAB Dec.15, 2017) (Paper 8) (informative). However, this list is non-exclusive and is not considered by every panel. Rather, the analysis is fairly fact specific. The PTAB will also weigh “petitioners’ desires to be heard against the interests of patent owners, who seek to avoid harassment.” Agrinomix, LLC v. Mitchell Ellis Prods., Inc., Case No. IPR2017-00525, slip op. at 11 (PTAB June 14, 2017)(Paper 6)(denying institution where the prior art reference “was discussed in the Specification of the ’583 patent, was cited by the applicant in an information disclosure statement, and was relied upon by the Examiner in an office action to reject certain limitations of the dependent claims[.]”).

Although the analysis is done on a case-by-case basis, there are some common trends amongst the PTAB’s recent decisions.

When Prior Art is Specifically Relied on During Prosecution

Generally, the PTAB will exercise discretion to deny institution when the prior art cited in the Petition was specifically relied on and substantively considered by the Examiner. For example, in Dorco Co., Ltd. v. The Gillette Co., LLC, Case No. IPR2017-00500, slip op. at 15 (PTAB June 21, 2017) (Paper 7), the PTAB exercised its discretion under section 325(d) and denied institution because it determined that the petitioner’s grounds I and II presented essentially the same question of patentability as previously considered by the Examiner. Although the prior art references were not exactly the same, the PTAB held that the reference substituted by the petitioner is an example of the reference cited by the Examiner and disclosed the same feature. See id. at 16. The PTAB determined that the petitioner’s ground II identified no claim elements disclosed by the substituted prior art reference that were not also disclosed by the art cited by the Examiner during prosecution. See id. at 16.

Similarly, in CSL Behring GMBH v. Shire Viropharma Inc., Case No. IPR2017-01512, slip op. at 13-14(PTAB Dec. 7, 2017) (Paper 12), the PTAB denied institution under section 325(d) and found that the petitioner made essentially the same arguments as to obviousness that the Examiner already considered. The PTAB held that “the prosecution history demonstrates that the Examiner considered many of the same issues with respect to the Schranz Declaration as Petitioner is arguing here” and that although “the Examiner noted in allowing the claims that Applicant Shire had established the secondary consideration of long-felt need and failure of others, the Examiner also stated that the art did not suggest the claimed dosage.” Id. at 14.

However, when the prior art was not specifically considered by the Examiner during prosecution, the PTAB has generally granted institution. See Pure Storage, Inc. v. Realtime Data LLC, Case No. IPR2018-00549, slip op. at 11 (PTAB July 23, 2018) (Paper 7) (noting that “there is no evidence of record that [the prior art references] were substantively considered by the Examiner.”). For example, in Synaptic Medical Inc. v. Karl Storz-Endoscopy-America, Inc., Case No. IPR2018-00462, slip op. at 10 (PTAB July 16, 2018) (Paper 6), the PTAB declined to exercise discretion to deny institution, concluding that “the references here were not applied to reject the claims of the ’360 Patent and there is no evidence that the Examiner considered the particular disclosures cited in the Petition or addressed arguments similar to those Petitioner now presents.” Additionally, when the prior art was merely cited in an Information Disclosure Statement, this was generally not enough for the PTAB to deny institution. See Comcast Cable Communs., LLC v. Promptu Sys. Corp., Case No. IPR2018-00342, slip op. at 17 (PTAB July 19, 2018) (Paper 13)(granting institution “[b]ecause the claims of the ’326 patent were substantially modified during the reissue prosecution and because [the prior art] was only cited in an IDS and not applied by the examiner in the reissue application process in any rejection of claims”). The prior art must be specifically relied on by the Examiner.

When Same Prior Art is Relied on but Not the Same Combination

One issue commonly before the PTAB is when the primary prior art references where considered by the Examiner during prosecution, but the petition makes an obviousness argument where the references are presented in combination with others that were not considered. There does not appear to be a consensus at the PTAB of whether discretion should be exercised under section 325(d) and for now appears to be highly fact dependent.

The PTAB has denied institution where the main prior art references in the Petition were the same as those considered by the Examiner, even though the petitioner used the references in different combinations. For example, in Microsoft Corp. v. Koninkijke Philips N.V., Case No. IPR2018-00277, slip op. at 11 (PTAB June 8, 2018)(Paper 10), the PTAB denied institution, finding the secondary prior art references to be cumulative to those relied on during prosecution even though the “Petitioner’s asserted grounds and the Examiner’s proposed combinations involving Traw and Kaliski rely on different primary references, or that Petitioner’s asserted grounds rely on two references whereas the Examiner’s proposed combinations involving Traw and Kaliski rely on four or more references.” Similarly, in Pfizer, Inc. v. Genentech Inc., Case No. IPR2018-00373, slip op. at 14 (PTAB Aug. 2, 2018)(Paper 12), the PTAB denied institution where “during prosecution of the challenged claims, the Examiner considered Kabbinavar with respect to anticipation and obviousness, and also considered Chen with respect to obviousness” and “the Petition relies upon those same references to support anticipation and obviousness grounds.”

However, by contrast, the PTAB has granted institution where the main prior art references were the same but the combinations differed. For example, in St Jude Medical, LLC v. Snyders Heart Valve LLC, Case No. IPR2018-00105, slip op. at 12 (PTAB May 3, 2018) (Paper 15), the PTAB concluded that “[t]he evidence of record does not demonstrate that the Examiner considered the references in the combinations relied upon by Petitioner or addressed arguments similar to those Petitioner now presents before the PTAB as the basis for the unpatentability of the challenged claims.” Similarly, in Trans Ova Genetics, LC. V. XY, LLC, Case No. IPR2018-00250, slip op. at 18 (PTAB June 27, 2018)(Paper 9), the PTAB granted institution and concluded that “the Petition presents a substantially different argument than was articulated by the Examiner and that the Examiner’s failure to appreciate the full scope of Lu’s disclosure warrants reconsideration of the asserted prior art.”

Additionally, where the petition includes new or additional evidence not considered by the Examiner, the PTAB may grant institution. See Sanofi-Aventis U.S. LLC v. Immunex Corp., Case No. IPR2017-01884, slip op. at 12 (PTAB Feb. 15, 2018)(Paper 14) (finding that “because the Examiner did not have the benefit of Petitioner’s additional experimental evidence relating to competition, we are not persuaded that the same or substantially the same prior art or arguments were previously presented to the Office.”).

Conclusions

Section 325(d) provides the PTAB with a great deal of leeway when determining whether to exercise discretion to deny institution. However, the PTAB’s recent decisions provide key takeaways for patent owners and petitioners when dealing with section 325(d). For patent owners, the decisions demonstrate that to make a successful argument for denial under this section, the prior art must have been considered by the Examiner during prosecution. A patent owner cannot merely rely on the fact that the prior art was cited by the Examiner or cited in an Information Disclosure Statement. The patent owner should, where applicable, demonstrate that the reference was substantively relied on.

As for petitioners, the decisions demonstrate the importance of careful selection of the prior art references when challenging validity. The best strategy for avoiding section 325(d) is to rely on new art. However, if new art is not available, it is important to examine the prosecution history closely and see which prior art references were primarily considered. Even if a petitioner decides to use the same primary references, it is important to examine other secondary references that may be used that were not considered during prosecution.

Either way, the recent PTAB decisions demonstrate the prevalence of section 325(d) in institution decisions and as such, both patent owners and petitioners should keep it in mind when preparing their arguments before the PTAB.

In Ericsson Inc. v. Intellectual Ventures I LLC, the Court of Appeals for the Federal Circuit vacated and remanded a final written decision of the Patent Trial and Appeal Board (“the Board”) because the Board erred in not considering portions of Ericsson’s Reply regarding new claim constructions adopted by the Board after institution. — F.3d —-, slip op. (Fed. Cir. Aug. 27, 2018).

Ericsson petitioned for IPR of a patent owned by Intellectual Ventures directed to increasing the reliability of wireless communications by minimizing the effects of burst errors and nulls through a coding technique known as interleaving. Id. 2-3.  Although the patent expired prior to the filing of Ericsson’s petition for IPR, Ericsson proposed constructions for various terms under the broadest reasonable interpretation standard rather than the Phillips standard. Id. at 7.

In its decision to institute IPR, the Board construed certain terms under the broadest reasonable interpretation standard even though neither party requested construction of those specific terms. Id.  After institution, Intellectual Ventures argued for the first time in its Patent Owner Response that the claims must be construed under the Phillips standard and proposed unopposed constructions under the Phillips standard. Id. at 8.  After adopting the new constructions, the Board revisited whether the combination of the prior art taught interleaving as disclosed in the patent. Id.  In its Reply, Ericsson discussed how interleaving was known in the prior art and argued that the differences under the narrower Phillips construction would have been “insubstantial at best” to a person of ordinary skill, given that interleaving was known in the art. Id. at 8-9.

In its Final Written Decision, the Board relied entirely on Intellectual Ventures’ construction and found that Ericsson had not proven that the challenged claims were obvious in light of the prior art. Id. at 8.  In doing so, the Board rejected the portions of Ericsson’s Reply that addressed the new claim constructions, holding that it “was a new theory beyond the scope of a proper reply as defined in 37 C.F.R. §42.23(b).” Id. at 9.  The Board further stated that “the reply is not an opportunity for Petitioner to identify, for the first time, new and different prior art elements that are alleged to satisfy the claim requirements,” and declined to consider portions of Ericsson’s Reply. Id.

The Federal Circuit held that, given the admissions within the patent itself, the arguments raised in the petition, and the Board’s own evolving interpretation of the claims, the Board’s decision not to consider portions of Ericsson’s Reply was erroneous. Id. at 10-11.  Since the patent acknowledged that interleaving was known in the art, the court stated that Ericsson was entitled to argue in its reply that the distinction in the specific type of interleaving between the prior art and the patent would have been insubstantial to a person of ordinary skill in the art. Id. at 11. The court noted that the “error was exacerbated by the fact that the significance of interleaving arose after the Petition was filed” because the Board adopted a different claim construction after institution was granted. Id.  Because the new construction regarding “interleaving” formed an essential basis for the Board’s decision, the court held that Ericsson should have been given an opportunity to respond. Id. (citing 5 U.S.C. § 554(b)(3), (c)).

This case shows that the Board must consider arguments in a petitioner’s reply that expand upon the same arguments made in the petition and that are necessary to address claim construction issues arising after the institution decision.

The USPTO first published its AIA Trial Practice Guide (“TPG”) in August 2012.[1] The TPG provides practitioners with guidance on typical procedures and times for taking action in AIA trials before the Patent Trial and Appeal Board (“the Board”), including inter partes reviews, post-grant reviews, covered business method reviews, and derivation proceedings.  The TPG is also intended to ensure consistency of procedures among panels of the Board.

Earlier this month, the USPTO issued an update to the TPG to incorporate the Board’s current practices and provide further explanation to the public of certain aspects of the Board’s practices.[2]  This update accounts for almost six years of the Board’s experience with the program.  As this update demonstrates, the USPTO has chosen to issue updates to the TPG on a section-by-section, rolling basis instead of in a single omnibus update addressing all aspects of the original TPG, the reasoning being to “expedite these updates and provide guidance to the public as quickly as possible.”  Below is a high-level survey of the sections revised or added in the August 2018 update to the TPG.

Section I.G. (Expert Testimony) is a new section added to the TPG.  This section outlines the timing for submitting expert testimony, the qualification requirements for an expert witness, the form and use of expert testimony, and the Board’s discretion to assign weight to be accorded to expert testimony.  This new section also clarifies the limitations of expert testimony, stating that “expert testimony may explain ‘patents and printed publications,’ but is not a substitute for disclosure in a prior art reference itself.”

Section II.A.3. (Word Count and Page Limits) specifies word count limits and page limits for the papers filed in AIA trials.  This section of the update thereby reflects the amendment to 37 C.F.R. § 42.24 that became effective on May 2, 2016, which replaced page limits with word count limits for petitions, patent owner preliminary responses, patent owner responses, and petitioner replies to patent owner responses.  This section also addresses word count certifications (“when certifying word count, a party need not go beyond the routine word count supplied by their word processing program”) and practical guidance regarding compliance with word count limits and challenging violations of word count limits (“the Board will generally accept a party’s certification of compliance with word count limits”).

Section II.D.2. (Considerations in Instituting a Review) discusses the Board’s consideration of various non-exclusive factors in determining whether to institute a trial.  Specifically, the update notes that 35 U.S.C. §§ 314(a) and 324(a) provide the USPTO Director with discretion to deny a petition and  that the Board will consider, for example, the non-exclusive factors enumerated in General Plastic Co., Ltd. V. Canon Kabushiki Kaisha in exercising that discretion, especially as to “follow-on” petitions. IPR2016-01357, slip op. 16–17 (PTAB Sept. 6, 2017) (Paper 19) (precedential).  This section also expounds the Board’s practice of exercising its discretion to deny institution under 35 U.S.C. § 325(d), which allows the Board to consider whether the same or substantially the same prior art or arguments were previously presented to the USPTO.  The update expressly lists non-exclusive factors considered by the Board in Becton Dickinson & Co. v. B. Braun Melsungen AG in this regard.  IPR2017-01586, slip op. at 17–18 (PTAB Dec. 15, 2017) (Paper 8) (informative).

Section II.I. (Reply to Patent Owner Response and Reply for a Motion to Amend; Sur-Replies) is updated with guidance on the practice of “providing for sur-replies to principal briefs as a matter of right.”[3]  It notes that “[t]his sur-reply practice essentially replaces the previous practice of filing observations on cross-examination testimony.”

Section II.K. (Challenging Admissibility; Motions to Exclude; Motions to Strike) includes guidance on the distinction between motions to exclude and motions to strike, and the proper use of each.  For example, the update clarifies that a motion to strike, but not a motion to exclude, may address arguments or evidence believed to exceed the proper scope of reply or sur-reply.

Section II.M. (Oral Hearing) provides for a pre-hearing conference call to afford the parties the opportunity to preview and seek the Board’s guidance as to the issues to be discussed at the oral hearing. The pre-hearing conference may also allow for discussion of pending motions to strike, admissibility of exhibits subject to motions to exclude, and unresolved issues with demonstrative exhibits.  This section also includes new guidance on sur-rebuttals, demonstrative exhibits, and live testimony for oral hearings before the Board.

Also included in the update is a revised Appendix A (Sample Scheduling Order), which features elements discussed in other sections of the update, such as the provision of a sur-reply.

Of note, the USPTO’s announcement of the update acknowledged that “[t]his TPG update is not all-encompassing, and there may be further revisions as we continue to review AIA trial proceedings.”  Nonetheless, this update provides useful guidance for practitioners and aims to clear up inconsistencies that have developed in cases before the PTAB on matters such as motions to exclude and sur-replies.

[1] https://www.uspto.gov/sites/default/files/ip/boards/bpai/trial_practice_guide_74_fr_48756_081412.pdf.

[2] https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/ptab-trial-practice-guide-august-2018; https://www.gpo.gov/fdsys/pkg/FR-2018-08-13/pdf/2018-17315.pdf (Federal Register notice announcing release of the August 2018 update to the TPG); https://www.uspto.gov/sites/default/files/documents/2018_Revised_Trial_Practice_Guide.pdf (full text of the August 2018 update to the TPG).

[3] https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/ptab-trial-practice-guide-august-2018.