1. PTAB Litigation 2016 Part 3 – The Patent Owner Preliminary Response 1

2. Preliminary Response 2

3. Advantages of Filing POPR The best chance of winning is to have the petition thrown out before institution The same three judges who decided to institute also decide patentability – tough to overcome decision to institute. 3 Proposed Rule Change: Pilot program in which only a single judge will decide institution. Two additional judges will join the first judge after institution.

4. Preliminary Response Scope “reasons why no inter partes review should be instituted” (Rule 42.107(a)); 60 page limit (Rules 42.107(a), 42.24(b)(1)). Timing Due 3 months from filing date notice (Rule 42.107(b)). 4

5. Preliminary Response Optional “A patent owner may file a response …” (Rule 42.107(a)); Can expedite IPR proceeding by filing explicit waiver of preliminary response. Current waiver rate ~ 15%. “No adverse inferences will be drawn where a patent owner elects not to file a response or elects to waive the response.” 77 Fed. Reg. 48,680, 48,689 (Aug. 14, 2012). FY2013-FY2014: Patent owners filed response to ~80% of petitions. FY2015: response filed in ~86%: 5 Source: http://www.uspto.gov/sites/default/files/ documents/2015-07-31%20PTAB.PDF

6. Preliminary Response No new testimonial evidence. Rule 42.107(c): The preliminary response shall not present new testimony evidence beyond that already of record, except as authorized by the Board. In August 2015, USPTO issued notice of proposed rule changes that included permission for patent owner to file a declaration with their preliminary response. Amendments to the PTAB Rules of Practice, 80 Fed. Reg. 50,719, 50,725-26 (proposed Aug. 20, 2015). Can attempt to submit preexisting testimony (e.g., expert report from parallel district court proceeding). Some Board panels have refused to allow expert reports filed in district court after the petition filing date. See e.g., Stellar Energy Ams., Inc. v. TAS Energy Inc., IPR2015-00882 (PTAB Sept. 21, 2015). 6

7. Patent Owner Initial Strategy Three months to file Preliminary Response. Identify attacks: Is Petitioner estopped? Failure to identify all real parties in interest? Do the references qualify as prior art? Can you swear behind the prior art? Are there procedural or substantive deficiencies? Scrutinize expert declaration. Retain expert…immediately. Helpful testimony from other proceedings? Gather evidence of secondary considerations. Consider claim amendments. 7

8. Preliminary Response Strategy- Procedural vs. Substantive Attack An all-out substantive attack tips hand to the petitioner, showing the petitioner the best argument 6 months earlier than they would otherwise see in the Patent Owner Response. But there is no petitioner rebuttal before Institution Decision. In contrast, petitioner will get the last word before the Final Written Decision. Opportunity to extricate a patent from the PTAB early and put pressure back on the petitioner back in district court. Allows patent owner to test arguments. Board will respond to those arguments in its institution decision, and patent owner can adjust in its Patent Owner Response. Patent Office envisioned mostly procedural arguments. But many patent owners have elected to file substantive Preliminary Responses. 8

9. Preliminary Response Procedural Arguments Challenge petitioner standing –1 year bar; –Declaratory judgment bar; Challenge identification of real party in interest –35 U.S.C. § 312(a)(2) – A petition filed under section 311 may be considered only if the petition identifies all real parties in interest; –Seek early discovery: unlikely granted, but raises flag of possible real party in interest issue; Challenge status of references as prior art –Prior art is not a publication. 9

10. Preliminary Response Substantive Arguments Note failures to substantively address certain claims; Draft proposed claim constructions to avoid prior art; Attack motivation to combine; Attack claim features not present in references; Attack inherency (e.g., § 103 arguments lacking reference cites); Secondary considerations: –Seldom successful; Board strict about nexus; Success in IPR2014-00309 and IPR2014-01279; Raise petitioner inconsistencies from other proceedings; Attack “expertizing” declaration. 10