1. Inter Partes Review Update
Steven F. Meyer
IP Practice in Japan Pre-Meeting
October 25-26, 2016
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2. I. Supreme Court Addresses Non-Appealability of
I. Supreme Court Addresses Non-Appealability of Institution Decision in An Inter Partes Review
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3. Supreme Court Addresses Inter Partes Review
Supreme Court agreed to address two issues raised in the Federal Circuit’s In re Cuozzo Speed decision:
Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.
Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.
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4. Decisions by PTAB
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5. Statutory Provisions At Issue In Cuozzo
35 U.S.C. § Petitions
(a) Requirements of Petition. – A petition filed under section 311 may be considered only if –
* * *
(3) the petition identifies, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim ….
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6. Statutory Provisions At Issue In Cuozzo
35 U.S.C. § Institution of inter partes review
(a) Threshold. – The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 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.
* * *
(d) No Appeal. – The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
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7. In re Cuozzo Speed Techs., 793 F.3d 1268 (Fed Cir. 2015)
Petition:
Claim 10: §102(e) by Aumayer §103 over Tegethoff & Awada §103 over Tokunaga & Hamamura
Claim 14: §103 over Aumayer & Evans §103 over Tegethoff, Awada & Evans
Claim 17: §103 over Aumayer, Evans & Wendt §103 over Tegethoff, Awada, Evans & Wendt
2013 WL , at *2.
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8. In re Cuozzo Speed Techs., 793 F.3d 1268 (Fed Cir. 2015)
Institution Decision:
Claim 10: § 102(e) by Aumayer §103 over Aumayer, Evans & Wendt
Claim 14: §103 over Aumayer, Evans & Wendt §103 over Tegethoff, Awada, Evans & Wendt
Claim 17: §103 over Aumayer, Evans & Wendt §103 over Tegethoff, Awada, Evans & Wendt
PTAB’s Final Written Decision: Claims 10, 14 & 17 invalid under §103 over (1) Aumayer, Evans and Wendt; and, alternatively (2) Tegethoff, Awada, Evans, and Wendt.
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9. Federal Circuit’s Cuozzo Decision
Relying upon 35 U.S.C. §312(a)(3), Cuozzo argues that the Board improperly instituted the IPR on claims 10 and 14 because the Board relied upon prior art not identified in the petition for those two claims.
Federal Circuit: Not appealable under 35 U.S.C. §314(d)
“The fact that the petition was defective is irrelevant because a proper petition could have been drafted. The same is even clearer here, where §314(d) explicitly provides that there is no appeal available of a decision to institute. There was no bar here to finding claims 10 and 14 unpatentable based on the Evans and/or Wendt references. The failure to cite those references in the petition provides no ground for setting aside the final decision.”
Cuozzo, 793 F.3d 1268, 1274 (Fed. Cir. 2015)
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10. Supreme Court’s Cuozzo Decision: Non-Appealable
“[O]ur interpretation [of non-appealability] applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review. See §314(d) (barring appeals of determinations … to initiate an interpartes review under this section’).”
“This means that we need not and do not, decide the precise effect of §314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond this section’.”
Cuozzo Speed Techs. v. Lee, 136 S.Ct. 2131, 2141 (2016)
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11. Supreme Court’s Cuozzo Decision
“[W]e do not categorically preclude review of a final decision where a petition fails to give ‘sufficient notice’ such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, concerning a patent claim ‘for indefiniteness under §112’ in inter partes review.”
“Such ‘shenanigans’ may be properly reviewable in the context of §319 and under the Administrative Procedure Act, which enables reviewing courts to ‘set aside agency action’ that is ‘contrary to constitutional right,’ ‘in excess of statutory jurisdiction,’ or ‘arbitrary and capricious’.”
Cuozzo Speed Techs. v. Lee, 136 S.Ct. 2131, 2141 (2016)
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12. II. Federal Circuit Decisions Applying Cuozzo
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13. SightSound Techs., LLC v. Apple Inc., 809 F.3d 1307 (Fed. Cir. 2015)
CBM Petition alleged in its petition that the challenged claims were anticipated under §102 by the CompuSonics publications.
Board instituted a CBM review of challenged claims based on obviousness under §103 over the CompuSonics publications.
Final Written Decision: Challenged claims unpatentable over the CompuSonics publications under §103.
Federal Circuit: “SightSound argues that the Board erred in considering obviousness because Apple failed to include such arguments in its petitions. As in Cuozzo, the statute does not limit the Board’s authority at the final decision stage to grounds alleged in the CBM petitions.”
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14. Board denied Wi‒Fi’s motion for discovery of this privity issue.
Wi‒Fi One, LLC v. Broadcom Corp., ____ F.3d ____, WL (Fed. Cir. Sept. 16, 2016)
Patent Owner Wi‒Fi argued that Broadcom’s petition was untimely under §315(b) because Broadcom was in privity with certain entities that were time‒barred by earlier district court patent infringement suit.
Board denied Wi‒Fi’s motion for discovery of this privity issue.
Inter partes review instituted, and challenged claims held to be unpatentable in Final Written Decision.
Federal Circuit:
“Supreme Court stated that the prohibition against reviewability applies to ‘questions that are closely tied to the application and statutes related to the Patent Office’s decision to initiate inter partes review.’ Section 315 is just such a statute.”
Board’s denial of Wi‒Fi’s discovery request is not example of the type of “shenanigans” that are reviewable.
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15. Husky Injection Molding Sys. v. Athena Automation, ____ F
Husky Injection Molding Sys. v. Athena Automation, ____ F.3d ____, 2016 WL (Fed. Cir. Sept. 23, 2016)
History of Petitioner Athena: Co‒inventor of the challenged '536 patent, Mr. Schad, assigned the '536 patent to Husky. Shortly thereafter, Schad sold Husky to a private equity group, and left to form Athena.
Institution Decision: assignor estoppel is not an exception to the otherwise broad statutory mandate that "a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent," 35 U.S.C. §311.
Federal Circuit:
“Even though the Supreme Court did not set forth any specific framework for determining if a statute is "closely related,” the statutes "closely related" to the decision whether to institute are necessarily, and at least, those that define the metes and bounds of the inter partes review process. And an interpretation of §311 and its prescription of "a person who is not the owner of a patent may file" to either include or foreclose assignor estoppel is very "closely related" to any decision to initiate inter partes review.”
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16. Institution Decision:
SAS Institute, Inc. v. Complement Soft, LLC, 825 F.3d 1341 (Fed. Cir. June 10, 2016)
Institution Decision:
Interpreted “graphical representations of data flows” claim term to mean “a depiction of a map of the path of data through the executing source code”.
Instituted IPR for claims 1 and 3-10 on obviousness grounds.
Final Written Decision:
Newly construed the same “graphical representations of data flows” limitation recited in claim 4 to now mean “a graphical representation comprised of icons depicting data processing steps and arrows to depict the movement of data through source code.”
Claims 1, 3 and 5-10 unpatentable, and claim 4 patentable.
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17. SAS Institute, Inc. v. Complement Soft, LLC, 825 F. 3d 1341 (Fed. Cir
SAS Institute, Inc. v. Complement Soft, LLC, 825 F.3d 1341 (Fed. Cir. June 10, 2016)
Federal Circuit:
“We have interpreted §554(b)(3) [of the Administrative Procedure Act] in the context of IPR proceedings to mean that ‘an agency may not change theories in midstream without giving respondents reasonable notice of the change and the opportunity to present argument under the new theory’.”
“What concerns us is not that the Board adopted a construction in its final written decision, as the Board is free to do, but that the Board ‘changed theories in midstream.’”
“[Petitioner] SAS focused its argument on the Board’s institution decision claim interpretation, a reasonable approach considering Complement Soft agreed with this interpretation in its patent owner’s response and never suggested that the Board adopt the construction that eventually materialized in the final written decision. It is difficult to imagine either party anticipating that already‒interpreted terms were actually moving targets, and it is thus unreasonable to expect that they would have briefed or argued, in the alternative, hypothetical constructions not asserted by their opponent.”
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18. Genzyme Therapeutic Prods. v. Biomarin Pharm. , 825 F. 3d 1360 (Fed
Genzyme Therapeutic Prods. v. Biomarin Pharm., 825 F.3d 1360 (Fed. Cir. June 14, 2016)
Board instituted IPRs on two patents directed to treating Pompe’s disease with injections of human acid a‒glucosidase.
Patent Owner’s Response: All prior art references in Petition described in vitro experiments, and did not include any in vivo data from studies on live animals.
Petitioner’s Reply: Responded to Genzyme’s arguments by citing two in vivo studies --Van der Ploeg ’91 and Kikuchi.
Final Written Decision: Referred to the Van der Ploeg ’91 and Kikuchi references as support for its findings as to the state of the art regarding the in vivo studies.
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19. Genzyme Therapeutic Prods. v. Biomarin Pharm. , 825 F. 3d 1360 (Fed
Genzyme Therapeutic Prods. v. Biomarin Pharm., 825 F.3d 1360 (Fed. Cir. June 14, 2016)
Federal Circuit:
“The notice and opportunity to be heard provisions of the APA have been applied ‘to mean that an agency may not change theories in midstream without giving respondents reasonable notice of the change and the opportunity to present argument under the new theory.’”.
“In this case, the Board did not ‘change theories in midstream,’ much less deny Genzyme notice of any such change. The Board’s final written decisions were based on the same combination of references that were set forth in its institution decisions.”.
“There is no requirement, either in the Board’s regulations, in the APA, or as a matter of due process, for the institution decision to anticipate and set forth every legal or factual issue that might arise in the course of the trial.”
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20. In re Magnum Oil Tools, 829 F.3d 1364 (Fed. Cir. July 25, 2016)
Petition:
Ground 1: §103 based on Alpha, Cockrell, & Kristiansen, and provided an articulated reason with rational underpinning to support the combination.
Ground 2: §103 based on Lehr, Cockrell & Kristiansen, and stated “the same analysis applies to combinations using Lehr as a base reference”.
Institution Decision: instituted on Ground 2, but not on Ground 1, finding Ground 1 to be redundant to Ground 2.
Patent Owner Response: “simply referring to how one of ordinary skill in the art would combine the teachings of Alpha, Cockrell, and Kristiansen does not, in any way, describe how one of ordinary skill in the art would combine the teachings of Lehr, Cockrell, and Kristiansen.”
Final Written Decision: “As we explained in the Decision to Institute (Dec , 24-25), when McClinton discusses the alleged ground of unpatentability based on the combination of Alpha, Cockrell, and Kristiansen in its Petition, McClinton indicates why it would have been obvious to one with ordinary skill in the art to combine Cockrell and Kristiansen with other prior art directed to downhole plugs. Pet McClinton asserts, and we agree, that the same analysis applies to the combinations using Lehr as the base reference. Id.”
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21. In re Magnum Oil Tools, 829 F.3d 1364 (Fed. Cir. July 25, 2016)
Federal Circuit:
“Magnum is correct to state that we have jurisdiction to review determinations made during institution that are subsequently incorporated into the Board’s final written decision....Nothing in either 35 U.S.C. §314(d) or Cuozzo Speed Techs. shields aspects of a Board decision which are critical to its ultimate judgment merely because its final analysis relies on statements made when it initially considered the petition.”
“The PTO takes the view that upon institution of an IPR, the Board necessarily finds that the Petitioner has demonstrated a ‘reasonable likelihood of success.’ The PTO urges that this finding operates to shift the burden of producing evidence of nonobviousness to the patentee.”
“In an inter partes review, the burden of persuasion is on the petitioner to prove unpatentability by a preponderance of the evidence, 35 U.S.C. §316(e), and that burden never shifts to the patentee.”
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22. III. Motion To Amend Claims During Post-Grant Reviews
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23. Very Few Motions To Amend Have Been Granted So Far
Of the 134 motions to amend filed in PTAB proceedings to date, only 7 have been granted [5.2% success rate]:
Google v. ContentGuard, CBM (PTAB June 21, 2016).
Shinn Fu v. Tire Hanger, IPR (PTAB April 22, 2016).
REG Synthetic Fuels v. Neste Oil, IPR , Paper 48 (PTAB June 5, 2015).
Chi. Mercantile Exch. v. 5th Market, CBM , Paper 38 (PTAB Mar. 23, 2015).
Riverbed Tech. v. Silver Peak Sys., IPR , IPR (PTAB Dec. 30, 2014).
Int’l Flavors & Fragrances v. United States, IPR (PTAB May 20, 2014).
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24. 35 U.S.C. §316 Conduct Of Inter Partes Review
Amendment of the Patent. −−
(1) In General. −− During an inter partes review instituted under this chapter, the patent owner may file 1 motion to amend the patent in 1 or more of the following ways:
(A) Cancel any challenged patent claim.
For each challenged claim, propose a reasonable number of substitute claims.
* * *
(3) Scope of Claims. −− An amendment under this subsection may not enlarge the scope of the claims of the patent or introduce new matter.
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25. Burden of Proof
“The moving party has the burden of proof to establish that it is entitled to the requested relief.” C.F.R. §42.20(c).
“For a patent owner’s motion to amend, 37 C.F.R. §42.20(c) places the burden on the patent owner to show a patentable distinction of each proposed substitute claim over the prior art.” Idle Free Sys., Inc. v. Bergstrom, Inc., IPR , Decision (Paper 26) at p. 7 (PTAB June 11, 2013) (Informative).
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26. Burden of Proof
35 U.S.C. §316(e) Evidentiary Standards In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.
“Section 316(e) places the burden on the petitioner to prove unpatentability of any issued claim for which the Board has instituted review and requires that the petitioner carry this burden by a preponderance of the evidence. Thus, the Board did not err by placing the burden on Nike to establish patentability over the prior art of Nike’s proposed substitute claims.” Nike, Inc. v. Adidas AG, 812 F.3d 1326, 1334 (Fed. Cir. 2016).
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27. In re: Aqua Products, Inc.
The petition for rehearing en banc filed by Appellant Aqua Products, Inc. is granted.
* * *
(4) The Appellant and Intervenor are requested to file supplemental briefs. The briefs should address the following questions:
When the patent owner moves to amend its claims under 35 U.S.C. §316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. §316(e)?
When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?
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28. Supplemental Brief of Appellant Aqua Products
Patentee bears burden of showing:
proposed amendment is responsive to an issue in the IPR and is not being introduced for an improper purpose (i.e., cure potential defects arising purely under 35 U.S.C. §101 or §112);
proposed amendment is non-broadening; and
proposed amendment is supported by the written description.
Petitioner bears burden of proving unpatentability of substitute claims by a preponderance of the evidence.
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29. Amicus Brief of AIPLA
“The PTO has permissibly modified the burden of production for the amendment process in a narrowly circumscribed manner by promulgating 37 C.F.R. §42.121(a)(2), which imposes a limited initial burden of production on the patent owner. That regulation states that a motion to amend “may be denied” (1) if the amendment does not respond to the grounds of unpatentability “involved in the trial,” (2) if the amendment “seeks to enlarge the scope of the claims of the patent,” or (3) if the amendment “introduce[s] new subject matter.” Once the patent owner has met the limited burden of production imposed by 37 C.F.R. §42.121(a)(2), the petitioner continues to have the burden of persuasion and an accompanying burden of producing evidence to show that the amended claims are unpatentable.”
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30. Amicus Brief of Intellectual Property Owners Association
“Section 316 governs “[c]onduct of inter partes review,” and there are no subsections other than subsection (e) that address the burden of proof regarding unpatentability. In fact, there are no other statutes allocating burdens of proof regarding questions of unpatentability during an IPR under any other circumstance. This is because §316(e) is complete and all−inclusive; it allocates the burden of proof to the petitioner in all circumstances.”
“This statutory language is mandatory, it is consistent with the ordinary rule that a party seeking relief bears the burden of proof, and it is not limited in any fashion—it applies to all claims, original and amended. Therefore, the petitioner, not the patent owner, bears the burden of proving the unpatentability of amended claims in IPR proceedings.”
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31. Thanks for your attention! Questions?
Steven F. Meyer
Partner
Locke Lord LLP
Brookfield Place
200 Vesey Street, 20th Floor
New York, NY 10281
Chair of Locke Lord’s IPR Practice Group
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