1. Recent Court Decisions Impacting Review Proceedings Under The AIA J. Steven Baughman Ropes & Gray LLP Nancy J. Linck, Esq. Rothwell, Figg, Ernst & Manbeck

2. 2 Review of PTAB Decisions other than Final Written Decisions on Patentability 35 U.S.C. § 314(d): “The determination by the Director whether to institute an inter partes review … shall be final and nonappealable.” 35 U.S.C. § 318(a): If an IPR is instituted, the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner ….” 35 U.S.C. § 319: “A party dissatisfied with the final written decision … may appeal” to the Federal Circuit.

3. St. Jude Medical v. Volcano, 749 F.3d 1373 (Fed. Cir. Apr. 24, 2014) § 314(d) prohibited direct appeal of the PTAB’s decision not to grant a petition for inter partes review. §§ 318(a) and 319 only authorize appeals to the Federal Circuit from the PTAB’s “final written decision with respect to patentability” resulting from the conduct of the proceeding after institution (2 nd step of a 2 step process). 3

4. In re Dominion Dealer Sol’ns, 749 F.3d 1379 (Fed. Cir. Apr. 24, 2014) Mandamus petition challenging a non-institution decision. Mandamus requires – “Clear and indisputable” right to relief – No other adequate means to obtain relief – Court “must be satisfied that the writ is appropriate under the circumstances” Here, no “clear and indisputable” right to relief in the Federal Circuit 4

5. In re The Procter & Gamble Co., 749 F.3d 1376 (Fed. Cir. Apr. 24, 2014) Mandamus petition filed prior to a final written decision challenging institution of IPR Extended St. Jude and Dominion to decisions to the institution of review No clear and indisputable right to immediate review “[S]eparate question whether § 314(d) means that the decision to institute … is unchallengeable later” 5

6. Challenges to PTAB Interlocutory Decisions in the Eastern District of Virginia 6

7. Versata Development Corp. v. Rea, 959 F.Supp.2d 912 (E.D. Va. April 17, 2013) Interlocutory review of institution decision sought under APA Court granted motion to dismiss “for want of subject matter jurisdiction” in federal district court “for failure to state a claim” because not a final agency action for which Plaintiff lacks an alternative remedy in a court” -- “Versata may present arguments concerning the decision to initiate review” during its Federal Circuit appeal 7

8. Mentor Graphics Corp. v. Rea, No. 1:13-cv-518 (E.D. Va. July 25, 2013) Mentor sought interlocutory review of decision to institute IPR under APA Court granted USPTO’s motion to dismiss – Decision to institute “not a final agency action” – Mentor had “another adequate remedy available in the Federal Circuit” 8

9. Synopsys v. Lee, 1:14cv00674- JCC-IDD (E.D. Va. Oct. 9, 2014) Synopsys filed this APA action challenging PTAB’s authority to review only some of the challenged claims (“partial review”) based on §318(a): – The PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner ….” 9

10. Synopsys (cont’d) Court granted USPTO’s motion to dismiss: – AIA precluded review in district court – “AIA provides an alternative adequate remedy in the Federal Circuit ….” Appealed December 2, 2014 10

11. Cooper v. Lee, No. 1:14-cv-00672 (E.D. Va. Feb. 18, 2015) Prior to a final written decision, patent owners challenged the constitutionality of the AIA 2 exceptions to exhaustion doctrine identified – When “a statute is ‘patently unconstitutional or an agency has taken a clearly unconstitutional position’” – “where the litigant will suffer ‘irreparable injury’ without immediate judicial relief” 11

12. Cooper (cont’d) Based on reexamination cases, Patlex v. Mossinghoff and Joy Techs. v. Manbeck, court concluded plaintiffs’ constitutional challenge would “ultimately fail.” Court concluded there was “no constitutionally-significant distinction” between ex parte reexam and inter partes review. 12

13. In re Cuozzo Speed Techs., 778 F.3d 1271 (Fed. Cir. Feb. 14, 2015) Federal Circuit held that the PTAB’s decision to institute IPR was not reviewable on direct appeal from the PTAB’s final written decision. Suggested that “mandamus may be available to challenge [PTAB’s] decision to institute IPR after the Board’s final decision” in some situations. Judge Newman dissented: §314(d) only bars interlocutory review. En banc rehearing requested on March 23, 2015, and PTO has responded at the court’s request. 13

14. Summary Both the Federal Circuit and the E.D. Va. appear to be taking a “hands off” approach to AIA review. Except in rare situations (yet to be identified), interlocutory review by a federal court will not be available. There will be no court review of decisions not to institute an AIA review proceeding. Thus far, no challenge to PTAB interlocutory decisions has been permitted, even after a final written decision. 14

15. 15 Review of Final Written Decisions on Patentability 35 U.S.C. § 318(a): If an IPR is instituted, the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner ….” 35 U.S.C. § 319: “A party dissatisfied with the final written decision … may appeal” to the Federal Circuit.

16. More on In re Cuozzo Federal Circuit majority affirmed PTAB determination that challenged claims were obvious. – Federal Circuit found the PTAB properly employed the “broadest reasonable interpretation” (BRI) standard in construing the reviewed claims. – Factual findings reviewed under “substantial evidence” standard, and legal issues reviewed de novo. 16

17. More on In re Cuozzo (cont’d) Judge Newman dissented, criticizing, inter alia, the majority’s endorsement of BRI: – “This built in discrepancy defeats the legislative purpose of substituting administrative adjudication for district court adjudication, for a PTAB decision based on this artificial ‘broadest’ standard cannot substitute for litigation directed to the correct result.” 17

18. Belden Inc. v. Berk-Tek LLC, No. 14-1676 (Fed. Cir. Apr. 17, 2015) Federal Circuit affirmed PTAB decisions in two IPRs cancelling challenged claims as anticipated/obvious. Unanimous panel rejected arguments that Board erred in claim construction (applying BRI) 18

19. 19 Rule 36: Entry of Judgment – Judgment of Affirmance Without Opinion – The court may enter a judgment of affirmance without opinion, citing this rule, when it determines that any of the following conditions exist and an opinion would have no precedential value: (a) the judgment, decision, or order of the trial court appealed from is based on findings that are not clearly erroneous; (b) the evidence supporting the jury’s verdict is sufficient; (c) the record supports summary judgment, directed verdict, or judgment on the pleadings; (d) the decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review; or (e) a judgment or decision has been entered without an error of law. Review of Final Written Decisions on Patentability

20. Rule 36 Decisions…. Softview v. Kyocera (Nos. 14-1599 and -1600) Board of Trustees v. Micron Technology, Inc. (Nos. 14-1509, -1510, and -1511) Helferich Patent Licensing, LLC v. CBS Interactive, Inc. (No. 14-1556) Clearlamp, LLC v. LKQ Corp. (14-1627) Luv N’ Care Ltd. V. Munchkin, Inc. (14-1653) 20

21. Federal Circuit on District Court Stays Pending CBM Review AIA § 18(b)(1) factors: – (A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; – (B) whether discovery is complete and whether a trial date has been set; – (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and – (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. 21

22. VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307 (Fed. Cir. 2014) – Federal Circuit majority concluded Judge Gilstrap (E.D. Tex.) “clearly erred” in finding AIA § 18(b)(1) factors did not favor stay Defendant had moved for stay five days after CBM petition filed on all asserted claims Not error for district court to wait to rule until after institution – Judge Newman dissented: stay was within district court’s discretion, and found no abuse here 22

23. Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368 (Fed. Cir. 2014) vacated 780 F.3d 1134 (2015) Federal Circuit majority reversed Judge Robinson’s (D. Del.) partial denial of stay, finding district court “clearly erred” in deciding each of the four stay factors – Defendant filed two sets of CBM petitions on 3 patents: First set before asserted claims were identified; stay denied pending decision by the PTAB Second set thereafter on remaining claims in 2 patents; renewed stay motion (after first petitions granted) denied as to patents for which not all claims yet instituted 23

24. Case may be simplified with less than all claims before the PTAB – “The district court seemingly created a categorical rule that if any asserted claims are not also challenged [the simplification] factor disfavors a stay... But this type of categorical rule is inappropriate. Stays can be warranted even when a CBM proceeding does not address all patents, claims, or invalidity defenses.” 24 Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368 (Fed. Cir. 2014) vacated 780 F.3d 1134 (2015)

25. Federal Circuit on District Court Stays Pending CBM Review AIA § 18(b)(1): – “If a party seeks a stay... relating to a [CBM] proceeding for that patent, the court shall decide whether to enter a stay…” AIA § 18(b)(2): – “A party may take an immediate interlocutory appeal from a district court’s decision under paragraph (1). The United States Court of Appeals for the Federal Circuit shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.” 25

26. Intellectual Ventures II LLC v. JPMorgan Chase & Co., No. 14-1724 (Fed. Cir. Apr. 1, 2015) Federal Circuit majority dismissed – Concluded it lacked jurisdiction over interlocutory appeals under AIA § 18(b)(2) until “proceeding” is instituted by the PTAB – “AIA differentiates between a petition for a CBMR proceeding (which a party files) and the act of instituting such a proceeding....” 26

27. Intellectual Ventures II LLC v. JPMorgan Chase & Co., No. 14-1724 (Fed. Cir. Apr. 1, 2015) Judge Hughes dissented: – “[T]he majority’s conclusion relies on an overly narrow textual analysis and is at odds with the overall purpose of the AIA and the specific purpose of the CBM procedure.” – Would have affirmed on the merits 27

28. Estoppel Following PTAB Review 35 U.S.C. § 315(e)(2): – “The petitioner in an inter partes review of a claim in a patent... that results in a final written decision... may not assert... in a civil action... that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 28

29. Star EnviroTech, Inc. v. Redline Detection, LLC et al., No. 8-12-cv-1861 (C.D.Cal. Jan. 29, 2015) District court litigation resumed after PTAB final written decision finding defendant failed to show claims unpatentable in IPR – Plaintiff moved to strike invalidity contentions that included references plaintiff argued were raised or reasonably could have been raised in IPR – Defendant relied, as part of prior art combination, on product made by plaintiff, arguing it could not have raised because it was not a patent or printed publication – Plaintiff argued manual for product could have been raised in IPR – Court denied motion to strike, finding physical product could not have been raised in IPR and noting (as argued by defendant) that it also disclosed features not found in manual, and thus was a “superior and separate reference” 29

30. Dell Inc. v. Elecs. & Telecomms. Research Inst., IPR2015-00549, Paper 10 (Mar. 26, 2015) Board denied institution, concluding Petitioner was estopped: – “Under 35 U.S.C. § 315(e)(1), once a Petitioner has obtained a final written decision, that Petitioner may not request or maintain subsequent proceedings on a ground that it ‘could have raised’ during the prior proceeding.” – Here, same petitioner’s prior IPR petition resulted in final written decision that same (overlapping) challenged claims had not been shown unpatentable – And the new (denied) petition relied solely on prior art petitioner had already relied upon to challenge the same patent in earlier IPR Joinder for two previously-unchallenged claims (necessary to avoid 1-year bar) also denied: – “On the present record, we are not inclined to join Petitioner to assert a ground partially, i.e., for two claims, but not the others.” 30

31. Looking Ahead… 31 Many more cases at the PTAB Many more cases reaching the Federal Circuit or returning to district court Many more decision points on stays, estoppel, and other key issues