IPR Defense 2017 – Lessons From Denied Inter Partes Review Petitions
The America Invents Act (AIA) created a proceeding, called inter partes review (IPR), to challenge the validity of an issued patent at the United States Patent and Trademark Office (USPTO). As of September 16, 2012, a petitioner could file an IPR to request to cancel one or more claims of an issued patent on the grounds of anticipation (35 U.S.C. § 102) and/or obviousness (35 U.S.C. § 103) based on patents or printed publications. IPR proceedings are adjudicated by a panel of Administrative Patent Law Judges in the Patent and Trial Appeal Board (PTAB) at the USPTO, but these proceedings are intended to be similar to validity challenges that would ordinarily take place in the federal district courts. The following is a discussion of basics of IPRs and IPR defense along with lessons learned from the denial of 9 inter partes review (IPR) petitions.
Elements of IPR Defense
Institution of IPR is not as a matter of right. Instead, the petitioner must request IPR through filing a petition, and the PTAB will evaluate the petition to see if there is a reasonable likelihood that the petitioner would prevail with respect to at least one ground for invalidity as to at least one of the claims challenged in the petition. 35 U.S.C. § 311(b). The petitioner in IPR then has the ultimate burden of showing unpatentability by a preponderance of the evidence. This standard for invalidity through IPR is lower than the clear and convincing standard in a district court challenge, which may make IPR an attractive mechanism to challenge a patent if substantive grounds exist to do so.
The patent owner has the right to rebut the petition prior to the PTAB making a decision whether to institute IPR. The rebuttal must set forth reasons why no IPR should be instituted based upon the failure of the petition to meet any of the myriad petition requirements. 35 U.S.C. § 313. Challenges may include: (1) failure to demonstrate that the petition meets the reasonable likelihood of prevailing standard for instituting IPR; (2) statutory bar from filing IPR; (3) estoppel based on actions of petitioner/real party in interest or a privy of the petitioner/real party in interest; (4) failure to file within permitted statutory time period; (5) references do not qualify as prior art; (6) prior art teaches away from the combination advocated by the petitioner; and/or (7) claim interpretation advanced by petitioner is unreasonable. This rebuttal (if filed) can be a valuable tool for the patent owner because the petitioner does not have the ability to file any additional comments or arguments before the PTAB makes a decision on the petition. Accordingly, the patent owner can have the final word; however, the rebuttal is optional and no adverse inferences are to be drawn where the patent owner elects not to file a rebuttal.
A small percentage of patent owners (approximately 13 percent) have waived their right to file a rebuttal to the IPR petition altogether. Preventing the petitioner from obtaining an early, sneak preview of arguments, ensuring the strong estoppel provisions of IPR take hold, and the general sense that rebuttals are not effective, are among the factors playing into this growing trend of waiver. On the other hand, a review of petitions that have been denied reveals that petitions are most often denied in their entirety when the patent owner elects to file a response challenging the substantive grounds raised in the petition or making a procedural challenge.
PTAB Evaluation of IPR Petitions
For IPR to be instituted, the petition must establish that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition. 35 U.S.C. § 314(a). The decision will take into account the patent owner’s rebuttal if one is filed. 37 C.F.R. § 42.108(c). A petition may be granted, denied, or partially granted. When a petition is partially granted, this means that the PTAB found that the petitioner showed reasonable likelihood of success for some claims, but not for others. While it is more likely a petition will be granted in whole or in part, it is informative to look at why some IPR petitions are being denied as it may be helpful in evaluating whether to respond to the petition if you are a patent owner or whether to file in the first place if you are a prospective petitioner.
Successful IPR Defenses -- Lessons Learned from 9 Rejected IPR Petitions
Synopsis v. Mentor (IPR2012-00041)
The PTAB denied IPR in Synopsis v. Mentor (IPR2012-00041), and a review of this denial sheds some light on the fact that a petitioner cannot hide the weaknesses in its petition. In its petition, the petitioner alleged that several U.S. patents anticipated certain claims of U.S. Patent No. 6,947,882 B1. IPR2012-00041 Decision at 2. While the petition identified a key claim element at issue in the patent (“wherein clocking of the second time multiplexed interconnection is independent of clocking of the first time multiplexed interconnection”), the petition failed to explain how the key element should be construed. Instead, the petition merely provided an implicit claim construction. IPR2012-00041 Decision at 5. The petition also alleged that these references rendered the claims obvious; however, the petition only stated that “[a]t a minimum, each challenged claim element would have been obvious to a person of ordinary skill in the art in view of the [prior art].” IPR2012-00041 Decision at 13. The patent owner filed a rebuttal and argued that the prior art did not teach the key element. The patent owner, like the petitioner, did not propose a construction for the key element, but did provide some arguments as to why the petitioner’s implicit claim construction should not be adopted. The patent owner also pointed out that the petition’s obviousness challenge appeared to fail to state any ground or rationale to support such a finding, and thus, failed even to set forth a prima facie case of obviousness.
In denying IPR, the PTAB construed the key claim element even though neither the petitioner nor the patent owner had done so. Of note, the PTAB did its own research to construe the key claim element, relying on an online dictionary that neither party had used in its briefing. IPR2012-00041 Decision at 6. Using this claim construction, the PTAB concluded that the prior art did not disclose the key claim element. IPR2012-00041 Decision at 8-13. The obviousness arguments also were rejected, finding that “[p]etitioner does not clearly explain the reasoning behind [its] unsupported assertions.” IPR2012-00041 Decision at 13-14. The PTAB emphasized that “[p]etitioner’s conclusory statements, without more detail, fail to satisfy any of the [petition] requirements and are irreparably lacking in detail.” Id. at 14.
It is unclear whether the petitioner in Synopsis was attempting to hide the weaknesses in its invalidity position or just hastily glossed over/omitted certain parts of the analysis, which led to denial of the IPR petition. Regardless, if a petitioner wishes to use IPR, it should be prepared to carefully explain its invalidity case and affirmatively provide reasonable claim construction positions. The PTAB will not simply accept arguments presented by either the petitioner or the patent owner at face value.
BSP Software LLC et al. v. Motio, Inc. (IPR2013-00307)
BSP Software LLC et al. (“BSP”) filed a IPR petition related to a patent owned by Motio, Inc. (“Motio”) challenging claims 1-10 as anticipated (35 U.S.C. § 102) and obvious (35 U.S.C. § 103). More specifically, BSP alleged that claims 1-3 were invalid as anticipated based on the Dixon and McCauley references and claims 10 were invalid as anticipated based on the Gentner reference. BSP also alleged that the claims were invalid as obvious based on four different combinations of references (Dixon and Gentner; McCauley and Gentner; Dixon and Cohen; Gentner and EQM). The PTAB denied BSP’s petition in its entirety, and the decision denying the petition is instructive as it illustrates the potential importance of the patent owner filing a response challenging the IPR petition. For example, in evaluating the anticipation grounds based on Dixon, the PTAB referred to Motio’s response and agreed that there was nothing in Dixon that indicated that the version control system employed automated version control as required by the claims. See IPR2013-00307 Decision at 11. With respect to Gentner, BSP argued that it disclosed all elements of the claims. In its response, Motio argued that Gentner failed to disclose any type of user-authored object that produces output when executed, which would be equivalent to the claim term “business intelligence artifact” and the PTAB was persuaded by Motio’s argument. IPR2013-00307 Decision at 13. Because the PTAB was not persuaded by the anticipatory grounds with respect to Dixon and Gentner, and BSP failed to advanced further arguments related to these references in asserting that the claims were obvious in view of these references, the PTAB failed to be persuaded by the obviousness grounds. IPR2013-00307 Decision at 17. Further, the PTAB found that BSP’s rationale for combining the teachings of Dixon and Gentner was conclusory.
BSP merely states that ‘it would have been obvious to one of ordinary skill in the art to augment the version control provided by Dixon with that described by Gentner.’ Pet. 27. As Motio argues, the methods employed by each reference are quite different, and BSP has failed “to provide sufficient reasoning or facts upon which to base a conclusion.” Prelim. Resp. 37. BSP’s reason to combine the teachings of Dixon and Gentner appears to be that both references are concerned with version control, Pet. 27, which, without more, is an insufficient rationale to combine. IPR2013-00307 Decision at 17.
BSP also attempted to argue that the claims were obvious based on the combination of Gentner and EQM, but the PTAB found that the reason provided to combine the references (because both references are allegedly concerned with version control), without more, was an insufficient rationale to combine. IPR2013-00307 Decision at 21. “There is no ‘why’ provided where BSP argues that ‘one of ordinary skill in the art would have been motivated to apply the version control methodologies taught in Gentner to the business intelligence systems disclosed by EQM.’” IPR2013-00307 Decision at 21. The PTAB also was persuaded by BSP’s expert declaration because it did not provide any factual support to substantiate BSP’s position. IPR2013-00307 Decision at 21.
This decision demonstrates not only the potential importance for the patent owner to submit a response to the IPR petition, but also that, with respect to obviousness, it is important for the petitioner to provide motivation to combine references, and further, any expert declarations should do more than just regurgitate the arguments made in the petition or in the response.
Fontaine Engineered Products, Inc. v. Raildecks (2009), Inc. (IPR2013-00361)
The PTAB engages in claim construction when it evaluates an IPR petition, and there are instances where this claim construction can be fatal to the substantive grounds in the IPR petition. In Fontaine Engineered Products, Inc. v. Raildecks (2009), Inc., the petitioner did not propose interpretations of claim terms and argued that they should retain their plain and ordinary meaning, but the patent owner elected to advance a claim construction position in its response. The PTAB then elected to construe the claim term “stacking block” which appeared in the claims being challenged. The PTAB agreed at least partially with the patent owner’s proposed claim construction for this term. IPR2013-00361 Decision at 9. Using this claim construction, the PTAB found that the petition had not demonstrated a reasonable likelihood that any of the anticipation or the obviousness references disclosed “a stacking block mounted to each first brace” as required by the claims. IPR2013-00361 Decision at 10. As this limitation could not be met, the IPR petition was denied.
Dell Inc. v. Acceleron, LLC (IPR2013-00443)
The PTAB has shown a willingness to address priority claims even in consideration of IPR petitions. In Dell Inc. v. Acceleron, LLC, the petitioner contended that the patent claims were unpatentable based on the Fung reference and the Bottom reference (each alone as a anticipatory reference) as well as in combination with various references (8 total obviousness grounds).
The petitioner argued that the patent-at-issue was not entitled to the benefit of the filing date of the provisional application to which it claimed priority because the claims were not explicitly or implicitly described, supported or enabled by the disclosure of the provisional application. IPR2013-00443 Decision at 7. More specifically, the petitioner alleged that the provisional did not disclose a hot-swappable CPU module wherein “each CPU module is a stand-alone independently-functioning computer” as required by claims 1-4 and 6-19 or wherein “each CPU module is an independently functioning stand-along computer” as required by claims 30 and 34-36. Id. The patent owner responded and cited disclosure in the provisional application that allegedly supported these claim limitations. IPR2013-00443 Decision at 8. The PTAB was persuaded by the patent owner’s arguments that the provisional application disclosed a CPU module that was “independently-functioning” and concluded that the patent-at-issue was entitled to the provisional filing date. Id.
Priority date analysis proved fatal to the substantive grounds set forth in the IPR petition. For example, the petitioner argued that Fung qualified as prior art because it claimed the benefit of two provisional applications filed before the provisional to which the patent-at-issue claimed priority. IPR2013-00443 Decision at 8-9. The patent owner responded and argued that the subject matter of Fung relied upon by the petitioner was not present in the provisional applications, and thus, the patent-at-issue predated Fung. The PTAB did not specifically conduct an analysis of whether the Fung provisional applications contained the subject matter relied upon in the IPR petition. Instead, the PTAB noted that the petitioner failed to specify the disclosure in the Fung provisional applications that support the relied upon subject matter from Fung. IPR2013-00443 Decision at 10. As neither the petitioner nor its expert cited to the Fung provisional applications, the PTAB concluded that the petitioner had not demonstrated a reasonable likelihood of prevailing on the Fung challenges, and therefore, denied that portion of the petition. IPR2013-00443 Decision at 10-11. Similarly, the PTAB concluded that Bottom did not qualify as prior art because Bottom as well as the provisional application to which it claims priority were filed after the provisional to which the patent-at-issue claimed priority. IPR2013-00443 Decision at 11.
Monsanto Company v. Pioneer Hi-Bred International, Inc. (IPR2013-0002)
The IPR decision in Monsanto Company v. Pioneer Hi-Bred International, Inc. illustrates the importance of making sure that any expert declaration filed in connection with an IPR petition meets certain standards. The challenged claims required both defoliating within a specified growing degree days (GDD) time frame and obtaining enhanced seed vigor. Monsanto relied on an expert declaration to attempt to establish that the prior art references taught and/or provide a reason to defoliate maize plants within the claimed GDD timeframe. IPR2013-0002 Decision at 6. The patent owner argued that the expert declaration was entitled to little weight as the expert “withheld the data and conclusions that underlie his opinions.” Id. The PTAB agreed with the patent owner and concluded that the declaration failed to provide sufficient underlying data “such that one of ordinary skill in the art would have a reasonable basis to believe that his growing degree day calculations and conclusions are correct.” IPR2013-0002 Decision at 7. More specifically, the PTAB noted:
Absent Dr. Burris’ declaration, Monsanto has failed to identify sufficient credible evidence to establish that the prior art meets the GDD limitation of the claims. That is, the prior art references relied upon by Monsanto do not discuss the number of GDDs between pollination and defoliation. Therefore, absent Dr. Burris’ Declaration, Monsanto has not provided sufficient evidence to demonstrate that the prior art references anticipate or render obvious the limitation that the plants were defoliated between about 600 and about 850 GDDs after pollination of the plants, as required by all of the challenged claims. As we do not credit Dr. Burris’ declaration with respect to his GDD calculations and conclusions, we conclude that Monsanto has failed to demonstrate that there is a reasonable likelihood that the prior art renders the challenged claims unpatentable. IPR2013-0002 Decision at 7.
Monsanto also relied on the expert declaration to establish that enhanced seed vigor was obtained in the prior art references relied upon. Id. As to this limitation, the PTAB concluded that the expert failed to provide a sufficient and credible explanation as to why the ordinary artisan would have expected enhanced seed vigor, and thus, the PTAB did not credit his conclusions that the prior art allegedly inherently taught enhanced seed vigor. IPR2013-0002 Decision at 8. Further, the PTAB concluded that the expert declaration failed to establish there would have been a reasonable expectation of successfully obtaining enhanced seed vigor as neither the patent nor the declaration identified the specified conditions necessary to achieve the result. Id. Accordingly, the PTAB declined to institute IPR.
BioDelivery Sciences International, Inc. v. Monosol RX, LLC (IPR2013-00315)
While there are decisions that have refused to institute IPR review based on substantive evaluation of the references and grounds, many IPR petitions continue to be denied based on more procedural grounds. BioDelivery Sciences International, Inc. filed a petition related to U.S. Patent 7,425,292 owned by Monosol RX, LLC. Monosol filed a patent infringement lawsuit and served BioDelivery with a second amended complaint on September 27, 2011. BioDelivery requested ex parte reexamination of the Monosol patent on January 20, 2012. Reexamination was ordered on February 16, 2012. The reexamination proceeding terminated July 3, 2012, upon issuance of a reexamination certificate by which each of the original claims 1-22 was confirmed either as amended or as dependent on an amended claim, and new claims 23-55 were added. The parties represented that the litigation was stayed pending resolution of the reexamination, and that it remained stayed at the time of the IPR petition.
The PTAB had to decide whether the IPR petition was filed within one year after the complaint was served. The PTAB denied the petition, rejecting BioDelivery’s argument that reexamination results in the issuance of a new patent noting that “[a] reexamination certificate merely “incorporat[es] in the patent any proposed amended or new claim determined to be patentable.” IPR2013-00315 Decision at 3. 35 U.S.C. § 315(b) references the “the date on which the petitioner . . . is served with a complaint alleging infringement of the patent” (emphasis added), and the PTAB stated that this indicates that the timeliness analysis is to be made with reference to “the patent.” IPR2013-00315 Decision at 4. Accordingly, as BioDelivery was served with the complaint alleging infringement on September 27, 2011, the petition filed on June 12, 2013, was filed more than one year after service, and therefore, the IPR petition was time-barred. IPR2013-00315 Decision at 5.
Anova Food, LLC v. Sandau (IPR2013-00114)
Anova Food, LLC v. Sandau is another example of an IPR petition being denied because the petition was deemed to be time-barred. Anova Food, Inc. had filed three civil actions challenging the validity of the patent in March 25, 2013, August 1, 2003 and March 18, 2004 respectively. All three of these actions were dismissed. IPR2013-00114 Decision at 3. The patent owner asserted that Anova Food, LLC was the same entity as Anova Food, Inc. and thus the IPR petition should be barred under 35 U.S.C. § 315(a)(1) and 37 C.F.R. § 42.101 because of the filing of the three Anova Food, Inc. actions, and the dismissal with prejudice of the last Anova Food, Inc. action. IPR2013-00114 Decision at 3-4. 35 U.S.C. § 315(a)(1), states that IPR may not be instituted “if, before the date on which the petition for such review is filed, the petitioner or real party-in-interest filed a civil action challenging the validity of a claim.” Thus, section 315(a)(1) refers only to filing, and Anova Food, LLC could not identify any legislative history to demonstrate that the legislative intent was in fact that “filed” be read as “filed and served.” Accordingly, the PTAB declined to read “served” into 35 U.S.C. § 315(a)(1).
The PTAB then had to determine whether Anova Food, LLC was the successor-in-interest of Anova Food, Inc. such that the filing of the Anova Inc. actions by Anova Inc. may be imputed to Anova Food, LLC. IPR2013-00114 Decision at 6-7. The PTAB had to look to the law of the state of the principal place of business for the issue of corporate successor liability, which, in this case, was Florida. IPR2013-00114 Decision at 7. The patent owner identified how declarations from corporate officers referred to the entities as the same business. Id. The PTAB concluded that Anova LLC did not present sufficient evidence to outweigh the patent owner’s evidence showing that Anova Food, LLC and Anova Food, Inc. operated as one continuous entity. IPR2013-00114 Decision at 11. Accordingly, Anova Food, LLC was barred from filing an IPR because Anova Food, Inc. “filed a civil action challenging the validity of a claim” of the patent before the IPR petition was filed by Anova Food, LLC. IPR2013-00114 Decision at 11-12.
Intelligent Bio-Systems, Inc. v. Illumina Cambridge Limited (IPR2013-00324)
There may be a desire to file multiple IPR petitions in succession to challenge a single patent. This may occur because certain references are not identified at the same time or it may be a more calculated move so as to have different IPR proceedings moving forward at different rates with respect to the same patent. However, as illustrated by Intelligent Bio-Systems, Inc. v. Illumina Cambridge Limited, the filing of multiple IPR petitions can backfire.
Several months prior to filing the instant petition, Intelligent Bio-Systems filed a petition on January 29, 2013, that requested an IPR of claims 1-8 of the ’026 patent. IPR2013-00128, Paper 2 (“128 Petition”). On July 29, 2013, the Board granted the 128 Petition, and instituted IPR of claims 1-8. In the instant petition, Intelligent Bio-Systems requested IPR be instituted based on the Odedra reference, either alone or in combination with two other references.
35 U.S.C. § 325(d) provides that while any post-grant review is going on and another proceeding or matter involving the same patent arises, the Director may determine the manner in which the post-grant review or other proceeding or matter may proceed, including providing for the stay, transfer, consolidation, or termination of any such matter or proceeding. More specifically, the Director can reject a later petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office. The PTAB evaluated the instant petition and noted that the grounds were similar to those raised in the IPR petition already granted. IPR2013-00324 Decision at 5. The PTAB reviewed the Odedra reference and found that its teachings were substantially the same as those raised in the references that are the subject of the already pending IPR proceeding. In fact, the petitioner had used almost the same language in describing Odedra as it did with the references in the prior petition. IPR2013-00324 Decision at 6. The PTAB also noted that Intelligent Bio-Systems failed to distinguish any teaching of Odedra that is lacking from the references cited in the 128 petition, and thus, the petitions were the same or substantially the same in terms of the prior art and the arguments. IPR2013-00324 Decision at 6-7. Accordingly, the PTAB exercised its discretion under 35 U.S.C. §§ 314(a) and 325(d), and 37 C.F.R. § 42.108(b), and declined to institute an IPR in the instant proceeding. IPR2013-00324 Decision at 7.
Apple Inc. v. Benjamin Filmalter Grobler (IPR2014-00060; IPR2014-00061)
The PTAB has also seemingly taken a stance against certain tactical strategies and gamesmanship. For example, on October 11, 2013, Apple filed two petitions for IPR with respect to U.S. Patent No. 6,799,084 (IPR2014-00060 and IPR2014-00061). Each petition would ordinarily be time-barred as each was filed more than one year after the patent owner served Apple with a complaint alleging infringement. However, Apple sought to get around the time bar by seeking joinder with IPR2013-00076, filed by Sony Computer Entertainment LLC on December 31, 2012, before the one-year bar date. The PTAB instituted a trial in IPR2013-00076 on July 22, 2013, and thus the time limit for Apple to file its Motion For Joinder expired on August 22, 2013. Moreover, Sony and the patent owner settled and the PTAB subsequently entered a judgment terminating IPR2013-00076 on October 7, 2013. (Apple simultaneously filed a Motion to Waive Time Limit for Filing a Request for Joinder Pursuant to 37 C.F.R. § 42.5(c)(3), a Motion For Joinder of Proceedings, and a Motion For Leave To File Motion For Reconsideration of Termination of IPR2013-00076 with its Petition For IPR in each proceeding).
The PTAB refused to institute both IPRs based on Apple’s petitions as both were untimely. However, the bulk of the PTAB’s decision dealt with Apple’s other motions, which if granted would have revived dismissed IPR2014-00076 and allowed Apple to join the proceedings.
The PTAB mentioned in its decision that Apple “readily admits that its election not to participate in IPR2013-00076 was a deliberate and considered decision on Apple’s part.” IPR2014-00060 Decision at 4. Apple stated that it “did not file these papers earlier in light of the fact that Sony was pursuing the invalidity of the ’084 patent in IPR2014-00076, where the Board recognized a reasonable likelihood that Sony would prevail in its challenge.” See Apple’s Motion for Leave, p. 4. The PTAB found Apple’s arguments unpersuasive, noting that “Apple provides no basis for the Board to authorize Apple to file a motion in a now terminated proceeding in which Apple did not make an appearance and did not participate in any way.” IPR2014-00060 Decision at 4.
The PTAB held that “Apple’s disappointment with Sony’s decision to settle IPR2013-00076 does not establish that the interests of justice require the Board to authorize Apple to file a motion to revive a proceeding it deliberately chose to avoid, so that Apple can join the revived proceeding and pursue the action in Sony’s stead. IPR2014-00060 Decision at 5-6.
Final Thoughts on Successful IPR Defense
IPR is likely to continue to be requested as the statistics indicate that it has been patent challenger (petitioner)-friendly, and can be an effective, efficient, lower-cost option than district court litigation to challenge the validity of a patent. Approximately 92 percent of all petitions are granted as to at least one ground for challenge, and if a petition is granted, the statistics indicate that IPR is instituted for approximately 88% of the claims that have been raised in the petition. However, as the prior IPR decisions may provide some motivation for patent owners to carefully consider and possibly respond to an IPR petition as there are instances where IPR may be shut down before it is ever instituted through an effective challenge to the petition.
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