Source: https://armstrongteasdale.typepad.com/at_post_grant/page/2/
Timestamp: 2019-04-22 20:33:24+00:00

Document:
Earlier this month, in MCM Portfolio LLC v. Hewlett-Packard Company (case number 15-1091), the Federal Circuit heard arguments challenging whether or not AIA reviews are constitutional under Article III of the Constitution. In January, MCM Portfolio LLC (MCM) appealed the final written decision of the Patent Trial and Appeal Board (PTAB) of the inter partes review (IPR) of U.S. patent number 7,162,549 (directed to controller chips for coupling a computer system with a flash storage system).
In the appeal brief, MCM argued, among other things, that any action to cancel or revoke a patent must be tried in an Article III court with access to a jury under the Seventh Amendment to the Constitution. MCM alleged that patents are the property of their owners and even the government must resort to the Courts if there is an issue related to the patent - regardless of who is to blame for any issue. MCM believes that by allowing AIA reviews to decide the validity of patents, Congress has denied patent owners their rightful access to a jury trial in violation of the Seventh Amendment.
The USPTO responded by arguing that Congress has not taken away any rights, but, rather, has merely offered a different path to determine the validity of a patent. The USPTO’s position is that a patent is a public right that can only be granted by the USPTO and thus the PTAB is an appropriate agency to determine the validity of a patent.
The MCM case is another example of a patent owner seeking to find a way to remove adjudicative authority from the PTAB, as the AIA process continues to invalidate patents at an alarming rate. The Court’s decision with respect to this matter could potentially have a huge impact on this process, as a favorable ruling for MCM could essentially strip the PTAB of any AIA petition review power.
On August 26, 2015, in CBM2015-00022, the Patent Trial and Appeal Board (PTAB) refused to terminate a Covered Business Method (CBM) proceeding as being moot in view of a district court decision that the challenged claims of the patent are invalid under 35 U.S.C. 101.
More specifically, MyMedicalRecords, Inc., the owner of U.S. Patent No. 8,301,466 (‘466 patent) for “Method and system for providing online records” informed the PTAB that on December 23, 2014, the District Court for the Central District of California held that each of the challenged claims of the ‘466 patent is directed towards patent ineligible subject matter. MyMedicalRecords had initially appealed the District Court’s decision, but subsequently had the case voluntarily dismissed at the Federal Circuit. Accordingly, MyMedicalRecords asserted to the PTAB that issue of subject matter eligibility was settled and that it would be proper for the PTAB to dismiss the CBM proceeding under 37 C.F.R. 42.72, rather than enter a judgment. The cited rule, 37 C.F. R. 42.72, states “[t]he Board may terminate a trial without rendering a final written decision where appropriate . . . .” The PTAB determined that it would be inappropriate to dismiss the CBM.
In refusing to dismiss the CBM proceeding, the PTAB stated that the CBM instituted against claims 8-12 of the ‘466 patent is distinct and independent from the appeal from the District Court’s holding. In particular, the PTAB stated that the CBM was not at a preliminary phase. Rather, the PTAB had already issued a decision to institute review of the ‘466 patent by the time MyMedicalRecords requested that the CBM be dismissed.
The PTAB then proceeded to find that challenged claims 8-12 are indeed patent ineligible because they merely recite the concept of user management performed by a generic computer, do not improve the functioning of the computer itself, and do not provide an improvement to another technology or technical field. In reaching its decision, the PTAB relied on the declaration of an expert that the recited elements of the claims, such as a server, storing files in a computer readable storage medium, a user interface on a computing device, passwords, and receiving files that include image format files, were well-known conventional concepts on September 12, 2005, the priority date of the ‘466 patent.
The takeaway from CBM2015-00022 is that the PTAB is not required to dismiss a proceeding regarding the patentability of challenged claims when concurrent litigation has reached a conclusion on the patentability of the claims. Rather, the proceeding at the PTAB is independent and distinct, and is likely to go forward if the PTAB has already issued a decision to institute review of the challenged patent.
A second set of proposed rule changes to AIA post-grant proceedings was published by the Patent Office on August 20, 2015. The proposed rule changes cover many different aspects of AIA proceedings but, are generally favorable to patent owners. While this post discusses several issues addressed in the proposed rule changes, the proposal (available here) is worth reading in its entirety as it provides useful insight as to how the Patent Office intends to address various issues in AIA proceedings.
One issue addressed in the proposed rule changes is one of the most contentious issues for patent owners since the enactment of the AIA–namely, the procedure for amending claims in AIA proceedings. The proposed rule changes, although acknowledging improvements in this area are needed, do not include any specific rule changes for motions to amend claims. Rather, the proposed rule changes contemplate improving and clarifying the claim amendment process by designating appropriate PTAB decisions as precedential or informative.
One such decision discussed in the rule proposal is the PTAB’s MasterImage decision, which the Board recently designated as “representative”. The MasterImage decision clarified the requirements for patent owners to demonstrate their proposed amendments are patentable (see MasterImage 3D, Inc. v. RealD Inc., IPR2015–00040, Paper 42 (PTAB July 15, 2015)), and many, including PTAB Chief Judge Nathan Kelley, believe the MasterImage decision paves the way for easier claim amendments in AIA proceedings.
The Patent Office also indicated in the proposed rule changes that it would stand pat on its “broadest reasonable interpretation” (“BRI”) claim construction standard currently applied in AIA proceedings. This decision is not surprising in light of the Board recently receiving the Federal Circuit’s blessing to apply the BRI standard. See In re Cuozzo Speed Technologies LLC, No. 2014-1301 (Fed. Cir. July 8, 2015). The Patent Office also clarified in the proposed rule changes that it would apply a Phillips-type claim construction standard where the challenged patent is expired or will expire during the post-grant proceeding. Although the Board had already been applying the Phillips district court claim construction standard in some of these cases, there was no firm rule, so the proposed rules provide at least some clarity to AIA proceedings.
The proposal also includes rule changes that would permit patent owners to include expert declarations and other testimonial evidence in response to challengers’ petitions. Under current rules, patent owners are not entitled to submit testimonial evidence in preliminary responses, which many have argued put patent owners at a disadvantage by allowing petitioners’ evidence to go unanswered before trial is instituted. The proposed rule changes would allow patent owners to rebut expert testimony and evidence at the institution stage, rather than having to wait until trial is instituted to present rebuttal evidence.
The proposed rules will not be finalized until after the public commentary period ends on October 19, 2015. The proposed rule changes, while not drastically changing current practice, would favor patent owners by, among other things, allowing patent owners to rebut expert testimony and evidence prior to institution of a trial, and by allowing the Office to further refine claim amendment procedures through appropriate PTAB decisions. Practitioners should stay tuned for a final rule announcement in the coming months.
Of the many procedural wrinkles of post-grant reviews, Petitioners may sometimes overlook the seemingly trivial matter of standing. A recent decision illustrates how this issue should be considered more cautiously.
In Acxiom Corporation v. Phoenix Licensing, LLC, the PTAB denied the institution of a CBM review upon finding that the sole remaining petitioner, Acxiom Corporation, lacked standing under § 18(a)(1)(B) of the America Invents Act. See Acxiom Corp. v. Phoenix Lic., CBM2015-00068. Initially, Acxiom had filed the Petition jointly with three other entities – AT&T Mobility, LLC, AT&T Services, Inc., and Ford Motor Company. Upon Joint Motions to Terminate, the other three entities were removed from the Petition, leaving only Acxiom. The PTAB found the Petition failed to show standing for Acxiom.
Regarding Acxiom, the Petition stated in the “Grounds for Standing” section that, “Acxiom Corporation and AT&T Services, Inc. are both real parties-in-interest to and/or privies of one or more parties who have been sued for infringement.” The PTAB found this statement deficient because (1) no persuasive evidence was provided to show that the parties sued for infringement are Acxiom ‘s real party-in-interest or privies of Acxiom and (2) Acxiom’s statement that it was privy of one or more parties who have been sued for infringement could not have justified standing, even if true.
Regarding the first point, the PTAB’s decision makes clear that the Board will not confer standing based on unsupported assertions alone. Practitioners are advised to articulate the evidentiary basis for such assertions. Regarding the second point, the PTAB explicitly clarified that privy status can only confer standing when the party sued is a privy of a Petitioner, but not the converse. Looking to legislative history of the AIA, the PTAB noted that the word “privy… effectively means customers of the petitioner.” 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011)(statement of Sen. Schumer). In other words, a Petitioner may only have standing based on privy status if a customer of the Petitioner is the party sued. The converse does not hold: the fact that a party is sued does not confer standing to every customer of that party.
In Arctic Cat, Inc. v. Polaris Industries, Inc. (Case IPR2014-01427), the Patent Trial and Appeal Board (PTAB) recently denied a motion for additional discovery filed by Arctic Cat during the inter partes review of U.S. Patent No. 8,596,405 (the ‘405 Patent ).
By way of its motion, Arctic Cat sought the production of marketing and customer survey documents that it contended were highly relevant to Polaris’ argument that the ‘405 Patent is nonobvious in view of the commercial success of Polaris’ RZR vehicle. In ruling on the motion, the PTAB evaluated the Garmin factors and found against Arctic Cat with respect to whether the additional discovery requests would have been overly burdensome to answer.
One of Arctic Cat’s key arguments against the overly burdensome nature of the additional discovery requests was that the requests were “narrower” than those to which Polaris had already been ordered to respond by the district court in co-pending litigation. Arctic Cat essentially argued that Polaris simply had to review and produce before the PTAB what it had already reviewed and produced before the district court.
Polaris argued in response that, unlike the discovery requests before the district court, Arctic Cat’s additional discovery requests before the PTAB required Polaris to designate whether each of the documents was by nature a marketing presentation or a consumer survey. Polaris also argued that the additional discovery requests before the PTAB were not limited by the same search terms, e-mail restrictions, and custodian restrictions that were agreed-upon by the parties before the district court. Hence, Polaris contended that it was unclear whether its actions in producing documents before the district court would have been sufficient to satisfy its obligations before the PTAB. On this basis, Polaris argued that the additional discovery requests by Arctic Cat were overly burdensome to answer, and the PTAB agreed.
As a takeaway, it may be helpful for a moving party to craft its additional discovery requests before the PTAB to mirror exactly those that were previously made in co-pending litigation. This could diffuse the opposing party’s argument that the additional discovery requests are overly burdensome. Had Arctic Cat not attempted to make its litigation discovery requests “narrower” for use in the inter partes review, the PTAB may have actually sided with Arctic Cat on the “overly burdensome” Garmin factor.
IPR Petitioners often wrestle with determining how much content to put into a petition (and related declarations and exhibits) before considering breaking a petition into multiple filings. On the one hand, insufficient detail of anticipation or obviousness can cause a failure of institution of proceedings. On the other hand, at some point an overly lengthy filing can prevent institution of an IPR on its own. Further, the cost of each petition may drive clients to seek to maximize the information in any particular filing.
This question came to a head in a recent decision in which the PTAB denied institution for a variety of reasons, but most notably because the petition was unduly lengthy. See Apple, Inc. v. ContentGuard Holdings, Inc., IPR2015-00356. In the underlying Petition, Apple filed an IPR challenging the validity of ContentGuard’s patent, U.S. Patent No. 8,001,053 (the ‘053 patent) related to digital rights management (DRM). The petition was filed based on two separate 35 U.S.C. § 103 grounds, both based on U.S. Patent No. 6,389,538 to Gruse. The PTAB determined that the Petitioner did not demonstrate a reasonable likelihood of prevailing based on either ground because the ‘053 patent “describes and claims a particular scheme among the many possible schemes” of DRM and the Gruse reference showed general schemes of DRM without disclosing the particular scheme of the ‘053 patent.
Yet, the PTAB’s other bases for denial of institution are more important than the defects of the § 103 grounds. First, the PTAB took significant exception to the unnecessarily lengthy nature of the Petition, and particularly to the fact that the Petition included excessive irrelevant content.
The PTAB noted that the Expert Declaration used by Petitioner was an “omnibus declaration” that was used in multiple other petitions. As a result, the Expert Declaration included significant information not pertinent to the challenge of the ‘053 patent. Similarly, the PTAB noted that while the Petition included sixty-one exhibits totaling 30,298 pages, fifty-one exhibits were not cited in the Petition, ostensibly because they were related to other petitions. Elaborating on the problem posed by this extraneous content, the PTAB stated, “petitioners, ‘should avoid submitting a repository of all the information that a judge could possibly consider, and instead focus on concise, well-organized, easy-to-follow arguments supported by readily identifiable evidence of record.’ (citing to 77 Fed. Reg. at 48,763) The Petition widely misses that mark.” IPR2015-00356 at 18-19.
Based on the PTAB’s final written decision, it appears that a large part of the problem was the Petition’s reliance on information that the Board did not need, whatsoever. Although finding the magic length of a Petition may be difficult, a clear lesson from this decision is to strike any extraneous content and avoid omnibus declarations like the one used by Petitioner.
This written decision includes one final lesson – always fully comply with all mandatory Petition requirements. The Petitioner failed to completely disclose all matters related to the ‘053 patent. Citing to 35 U.S.C. § 312(a)(4), the PTAB noted that mandatory requirement of “any other judicial or administrative matter that would affect, or be affected by, a decision in the proceeding.” (quoting 35 C.F.R. § 42.8(b)(2)) Apparently, Petitioner failed to cite several litigation matters directly related to the ‘053 patent and also failed to cite to litigation matters related to other patent applications related to the ‘826 matter. The PTAB determined that, although the institution would not be granted on § 103 grounds, the institution could have been denied by the failure to provide mandatory notices.
When filing a Petition (or any filings before the PTAB), be mindful of the discretion and power of the Board. This decision suggests that taking shortcuts may be severely sanctioned and lead to adverse outcomes for a party.
One of the terms at issue was “gateway… connected to said packet-switched network in such a way that network packets sent between at least two other computers.” The patent owner argued that the “two other computers” should be construed as only the sender/computer and the receiver/computer. The Board adopted Microsoft’s construction of “any two computers connected on the network to the gateway, including the caching computer.” The Board then found the claim anticipated.
In reversing, the Court found that the Board erred in concluding that the “two other computers” could include the caching computer. The Court found the claim’s explicit requirement of a caching computer and “two other computers” and the specification’s treatment of the caching computer and the “two other computers” supported a more narrow construction. While confirming the “broadest reasonable interpretation” claim construction standard, the Court reinforced the “reasonable” aspect of this standard. The Court reversed two additional constructions and remanded to the Board for additional validity findings.
The Court also affirmed the Board's denial of patent owner's Motion to Amend.
Since the inception of post-grant proceedings (e.g., inter partes reviews (IPRs), post-grant reviews (PGRs)) under the America Invents Act (AIA), many patent owners have viewed the Patent Trial and Appeals Board (PTAB) as somewhat of a slaughterhouse for patents. In particular, as the number of granted IPR petitions rises, so does the number of patents invalidated by the PTAB. Many, in fact, view the entire process as heavily tilted in view of the IPR petitioners. There may be hope on the horizon, however, for patent owners’ chances in future proceedings.
- Requiring the PTAB to use the claim construction standard used in district courts as opposed to the “broadest reasonable interpretation” standard currently used.
- Limiting multiple challenges to the same patent.
- Limiting the number of PTAB members of a panel that granted the review to be allowed to take part in the final decision of the review (i.e., to avoid the instance of a decision-making panel viewing the patent unfairly based upon the decision to grant the review).
- Requiring the party filing a petition to do so under an obligation similar to the Rule 11 obligations of the Federal Rules of Civil Procedure (which allows sanctions to be imposed on attorneys who file frivolous suits).
- Amending the estoppel rules in PGRs to only estop a patent owner from raising issues in later court proceedings that the patent owner actually did raise in the PGR (as opposed to also including estoppel for issues that “could have been raised” during the PGR).
By drafting this bill, the senate appears to empathize with the plight that many patent owners have experienced during the AIA review process. As such, the PATENT Act is something for patent owners to keep an eye on because if it eventually passes, then the idea of successfully overcoming an AIA review may not be as daunting.

References: v. 
 v. 
 v. 
 § 18
 v. 
 v. 
 v. 
 § 103
 § 103
 § 312
 § 42
 § 103