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Jennifer C. Bailey is a partner and patent attorney with Hovey Williams LLP in Overland Park, Kansas. She practices in the electrical and computer software arts and specializes in prosecution and post-grant procedures in the United States and Europe. Ms. Bailey was lead counsel for Garmin International Inc. in the first inter partes review filed and argued before the Patent Trial and Appeal Board. She can be reached at firstname.lastname@example.org.
The past year has been exciting, challenging, and interesting for post-grant patent practitioners. The new inter partes review (IPR) and covered business method (CBM) procedures are focused, speedy vehicles for resolving unpatentability claims and § 101 patentability issues. IPRs, especially, are quickly gaining traction as the “go-to” mechanism for invalidating patents and defending against nonpracticing entities. But with new procedures come new (or not-yet-established) law, a learning curve, and insights from practicing in uncharted territory. This article focuses on IPRs, although much of the discussion is equally applicable to CBMs. Here are a few lessons learned from the first year of IPR practice.
An IPR is not the old inter partes reexamination, nor is it invalidity litigation. It is its own procedure with a detailed set of rules1 and strategies. If the practitioner treats an IPR as original prosecution regurgitated and does not appreciate the litigation aspects, mistakes will be made. Conversely, if the practitioner follows the oftentimes scorched-earth approach of litigation, such efforts will be quickly reigned in and shuttered by the Patent Trial and Appeal Board (PTAB).2
An IPR forces the practitioner to identify early the best arguments and the information needed to support those arguments and efficiently implement a plan. An IPR moves quickly; the PTAB’s final decision must occur within one year after the IPR is instituted.3 Thus, the procedure is regimented, with little room for error. Page limits4 are stringent and foreclose practitioners from presenting an array of arguments in the hope that one will “stick” with the PTAB. Discovery is allowed,5 but only for limited subjects and certainly not to the same extent as in litigation. Moreover, as to any patent claim for which a final decision is reached, a petitioner is estopped from later presenting anticipation- or obviousness-based invalidity arguments in litigation or another post-grant procedure.6 IPRs thus require a clear action plan with an appreciation for the limitations and opportunities of the process.
The members of the PTAB are skilled patent practitioners who will see through any hole or weakness in a party’s argument. This is yet another reason why early, thorough analysis of a party’s case and arguments is crucial. Changing direction midway through an IPR or not appreciating the full ramifications of a position can have damaging consequences—both in the IPR and in any concurrent infringement litigation. The PTAB can—and will—efficiently weed out ancillary issues to isolate the contentious point. For a petitioner with a strong unpatentability case, the PTAB is an ideal audience, as its analysis of the issues borders on academic given the judges’ technical and patent knowledge. Likewise, for a patent owner, the PTAB’s experience is a boon if the unpatentability case is nuanced or requires a “deeper dive” than often occurs in litigation.
Claim construction is an integral part of an IPR and, in the author’s opinion, much more central to the proceedings than it was in reexaminations. The PTAB will undertake to construe a claim term if such is necessary in deciding institution of the IPR. Therefore, the parties need to carefully consider what claim constructions they want to propose and how to support them (e.g., with declarant evidence). If there is concurrent litigation, the claim construction in an IPR often occurs well before any claim construction briefing or Markman hearing in the litigation. A party must identify its constructions early—usually before any litigation discovery, and even before the opposing party has clearly delineated its infringement arguments and other legal positions. This can be extremely risky for both sides as they juggle the competing concerns of invalidity and infringement.
To support their constructions, the parties should consider submitting declarant evidence with reasoned, as opposed to conclusory, opinions. At the very least, parties should support their claim constructions with evidence from the patent record, as opposed to simply proposing constructions in their respective briefs.7 Absent input from the parties or a definition in the specification, the PTAB will adopt the ordinary and customary meaning.8
Additionally, the PTAB will apply the broadest reasonable interpretation (BRI),9 which some opine may be inconsistent with a Phillips-type construction in litigation.10 The PTAB raised this issue in its first CBM final decision, rejecting the patent owner’s argument that the district court’s claim construction should apply in the IPR.11 (Note that the Federal Circuit had not yet ruled upon the district court’s construction.) Suffice it to say, this will be an ongoing source of tension between the U.S. Patent and Trademark Office (USPTO) and district courts, and opinions—both from the patent bar and the courts—are sure to follow.
It is also important to remember that the construction the PTAB relies upon to institute the IPR is nonfinal,12 and the PTAB may arrive at an entirely different final construction when it decides whether the instituted rejections are unpatentable. This can place the petitioner in a predicament. If the art does not teach or suggest the claimed invention applying the nonfinal construction, then certain grounds of rejection may not be instituted. But if the PTAB adopts a different final construction, institution of those initially rejected constructions may have been warranted. To address this potential disparity, some petitioners have filed two IPRs presenting two different claim constructions13 (i.e., the petitioner’s construction and the patent owner’s construction) or otherwise argued under both constructions (which is difficult to do thoroughly because of the page limits). The lesson for petitioners is to vigorously argue for the preferred claim construction during the initial briefing and not wait until after the IPR is instituted—while also providing art or other support for unpatentability under both constructions.
Most practitioners know that unpatentability arguments in an IPR should be more comprehensive than invalidity contentions in litigation. A well-reasoned unpatentability argument should be a detailed, precise tutorial of the prior art reference that does not require reviewing the prior art reference itself to understand the arguments. Avoid broadly characterizing the art or glossing over a limitation; an IPR is not conducive to arguing obviousness in generalized terms or by presenting a plethora of prior art references that teach the broad invention. Preparing unpatentability arguments for an IPR is often tedious, but an eye for minutiae will make the PTAB’s decision easier—which usually means a win for the client.
The downside of providing detailed unpatentability arguments is a tendency to be redundant—and the PTAB will reject a petition that presents redundant rejections. According to the PTAB, redundancies may be either “horizontal” or “vertical.”14 Horizontal redundancy is the citation of multiple prior art references that each teach the same claimed feature. If one reference more closely teaches the claimed feature than another reference, the petitioner must explain such to the PTAB. “Because the references are not identical, each reference has to be better in some respect or else the references are collectively horizontally redundant.”15 Vertical redundancy arises when both a partial combination and a full combination of references are proposed for the claimed combination.16 If the partial combination of references suffices to teach the claimed combination, the petitioner must explain why the partial combination is better (or worse) than the full combination. “Without a bi-directional explanation, the assertions are vertically redundant.”17
The redundancy issues require the practitioner to determine the best argument and proceed with it alone. Because positions change and arguments develop and clarify over time, addressing the redundancy issue at the beginning of the IPR process requires analyzing the interplay of the art, the infringement arguments, and the claim construction.
For proposed obviousness rejections, a petitioner must set forth an articulated rationale for why one of ordinary skill in the art would have found the combination obvious.18 The PTAB appears to be seeking a much more thorough and thoughtful rationale than what is proffered during original examination or what was required in inter partes reexaminations. A mere citation to a sentence in the prior art that reiterates an advantage of the proposed combination is a common tactic during original examination but may be insufficient in an IPR. A patent owner attempting to defeat a rationale to combine should go beyond generalized rebuttals and explain why the proposed combination would present “technological difficulties” or produce unexpected results.19
Declarant evidence to support the rationale to combine may also be helpful; in any event, it prevents complete reliance on attorney argument. In at least a few instances, the PTAB has cited declarant evidence as the basis for the rationale to combine.20 Because using declarant evidence subjects the declarant to a deposition on the topic, the petitioner should be sure the required rationale underpinnings are succinctly discussed.
The IPR rules are numerous and strict. Opportunities for missteps abound, and although the PTAB is showing some leeway while the patent bar learns the new procedure, this cannot be expected to continue forever. Some rules are significant, and failing to follow them results in serious penalties. For example, there are strict deadlines to request rehearing on any PTAB decision21 or to submit certain types of motions.22 Other rules are more flexible, but failing to follow them still frustrates the process. For example, the PTAB has recently rejected petitions for even relatively minor infractions (although petitioners are given an opportunity to correct their petitions).23 Moreover, many of the PTAB preferences (as opposed to actual rules) are not set forth in any guidelines or FAQs and are learned only through experience. Some procedures that were acceptable a year ago are no longer acceptable; for example, all claims charts now must be in double-column format, and the appendix of exhibits must be internal to the petition document. Fortunately, the PTAB and its support staff are very helpful. For logistical issues where there is no written direction, a call to the PTAB may prevent some problems.
The comments and responses set forth in the Federal Register also are helpful to resolving issues without a rule on point. For example, errata sheets for depositions are not discussed in the rules, but a comment was raised during rulemaking, and the response is a helpful guideline.24
As mentioned above,25 a final written decision in an IPR estops a petitioner from later asserting invalidity or unpatentability in a district court infringement action or an ITC or USPTO proceeding.26 Notably, a “final written decision” is defined as a decision from the PTAB.27 By contrast, in inter partes reexaminations, a decision was not considered “final” until all appeals were exhausted.28 Consequently, estoppel rarely arose from inter partes reexaminations because the litigation typically terminated well before the reexamination appeals were exhausted. Because an IPR petitioner is estopped as soon as there is a final PTAB decision, estoppel can arise much earlier—and more frequently—in the litigation process. Combine this with the page limits for petitions and other restrictions on presenting unpatentability arguments in an IPR (e.g., the redundancy issue29), and a petitioner must carefully weigh the benefit of the IPR against the risk of estoppel.
Not all future invalidity arguments are lost under the IPR estoppel statute. Only anticipation and obviousness based on patents or printed publications can be asserted in an IPR.30 Thus, because invalidity based on § 112 issues or prior public use were not raised by the petitioner or could not have reasonably been raised,31 IPR estoppel does not foreclose these arguments in future proceedings.
In the author’s opinion, a petitioner should carefully consider estoppel, but it should not weigh completely against the decision to seek an IPR. Although each patent must be evaluated on a case-by-case basis, if the unpatentability arguments are strong, the PTAB is the best audience to appreciate them and be willing to render the claims unpatentable.
One of the most potentially impactful features of an IPR is that the PTAB has the option of terminating it if the parties settle their dispute.32 Although it is presently unclear under what circumstances the PTAB would choose to continue the IPR, such instances probably will be relatively rare if settlement is sought early or before the PTAB has invested enough time to appreciate the unpatentability of the claims. Given the short timeline for an IPR, the claim constructions adopted by the PTAB, argument during the IPR that potentially can be used against a party in concurrent litigation, and the estoppel accorded the petitioner, the option of settlement is a significant negotiation tool for both parties.
Discovery in an IPR is allowed but is limited to “routine discovery” or “additional discovery” when in the “interests of justice.”33 Routine discovery covers cross-examination of a declarant and noncumulative information inconsistent with a party’s position in the IPR. Additional discovery is everything else, and the PTAB appears to be allowing additional discovery only under very limited circumstances.34 Notably, a party absolutely cannot treat IPR discovery as even remotely related to litigation discovery; the PTAB will not allow a fishing expedition.35
Conversely, because routine discovery allows for cross-examination of declarants, a party must strategically consider which issues truly require declarant evidence. Unlike in district court litigation, where evidentiary relevance sweeps broadly, in an IPR a party can depose a declarant only on the general issues the opposing party has presented. Thus, if a declarant opens the door to an issue, a deposition on that topic is allowed. But if a party forgoes using declarant evidence to support certain arguments, this will limit the scope of cross-examination.
One of the most debated topics among the IPR patent bar is whether a patent owner should file a preliminary patent owner response. The patent owner may (but does not have to) file a response within three months of the petition filing date.36 The PTAB will then evaluate institution of the IPR based on the petition and preliminary response.
There are several issues to consider in deciding whether to file a response. First, the patent owner cannot submit rebuttal declarant evidence at this stage, unless in the “interests of justice,” and cannot amend the claims.37 Therefore, substantive unpatentability arguments must be well-reasoned and based on the plain reading of the prior art. Because most petitions are not likely to have gaping holes (e.g., an entire limitation missing from the art), a discussion of the prior art reference’s nuances is probably not optimally presented in the preliminary response. Moreover, a preliminary response gives the petitioner a four to six month preview of the patent owner’s arguments. On the other hand, filing a preliminary response may narrow the limitations before institution. Other considerations include the stage of any concurrent litigation (e.g., will filing a preliminary response help or hinder a stay in the concurrent litigation?), additional prosecution history that might be leveraged by the petitioner, and the need to present declarant evidence to obtain the desired claim construction.
An IPR trial is much more similar to appellate argument than a district court trial. The PTAB may ask numerous questions and challenge the practitioner’s responses to flesh out the issues. The practitioner should know the record extremely well and be able to readily discuss the art, the law, and the opposing party’s arguments. For district court litigators who are used to developing their case through lengthy argument presentations and testimony, the PTAB’s desire to discuss very specific issues and to ask many questions in a short amount of time might require some adjustment. Moreover, due to the PTAB members’ substantial qualifications, any mischaracterization or lack of appreciation for a certain aspect of patent law will be challenged. That being said, if the practitioner is well-versed in the record and patent law, the trial is an excellent opportunity to solidify arguments.
The grand experiment of the America Invents Act’s post-grant review may very well change the landscape of patent challenges. The sheer number of IPRs filed in the first year (over 500) evidences the patent bar’s interest in using this fast and relatively inexpensive procedure to address unpatentability. It will be interesting to see how the next year of IPR experience will affect litigation and settlement strategies of interested parties.
1. The trial practice and procedure for IPRs is located at 37 C.F.R. §§ 42.1 et seq.
2. The new PTAB oversees all IPRs and CBMs. See id. § 42.3(a).
3. 35 U.S.C. § 316(a)(11) (“requiring that the final determination in an inter partes review be issued not later than 1 year after the date on which the Director notices the institution of a review under this chapter”).
4. See 37 C.F.R. § 42.24 (setting forth page limits for various briefs, e.g., 60 pages each for petitions for IPR and patent owner responses, 15 pages for motions).
5. See id. § 42.51 (setting forth rules for “routine” and “additional” discovery).
6. 35 U.S.C. § 315(e). Note that a petitioner can still present in a later district court proceeding invalidity arguments under 35 U.S.C. § 112 and prior public use.
7. See, e.g., Decision on Institution of Inter Partes Review at 5, Veeam Software Corp. v. Symantec Corp., No. IPR2013-00141 (P.T.A.B. Aug. 7, 2013), Paper No. 11 (discussing the conflicting views of the parties’ claim constructions based on the specification).
8. See, e.g., Decision on Institution of Inter Partes Review at 13, Vestcom Int’l, Inc. v. Grandville Printing Co., No. IPR2013-00031 (P.T.A.B. Apr. 1, 2013), Paper No. 22 (“If the specification does not set forth an explicit or special definition for a claim term, we resort to its ordinary and customary meaning as would be understood by one with ordinary skill in the art.”); Decision Denying Institution of Inter Partes Review at 5, Synopsys, Inc. v. Mentor Graphics Corp., No. IPR2012-00041 (P.T.A.B. Feb. 22, 2013), Paper No. 16 (adopting plain and ordinary meaning because neither party proffered construction).
9. See Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,766 (Aug. 14, 2012); 37 C.F.R. § 42.100(b).
10. David Kappos, Ensuring Quality Inter Partes and Post Grant Reviews, Director’s Forum: A Blog from USPTO’s Leadership (June 19, 2012), www.uspto.gov/blog/director/entry/ensuring_quality_inter_partes_and.
11. See Final Written Decision at 18, SAP Am., Inc. v. Versata Dev. Grp., Inc., No. CBM2012-00001 (P.T.A.B. June 11, 2013), Paper No. 70 (refusing to adopt district court’s claim construction, based on the doctrine of stare decisis).
12. Decision on Motion for Additional Discovery at 2, Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC, No. IPR2012-00001 (P.T.A.B. Mar. 5, 2013), Paper No. 26 (referring to the PTAB’s claim construction in the decision to institute IPR as “non-final”); see also Rules of Practice for Trials Before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decisions, 77 Fed. Reg. 48,612, 48,627 cmt. 17 & response (Aug. 14, 2012) (referring to the construction in the decision to institute trial as an “initial claim construction for the trial”).
13. See, e.g., Petition for Inter Partes Review at 2, LaRose Indus., LLC v. Capriola Corp., No. IPR2013-00121 (P.T.A.B. Jan. 23, 2013), Paper No. 1.
14. Order (Redundant Grounds) at 3, Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co., No. CBM2012-00003 (P.T.A.B. Nov. 26, 2012), Paper No. 7 (discussing horizontal and vertical redundancies of proposed prior art rejections).
18. See Decision Denying Institution of Inter Partes Review at 9, Heart Failure Techs., LLC v. CardioKinetix, Inc., No. IPR2013-00183 (P.T.A.B. July 31, 2013), Paper No. 12 (refusing to initiate IPR because petitioner failed to cite “some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness”) (quoting KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 418 (2007)).
19. See Decision on Institution of Inter Partes Review at 24, Vestcom Int’l, Inc. v. Grandville Printing Co., No. IPR2013-00031 (P.T.A.B. Apr. 1, 2013), Paper No. 22 (rejecting the patent owner’s arguments for why there was no rationale to combine).
20. See, e.g., Decision on Request for Inter Partes Review at 19, Microsoft Corp. v. Proxyconn, Inc., No. IPR2012-00026 (P.T.A.B. Dec. 21, 2012), Paper No. 17 (relying on the “detailed and credible reasons for combining the teachings of [the prior art]” set forth in petitioner’s declaration).
21. 37 C.F.R. § 42.71(d) (setting forth 14 days to request rehearing on any nonfinal decision or a decision not to institute trial, and 30 days for any final decision).
22. A motion to submit supplemental information must be filed within one month of the date the trial is instituted. See Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,766 (Aug. 14, 2012).
23. See, e.g., Notice of Filing Date According to Petition at 2, Printing Indus. of Am. v. CTP Innovations, LLC, No. IPR2013-00489 (P.T.A.B. Aug. 8, 2013), Paper No. 3 (rejecting petition due to exhibits not being labeled correctly).
24. See 77 Fed. Reg. at 48,642 cmt. 144 (noting that final rules do not provide for errata sheets but that parties can arrange a conference call with the PTAB to discuss the necessity of filing them).
25. See supra note 6 and accompanying text.
26. 35 U.S.C. § 315(e). Note that estoppel is for any claim the petitioner “raised or reasonably could have raised.”
27. See id. § 318(a).
28. Bettcher Indus., Inc. v. Bunzl USA, 661 F.3d 629, 642–43 (Fed. Cir. 2011) (holding “this court agrees with Bunzl that the estoppel provision of § 315 [pre-America Invents Act] is triggered not when examination is completed but only after all appeal rights have been exhausted”).
29. See supra notes 14–17 and accompanying text.
30. 35 U.S.C. § 311(b) (“A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”).
31. Id. § 315(e) (stating that estoppel applies only to any claim that the petitioner “raised or reasonably could have raised” during the IPR).
32. Id. § 317(a) (“If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).” (emphasis added)); see also 37 C.F.R. § 42.72; Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012); Judgment on Termination of the Proceedings, Hyundai Motor Am., Inc. v. Clear with Computers, LLC, Nos. IPR2013-00104, -00176 (P.T.A.B. July 1, 2013), Paper Nos. 18 & 20 (terminating IPRs due to settlement between the parties); Order on Conduct of the Proceedings at 2, Macauto U.S.A. v. BOS GmbH & KG, No. IPR2012-00004 (P.T.A.B. Feb. 4, 2013), Paper No. 21 (quoting Rule 42.72 (“The Board may terminate a trial without rendering a final written decision . . . .”) (stating that “termination of a proceeding is discretionary with the Board is confirmed by Rule 42.72”)).
33. See 37 C.F.R. § 42.51.
34. See Decision on Motion for Additional Discovery at 7, Bloomberg Inc. v. Markets-Alert Pty Ltd., No. CBM2013-00005 (P.T.A.B. May 29, 2013), Paper No. 32 (allowing additional discovery of documents reviewed or considered by a declarant in preparing his declaration for the CBM).
35. Decision on Motion for Additional Discovery, supra note 12, at 8 (stating that “[t]he mere possibility of finding something useful, and mere allegation that something useful will be found, are insufficient to demonstrate that the requested discovery is necessary in the interest of justice”).
36. 35 U.S.C. § 313; 37 C.F.R. § 42.107(b).
37. 37 C.F.R. § 42.107(c), (d).