United States: Ten Key Board Decisions In 2015 – Part Two

In part two of this series, we continue to review the most important, or at least most interesting PTAB decisions of 2015. Part one can be found here.

6.) MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (Jul. 15, 2015)

The Board designated its MasterImage Order as "representative" on the issue of motions to amend and clarified that the burden is on the Patent Owner to demonstrate that the proposed amendments are patentable over the prior art of record and also prior art known to patent owner. Citing Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 26, the Board defined "prior art of record" as "a) any material art in the prosecution history of the patent; b) any material art of record in the current proceeding, including art asserted in grounds on which the Board did not institute review; and c) any material art of record in any other proceeding before the Office involving the patent." The other category, "prior art known to the Patent Owner", is equivalent to "[n]o more than the material prior art that Patent Owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the Office under 37 C.F.R. § 42.11." According to the Board, once the Patent Owner makes a prima facie case of patentability, the burden shifts to the Petitioner to rebut the arguments but the ultimate burden, however, remains with the Patent Owner.

Many believed that MasterImage was a signal from the Board that it was lessening the requirements placed on Patent Owners to encourage more motions to amend, and while the data seems to be trending in that direction, the number of motions to amend is too small so as to be significant. Only 22 motions to amend were filed in 2015 after the MasterImage decision, which is only three more than the 19 filed during the same time period in 2014.

7.) ServiceNow, Inc. v. BMC Software, Inc., CBM2015-00107, Paper 12 (Sep. 11, 2015)

This case is important for its detailed analysis of what constitutes a Covered Business Method (CBM). The PTAB denied institution of a CBM petition because Petitioner failed to show that the patent is a covered business method patent. In doing so, the Board highlighted that the analysis should focus on the claims, not on exemplary teachings in the specification.

8.) LG Electronics, Inc. v. Mondis Technology Ltd., IPR2015-00937, Paper 8 (Sep. 17, 2015)

In past decisions, the Board has found that service of a subsequent complaint for infringement of a patent does not restart 35 U.S.C. § 315(b)'s one-year window for a petitioner to file an IPR petition after being served with an earlier complaint for infringement, unless the earlier complaint is dismissed without prejudice, leaving the parties as though the action had never been filed. See, e.g., Macauto U.S.A. v. BOS GmbH & KG, IPR2012-00004, Paper No. 18 at 15 (Jan. 24, 2013);Universal Remote Control Inc. v. Universal Elecs. Inc., IPR2013-00168, Paper No. 9 (Aug. 26, 2013). In LG Electronics, the Board reiterated this reasoning and designated its decision precedential.

9.) Coalition for Affordable Drugs VI, LLC (Kyle Bass) v. Celgene Corp., IPR2015-01092, Paper 19 (Sep. 25, 2015)

Perhaps no petitions for IPR have raised more controversy than those filed by the Coalition for Affordable Drugs and hedge fund manager Kyle Bass. The Coalition has filed multiple petitions for IPR against the patents of various drug companies, unapologetically using the petitions as part of an investment strategy to hurt stock prices of targeted companies and profit by short selling its stocks. In this case, Celgene filed a motion for sanctions alleging abuse of process. In deciding against Celgene, the Board held that Congress did not limit inter partes review proceedings to parties having a competitive interest in the patent. According to the Board, "Congress intended inter partes reviews to allow parties to challenge a granted patent as an expeditious and less costly alternative to litigation . . . [and] the AIA sought to establish a more efficient and streamlined patent system that improved patent quality, while at the same time limiting unnecessary and counterproductive litigation costs." The Board declined to take a position as to the merits of Mr. Bass's strategy but noted that "profit is at the heart of nearly every patent and nearly every inter partes review."

10.) Microsoft Corp. v. Proxyconn, Inc., IPR2012-00026, IPR2013-00109, Paper 80 (Dec. 9, 2015)

This decision goes down in infamy as the first decision of the Board following remand from the Court of Appeals for the Federal Circuit (CAFC). In the original February 19, 2014 decision (Paper 73), the Board found claims 1, 3, 6-7, 9-12, 14, and 22-23 unpatentable as anticipated, claims 1, 3, and 10 as obvious, and that Microsoft had not established that claim 24 was unpatentable. After finding that claims 6, 7, and 9, among others were anticipated, the Board declined to address the ground that claims 6, 7, and 9 were also obvious. Both parties appealed to the CAFC.

On June 19, 2015, the CAFC concluded that the Board had erred in its claim construction and vacated the determinations that claims 1, 3, 6-7, 9-10, 22, and 23 were not patentable, and remanded "for proceedings consistent with this opinion." The CAFC affirmed the finding of unpatentability of claims 11-12, and 14, and the determination that claim 24 was patentable.

On remand, the Board ordered the parties to file briefs on the effect of the Federal Circuit's decision. Microsoft limited its challenge to  obviousness of claims 1, 3, 6, 7, 9, and 10 and anticipation of claims 22 and 23.

With this decision, the Board again found claims 1, 3, 6-7, 9-10, 22, and 23 unpatentable. The Board found that there was nothing improper about finding the claims unpatentable on a different ground than in its original decision because the ground was present in the Petition and Microsoft relied on the same claim charts and declaration as filed with the Petition; therefore, the argument was not "new". Moreover, since the Board did not reach the merits of the argument in its Final Written Decision, there was no final decision to appeal, nothing prevented the Board from deciding the issue on remand.

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