United States: Guidance From Recent PTAB Expanded Panels On Serial Petitions

In a rare occurrence, the chief judge and deputy chief judge of the Patent Trial and Appeal Board (PTAB) joined panels issuing decisions on the same issue: multiple petitions filed by the same party against previously challenged patents. It is easy to surmise that the board intended to send a message with these expanded panel decisions (one decision was even later designated as informative), but what is that message?

Many have assumed that these two decisions from Chief Judge David P. Ruschke and Deputy Chief Judge Scott R. Boalick slam the door on serial petitions in the trials enacted under the America Invents Act of 2011. Closer review of the board's decisions, however, illustrates that these decisions provide guidance regarding when the board will consider a follow-on petition to be harassment and deny institution. Significantly, the board stated that "there may be circumstances where multiple petitions by the same petitioner against the same claims of a patent should be permitted," but the board "recognize[s] the potential for abuse of the review process by repeated attacks on patents." General Plastic Industrial Co. v. Canon Kabushiki Kaisha, No. IPR2016-01357, slip op. 16–18 (Paper 19) (P.T.A.B., Sept. 6, 2017) (emphasis added).

Here, we examine strategies that petitioners should consider when determining whether to file follow-on petitions and how patent owners might defend against such petitions.

I. The Message from General Plastic & Ziegmann

In August, Joseph Matal, interim director of the U.S. Patent and Trademark Office (PTO) identified that "there has been a fair amount of controversy" regarding serial inter partes review (IPR) petitions but noted that the board continues to issue decisions in this area and "refine the way it exercises its discretion to regulate these [petitions] and prevent ... harassing behavior." Public Patent Advisory Committee (PPAC) Transcript, Aug. 3, 2017, p. 13.

One month later, the board did just that, refining the way it exercises its discretion with respect to follow-on petitions in two cases: General Plastic and Ziegmann, N.P.Z., Inc. v. Stephens. Chief Judge Ruschke expanded both panels "due to the exceptional nature of the issues presented" in these cases. General Plastic, slip op. 4–5.

A. General Plastic, Denial under Section 314(a)

In General Plastic, the expanded panel released a decision, later designated as informative, denying institution of five follow-on IPRs and providing a lengthy explanation of the seven factors the board considers in determining whether to exercise its discretion to deny institution under 35 U.S.C. §314(a). Id. at 8–9. These factors were first set forth in a May 2016 decision by the board in Nvidia Corp. v. Samsung Elec. Co., a decision that went largely unnoticed. No. IPR2016-00134, slip op. 6–7 (Paper 9) (P.T.A.B. May 6, 2016). In General Plastic, the board ultimately determined that six of the seven factors weighed against institution and thereby denied institution. General Plastic, slip op. 18.

The board commented in General Plastic that the seven factors permit the board to assess potential impacts on the efficiency of the IPR process and the fundamental fairness of the process for all parties. Id. at 18. The board recognized the "potential for abuse of the review process by repeated attacks on patents." Id. at 16–17 (emphasis added). "Our intent in formulating the factors was to take undue inequities and prejudices to the Patent Owner into account." Id. at 17. The board warned that there must be restrictions on follow-on petitions to prevent petitioners from strategically staging their prior art and arguments in multiple petitions, using the board's denials as a road map until a ground is found that results in the grant of review. Id. at 17.

B. Ziegmann, Denial Under Section 325(d)

In conjunction with the release of the informative General Plastic decision, an expanded panel released a decision in Ziegmann N.P.Z. Inc. v. Stephens that confirmed a denial of institution under a separate section of the statute, 35 U.S.C. §325(d). No. IPR2015-01860, slip op. 32 (Paper 13) (P.T.A.B. Sept. 6, 2017). Specifically, the board found that the primary reference asserted by the petitioner was previously presented to and considered by the PTO during prosecution.

Section 325(d) gives the board the discretion to deny institution when "the same or substantially the same prior art or arguments previously were presented to the Office." The board held in Ziegmann that a set of prior art or arguments may be considered "substantially the same" if they are "cumulative to or substantially overlap with issues previously considered by the Office with respect to the patent." Id. (emphasis added). The board advised those arguing "substantially the same" to focus on the differences (or lack thereof) between the prior art and arguments in the petition and those previously presented to the PTO. Id. at 8. Furthermore, the board instructed that "previously considered by the Office" includes prior art and arguments submitted in a previous proceeding or prosecution history by either a party or a PTO patent examiner. Id. at 16–70.

II. When Does the Board Rely on §314(a) Versus §325(d)?

These cases highlight that the board relies on two different sections in the statute, either Section 314(a) or Section 325(d), to deny institution. What is the difference, and which section should parties argue to the board?

In most circumstances, Section 325(d) can be seen as a subset of Section 314(a). For example, the petitioner in General Plastic argued that the board's discretion to deny institution under Section 314(a) was preempted by Section 325(d) and that the use of the General Plastic factors was therefore an abuse of discretion. General Plastic, slip op. 12, 19. Petitioner argued that Section 325(d) is a specific statutory section addressing multiple petitions and that the board should use only Section 325(d) to determine whether to institute a follow-on petition. Id. at 12–13. The board did not agree and determined that "§325(d) is not intended to be the sole factor in the exercise of discretion under 314(a)." Id. at 19. The board held that nothing in the statute specifies a circumstance in which review must be authorized but provides the director with discretion to institute inter partes review. Id. at 15, 19, 32.

In Ziegmann, the board's analysis was focused on the extent to which the primary prior art reference had been previously considered by the PTO; thus the board's decision relied only on Section 325(d). Ziegmann, slip op. 15, 19. In contrast, in General Plastic, the board evaluated the potential inequities and prejudices to both parties from multiple perspectives in determining whether to institute review. General Plastic, slip op. 15–22. Parties should anticipate that in most situations, a follow-on petition will be evaluated under Section 314(a) and the seven General Plastic factors, but, as exemplified in Ziegmann, the board places particular emphasis on the extent to which the same or substantially the same prior art or arguments were previously presented to the office.

III. Key Factors to Consider in Attacking or Defending Follow-On Petitions

In view of the board's careful comments regarding follow-on petitions, it is clear that neither General Plastic nor Ziegmann prohibits future follow-on petitions. These decisions highlight, however, the types of circumstances that the board will likely deem to be harassment. See id. at 16–19. We analyze some of the key factors for this determination below.

A. Multiple Petitions Filed Simultaneously

The board typically applies the General Plastic factor analysis to subsequently filed petitions, not those filed on the same day or close to the same day. But c.f. Nvidia Corp, slip op. 12 (in this uncommon decision, the board denied institution under both §314(a) and §325(d)). However, the board has routinely used Section 325(d) to deny institution on some or all grounds in a single petition or family of petitions filed on the same day. See e.g., Hospira, Inc. v. Genetech, Inc., No. 2017-00739, slip op. 19 (Paper 16) (P.T.A.B. July 27, 2017).

Accordingly, parties challenging the same patent from multiple perspectives should consider filing multiple petitions at the same time. Furthermore, parties filing extensive grounds in the same petition or multiple petitions on the same day should consider, in accordance with Ziegmann, emphasizing any differences (or lack thereof) between the prior art and arguments presented in the petition and any previously presented to the office. Ziegmann, slip op. 8.

B. Feedback Loops

For patent owners challenging a follow-on petition, one of the more persuasive arguments for denial is to illustrate that the petitioner is "filing sequential attacks" with "the opportunity to morph positions along the way." General Plastic, slip op. 4–5. The third General Plastic factor considers whether the petitioner received either the patent owner's preliminary response or the board's institution decision on a first petition before filing its follow-on petition. Nvidia Corp., slip op. 6–7.

In one decision denying institution, the board emphasized that "a decision on petition ... is not simply part of a feedback loop by which a petitioner may perfect its challenges through a subsequent filing." Travelocity.com L.P. v. Cronos Tech., LLC, No. CBM2015-00047, slip op. at 13 (Paper 7) (P.T.A.B. June 15, 2015) (emphasis added). Accordingly, patent owners may focus on whether the follow-on petition uses a prior decision by the board or filing by the patent owner as a road map to improve the challenges made by petitioner.

C. Timing of Filing and Explanation of Any Delay

The timing of a follow-on petition is critical to the board's determination on institution, as set forth in the fourth and fifth General Plastic factors. Specifically, the board scrutinizes delay between the filing of a first case and a follow-on petition. In denying institution in Nvidia, the board determined that "[p]etitioner has provided no rationale on why it waited ... more than five months after filing its first petition" to file a follow-on petition. Nvidia Corp., slip op. 11.

Accordingly, petitioners filing a follow-on petition might consider explaining the time elapsed between a first petition and a follow-on petition. In contrast, patent owners should consider challenging the "adequacy" of any such rationales as well as any unexplained time periods.

D. Prior Art Searches

In addition to timing, the board scrutinizes the characteristics of subsequent prior art searches. Petitioners might consider explaining why they did not know, nor should they have known, of the prior art asserted in the follow-on petition. In General Plastic, the board determined that the record was devoid of any explanation as to why the "petitioner could not have found the newly asserted prior art in any earlier search(es) through the exercise of reasonable diligence." General Plastic, slip op. 15–22.

In addition to explaining the timing of the prior art search, petitioners might consider explaining any modifications in the prior art search that occurred after the filing of a first petition. The board noted in General Plastic that the "shift" in the prior art asserted and the arguments was of "particular concern" because the "shift" was based on an analysis articulated in the decision denying institution on the first petition. Id. at 11.

In light of this guidance, patent owners might consider attacking modifications made to petitioner's search strategy that were likely made as a reaction to information learned from either the patent owner or the board in the first proceeding.

E. Surprises Help the Petitioner

A petitioner's follow-on petitions are less likely to be denied if the new challenges were a consequence of a position that patent owner surprisingly advanced or that the board surprisingly adopted in the first proceeding.

Patent owners might consider challenging such allegations of surprise by arguing that petitioner's surprise is unreasonable from an objective perspective in the context of the applicable law and facts. In General Plastic, the board determined that the term "toner supply container" in the claim preamble is a structural limitation; thus, the petitioner's assertion of being surprised by the board giving weight to the term was not reasonable. General Plastic, slip op. 21.

IV. Conclusion

It is clear that no blanket prohibition against follow-on petitions has been delivered by the board's recent expanded panel decisions. Patent owners have received, however, further guidance as to those situations that may be characterized as harassment. Both parties should be mindful of the General Plastic factors when considering whether to file, or how to defend against, a follow-on petition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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