United States: PTAB Cases You Should Know

Last Updated: February 23 2018
Article by Julianne M. Hartzell

The Federal Circuit, Supreme Court, and PTAB have been addressing a number of big issues in 2017 and 2018. Here are the cases you should know.

Recent Decisions

Appeal of PTAB Institution Decisions

After years of decisions applying a hardline rule that the PTAB's decision whether or not to institute an IPR was not subject to appeal, the Federal Circuit held en banc, that the issue of whether a petitioner is time-barred from filing an IPR petition under 35 U.S.C. § 315(b) – the one year time bar after an infringement claim has been brought – can be appealed to the Federal Circuit. Wi-Fi One LLC v. Broadcom Corp., Nos. 15-1944, 15-1945, and 15-1946 (Fed. Cir. Jan. 8, 2018) (discussed here). The court determined that § 315(b) creates a condition precedent to the Director's authority to make an institution decision. This decision is expected to result in additional appellate challenges to other institution determinations that do not relate directly to the merits of the claims.

Amendment of Claims

After years of complaints that the burden placed on patent owners for motions to amend claims during post-grant proceedings was too high, the Federal Circuit held that the Board could not place the burden of persuasion with respect to the patentability of substitute claims on the patent owner. Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (discussed here and here). In response, the PTAB's Chief Administrative Patent Judge issued a memorandum providing guidance on motions to amend and stating that the board will determine whether substitute claims comply with 35 U.S.C. § 316(d) by a preponderance of the evidence based on the entirety of the record. Our summary of the guidance is provided here.

Institution of multiple petitions challenging the same patent

In an effort to conserve the Board's resources and prevent inequity to the patent owner, the Board set forth guidance for its use of discretion regarding when to institute when multiple petitions have been filed challenging the same patent. General Plastic Industrial Co. Ltd. v. Canon Kabushiki Kaisha, case numbers IPR2016-01357, IPR2016-01358, IPR2016-01359, IPR2016-01360, and IPR2016-01361 Paper 19 (Sept. 6, 2017). The case was decided by an expanded panel due to its exceptional importance, and the decision was designated precedential. The opinion outlines seven factors to be used as a baseline for making this determination. These factors include:

  1. whether the same petitioner previously filed a petition directed to the same claims of the same patent;
  2. whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
  3. whether at the time of filing of the second petition the petitioner already received the patent owner's preliminary response to the first petition or received the Board's decision on whether to institute review in the first petition;
  4. the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
  5. whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
  6. the finite resources of the Board; and
  7. the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.

Eligibility for CBM Review

Again following years of the PTAB's application of a rather expansive definition of CBM eligibility, the Federal Circuit clarified that CBM review is only available where the claimed invention is used in the practice, administration, or management of a financial product or service. SecureAxcess, LLC v. PNC Bank National Ass'n, et. al, 848 F.3d 1370, 1378-1381 (Fed. Cir. 2017); see also Unwired Planet, LLC v. Google, Inc., 841 F.3d 1376, 1379-82 (Fed. Cir. 2016). This review does not include inventions that are incidental or complementary to a financial activity. Additional PTABWatch coverage of this issue can be found here and here. Both cases have petitions for cert. pending before the Supreme Court. The Board also issued a precedential decision (designated on Dec. 21, 2017) that clarified that the determination of eligibility for CBM review is based on what the patent "claims" at the time of the institution decision. Facebook v. Skky, CBM2016-00091, Paper 12 (Sept. 28, 2017). Claims that are statutorily disclaimed after a petition is filed are treated, for purposes of CBM eligibility, "as if they never existed."

Previously Asserted Art

The PTAB designated three decisions as informational that address the PTAB's authorization to reject petitions under 35 U.S.C. § 325(d) on the grounds that they assert art or arguments that are the same or substantially the same as those previously presented to the Patent Office.

In Unified Patents Inc. v. Berman, Paper 10, No. IPR2016-01571 (December 14, 2016), the Board held that all three grounds raised by petitioner relied on the same primary reference that had been used by the examiner and, while a new reference was combined with that art for two grounds, that new reference was relied upon in substantially the same manner as the original reference was relied upon in prosecution. For that reason, the board denied institution on those two grounds.

In Hospira, Inc. v. Genentech, Inc., Paper 16, No. IPR2017-00739 (July 27, 2017), petitioner challenged the priority claimed in the patent. The PTAB determined that the examiner had already fully considered the written description and enablement issues relating to the claim of priority and that the petitioner presented no new evidence or arguments.

In Cultec, Inc. v. Stormtech, LLC, Paper 7, No. IPR2017-00777 (August 22, 2017), the Board denied institution where the primary references relied upon by the petitioner were presented during examination through a third party submission by the petitioner's counsel. These cases exemplify the need to assert materially different arguments in IPR than those made during prosecution.

Another Board decision, Juniper Networks, Inc. . Mobile Telecomms. Techs., LLC, IPR2017-00642, Paper No. 24 (July 27, 2017), identified six factors that have been applied in previous Board decisions to analyze § 325(d). Those factors include:

  1. the similarity of the now-asserted art and the art before the examiner,
  2. the extent the art was considered during examination, including whether it was the basis for a rejection, the asserted art was the basis for a rejection,
  3. the cumulative nature of the asserted art and the art considered during examination,
  4. whether the petitioner explained how the Examiner erred,
  5. the overlap between the petitioner's arguments and the arguments made during examination, and
  6. the extent that additional evidence and facts in the petition warrant reconsideration of the prior art.

Standing to Appeal

Although "any person who is not the owner" may petition for institution of an IPR or PGR, the Federal Circuit clarified that, in order to appeal a decision of the PTAB to the federal courts, one must have Article III standing. Thus, one must show invasion of a legally protected interest that is concrete and particularized or actual and imminent to have standing. Phigenix, Inc. v. ImmunoGen, Inc., 845 F.3d 1168, 1171-1172 (Fed. Cir. 2017). As a result, one may be able to bring an IPR or PGR petition, but have no standing to appeal any resulting decision.

APA Compliance by the PTAB

In recent cases, the Federal Circuit has considered challenges to the PTAB's compliance with the Administrative Procedure Act. This Act governs the internal procedures of federal agencies that engage in rulemaking or provide formal administrative adjudications. The APA requires that parties be given notice of the facts and the arguments and that an administrative agency must articulate logical and rational reasons for the decision. Challenges to compliance with the APA are reviewed de novo, increasing the likelihood that an appeal will be successful.

The Federal Circuit found that the Board failed to provide notice when it did not allow the patent owner an opportunity to respond to the Board's reliance on prior art that had not previously been discussed in connection with certain claims (EmeraChem Holdings LLC v. Volkswagen Group of America, 859 F.3d 1341, 1348-1352 (Fed. Cir. 2017)) and when it did not allow the patent owner to respond to arguments made by the petitioner for the first time in its reply brief (In re Nuvasive, 841 F.3d 966, 971-973 (Fed. Cir. 2016)).

The Federal Circuit found that the Board failed to properly articulate a basis for its decision in Ultratec, Inc. v. CaptionCall, LLC, 872 F.3d 1267, 1272-1275 (Fed. Cir. Aug. 28, 2017) [discussed here. In that case, the Board refused to consider inconsistencies between the petitioner's expert's trial testimony and his written declarations submitted in the IPRs. The patent owner moved to supplement the record with this inconsistent testimony, but because it failed to seek authorization to file the motion, the Board refused to accept it. The Board set out its refusal in a conference call. The Federal Circuit found that the Board abused its discretion in refusing to admit and consider the trial testimony and in refusing to explain its decision. The court explained that the Board lacked the information necessary to make a reasoned decision, denied a request to admit evidence without ever seeing the evidence it was denying, made significant evidentiary decisions without providing an explanation or reasoned basis, and impeded meaningful appellate review by failing to provide a Board order explaining its denial and excluding the testimony at issue from the record. Because the Board relied heavily on the challenged expert testimony in reaching its written decision, the Board decision was vacated.

Joinder/Expanded Panels

There has been some controversy about the Board's use of expanded panels, with critics arguing that the PTAB is improperly influencing the outcome of certain cases by loading the panels with APJs expected to decide in favor of a predetermined outcome. While the Federal Circuit has acknowledge the Board's authority to designate expanded panels, Judges Dyk and Wallach identified potential concerns about this practice questioning whether expanded panels are the appropriate means to maintain uniformity of decisions. Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. Ltd., Appeal 2016-2321 (Fed. Cir. Aug. 22, 2017). Our earlier discussion of the case can be found here. The issue also arose during Supreme Court oral arguments in the Oil States case discussed further below. The questions addressing the issue seemed to raise concerns about the propriety of the practice, but it was not directly at issue in the case.

Sovereign Immunity

In view of the recent, controversial efforts by some patent owners to assign their patents to entities that enjoy sovereign immunity, some recent PTAB decisions have placed limits on the scope of sovereign immunity in IPR proceedings. As previously discussed on PTABWatch, the PTAB has placed limits on the scope of sovereign immunity to restrict PTAB review. In Ericsson v. Regents of the University of Minnesota, IPR2017-01186, -01197, -01200, -01213, -01214, and -01219 (Dec. 19, 2017), the Board decided that sovereign immunity with respect to an IPR proceeding is waived when the patent owner files an infringement action against the Petitioner. In Reactive Surfaces Ltd., LLP v. Toyota Motor Corp., Case No. IPR2017-00572 (July 13, 2017), discussed here, the Board acknowledged that sovereign immunity may be asserted by a state university in an IPR, but held that an IPR may continue against a non-sovereign co-owner of the challenged patent.

Patent Owner Estoppel

While the vast majority of PTAB and district court cases addressing IPR estoppel have been focused on the estoppel effect on petitioners, a few recent decisions have discussed the scope of patent owner estoppel. As described more fully in our previous coverage, 37 C.F.R. § 42.73(d)(3)(1) provides that a patent owner is precluded from taking action inconsistent with an adverse judgment, including obtaining in any patent a claim that is not patentably distinct from a finally refused or canceled claim. In Arthrex, Inc. v. Smith & Nephew, Inc., No. 2017-1239 (Fed. Cir. Jan. 24, 2018), the Federal Circuit affirmed the PTAB's entry of adverse judgment against the patent owner where Arthrex had disclaimed all challenged claims before the PTAB's institution decision. Arthrex argued that those claims, which had been disclaimed were not "in the trial" because no institution decision had been made on the merits. The Federal Circuit held that an adverse judgment may be entered "during a proceeding" which includes the period prior to an institution decision.

Petitioner Estoppel

The Board and the district courts have been working to define the scope of estoppel. We have previously summarized the current state of estoppel here.

Cases to Watch

Oil States Energy Services LLC v. Greene's Energy Group, LLC, 16-712 (S.Ct.) – In Oil States, the patent owner challenges the post-grant proceedings (specifically inter partes review) implemented in the America Invents Act. Oil States argues that patents grant a private property right that cannot be taken by the patent office, an administrative body. Rather, Oil States argues that patent owners have a 7th Amendment right to a jury trial in any instance in which that private property right is being taken and that an Article III judge must preside over any such proceeding. The Supreme Court heard oral argument on November 27, 2017, and a decision is expected soon. The Court's questions at oral argument indicated a divide among the Justices seeking to balance the rights of a patent owner in an issued patent and the scope of Congress's ability to establish limits on that right. We have previously covered the issues raised in the case here. If the Supreme Court agrees with Oil States, it is difficult to see how IPR proceedings (and likely post-grant proceedings and CBMs) can continue before the PTAB. The effect of such a decision would be wide-reaching.

SAS Institute, Inc. v. Matal, 16-969 (S.Ct.) – In SAS, the petitioner argues that the PTAB does not have the authority to make institution decision as to only a subset of claims challenged by a petition, but must instead issue a final written decision on all challenged claims. The Supreme Court heard oral argument on November 27, 2017, and a decision is expected soon. Justice Sotomayor set the tone for this argument with her opening line of questioning characterizing SAS's requested relief as an attempt to "get around Cuozzo" and provide an alternative means for appellate review of the denial of institution by requiring that every claim challenged by the petitioner must be addressed in the final written decision. We have previously covered the issues raised in the case here.

GoPro, Inc. v. Contour IP Holding LLC, 17-1894 (Federal Circuit) – The PTAB concluded that GoPro failed to prove that the challenged claims were unpatentable in view of a Go-Pro product catalog that was distributed at an action sports trade show. The PTAB concluded that GoPro had not shown that the reference was publically accessible and that a person interested and ordinarily skilled in the art could have obtained a copy of the product catalog at the trade show. Our earlier summary of the case is available here. GoPro has filed an appeal of the Board's decision. The case is set for oral argument on March 9, 2018.

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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