Inter Partes Review (“IPR”) proceedings are proving to be a highly cost efficient means to challenge patent claims as either lacking novelty under 35 U.S.C. § 102 or as being obvious under 35 U.S.C. § 103. However, a challenger’s ability to obtain institution of an IPR, and ultimately succeed on the merits, can be highly dependent on the facts that are entered into the record of the proceeding. One effective way for a challenger to gain entry of facts material to its position is to include a Statement of Material Facts in its IPR petition. As recently clarified by the Patent Trial and Appeal Board (“PTAB”), the inclusion of such a statement in an IPR petition places the onus on the patent owner to either admit or deny the stated facts (or contend that it has insufficient information to either admit or deny the facts) if the patent owner elects to file an optional patent owner preliminary response prior to institution of the IPR.
Pursuant to the Patent Office’s umbrella rules for trial practice and procedure before the PTAB, the contents of a petition “may include a statement of material fact[s].”1 These rules are silent, however, as to the responsibility of the patent owner to respond to the statement of material facts should the patent owner file a preliminary response to the petition. According to the rules, the patent owner may file an optional preliminary response to a petition no later than three months after the date of a notice indicating that the IPR petition has been granted a filing date.2 This optional preliminary response is limited to setting forth the reasons why the IPR should not be instituted.3 In arguing why the proceeding should not be instituted, the preliminary response cannot include any new testimonial evidence or amendments.4 However, the patent owner may file a statutory disclaimer in the preliminary response to disclaim one or more claims such that no IPR will be instituted with respect to the disclaimed claims.5
Whether a patent owner must respond to a statement of material facts in an IPR petition was resolved by the PTAB in two related IPR’s, IPR Nos. IPR2013-00080 and IPR2013-00081. In these two IPR’s, petitioner Apple, Inc. challenged U.S. Patent Nos. 6,173,4036 and 5,982,889.7 Prior to institution of theses IPRs, a conference call was conducted between the petitioner, the patent owner, and the PTAB administrative judges to discuss the patent owner’s request to file certain motions. During the conference call, the patent owner asked whether it must respond to the statement of material facts included in the petition if it chose to file a preliminary response and whether those facts will be deemed admitted if it does not. The PTAB explicitly ruled that the patent owner must respond to petitioner’s statement of material facts if a preliminary response is filed:
Under 37 C.F.R. § 42.107(a), a patent owner may, but is not required to, file a preliminary response. Should Patent Owner choose to file a preliminary response, however, Patent Owner must respond to Petitioner’s statement of facts by admitting or denying each fact, or stating that the fact cannot be admitted or denied based on information available at this point in time. A response to a petition’s statement of facts is not counted toward the page limit for a preliminary response. 37 C.F.R. § 42.24(b).8
A patent owner’s denial of a petitioner’s statement of material facts is, however, not an absolute bar to admission of such facts. Although the PTAB will not admit as facts for the record any facts denied by the patent owner, the PTAB will consider the factual record as a whole when determining whether to institute an IPR:
While we do not deem any facts denied by Patent Owner as admitted for purposes of this proceeding, we consider the factual record as a whole (including Petitioner’s arguments in the Petition, Petitioner’s statement of material facts, Patent Owner’s arguments in the preliminary response, and Patent Owner’s response to the statement of material facts) in determining whether Petitioner has met the threshold standard for instituting an inter partes review.9
For example, in assessing whether a particular fact should contribute to the institution of an IPR, the PTAB will consider evidence presented in the petition and preliminary response, such as statements, admissions and arguments made by the petitioner or patent owner concerning the asserted fact in question and the parties’ interpretations of the related evidence. In contrast, failing to deny a fact in a petitioner’s statement of material facts will result in that fact being admitted into the record, without an evaluation of the veracity of the asserted fact by the PTAB.
Given that a patent owner’s preliminary response, while voluntary, must admit or deny each statement of material fact included in a petition (or contend that it has insufficient information to either admit or deny the fact), a patent owner must evaluate the value and risk of submitting such a voluntary response. However, denying a fact will not prevent consideration of the fact by the PTAB. Instead, it will prompt the PTAB to evaluate petitioner’s and patent owner’s arguments regarding the admissibility of the fact and whether it should factor into the decision to institute the IPR or any subsequent decision by the PTAB. Thus, the patent owner should evaluate the strength of its arguments when filing its preliminary response, as simply denying a fact will not prevent it from factoring into the PTAB’s decisions. For example, in IPR2013-00080 petitioner included in a statement of material facts that the scope of the claim term “authentication code” included certain digital codes described by the prior art based on the patent owner’s construction of such claim term. In response, the patent owner denied that statement of material facts as legal conclusions based on facts yet to be determined. However, the PTAB, in view of the totality of the record, agreed with petitioner’s characterization of the claim term.10 Thus, petitioners may have much to gain, and little to lose, by including a statement of material facts in an IPR petition. At best, the facts will be admitted by the patent owner. At worst, the facts are denied, but the PTAB is still within its rights to consider the petitioner’s arguments concerning the facts when deciding whether to institute the IPR and when rendering its final decision.
1See 37 C.F.R. 42.22(c).
2See 37 C.F.R. 42.107(b).
3See 37 C.F.R. 42.107(a).
4See 37 C.F.R. 42.107(c) and (d).
5See 37 C.F.R. 42.107(e).
6See Apple Inc. v. Achates Reference Publishing, Inc., IPR2013-00080.
7See Apple Inc. v. Achates Reference Publishing, Inc., IPR2013-00081.
8See IPR2013-00080 and IPR2013-00081, Order Authorizing Motion for Additional Discovery 37 C.F.R. § 42.51(b)(2), at 3.
9See IPR2013-00080, Decision Institution of Inter Partes Review 37 C.F.R. § 42.108, at 22-23.
10See IPR2013-00080, Final Written Decision 35 U.S.C. § 318(a) and 37 C.F.R. § 42.73, at 20-22.