In a decision entered last week, the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office made clear its intention going forward to weigh seven factors in determining whether to deny follow-on inter partes review (IPR) petitions.

On September 6, 2017, the Board entered a decision denying Petitioner General Plastic Industrial Co., Ltd.'s requests for rehearing five related IPR proceedings.  General Plastic first filed a set of IPR petitions challenging two of Canon Kabushiki Kaisha's patents, after which the Board denied institution on the merits.  Nine months later, they filed five follow-on petitions challenging the same patents.  The Board did not institute any of the follow-on petitions.

As a general matter, a petitioner's burden of proof for institution of an IPR is set forth in 35 U.S.C. § 314(a):

The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.

In its rehearing requests, General Plastic argued that the Board erroneously relied on § 314(a), asserting that the application of § 314(a) to follow-on petitions "conflicts with the express wording" of 35 U.S.C. § 325(d), under which the Board is granted the discretion to deny institution when "the same or substantially the same prior art or arguments previously were presented to the Office."  General Plastic further argued that the Board's rationale in denying its follow-on petitions created, in essence, a rule that petitioners could not use follow-on petitions to challenge the same patent more than once.

In its decision denying the requests for rehearing, the Board noted that the express language of both § 314(a) and § 325(d) commits institution of review to the Director's -- and thus, the Board's -- discretion, and provides no requirement that, in certain scenarios, review must be instituted.  Along the same lines, the Board also noted that "[t]here is no per se rule precluding the filing of follow-on petitions after the Board's denial of one or more first-filed petitions on the same patent," and further acknowledged that "there may be circumstances where multiple petitions by the same petitioner against the same claims of a patent should be permitted, and that such a determination is dependent on the facts at issue in the case."  Specifically, the Board pointed to seven factors that it has consistently weighed in analyzing the facts of a case and determining whether to exercise its discretion in denying follow-on petitions:

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.

The Board highlighted the goals of some of these factors, noting that it formulated the factors "to take undue inequities and prejudices to [the] Patent Owner into account."  Factors 2, 4, and 5, for instance, allow the Board to "assess and weigh whether a petitioner should have or could have raised the new challenges earlier."  And factor 3 allows the Board to assess the potential benefit on the petitioner "from receiving and having the opportunity to study [the] Patent Owner's Preliminary Response, as well as [the Board's] institution decisions on the first-filed petitions, prior to [the petitioner's] filing of follow-on petitions."

Applying all seven factors, the Board had determined that all but factor 7 weighed strongly against instituting General Plastic's follow-on petitions.  For instance, with respect to factor 1, both General Plastic's first petitions and its follow-on petitions challenged the same claims of the same patent.  With respect to factor 6, the Board found that its resources would be "more fairly expended on initial petitions, rather than follow-on petitions."  Further, with respect to factor 3, at the time General Plastic filed the follow-on petitions, they had already received Canon's preliminary response, the Board had already issued its decisions denying institution of the first petitions, and the Board had issued its decisions denying rehearing of those decisions.  And with respect to both factors 2 and 3, the Board considered the nine-month span between the first petitions and the follow-on petitions, noting that General Plastic "provided no meaningful explanation for the delay."

With respect to factors 4 and 5, the Board drew particular attention to the timing of General Plastic's new prior art search, as well as to the "shifts in the prior art asserted and the related arguments in [its] follow-on petitions."  General Plastic had previously stated that they performed "two later searches" that turned up new prior art, which then led to the follow-on petitions.  However, these new prior art searches had not occurred until after the Board had denied institution of the first petitions.  According to the Board, General Plastic's actions in filing multiple petitions against the same claims, but with different arguments brought upon by new prior art, imposed the exact sort of inequities on Canon that the factors were formulated to address in the first place:

Petitioner demonstrated that it found new prior art, but provided no explanation why it could not have found this new prior art earlier—prior to filing the first-filed petitions—through the exercise of reasonable diligence.  We additionally found that Petitioner had modified its challenges in the follow-on petitions in an attempt to cure the deficiencies that the Board identified in its first-filed petitions.  More specifically, the newly-asserted prior art . . . was a shift in Petitioner's positions and arguments from the first-filed petitions based on the analysis articulated in our Decisions Denying Institution of those petitions.  Moreover, the shift in Petitioner's challenges was not the consequence of a position that Patent Owner surprisingly advanced or the Board surprisingly adopted.

Regarding the "should have known" standard for prior art in factor 2, the Board rejected General Plastic's argument that the Board's interpretation of this standard "would be self-defining to be adverse to Petitioners in every instance."  The Board then emphasized the importance of how any prior art references relied on in follow-on petitions must have been able to have been found with reasonable diligence.  While the Board seems willing to accept meaningful explanations as to why new prior art was not found at or before the time of filing a first petition, it noted that "[h]ere, the record is devoid of any explanation why Petitioner could not have found the newly asserted prior art in any earlier search(es) through the exercise of reasonable diligence."  Lastly, the Board rejected General Plastic's argument that the Board did not give enough weight to factor 7.

In recent years, the Board has ranged from weighing only five of these seven factors to weighing all seven.  For example, the Board weighed only factors 1 through 5 when denying a follow-on petition in Xactware Solutions, Inc. v. Eagle View Tech., Inc., IPR2017-00034, Paper 9 (PTAB April 13, 2017).  Whereas, the Board weighed all seven in NVIDIA Corp. v. Samsung Elec. Co. IPR2016-00134, Paper 9 (PTAB May 4, 2016).  Furthermore, while the NVIDIA decision appeared to indicate that these were seven factors that the Board could optionally consider, this new ruling against General Plastic notably emphasized that the Board plans to consider all seven factors in the future:

We recognize, also, that additional factors may arise in other cases for consideration, where appropriate.  However, the [seven] factors . . . , at the very least, serve to act as a baseline of factors to be considered in our future evaluation of follow-on petitions.

With this plan being set, it will be interesting to see how the Board applies the factors in future cases, and to see whether new circumstances in such cases might bring about additional factors.

Before Chief Administrative Patent Judge David P. Ruschke, Deputy Chief Administrative Patent Judge Scott R. Boalick, and Administrative Patent Judges Jameson Lee, Michael R. Zecher, Thomas L. Giannetti, Jennifer S. Bisk, And Sheila F. McShane
Decision Denying Petitioner's Requests for Rehearing by Administrative Patent Judge Mcshane