IP Newsflash - August 2014

by Akin Gump Strauss Hauer & Feld LLP

Court Denies Stay Pending Inter Partes Review in Light of Previous Unsuccessful Petition Filed by Third-Parties

On July 17, 2014, Judge John Heyburn of the Western District of Kentucky denied the Defendant’s motion to stay the action pending inter partes review of the two patents-in-suit. The court based its denial, in part, on the Patent Trial and Appeals Board’s (“Board”) previous decision not to institute inter partes review filed by a third-party.

On May 9, 2014, CTP Innovations, LLC (“Plaintiff”) filed a complaint accusing VG Reed and Sons, Inc. (“Defendant”) of infringing two patents directed to publishing and printing technology. A third-party, Printing Industries of America (PIA) had previously filed inter partes review petitions challenging the validity of the patents-in-suit. In December 2013, the Board denied those petitions, finding that PIA had not demonstrated that there was a reasonable likelihood it would prevail with respect to invalidating at least one claim of the patents-in-suit. Thereafter, on May 20, 2014, other third-parties (i.e., Eastman Kodak Co., Agfa Corp., Esko Software BVBA and Heidelberg, USA) filed four more inter partes review petitions directed to the two patents-in-suit (two petitions for each patent). Based on these four inter partes review petitions, Defendant moved to stay the district court litigation pending a final written decision by the Board.

The court denied the motion after considering the totality of the circumstances, including the following three factors: (1) whether the stay will unduly prejudice the non-moving party; (2) whether the stay will allow for simplification of the issues in the litigation and/or clarify some of the issues; and (3) whether the particular stage in the litigation makes a stay convenient. Although the stay motion was filed early in the litigation (i.e., one month after filing of the complaint), the court stated that a stay would unfairly prejudice Plaintiff because the inter partes review proceedings could stretch as far as November 2015 and because the previous denial to institute inter partes review makes it “seem even less likely that the current petition[s] would succeed.” The court did note, however, that it could potentially review its denial of a stay if the Board were to issue a decision that changes any of the court’s assumptions or the status of the overall dispute.

CTP Innovations, LLC v. VG Reed and Sons, Inc., No. 3-14-cv-00364 (WDKY July 18, 2014, Order)

- Author: Ashraf A. Fawzy

An Eastern District of Texas Decision Finds Judicial Economy Less Significant in its Venue Transfer Analysis

On July 29, the Magistrate Judge in American Vehicular Sciences LLC v. Kia Motors Corp. et al., ruled in favor of transfer primarily because more evidence was in the transferee venue than in Texas. In doing so, the court followed the Federal Circuit’s guidance of tuning out evidence outside of the transferor and transferee forums. AVS v. Kia Motors Corp. et al., at p. 4, citing, In re Toyota Motor Corp., 747 F.3d 1338, 1340 (Fed. Cir. 2014) (“comparison between the transferor and transferee forums is not altered by the presence of other witnesses and documents in places outside both forums”). Notably, the court reversed its own earlier conclusions that presence of evidence outside of both forums made the factor neutral.

Moreover, the court minimized the significance of the judicial economy factor in arriving at its decision. Although the court found that judicial economy “weighed against transfer,” it did not think this factor was significant enough to merit keeping the case in EDTX. After finding the other two private interest factors, (1) availability of compulsory process, and (2) cost of attendance, favored neither party, the court stated that “it appears that no meaningful factors favor retaining [the movants] in the Eastern District of Texas.” AVS v. Kia Motors Corp, at pp. 4-5, citing, In re Morgan Stanley, 417 Fed. Appx. 947, 949 (Fed. Cir. 2011) (“the proper administration of justice may be to transfer to the far more convenient venue” despite the considerations of judicial efficiency).

American Vehicular Sciences LLC v. Kia Motors Corporation et al. (6:13-cv-00148) (EDTX July 29, 2014, Order) (Love, J)

- Author: Samar Shah

District Court Reaffirms Availability of Laches Defense in Patent Cases Post-Petrella

On July 24, 2014, Judge Otis Wright, II granted plaintiff’s motion for reconsideration of the court’s order granting summary judgment on defendant’s laches defense. After reconsidering his prior opinion, he nevertheless reaffirmed its previous order, noting that laches remains a viable defense in patent infringement cases.

The court’s original summary judgment order was handed down ten days before the Supreme Court decided Petrella v. Metro-Goldwin-Mayer, Inc., 134 S. Ct. 1962 (2014), regarding laches defenses in copyright cases. The Supreme Court held that a laches defense cannot be used to defeat a claim filed within the Copyright Act’s three-year statute of limitations. Id. at 1967.

Plaintiff filed his motion to reconsider its prior ruling, arguing that Petrella materially changes the controlling law of laches set forth by the Federal Circuit in A.C. Aukerman Co. v. R.L. Chaides Construction Co. 960 F.2d 1020 (Fed. Cir. 1992). In its motion, plaintiff contended that he should be able to go forth with his infringement claims because Petrella prohibits courts from allowing a finding of laches to shorten a congressionally-defined limitations period.

The court, however, disagreed. In its opinion, the court noted that there were differences between the Copyright Act’s statute of limitations and § 286, which only limits damages to six years before the filing of a case. Unlike the Copyright Act’s statute of limitations, § 286 does not function to bar patent infringement suits. In addition, the court noted that while the decision in Petrella was confined to laches in the copyright context, the Supreme Court explicitly commented on laches with respect to patent law. In doing so, the Supreme Court stated that it did not have occasion to review the Aukerman decision. See Patrella, 134 S. Ct. at 1974 n.15. Accordingly, Judge Wright held that the Supreme Court left Aukerman standing as controlling law, and reaffirmed its previous order granting defendant’s laches defense.

Reese v. Spring Nextel Corp., No. 2:13-cv-03811 (C.D. Cal. July 24, 2014, Order) (Wright, II, J.)

 - Author: Romeao J. Jennings


PTAB Denies Inter Partes Review for Administrative Efficiency Reasons

On July 23, 2014, the Patent Trial and Appeal Board denied institution of an inter partes review of U.S. Patent No. 6,823,269 B2, owned by Westinghouse Electric Company, for reasons of administrative efficiency. The involved patent relates to techniques used in the inspection of tubing found in nuclear reactors and covers “a method of synthesizing nondestructive examination data of a component.”

Citing 35 U.S.C. § 312(a)(3), the Board stated that to be considered for inter partes review, the petitioner must identify, “in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim.”

According to the PTAB, the petitioner Zetec presented at least 127 different grounds of unpatentability and failed to fully develop any of the grounds. The Board found that petitioner failed to cite any portion of the specification of the ’269 Patent or provide any other evidence as to why the proffered constructions reflect each term’s ordinary and customary meaning. Additionally, the Board found that while the petitioner listed, in a summary fashion, 68 grounds of unpatentability, those grounds rely on one or more of fourteen references. Therefore, the Board concluded that Zetec asserted no fewer than 127 grounds of unpatentability with minimal analysis.

In its decision, the Board stated that it  “decline[d] to expend our resources scouring the numerous grounds for one that demonstrates a reasonable likelihood that petitioner would prevail in showing unpatentability of at least one of the claims.” Attempting to do so in the mere three-month statutory timeframe would “undermine the board's ability to complete determinations regarding other petitions awaiting decisions on institution and to complete instituted trials in the time periods mandated by Congress,” the Board said.

Zetec, Inc. v. Westinghouse Electric Company, LLC, IPR2014-00384 (PTAB July 23, 2014).

 - Author: John K. Grantham


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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