Issue Seven: PTAB Trial Tracker

by Goodwin


Parallel Proceedings

In In re Certain Network Devices and Related Software and Components Thereof, No. 337-TA-935, the U.S. International Trade Commission (“ITC”) had issued a limited exclusion order (“LEO”) and a cease and desist order (“CDO”) prohibiting Arista Networks from the unlicensed importation of certain devices and software that was found to infringe Cisco Systems’ patents.  Subsequently, the Board issued final written decisions finding unpatentable the claims of Cisco Systems’ patents.  Arista therefore moved to suspend or temporarily rescind the LEO and CDO.

The ITC refused, explaining that the “decisions do not constitute a changed circumstance such that the remedial orders should be rescinded.  The legal status of the claims at issue will not change unless and until the United States Patent and Trademark Office issues a certificate cancelling the claims following the exhaustion of all appeals.”  (I.T.C. June 20, 2017, at 2.)

Takeaway:  This case demonstrates that the relative timing of judgments in parallel proceedings can be critical.  Here, the respondent in an ITC case who was found to infringe certain patents was unable to immediately take advantage of the Board’s cancellation of claims of those same patents.  The ITC was unwilling to absolve the respondent of the LEO/CDO based on the Board’s issuance of final written decisions, where the decisions had not yet been appealed, and the time for appeal had not yet expired.  Even further, the ITC referenced issuance of a certificate cancelling the claims following the exhaustion of all appeals.  The PTO is currently working through a backlog of patents that have been finally found to be unpatentable, and issuance of that certificate can take many, many months after the exhaustion of all appeals.

Petitioner Estoppel

In Oil-Dri Corp. of America v. Nestlé Purina Petcare Co., No. 15-1067 (N.D. Ill., Aug. 2, 2017), the court ruled on the scope of estoppel to be applied to the defendant following an unsuccessful IPR petition.  Citing Federal Circuit precedent including Shaw Indus. Grp. v. Automated Creel Systems, 817 F.3d 1293 (Fed. Cir. 2016) and Credit Acceptance Corp. v. Westlake Services, 859 F.3d 1044 (Fed. Cir. 2017), the court ruled as follows:

  • Following Shaw, estoppel from an IPR final written decision does not apply to non-instituted grounds.  In this case, the Board had instituted IPR based on obviousness over a combination of two references taken together, but denied institution of grounds asserting obviousness over the individual references taken alone.  The court found that defendant was estopped from pursuing obviousness arguments based on the combination, but was not estopped as to obviousness based on each reference individually.
  • Estoppel from an IPR final written decision applies to non-petitioned grounds that “reasonably could have been raised” in the IPR petition.  Plaintiff argued that whether a ground “reasonably could have been raised” includes prior art that a “skilled searcher conducting a diligent search reasonably could have been expected to discover.”  (Pg. 20.)  To support their respective positions on this issue, the parties submitted declarations from patent searchers regarding what reasonably could have been found in a prior art search.  The court estopped defendant from raising four references that defendants’ patent searcher conceded could have been located, and reserved judgment on the remaining references until later in the case. 

Takeaway:  We continue to track the development of the contours of estoppel.  As this case pointed out, there is no binding Federal Circuit precedent on whether non-petitioned grounds give rise to estoppel, and various courts have reached different conclusions.  We await the Federal Circuit’s views on this issue.

Board Discretion to Institute Where Same Prior Art or Arguments Were Previously Before the Office

In Juniper Networks, Inc. v. Mobile Telecommunications Techs., LLC, IPR2017-00642 (Paper 24, July 27, 2017), the Board addressed its discretion under 35 U.S.C. § 325(d) to deny institution where “the same or substantially the same prior art or arguments” were previously presented to the Office (e.g. during prosecution of the patent).  Drawing from a collection of other institution decisions, the Board provided the following list of factors the Board will consider in evaluating whether to deny institution based on prior art or arguments that were previously presented to the Office:

  1. The similarity of the asserted art and the prior art involved during examination;
  2. The extent to which the asserted art was considered during examination, including whether the prior art was the basis for rejection;
  3. The cumulative nature of the asserted art and the prior art considered during examination;
  4. Whether Petitioner has pointed out sufficiently how the Examiner erred in its consideration of the asserted prior art;
  5. The extent of the overlap between the arguments made during examination and the manner in which Petitioner relies on the prior art or the applicant’s arguments during examination; and
  6. The extent the which additional evidence and facts presented in the Petition warrant reconsideration of the prior art.

Takeaway:  This decision provides a check-list of factors that the Board will evaluate in determining whether to deny institution based on prior art or arguments that were previously presented to the Office.  Petitioners seeking institution based on grounds similar to those raised during prosecution, and Patent Owners looking to avoid institution in such circumstances, may want to address each of these factors in their filings.

Serial Petitions

In Nautilus Hyosung, Inc. v. Diebold, Inc., IPR2017-00426, the Board denied a second petition filed by a single Petitioner months after having denied a first petition.  (Paper 17, Jun. 22, 2017.)  The Board explained that institution of serial petitions requires “balancing the equities” between the petitioner and patent owner.  In this case, “several factors counsel[ed] against institution.” 

First, Petitioner had previously filed a petition directed to the same claims.  Additionally, the second petition included some of the same prior art references that Petitioner had already relied on in a parallel ITC investigation.  Accordingly, the Board found that the Petitioner already had an opportunity to be heard.  Second, Petitioner offered no reason why its first petition did not include the evidence and arguments that were included in the second petition.  Third, the long delay between the denial of the first petition and Petitioner’s filing of the second petition afforded Petitioner the opportunity to use the Board’s rationale in denying the first petition to prepare its second petition.  Fourth, the Board rejected Petitioner’s argument that a denial of its second petition “would be tantamount to an outright prohibition on subsequent petitions,” noting that the Federal Circuit has recognized the Board’s discretion to deny institution, and the Congressional intent that IPRs not be used to harass patent owners.  (Paper 17, at 16.)   

The Board summed up:  “To be clear, we are not saying that multiple petitions against the same claims of the same patent by the same petitioner are never permitted.  Rather, we look to the particular circumstance of each proceeding, including what rationale a petitioner offers for filing multiple petitions and for the time elapsed between those filings.”  (Id.)   

Takeaway:  The Board will typically scrutinize fairness considerations where a single petitioner files a second petition on a single patent after having its first petition denied.  Absent a compelling reason why the arguments in the second petition could not have been presented in the first petition, petitioners face an uphill battle in securing institution of the second petition.

Timing of Settlement

In Petroleum Geo-Service Inc. v. Westerngeco LLC, IPR2016-00407 and IPR2016-00499, the parties settled their disputes months after the oral hearing, and requested that the Board terminate the IPRs.  The Board granted termination of both IPRs, issuing its order on the statutory deadline for entering a final written decision in one of the IPRs (the final written decision in the second IPR was not due for another 3 weeks).  (Paper 29, July 5, 2017.)  Despite the late date, the Board found that it was appropriate to terminate with respect to both parties because termination promotes efficiency and minimizes unnecessary costs. 

Takeaway:  Early on, there were several examples of the Board refusing to terminate the IPR where the parties requested termination at a late stage of the proceedings.  Here, in contrast, the parties settled just days before the statutory deadline for the completion of one of the IPRs, and the Board nevertheless terminated the review.  Nevertheless, it remains good practice to settle as early in the proceeding as possible, because the closer it gets to the statutory deadline for a final written decision, the parties run the risk that the Board will refuse to terminate and will proceed to final written decision.  For further analysis regarding the impact of timing of settlement on termination of an IPR, see the article “Timing Considerations When Settling Post-Grant Reviews: How Late is Too Late?,” by the undersigned authors, published in the February/March 2017 edition of the NYIPLA’s periodical The Report

Expert Declarations

In Amneal Pharmaceuticals, LLC v. Purdue Pharma L.P., IPR2016-01027, the Board granted Patent Owner’s request to file a sur-reply to the Petitioner’s Reply.  (Paper 31, July 7, 2017.)  Patent Owner explained that Petitioner had relied on one expert declarant in the Petition and on a different expert declarant in its Reply.  According to Patent Owner, the two declarants offered inconsistent opinions, but it did not have an opportunity to point out these inconsistencies.  Following petitioner’s reply, a Patent Owner may file observations on the deposition of the reply declarant, but these observations cannot be argumentative.  The Board granted the request for a sur-reply because it agreed that Patent Owner did not have a suitable vehicle to point out the inconsistencies. 

Takeaway:  Where a petitioner introduces a new declarant in its reply paper, evaluate whether there is any inconsistency between the new declarant’s testimony and that of petitioner’s earlier declarants.  If there is any inconsistency, consider seeking an opportunity for additional briefing to address the purported inconsistency. 

Due Process

In Emerachem Holdings, LLC v. Volkswagen Grp. Of America, Inc., No. 2016-1984 (Fed. Cir. Jun. 15, 2017), the Federal Circuit vacated and remanded a portion of the Board’s Final Written Decision in IPR2014-01558, because the Patent Owner did not have notice of, and a chance to respond to, the specific combination of prior art references that the Board used to find the claims unpatentable. 

In the IPR, the Petitioner had stated that the claims “are obvious under 35 U.S.C. § 103(a) over the combination of Campbell and either Hirota or Saito, in view of Stiles.”  For claims 3, 16, and 20, the petition included a claim chart that cited only Saito (not Stiles), whereas it cited Stiles for other claims.  The Board’s institution decision declared that all challenged claims were likely unpatentable over “Campbell, Hirota, Saito, and Stiles,” but like the petition, cited only Saito (not Stiles) in the detailed analysis of claims 3, 16, and 20.  Nevertheless, in its Final Written Decision, the Board found claims 3, 16, and 20 obvious over a combination that included Stiles, not Saito.  Given the specificity in the petition’s claim chart and the institution decision, which identified certain prior art references for some claims and not others, the Federal Circuit found that Patent Owner did not have sufficient notice and opportunity to respond to a combination that included Stiles for these three claims.  The Federal Circuit vacated the Board’s decision and remanded for clarification as to whether Saito discloses the limitations in claims 3, 16, and 20.

Due process concerns were also raised in a recent IPR,, Inc. v. AC Techs. USA, IPR2015-01802 (Paper 36, July 11, 2017).  There, the petition included two obviousness grounds and one anticipation ground.  The first obviousness ground was directed to 15 claims, and proposed a particular claim construction.  The anticipation ground and second obvious ground (which was directed to only claims 2, 4, and 6), offered an alternative claim construction.  The Board adopted the alternative claim construction, and instituted the first obviousness ground and the anticipation ground.  It denied the second obviousness ground as “moot.” 

In the Final Written Decision, the Board ruled that Petitioner’s first obviousness ground did not establish that claims 2, 4, and 6 were unpatentable as obvious.  Petitioner sought rehearing, because it was the second obviousness ground—which the Board had denied as “moot”—that contained Petitioner’s arguments as to how the claims were obvious under the claim construction the Board had adopted.

The Board agreed that it made sense to reach a decision as to the patentability of claims 2, 4, and 6.  Patent Owner had not addressed these claims in its Patent Owner Response.  As such, cognizant of Patent Owner’s due process rights, the Board granted Patent Owner an opportunity to address whether claims 2, 4, and 6 were unpatentable under Petitioner’s arguments in Ground 3.  The Board permitted Patent Owner a 10-page brief and the opportunity to depose Petitioner’s declarant on his testimony regarding claims 2, 4, and 6.  It also permitted Petitioner to file a 10-page reply to Patent Owner’s brief.

Takeaway:  Parties to post-grant proceedings should remain alert that their due process rights are respected throughout the proceeding.  In the PTAB, a party who feels that it did not have sufficient notice and opportunity to respond to a given argument should seek authorization for additional briefing.  Parties should also remain alert for potential due process issues to raise on appeal.


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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