Welcome to Winston & Strawn’s Patent Trial and Appeal Board Practice Update. This publication is a digest of decisions and orders from the weeks of August 12th and 19th.

To read the update, please click here.

IPRs By the Numbers. The number of petitions for IPR filed continues to climb, and if trends continue, the PTO will certainly exceed the 420-petition estimate it published in the Federal Register. About a month ago, we reported that there were an average of 8.5 petitions filed per week. Filings over the last month have increased that average to almost 9.4 petitions per week. Additionally, over the last 4 weeks, the PTAB has issued 36 decisions on institution under 37 C.F.R. § 42.108. Of those decisions, 13 of them (over 36%) denied the petition and did not institute trial.

Click here to see a graph showing the upward trend in IPR filings

[top]

Opinions Issue in Challenges to PTO’s Administration of IPR and CBM Trials. As we had mentioned earlier, two suits had been filed against the USPTO challenging aspects of the Patent Offices’ administration of the post-issuance trial statutes. Versata Development Group, Inc. v. Rea, 1:13-cv-328-GBL-IDD challenged the PTO’s application of the definition of “covered business method patent” in the context of a CBM review as well as the PTO’s interpretation of 35 U.S.C. 321(b) as allowing challenges to be raised under 35 U.S.C. 101. The second case, Mentor Graphics Corp. v. Rea, 1:13-cv-518-CMH-TCB challenged the PTAB’s decision to institute IPR over Mentor Graphics argument that a privy of the petitioner had been served with a complaint, thus barring the IPR under 35 U.S.C. 315(b). In each case, the PTAB still has jurisdiction over the respective proceedings. Orders issued by the U.S. District Court for the Eastern District of Virginia dismissing each action were issued about a month ago, indicating opinions were forthcoming. Those opinions have now issued.

In the Mentor Graphics case, Judge Hilton concluded that Mentor Graphics could not show that the decision by the PTAB that the petition for IPR was not barred by 35 U.S.C. 315(b) was “final.” Judge Hilton explained that “the PTAB’s decision to institute proceedings is plainly interlocutory in nature,” and furthermore the decision “does not determine any substantive rights or obligations, nor do any legal consequences flow from that decision.” Slip op. at 6. Judge Hilton explained that “[a] decision to institute inter partes proceedings here ‘does not itself adversely affect complainant but only affects his rights adversely on the continency of further administrative action,’ . . . and therefore is not a final agency action for APA purposes.” Id. at 7 (internal citation omitted). Moreover, that “Mentor Graphics is forced to participate in the inter partes proceedings” did not “render the PTAB’s decision final under the APA.” Id. Finally, the court rejected Mentor Graphics’ argument that having IPR proceedings pending against its patent created a “stigma” over that patent because “any stigma in this instance is purely conjectural and insufficient to make the PTAB’s decision a final agency action.”

Judge Hilton also provided a second basis for his decision dismissing the case. Namely, Judge Hilton concluded that the court lacked jurisdiction to review the decision because “Congress specifically chose to allow direct review of the PTAB’s final written determination to the Federal Circuit,” and thus “Congress has chosen an adequate alternative remedy allowing for direct Federal Circuit review at the culmination of the PTAB proceedings to streamline the review process while maintaining the parties’ full rights to judicial review.”

Judge Lee reached a similar conclusion in the Versata case, dismissing it for lack of subject matter jurisdiction “be-cause the AIA’s express language, detailed structure and scheme for administrative and judicial review, legislative purpose, and nature of the administrative action evince Congress’s clear intent to preclude subject matter jurisdiction over the PTAB’s decision to institute [CBM review].” Slip op. at 1-2. Moreover, Judge Lee also concluded that since the PTAB’s decision to institute CBM review “is merely an initial step in the PTAB’s process to resolve the ultimate question of patent validity,” it was not a final agency action under the APA. Moreover, “Plaintiff retains an alternative, adequate remedy through appeal to the Court of Appeals for the Federal Circuit.” Id. at 2.

Thus, both challenges to the USPTO’s administration of the post-issuance trial proceedings created by the AIA have been dismissed.

[top]

Board May Allow Motion for Joinder After Filing of Petition Argued to be Untimely. After hearing an argument from a patent owner that a petitioner’s petition was filed more than one year after service of a complaint in a companion district court action, the Board authorized a petitioner to file a motion to join IPR proceedings with a later-filed series of petitions for IPR filed by another petitioner. While 37 C.F.R. § 42.122(b) indicates that “[t]he time period set forth in § 42.101(b) [and 35 U.S.C. § 315(b)] shall not apply when the petition is accompanied by a request for joinder,” the Board determined that the time frame for filing a petition in instances in which the Board authorizes the filing of a motion for joinder after a petition has been filed. In rejecting the Patent Owner’s interpretation of 37 C.F.R. § 42.122(b), the Board explained that the “rule does not specify accompaniment must take place simultaneously. In other words, we disagree that the rule requires the petition and the motion for joinder to be filed simultaneously in order to be considered under every circumstance.” The Board went on to note that Apple’s petitions were filed before the petitions in the proceedings sought to be joined, meaning that Apple could not have filed a motion for joinder when it filed its petitions. Thus, the Board authorized Apple to file a motion for joinder. Apple v. Virnetx, Inc., IPR2013-00348, Paper 6 (Aug. 14, 2013); Apple Inc. v. Virnetx, Inc., IPR2013-00349, Paper 6 (Aug. 14, 2013); Apple Inc. v. Virnetx, Inc., IPR2013-00354, Paper 6 (Aug. 14, 2013); New Bay Capital, LLC v. Virnetx, Inc., IPR2013-00375, Paper 9 (Aug. 14, 2013); New Bay Capital, LLC v. Virnetx, Inc., IPR2013-00376, Paper 10 (Aug. 14, 2013); New Bay Capital, LLC v. Virnetx, Inc., IPR2013-00377, Paper 8 (Aug. 14, 2013); New Bay Capital, LLC v. Virnetx, Inc., IPR2013-00378, Paper 8 (Aug. 14, 2013); Apple Inc. v. Virnetx, Inc., IPR2013-00393, Paper 9 (Aug. 14, 2013); Apple Inc. v. Virnetx, Inc., IPR2013-00394, Paper 7 (Aug. 14, 2013); Apple Inc. v. Virnetx, Inc., IPR2013-00397, Paper 7 (Aug. 14, 2013); Apple Inc. v. Virnetx, Inc., IPR2013-00398, Paper 8 (Aug. 14, 2013).

[top]

Board’s Inability to Construe Indefinite Claim Leads to Denial of Petition As to That Claim. A petition for inter partes review can only present grounds for trial based on “prior art consisting of patents or printed publications.” 35 U.S.C. § 311(b) (“A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”). By statute, a petition 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 . . . .” 35 U.S.C. § 312(c). The Rules for inter partes review expand on these requirements by requiring a petition to include a statement that explains “[h]ow the challenged claim is to be construed.” 37 C.F.R. § 42.104(b)(3). What happens, however, where a claim cannot be construed because it is indefinite?

The Board has determined that when it is unable to construe a patent claim, it cannot properly apply the prior art to that claim. Thus, petitions attacking claims that are determined to be indefinite have been denied as to those claims. This came up in an August 19th decision in which the Board refused to institute inter partes review. In that decision, the Board found that the specification of the patent failed to disclose corresponding structure for several means-plus-function terms, rendering them incapable of being construed. Turning to the proposed grounds for trial, the Board explained that “we are unable to arrive at an interpretation of the requirements of claim 16 due to the lack of disclosed structure corresponding to the received ‘means for assigning,’ ‘means for indicating,’ and ‘means for setting.’ A lack of sufficient disclosure of structure under 35 U.S.C. § 112, sixth paragraph renders a claim indefinite, and thus not amenable to construction. See In re Aoyama, 656 F.3d 1293, 1298 (Fed. Cir. 2011) (quoting Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1332 (Fed. Cir. 2010) (‘If a claim is indefinite, the claim, by definition, cannot be construed.’). In the circumstances of this case, we conclude that the information presented in the Petition and the Preliminary Response does not show there is a reasonable likelihood that Petitioner would prevail in its challenge of claim 16 in an inter partes review.” Univ. Remote Control, Inc. v. Univ. Elecs., Inc., IPR2013-00152, Paper 8 (Aug. 19, 2013).

Thus, indefiniteness of a claim may be raised in a round-about way by petitioners seeking to have the PTO issue a decision attempting to construe an arguably indefinite claim that might be persuasive evidence of indefiniteness before a district court in parallel court proceedings. Universal Remote Control, however, will not give us any indication about whether such an approach is possible because, as noted by the Board, the district court had already held that the claims were indefinite for the same reasons that the Board determined it could not construe the means-plus-function terms.

[top]

Paneling for Post-Issuance Trials Solely Within the Discretion of the PTAB. Even where several related proceedings over similar or the same patents, and involving the same patent owner, the Board may or may not place those proceedings before the same panel of judges. The Board made this clear during a recent conference call. During the initial conference call with the Board, Illumina asked that the paneling for the proceeding be switched to the panel hearing three other IPR proceedings.

“Specifically, [Patent Owner] was concerned that inconsistencies may arise between the above IPRs and the instant proceeding. [Patent Owner] conceded, however, that it had no statutory or regulatory basis for its request.” The request was denied because “paneling of proceedings such as inter partes review is entirely within the Board’s purview. While paneling of different proceedings by the Board may take into consideration relat-ed proceedings, when disclosed by the parties, the Board noted that it has other factors that need [to] be considered as well, such as balancing judge resources.”

[top]

Routine Discovery is “Self Executing” and “Self Enforcing” so Discovery Requests are Not Proper. There are two general types of discovery available in post-issuance trial proceedings before the Board: (1) routine discovery, and (2) additional discovery. See 37 C.F.R. § 42.51(b)(1), (b)(2). Routine discovery requires a party to produce exhibits cited in a paper, make any witness submitting a declaration available for cross-examination, and “[u]nless previously served . . . relevant information that is inconsistent with a position advanced by the party during the proceeding concurrent with the filing of the documents or things that contains the inconsistency.” Id. at § 42.51(b)(1)(i)-(iii).

Although the rules do not provide a mechanism for a party to serve document requests on another party seeking the production of routine discovery, one patent owner recently served such discovery. The service of the discovery requests resulted in a conference call between the parties and the Board, with the petitioner seeking clarification on whether it needed to respond to the requests. The Board explained that the requests were not permitted under the rules and the petitioner had no obligation to respond to them. The Board explained that “routine discovery under 37 C.F.R. § 42.51(b)(1) is self-executing and self-enforcing, and thus there is no occasion for [Patent Owner] to serve a discovery request that purposes to be ‘routine discovery.’ Thus, requests for production of documents are neither required no authorized by the rules for routine discovery. See 37 C.F.R. § 42.51(c).”

[top]

Board Orders Petitioner to Make “Implicit” Claim Construction Positions “Explicit” in Corrected Petition. In the past, the Board has allowed the parties to take the position that claim terms are to be given their plain and ordinary meaning in light of the specification. Thus, the Board has rejected challenges from patent owners that such a statement by the petitioner resulted in an incomplete petition because the rules require the petitioner to provide positions on claim construction. See 37 C.F.R. § 42.104(b)(3). Moreover, the Board has been examining implicit claim constructions and engaging in claim construction of certain claim terms sua sponte even where the parties do not expressly construe a particular term.

However, a recent decision by the Board regarding whether a petition was even entitled to a filing date, calls into question the continued viability of that practice for parties in a post-issuance trial proceeding. Specifically, during a conference call between the Board and a petitioner the “Board explained that the petitioner’s implicit claim constructions for certain important claim terms (e.g., ‘communication tap’) should be made explicit in the claim construction section of the petition, as 37 C.F.R. § 42.104(b)(3) requires the petition to identify how the challenged claim is to be construed and claim construction is an important step in the determination of whether the challenged claims are unpatentable over the cited prior art.” It will be interesting to see whether this decision is a sign that the Board will be more exacting in analyzing newly-filed petitions to make sure that important claim terms are being expressly construed by the parties rather than simply arguing that the terms are entitled to their plain and ordinary meaning.

[top]