Last time I looked at the number of petitions for post-issue trials filed at the Patent Trial And Appeal Board (“PTAB” or the Board) (i.e., petitions for inter partes review (“IPR”) and petitions for covered business method patent (“CBM”) review) back in December, I noted that there had been more than 100 petitions filed that month. That was the largest number of filings in any month since these post-issue trials became available to the public. I had also been observing a trend in which the number of filings had increased month-to-month.

The trend noted during the second half of last year has not continued. The months of January and February have seen a decrease of almost 50% from the substantial number of petition filings in December. An analysis of petition filings for IPRs and CBM reviews is shown in the graph below.

Why might such a significant drop in PTAB filings have occurred? One might conclude that because of the one-year filing requirement imposed by 35 U.S.C. 315(b) that the number of IPR filings would reflect a similar trend as the number of patent case filings, but delayed by 9-12 months. This is because the AIA’s joinder provision, 35 U.S.C. 299, first took effect on September 16, 2011. That led to an increase in the number of patent case filings because so many defendants could no longer be joined in a single suit. IPR and CBM review did not become available for another year. When it did, those that had been served with a complaint more than one year before September 16, 2012 were precluded from seeking IPR. However, those that had been served with a complaint after September 16, 2012 would have had the full year to determine whether to file a petition for IPR. If the number of patent case filings correlates to the number of IPR petitions, then one would expect to see an upward trend in patent case filings from, say June 2012 to December 2012 that would roughly track the number of IPR filings. This appears to hold true.

As of March 7, 2014, the Board has issued a total of 479 institution decisions under 37 C.F.R. § 42.108 in IPR proceedings. Of those decisions, 323 (67.4%) resulted in the Board granting the petition as to all challenged claims on at least one ground presented for review. In 73 (15.2%) of those decisions, the Board denied the petition entirely. Finally, the Board’s decision was “mixed”—with trial on some challenged claims being instituted, and on other challenged claims being denied—in 83 decisions (17.3%). A summary of the Board’s institution decisions is shown in the pie chart below.

The statistics I reported back in December looked slightly different. While the number of petitions denied in their entirety has stayed relatively constant, the number of institution decisions resulting in “mixed” results has increased by roughly 3%, and the number of petitions granted in their entirety has decreased by a similar amount.

Parties considering pooling resources to file a single petition for post-issuance trial should take note of a recent decision by the Patent Trial and Appeal Board. The Board recently advised 35 petitioners identified as real parties-in-interest on a single petition that they must chose a single attorney to represent them as lead counsel, and must speak with one voice before the Board. This decision may influence how defendants accused of infringing a common patent want to think about sharing the expense of filing a single petition for IPR. In Agilysys, Inc. v. Ameranth, Inc., CBM2014-00015, Paper 12 (Feb. 11, 2014) and Agilysys, Inc. v. Ameranth, Inc., CBM2014-00016, Paper 11 (Feb. 11, 2014), the Board explained that “although thirty-five companies are identified in the petition as ‘Petitioners’ and real parties-in-interest, the thirty-five companies collectively constitute only a single party in this proceeding before the Board. Consequently, the designation in the petition of fifteen pairs of lead and backup counsel, one pair of reach of fifteen groupings of the thirty-five companies must speak with a uniform voice, whether in writing or orally in a conference call, hearing, or deposition.”

“37 C.F.R. § 42.2 . . . defines ‘Petitioner’ as a single party by referring to ‘the party filing a petition,’ but also prejudicial to Patent Owner, who potentially would have to respond to thirty-five different, possibly inconsistent, positions on every issue. Nor would the Board’s interests in the speedy and efficient resolution of post-grant proceedings be served by permitting the presentation of inconsistent positions based on the filing of a single petition.” See also Fandango, LLC v. Ameranth, CBM2014-00013, Paper 14 (Feb. 11, 2014).

The PTAB recently denied a request for discovery into the indemnification activities of a Petitioner in an IPR where a district court verdict had been obtained against Petitioner’s customers, thus answering, at least for now, how the PTAB will look at petitions filed by suppliers where the supplier’s customers have been served with a complaint. Specifically, in Broadcom Corp. v. Telefonaktiebolaget LM Ericsson (PUBL), IPR2013-00601, Paper 23 (Jan. 24, 2014), Broadcom Corp. v. Telefonaktiebolaget LM Ericsson (PUBL), IPR2013-00602, Paper 21 (Jan. 24, 2014), and Broadcom Corp. v. Telefonaktiebolaget LM Ericsson (PUBL), IPR2013-00636, Paper 20 (Jan. 24, 2014), Patent Owner sought additional discovery into the issue of privity including “indemnity agreements, defense agreements, payments, and email, or other communications between [Petitioner] and defendants” in a litigation resulting in a jury verdict of infringement against those defendants. The jury in that litigation found that certain defendants infringed “due partly to their use of Broadcom’s WiFi complaint products.” Patent Owner “maintains that the requested discovery will show that” Petitioner is in privity with at least one defendant from that litigation, resulting in the petition being barred under 35 U.S.C. § 315(b). The Board denied the motion.

Patent Owner’s evidence “does not amount to more than a ‘mere allegation that something useful will be found’ to show privity, as is required by the first Garmin factor.” Instead, Patent Owner must show that Petitioner would be bound by the outcome of the litigation. “To be bound, in normal situations, [Petitioner] must have had control over the Texas Litigation. According to long-standing precedent, Bros., Inc. v. W.E. Grace Mfg. Co., 261 F.2d 428, 429 (5th Cir. 1958), when a patent holder sues a dealer, seller, or distribut[o]r of an accused product, as is the case at hand, indemnity payments and minor participation in a trial are not sufficient to establish privity between the non-party manufacturer of the accused device and the defendant parties:

While the mere payment of counsel fees or participation in a trial by one not a named party to it would not alone be sufficient, c.f., I.T.S. Rubber Co. v. Essex Co.,[] 272 U.S. 429 [1926] . . . , the extent and nature of that participation may completely alter the consequences. This is particularly so in patent infringement cases, in which, from tactical or strategic considerations relating to venue, desirability of a particular forum and the like, such cases are so often filed and tried against a dealer, a seller, a distributor, or a user of the accused device manufactured by another. If the manufacturer stands aloof, he risks judgment adverse to his interest resulting perhaps from inadequate or incomplete defense by one who has a secondary interest. Such judgment, to be sure, would normall[y] not be binding by estoppel or res judicata, but it would take its place in the jurisprudence where Is practical effect as stare decisis might be as decisive. The alternative, of course, is to jump in and give the case full and active defense as though the manufacturer was the real named party. This assures that the issues will be presented and contested in a way deemed most effective by the nominally remote, but practically immediate, party at interest.

“261 F.2d at 429 . . . Bros, Inc. relies on a long line of precedent to support the normal rule that privity requires a finding of active control of the trial . . .” Thus, the Board explained that “[c]ontrol of the litigation, or some sort of representation, constitutes a ‘crucial’ factor.” Merely “[p]aying for trial expenses pursuant to indemnity normally does not establish privity or control.” Because the Board determined that Patent Owner had not shown that such a degree of control was exercised by Petitioner in the prior litigation, the Board found that “[t]his Garmin factor weighs heavily against [Patent Owner],” and that determining whether privity exists “especially without some evidence of actual control of a trial, typically spirals into what amounts to a separate trial that involves a myriad of considerations.” Thus, the motion for additional discovery was denied.

Parties retaining multiple declarants in connection with a post-issuance trial before the Patent Trial and Appeal Board (“PTAB”) should review a recent decision by the PTAB relating to discovery into communications between two declarants. During the depositions of Patent Owner’s declarants in Apple Inc. v. Achates Reference Publishing, Inc., IPR2013-00080, Paper 66, (Jan. 31, 2014) and Apple Inc. v. Achates Reference Publishing, Inc., IPR2013-00081, Paper 58 (Jan. 31, 2014) both declarants testified that they discussed certain prior art references by email while they were preparing their declarations. Petitioner sought discovery of those emails exchanged between the declarants. The Board concluded that “Petitioner cites portions of the depositions of [the two experts] where the witnesses testified that they had direct email communications with each other regarding the prior art at issue in these proceedings.” The testimony showed that they used each other as “sounding boards.” The Board explained that the deposition testimony of the witnesses “indicates that they exchanged emails regarding the challenged patents and prior art, and at least considered the statements in those emails (in addition to the other individual’s declaration) in forming their opinions regarding the alleged patentability of the challenged claims over that prior art. This testimony indicates more than a mere possibility or mere speculation that something useful will be uncovered by producing the emails. Petitioner’s request is otherwise proper as well, as it is narrowly tailored to a small number of emails that would not be overly burdensome for Patent Owner to answer.” Thus, while the standards for obtaining discovery in IPR are rigorous, and the PTAB has not been granting discovery very often, parties may expect that communications between witnesses related to the subject matter of their testimony will likely be discoverable. Therefore, Petitioners should ask questions during deposition to unearth any such discussions if their opponent has retained multiple experts, and counsel for parties using multiple witnesses should carefully monitor their communications.

The Patent Trial and Appeal Board (“PTAB”) has recently decided a number of motions to exclude evidence under 37 C.F.R. 42.64. Based on these decisions, parties engaged in litigation before the Board should be aware that exclusion of evidence appears to be the exception, not the rule. A few of the PTAB’s recent rulings are summarized below. In Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM2012-00002, Paper 66 (Jan. 23, 2014), the PTAB provided general guidance on the content of a motion to exclude. The PTAB explained that “[a] motion to exclude must explain why the evidence is not admissible (e.g., relevance or hearsay), but may not be used to challenge the sufficiency of the evidence to prove a particular fact. Office Patent Trial Practice Guide, 77 Fed. Reg. 48765, 48767 (Aug. 14, 2012). A motion to exclude evidence also must:

(a) Identify where in the record the objection originally was made;

(b) Identify where in the record the evidence sought to be excluded was relied upon by an opponent;

(c) Address objections to exhibits in numerical order; and

(d) Explain each objection.

Id.” The PTAB further explained that “[w]hile a motion to exclude may raise issues related to admissibility of evidence, it is not an opportunity to file a sur-reply, and also is not a mechanism to argue that a reply contains new arguments or relies on evidence necessary to make out a prima facie case.”

The PTAB has further explained that it has the expertise to weigh the evidence without excluding it. “We also agree with [Petitioner] that ‘the Board, sitting as a non-jury tribunal with administrative expertise, is well-positioned to determine and assign appropriate weight to the evidence presented in this trial, without resorting to formal exclusion that might later be held to be reversible error.’” Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM2012-00002, Paper 66 (Jan. 23, 2014). Moreover, the Board has explained that a motion to exclude based on relevance “is not likely to be successful except in a rare situation, because the Board is capable of according the proper weight to the evidence, including none, based on the pertinence of the evidence.” Toyota Motor Corp. v. Am. Vehicular Sciences LLC, IPR2013-00419, Paper 25 (Feb. 11, 2014); Toyota Motor Corp. v. Am. Vehicular Sciences LLC, IPR2013-00420, Paper 22 (Feb. 11, 2014); Toyota Motor Corp. v. Am. Vehicular Sciences LLC, IPR2013-00421, Paper 21 (Feb. 11, 2014); Toyota Motor Corp. v. Am. Vehicular Sciences LLC, IPR2013-00422, Paper 20 (Feb. 11, 2014).

In Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., IPR2013-00453, Paper 31 (Jan. 22, 2014), the PTAB concluded that a Petitioner for IPR was not a “privy” or a “real party-in-interest” for the purposes of 35 U.S.C. 315(b) where its affiliate and putative indemnitee was served with a complaint before any such indemnification obligation arose. In that case, “Patent Owner contend[ed] that, by virtue of various provisions of the supply agreement, [an earlier-served affiliate of Petitioner] is a privy of Petitioner and that institution of IPR is barred because [that affiliate] was served with a complaint alleging infringement of the [involved] patent more than one year before the petition was filed.” The Board disagreed. Specifically, “Patent Owner’s basis for privity, namely various provisions of the supply agreement, did not go into effect until service was effected on Petitioner, i.e., until Petitioner was noticed of the nature of the complaint against it, we need not reach the issue of whether” Petitioner and its affiliate “are related sufficiently closely to impute service on one to service on the other. . . Patent Owner contends that [the affiliate] has breached certain provisions of the supply agreement and ‘[t]hat breach imposes an obligation to make [Petitioner] and its subsidiaries whole for any damages sustained by them in an infringement suit.’ . . . Patent Owner’s proposition that the ‘word privy should mean a part that has a direct relationship with [Petitioner] concerning the manufacture, sale and/or division of revenues from sales of the product that has been accused of infringing the [involved] patent[,] or that has a direct interest in the proceedings outcome,’ is too broad because it takes insufficient account of the context provided by 35 U.S.C. § 315(b). Specifically, Patent Owner’s privity theory relies fundamentally on [the affiliate] having the right to control Petitioner’s involvement in this proceeding—a right that, at best, arises from Petitioner having been served with the complaint in the district court proceeding. Service upon [the affiliates] prior to service upon Petitioner, creates no clear obligation or opportunity for control of Petitioner by [the affiliate] in this proceeding.”