ICLE Presentation_Amelia Island 2015

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Patent Topic 2

Patent Drafting and Prosecution Tips for Surviving Inter Partes

Review

Paul E. McGowan,Troutman Sanders LLP

Daniel J. Santos,Smith Risley Tempel

Santos LLC

Lance Reich,Han Santos Reich PLLC

ICLE / IP Law InstituteAmelia Island, FL

September 20, 2015

http://www.srtslaw.com/16/home.htm

http://www.haniplaw.com/en/index.html

• Background of Inter Partes Review (IPR)• Drafting/Strengthening the Specification and/or

File History with IPR in Mind• Practical Considerations for those Prosecuting

Applications before filing an IPR• Question & Answer

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Patent Drafting and Prosecution Tips for Surviving Inter Partes Review

Outline



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Section I:

Background of Inter Partes Review (IPR)



• Inter Partes Review (IPR) is a relatively new procedure under the AIA for challenging patent validity at the USPTO.

• Why select IPR?• District Court litigation is expensive and can be slow.• IPR can result in a faster, cheaper decision.• Tried before a panel of Administrative Patent Judges

that may be more technically proficient.• But, an IPR can only be based on 35 U.S.C. §§ 102

and 103, using prior art patents and publications.• IPR jurisprudence is developing – literally – every day.

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Brief Review of IPR



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Brief Review of IPR cont.

12 months to Final decision(extendable to 18 in extraordinary circumstances)

6 monthsto IPR decision



• After three years, 3,655 petitions filed: 3,277 IPRs, 368 CBMs, and 10 PGR.

• 63% of patents from electrical/computer technology centers (TCs) and only 9% in bio/pharma TC.

• Trial instituted on 1,389 of 3,277 IPR petitions, 185 of 368 CBM petitions, and 2 of 10 PGR petitions.

• At trial, 12% of total claims available for challenge (4,496 of 38,462), were found unpatentable in a final written decision. • Other claims were either not challenged, resolved by

settlement, cancelled, or upheld as patentable.

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Recent PTAB Statistics Tell the Story of Where We Stand



• Of the first IPRs to reach a conclusion, 25% of claims actually challenged (4,496 of 17,675) were found to be unpatentable.

• Number of petitions is “around three times more” than what was originally expected.

Blog by Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle K. Lee, http://www,uspto.gov/blog/director/entry/ptab_update_proposed_changes_to (August 19, 2015)

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Recent PTAB Statistics Tell the Story of Where We Stand cont.



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Comparison of IPR with District Court Litigation

IPR District CourtDecided by PTAB Panel Judge/JuryTiming 1 – 1.5 years by

statute 1.5 – 4 years on average

Burden of Proof

Preponderance of the evidence

Clear and convincing evidence

Discovery Generally limited to depositions

Unlimited fact/expert discovery

Estoppel Raised or reasonably could have raised

None



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Comparison of IPR with District Court Litigation cont.

IPR District CourtClaim construction

Claims are given their “broadest reasonable interpretation [BRI] consistent in light of the specification.” MPEP § 2111.

“Ordinary and customary meaning...to a person of ordinary skill in the art...at the time of the invention.” Phillips v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005).



• IPR institution decision• Nonappealable – most important for Patent Owner• No estoppel attaches – Petitioner can raise same prior

art/arguments in a later proceeding• IPR final decision

• Appealable – either party can appeal to Federal Circuit• Estoppel attaches – Petitioner cannot later raise same

prior art/arguments• Statute allows Petitioner to file multiple IPRs on same

patent, but recycling same art/arguments is disfavored• Best to explain differences with subsequent filings

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Finality of IPR Decisions



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Brief comparison of IPR with PGR and CBMEx Parte Reexamination

Inter Partes Review (IPR)

Post Grant Review (PGR) Covered Business Method (CBM)

Can be filed by patent owner or any third party

Can be filed by any third party

Can be filed by any third party

Can only be filed by an accused infringer

Can be filed at any time after patent issues

Can be filed 9 months after issuance or completion of PGR

Available within 9 months after grant (patents filed on or after March 16, 2013)

Available after PGR period has expired (typically within 9 months after grant)

Threshold showing: substantial new question of patentability

“Reasonable likelihood of success” on at least one claim

“More likely than not” at least one challenged claim unpatentable, or presents important legal question

Same as PGR

Anonymous Not anonymous Not anonymous Not anonymous

No estoppel Estoppel for issues raised or reasonably could have been raised in IPR (applies to PTO, district court, ITC)

Estoppel for issues raised or reasonably could have been raised in PGR (applies to PTO, district court, ITC)

Estoppel only for issues actually raised in CBM by petitioner (applies to PTO, district court, ITC)



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Brief comparison of IPR with PGR and CBM cont.

Ex Parte Reexamination

Inter Partes Review (IPR)

Post Grant Review (PGR) Covered Business Method (CBM)

Basis: 102, 103 Basis: 102, 103 Basis: 101, 102, 103, and 112 (but not best mode)

Same as PGR (some 102 differences)

Prior art: patents and printed publications

Prior art: patents and printed publications

Prior art: patents and printed publications + public use, on-sale activity

Same as PGR

Reviewer: Central Reexamination Unit

Reviewer: PTAB Reviewer: PTAB Reviewer: PTAB

Declaration only Declaration and discovery

Declaration and discovery Declaration and discovery

Time to decision: could be many years

Time to decision: 12-18 months (from institution of IPR)

Time to decision: 12-18 months (from institution of PGR)

Time to decision: 12-18 months (from institution of PGR)

Patentee can appeal to PTAB, then CAFC

Both parties can appeal to CAFC



PTO Fees start at $12K

PTO Fees start at $23K

PTO Fees start at $30K PTO Fees start at $12K



• The PTAB, the so-called “death squad,” has been introducing new rules to level the playing field• Perception that the level of institution is too high and/or that

Patent Owners are disadvantaged by the current rules• E.g., Patent Owners presently unable to rely on expert

declarations in Preliminary Response• Summary of Rule Changes

• May 29, 2015: expanded page limits for Patent Owner’s motions to amend and Petitioner’s Reply; 14-point font

• August 19, 2015 proposal: Patent Owner Preliminary Response, motions to amend, additional discovery

• August 26, 2015 proposal: single-judge panel for institution• October 19, 2015: comments due to the PTAB

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Proposed Rule Changes for IPR



• Proposes to allow patent owners to include, with their opposition to a petition to institute a proceeding, new testimonial evidence such as expert declaration.

• Proposes a new requirement on practitioners before the PTAB, akin to Rule 11 in federal courts—providing a more robust means to police misconduct.

• Proposes to clarify that the PTAB will use the Phillips claim construction standard used by district courts for patents that will expire during proceedings and cannot be amended, while confirming the use of broadest reasonable interpretation (BRI) for all other cases.

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Proposed Rule Changes for IPR cont.



• Proposes to continue the PTAB’s development of motions-to-amend practice through its own body of decisions, including a recent decision that clarified what prior art a patent owner must address to meet its burden of proof.

• Proposes to continue applying the Garmin factors on a case-by-case basis when considering requests for additional discovery.• This includes requests for discovery of evidence of non-

obviousness, e.g., evidence of commercial success of a Petitioner’s product.

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• Proposes to continue to entertain requests to present live testimony at the oral hearing on a case-by-case basis.

• Proposes to adopt a word count instead of page limitations for the IPR petition, preliminary response and petitioner’s reply brief.• For all other briefing, a page limitation remains in place.

• Proposes to allow arguments in claim charts, given the change to word count instead of page limitations.

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• What is “Broadest Reasonable Interpretation” (BRI)?• BRI = broadest reasonable interpretation in light of the

specification (MPEP § 2111).• BRI does not mean broadest possible interpretation – it

still must be reasonable. Microsoft Corp. v. Proxyconn, Inc., 2014-1542, -1543, 2015 U.S. App. LEXIS 10081 (Fed. Cir. June 16, 2015).

• BRI is justified by Patent Owner’s ability to amend claims.• In re Cuozzo Speed Techs. upheld the PTAB’s use of BRI in

an IPR case. 778 F3d. 1271, 1274 (Fed. Cir. 2015).• Even though an IPR is “adjudicatory rather than an

examination.”

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Proposed Rule Changes for IPR: Claim Construction



What happens if the patent expires while an IPR is pending or on appeal?

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Proposed Rule Changes for IPR: Claim Construction



• Example 1: patent expires prior to PTAB institution decision• PTAB can apply district court claim construction

(Phillips) during entire proceeding. • See, e.g., Facebook Inc. v. Software Rights Archive,

IPR2013-00478.• Example 2: patent expires after PTAB institution

decision, but prior to final written decision• PTAB can apply BRI for purposes of institution, but

Phillips for purposes of final written decision. • See, e.g., Clearwire Corp. v. Mobile Telecomm.

Technologies, LLC, IPR2013-00306.

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Proposed Rule Changes for IPR: Claim Construction cont.



• Example 3: patent expires after PTAB final written decision, but prior to decision on appeal• No reported case yet.• But see Facebook Inc. v. Pragmatus AV, LLC, 2014 U.S.

App. LEXIS 17678, *3 (Fed. Cir. Sep. 11, 2014), in an inter partes reexamination case, the Board applied BRI but the Federal Circuit applied Phillips standard.

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• Proposed rule change: PTAB has been under pressure to modify its claim construction standard, e.g., to comport with the district courts and apply the Phillips standard in all cases.

• But, after reviewing comments from practitioners, the PTAB proposes to clarify that it will:• Use the Phillips claim construction standard used by

district courts for patents that will expire during proceedings and therefore cannot be amended.

• Continue to use of broadest reasonable interpretation (BRI) for all other cases.

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• Heavy reliance on intrinsic record in claim construction is best.

• Consider use of alternate constructions – but need to explain each to the Board.

• Consider timing of patent expiration and how that will affect the claim construction standard to be applied.

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Claim Construction: Practice Tips



• Summary of proposed rule change:• Patent Owner will be allowed to submit evidence with

the Preliminary Response (e.g., expert declaration).• But, Petitioner will not be able to depose any declarant

until after institution.• Petitioner will be able to seek leave to file a reply to

Patent Owner’s Preliminary Response.• This can be a real game changer.• Historically, the Patent Owner could offer no extrinsic

evidence.

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Proposed Rule Changes for IPR: Patent Owner's Preliminary Response



• No proposed changes, but recent PTAB decisions intended to clarify its motions-to-amend practice:• Burden is not on Petitioner to show unpatentability, but is

on Patent Owner to show patentability over the prior art of record and prior art known to it. Idle Free System, Inc. v. Bergstrom, Inc., IPR2012-00027 (Paper 26).

• But, burden shifts to Petitioner Patent Owner makes prima facie case over the prior art of record and know prior art. MasterImage 3D, Inc. v. RealD, Inc., IPR2015-00040 (Paper 42).

• PTAB has historically not favored claims amendments.• PTAB is relaxing the standard . . . or is it?

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Proposed Rule Changes for IPR: Motions to Amend Claims



• No changes proposed and PTAB will continue applying the Garmin factors on a case-by-case basis when considering requests for additional discovery:• More than a mere possibility and mere allegations – not

enough.• Litigation positions and underlying basis – off limits.• Ability to generate equivalent information by other

means – cuts against discovery.• Easily understandable instructions – required.• Requests not overly burdensome to answer – fairness.Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC,

IPR2012-00001 (Paper 26).

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Proposed Rule Changes for IPR: Patent Owner's Request for Additional Discovery



• Summary of proposed rule change:• Pilot program using single APJ for institution.• Adding two APJs for trial proceedings.

• Intended to avoid the perception that once the three-judge panel institutes, it has already come to a conclusion on the merits.

• Who does this favor? • Patent Owner? • Petitioner?

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Proposed Rule Changes for IPR: Use of One-Judge Panel



• In re Cuozzo – PTAB institution decisions are not appealable. 778 F3d. 1271 (Fed. Cir. 2015).• But see Versata Software, Inc. v. SAP America –

decision on patentability under CBM is appealable after a “final written decision.” 717 F.3d 1255 (Fed. Cir. 2013).

• Microsoft v. Proxyconn – Federal Circuit reverses PTAB for improper claim construction (BRI must still be “reasonable” – not just the broadest). 2015 U.S. App. LEXIS 10081 (Fed. Cir. June 16, 2015).• But see Versata v. SAP America – PTAB decision

affirmed (in a CBM) for applying the proper claim construction. 717 F.3d 1255 (Fed. Cir. 2013).

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Federal Circuit Treatment of PTAB decisions



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Section II:

Drafting/Strengthening the Specification and/or File History with IPR in Mind



• Define terms in specification and use in specification and claims consistent with the definition.• Include definitions for all terms positively recited in

claims.• Include definitions for terms such as “about,”

“approximately,” “substantially,” etc.• When possible, define terms consistent with accepted

meaning in the art.• Keep in mind the ultimate claim construction you will

want in an IPR.

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Some Patent Drafting Tips



• Consider drafting claim sets of varying scope and make sure that broadest reasonable interpretation (BRI) will not be unreasonable.• Using increased claim count and claim-tiering to

increase cost to institute IPR as a deterrent to would-be petitioners.

• Having multiple embodiments in specification to provide support for independent claims of varying scope.

• Cite MPEP sections during prosecution to support positions so that those positions can be relied on in IPR.

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Some Patent Drafting Tips cont.



• Consider using declarations from inventors or other experts during prosecution so that they are in the record and can be relied on in IPR• Using Rule 132 declarations to bolster arguments of

patentability, including secondary meaning.• Keep in mind In Re Therasense, 649 F.3d 1276, 1290

(Fed. Cir. 2011), and subsequent Federal Circuit cases when using declarations to avoid charges of inequitable conduct that may potentially be brought later in district court.

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• Consider using “patent profanity” in specification for some, but not all, embodiments so that BRI does not read on prior art.• Examples of “patent profanity”:

• “critical” or “essential” or “main” or “primary”• Provide different embodiments in the specification and

clearly delineate to which patent profanity applies.• It may be worth duplicating figures and their

corresponding description with only slight variations to help indicate which embodiments the patent profanity applies.

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• Claims directed to the narrower embodiments may survive IPR whereas those directed to broader embodiments may fall.

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• Consider keeping continuation applications pending.• Including many claims and multiple claim sets to

instigate a restriction requirement.• File divisional applications pursuant to restrictions to

keep applications pending.• The benefit of divisional applications is that the

inventions are patentably distinct, which avoids the problem of violating the rule against obtaining a patent containing a claim that is not patentably distinct from a claim that was previously canceled or finally rejected by the USPTO.

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• Consider use of reissue or reexamination to correct problems in anticipation of IPR.• Patent Owner has more input/control over the

proceedings.• Claims can be more liberally amended during

reexamination.

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• Drafting/strengthening the specification and/or file history with IPR in mind.• Performing thorough patentability searches prior to filing

application to carefully sculpt application to define around closest art.

• Describing prior art in Background as preemptive argument that can be used in Preliminary Response, but be mindful to not mischaracterize or create unintended file history estoppel.

• Get all relevant prior art in the record, including art from foreign and domestic counterpart applications.

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• Filing overlapping applications with overlapping claim coverage to create thicket of patents.• Make sure prior art is cross-cited.• Is the cost worth it?

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Section III:

Practical Considerations for those Prosecuting Applications before

filing an IPR



• Are you going to argue a construction that can be used against you elsewhere?• There is no stare decisis on any issue between any

entity at the PTO, e.g., rulings on claim construction can be decided differently between PTAB panels, examiners.

• There are cases where statements made by a party in one patent office proceeding have been used against the party in a different proceeding. See Kilopass Technology v. Sidense (2102 U.S. Dist. LEXIS 60973)

• What about different claim constructions offered or decided in a district court (is it binding on a party of the PTAB)?

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Practical Considerations



• Potential joinder of proceedings at the PTAB, e.g., different IPRs, reissues, reexaminations.• Board has discretion to join cases as it sees fit, 35

U.S.C. § 325(c).• Similarity among different patent specifications and

claims could cause joinder.• Failure to address how joinder will affect all pending

proceedings can result in joinder (IPR2015-00521).• Use of different experts in two IPRs can result in denial

of joinder (IPR2015-01184).• So far, the PTAB has been generally against joinder.

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Practical Considerations cont.



• Stays of other Patent Office Proceedings, e.g., reexaminations.• Board has discretion to manage its own docket as it

sees fit, 35 U.S.C. § 325(d).• Stays have occurred (in one of my cases, IPR2015-

00027, a later filed ex parte reexam was stayed even though it was for different art on a different theory of unpatentability).

• Stays of IPR are theoretically possible, but the Board has a statutorily-mandated deadline to conclude IPR within 12 months (extendable to 18 months) 35 U.S.C. § 326(a).

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• It is unclear if the IPR is “patent prosecution.”• You can amend the claims, so patent prosecution?• But, the patent examiner is out of the picture, so not

patent prosecution?• Non-registered attorneys can be in an IPR. 37 CFR

§42.10(c).• PTAB has said no in Google Inc. v. Jongerius Panoramic

Techs., LLC, IPR2013-00191. “An inter partes review is not original examination, continued examination, or reexamination of the involved patent. Rather, it is a trial, adjudicatory in nature and constituting litigation.”

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• There is no definitive court ruling on the conflicts of ethical duties here

• Should litigation counsel also participate in the IPR?• Rule 56 would apply if this is “prosecuting patents”

before the PTO. 37 C.F.R. §1.56.• Subject to OED for discipline. “Practice before the

Office” 37 C.F.R. §11.5.• Likewise for a prosecution counsel on other patent

cases at the PTO. Rule 56?

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• Rule 56 and others duties of disclosure of prior art are very unclear.

• What about protective order in litigation saying counsel can’t be involved in “prosecution” (Google, IPR2013-00179)?

• Motions have been filed for contempt in district court for participation in a IPR violating a protective order. Endo Pharm. v. Actavis, Inc. 1:12-cv-08115 (S.D.N.Y. August 13, 2014) (“Amneal’s protective order, which states that Dechert may not become ‘involved in prosecution of patent applications,’ does not bar Dechert from participating in the inter partes review proceedings.”) (citing Google).

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Thank You!

Questions?

Paul E. McGowan,Troutman Sanders LLP

404.885.3270

Daniel J. Santos,Smith Risley Tempel

Santos LLC770.709.0013

Lance Reich,Han Santos Reich PLLC

206.489.2648



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ICLE Presentation_Amelia Island 2015