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Preparing for and Navigating PTAB
Appeals Before the Federal Circuit Conducting PTAB Trials With Eye to Appeal, Determining Errors for Appeal,
Understanding PTO Practice and Federal Circuit Law
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WEDNESDAY, JANUARY 6, 2016
Presenting a live 90-minute webinar with interactive Q&A
Erika H. Arner, Partner, Finnegan Henderson Farabow Garrett & Dunner, Reston, Va.
Michael J. Flibbert, Partner, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C.
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Preparing for and Navigating PTAB Appeals
Before the Federal Circuit
January 6, 2016
Presented by Erika H. Arner and Michael J. Flibbert
5
Sources of PTAB Appeals
IPR, CBM and PGR appeals under 35 U.S.C. §141:
“A party to an inter partes review or a post-grant review
who is dissatisfied with the final written decision of the
Patent Trial and Appeal Board under section 318 (a) or
328 (a) (as the case may be) may appeal the Board’s
decision only to the United States Court of Appeals for
the Federal Circuit.”
Interlocutory appeals of CBM stay denials
under AIA § 18
Mandamus?
6
Tsunami of PTAB Appeals?
As of October 31, 2015:
3,684 inter partes review (IPR) petitions
393 covered business method review (CBM) petitions
13 post-grant review (PGR) petitions
PTAB instituting at high rate and holding claims
unpatentable at high rate
Very few motions to amend granted
Related district court litigation is common
Compared to . . .
7
Tsunami of PTAB Appeals?
8
Commencing a PTAB Appeal
Must file a timely Notice of Appeal:
“[n]o later than sixty-three (63) days after the date of the
final Board decision.” 37 CFR § 90.3(a).
“[m]ust be filed with the Director,” 37 CFR § 90.2(a), with
copy of notice to PTAB, 37 CFR § 90.2(a), and three
copies to Federal Circuit clerk, Fed. Cir. R. 15(a)(1)
Must provide sufficient information to allow the Director to
determine whether to intervene. 37 CFR 90.2(a)(3)(ii).
Cross-appeals:
Within 14 days of the Notice of Appeal. FRAP 4(a)(3).
9
First Rulings: Appeal of Institution Denials
Appeal of institution denials:
After PTAB refused institution and party appealed directly
to CAFC, Federal Circuit held that institution decision
could not be appealed because of Section 314(d)’s
‘‘broadly worded bar on appeal.’’ St. Jude v. Volcano, 749
F.3d 1373, 1376 (Fed. Cir. 2014).
Court noted that Section 314(d) “may well preclude all
review [of a noninstitution decision] by any route,” but it
“need not decide” that issue here. Id.
See also Zoll v. Phillips, 2014 WL 4179887 (Fed. Cir. Aug
25, 2014).
10
Review of FWDs
In re Cuozzo Speed Technologies LLC, 793 F.3d
1268 (Fed. Cir. 2015)
PTAB instituted IPR of claims based on grounds not in
the Petition; patent owner appealed.
35 U.S.C. § 314(d) states: ‘‘The determination by the
Director whether to institute an inter partes review under
this section shall be final and nonappealable.’’
Majority held § 314(d) prohibits all review of the
institution decision, even if it was wrong.
Left open option of mandamus if the Board “clearly and
indisputably exceeded its authority.”
11
Review of FWDs
Versata Development Group, Inc. v. SAP America,
Inc., 793 F.3d 1306 (Fed. Cir. 2015)
PTAB instituted CBM review; following a FWD, patent
owner appealed determination that patent is a CBM
patent
35 U.S.C. § 324(e) states: ‘‘The determination by the
Director whether to institute an inter partes review under
this section shall be final and nonappealable.’’
Court can review the PTAB’s threshold determination that
a patent is a CBM patent in an appeal from a FWD
12
Review of FWDs
Versata Development Group, Inc. v. SAP America,
Inc., 793 F.3d 1306 (Fed. Cir. 2015) (continued)
Majority reasoned that § 324(e) does not apply to “limits
on the authority to enter a ‘final written decision’
invalidating a patent” because “institution and invalidation
are two distinct actions by the PTAB.”
13
Review of FWDs
Achates Reference Publishing, Inc. v. Apple Inc,
803 F.3d 652 (Fed Cir. 2015)
Achates filed suit against several companies and joined
Apple as a codefendant a year later
Apple filed petitions for IPR of the asserted patents
Achates argued that the PTAB lacked authority to
institute the IPRs because Apple was time-barred
Court held that the PTAB’s determination on whether a
petition is timely is part of the decision to institute and is
therefore nonappealable, even after a FWD
Distinguished Versata: “time bar does not itself give the
Board the power to invalidate a patent”
14
Mandamus
Mandamus remains an option if, after the Board’s FWD, the
Board “clearly and indisputably exceeded its authority.” In re
Cuozzo Speed Technologies LLC, 793 F.3d 1268, 1274
(Fed. Cir. 2015).
But mandamus is this context has still not been directly
addressed: “However, we did not decide the question of
whether the decision to institute review is reviewable by
mandamus after the Board issues a final decision or
whether such review is precluded by § 314(d). . . . Nor do
we do so now.” Id.
15
First Rulings: Mandamus
Mandamus petitions relating to institution:
PTAB refused to institute IPR proceedings on five
patents, and Federal Circuit found that Petitioner had no
“‘clear and indisputable right’ to challenge a non-
institution decision directly in this court, including by way
of mandamus.” In re Dominion Dealer Solutions, 749
F.3d 1379, 1381 (Fed. Cir. 2014).
See also In re Procter & Gamble, 749 F.3d 1376 (Fed.
Cir. 2014).
16
First Rulings: Mandamus
Mandamus petitions relating to institution
(continued):
Party argued that IPR should have been barred under
Section 315(b)’s one-year deadline because IPR
petitioner was in privity with a third party from a previous
lawsuit. In re MCM Portfolio, LLC, 2014 WL 595366 (Fed.
Cir. Feb. 18, 2014).
Federal Circuit denied mandamus “without prejudice to
MCM attempting to raise its section 315(b) arguments on
appeal after final decision by the Board.” Id.
17
First Rulings: Interlocutory Appeal of Stay Denials
CBM-related stay requests (AIA § 18(b))
Four factors district courts “shall” consider when a stay
related to a CBM is requested
Immediate interlocutory appeal
De novo standard of review
Federal Circuit has reversed district court denials of
stays
VirtualAgility, Inc. v. Salesforce.com, Inc.
Versata Software, Inc. v. Callidus Software, Inc.
18
Standing
The PTO is an administrative agency
Party need only meet the requirements laid out by the
agency and congress to commence PTO proceeding
Article III courts require standing
Article III of the U.S. Constitution limits the jurisdiction of
federal courts to actual “Cases” and “Controversies.” Art.
III, § 2.
Standing is immutable and non-waivable
No requirement to show Article III standing before an
agency, but standing must be demonstrated on direct
appeal from agency action to a federal court of appeals
19
Standing
Standing – Consumer Watchdog v. Wisconsin
Alumni Research Foundation:
Petitioner-Appellant, Consumer Watchdog, was a
nonprofit taxpayer and consumer-rights organization
Filed inter partes reexamination, was unsuccessful, and
appealed
CAFC asked for supplemental briefing on Appellant’s
standing
20
Standing
Standing – Consumer Watchdog v. Wisconsin
Alumni Research Foundation (continued):
To establish standing must show injury that is:
Concrete and particularized
Imminent or actual
Caused by the defendant and
Is likely redressable by a favorable decision
21
Standing
Standing – Consumer Watchdog v. Wisconsin
Alumni Research Foundation (continued):
For standing, Consumer Watchdog relied on the Board’s
denial of its requested administrative action—namely, the
Board’s refusal to cancel claims in the patent
Consumer Watchdog did not claim to make, use, or sell
the patented invention; was not threatened with suit; and
did not name another real party in interest
22
Standing
Standing – Consumer Watchdog v. Wisconsin
Alumni Research Foundation (continued):
Court held that the Board’s denial of Consumer
Watchdog’s requested action did not confer standing
Not enough that 35 U.S.C. § 315(b) allows a third-party
requester to appeal decisions favorable to patentability. A
statutory grant of a right to appeal does not eliminate
requirements of Article III.
Consumer Watchdog had not “identified a particularized,
concrete interest in the patentability of the ’913 patent, or
any injury in fact flowing from the Board’s decision.” Slip
Op. at 8.
23
Claim Amendments
Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292
(Fed. Cir. 2015)
Proxyconn appealed denial of motion to amend.
37 C.F.R. § 42.20(c): “The moving party has the burden
of proof to establish that it is entitled to the requested
relief.”
37 C.F.R. § 42.121(a)(2): “A motion to amend may be
denied where: (i) The amendment does not respond to a
ground of unpatentability involved in the trial; or (ii) The
amendment seeks to enlarge the scope of the claims of
the patent or introduce new subject matter.”
24
Claim Amendments
Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292
(Fed. Cir. 2015) (continued)
PTAB previously addressed several important
requirements for a patent owner’s motion to amend
claims in Idle Free Systems, Inc. v. Bergstrom, Inc.,
IPR2012-00027, 2013 WL 5947697 (PTAB June 11,
2013).
Court affirmed the Board’s decision to require a showing
that the amended claims are patentable over all prior art
of record—not just the prior art that the Board relied upon
when instituting review.
25
Claim Construction
In re Cuozzo Speed Technologies LLC, 793 F.3d
1268 (Fed. Cir. 2015)
The claim construction in IPR should be the broadest
reasonable interpretation for unexpired patents.
“Although the opportunity to amend is cabined in the IPR setting,
it is nonetheless available.”
Review underlying factual determinations concerning
extrinsic evidence for substantial evidence and the
ultimate construction of the claim de novo, following the
Supreme Court’s Teva Pharms. USA, Inc. v. Sandoz, Inc.
26
CBM and § 101
Versata Development Group, Inc. v. SAP America,
Inc., 793 F.3d 1306 (Fed. Cir. 2015)
Versata appealed whether the PTAB is authorized to
invoke § 101 as a test of validity in CBM proceedings.
35 U.S.C. § 328(a) states: The PTAB "shall issue a final
written decision with respect to the patentability of any
patent claim challenged . . . .”
“[W]e so hold that, looking at the entirety of the statutory
framework and considering the basic purpose of CBM
reviews, the PTAB acted within the scope of its authority
delineated by Congress in permitting a § 101 challenge
under AIA § 18.”
27
Constitutionality
MCM Portfolio LLC v. Hewlett-Packard Co., No.
2015-1091, 2015 WL 7755665 (Fed. Cir. Dec. 2,
2015)
Patent holder argued that IPR is unconstitutional
because any action revoking a patent must be tried in an
Article III court with the protections of the Seventh
Amendment.
Court held that IPR provisions do not violate Article III.
“Because patent rights are public rights, and their validity
susceptible to review by an administrative agency, the
Seventh Amendment poses no barrier to agency
adjudication without a jury.”
28
Rule 36 Judgments
Federal Circuit Rule 36 specifies that “[t]he court
may enter a judgment of affirmance without
opinion” when certain conditions exist and an
opinion would have no precedential value.
From December 2013 to November 2015, 50% of
decisions in IPR appeals were Rule 36 judgments.
Possible explanations:
Rule 36 decisions are made public faster, so the
numbers may appear inflated.
Substantial evidence standard of review for factual
determinations is highly deferential.
29
Strategic Tips: Make a Record
Make a record
Introduce facts into the record to support theme:
Expert declarations
Factual declarations and
Discussion of prior art references
Balance theme development with discovery
repercussions
Witnesses submitting affidavits or declarations can be
deposed; other discovery allowed based on the interest
of justice
30
Strategic Tips: Preserve Issues for Appeal
Preserve Arguments:
When seeking to challenge a specific rule, cite the rule to
the PTAB. Lingamfelter v. Kappos, No. 2011-1449, 2012
WL 3218529, at *2 (Fed. Cir. Aug. 9, 2012).
Specifically articulate arguments at every step – before
rehearing. In re Avid Identification Sys., Inc., No. 2012-
1092, 2013 WL 69102, at *6 (Fed. Cir. Jan. 23, 2013).
Requests for Rehearing: opportunity to bolster your
record, but also gives PTAB a chance to bolster its
reasoning
31
Strategic Tips: Third-Party Involvement
Government participation in appeals from PTAB is
discretionary
The USPTO and the United States may only participate
in significant cases
The Federal Circuit may request government briefing
May third parties intervene in the appeal?
What about estoppel?
Will Court permit third parties to file an amicus brief?
32
Strategic Tips: Positioning the Appeal
Narrow the issues – only present strongest grounds for reversal One issue is better than two, etc.
Consider the applicable standard(s) of review Issues of law reviewed de novo – greatest chance
E.g., obviousness, enablement, statutory interpretation
Issues of fact reviewed for substantial evidence – difficult to reverse E.g., written description, anticipation, facts underlying
obviousness
Procedural issues (e.g., denial of discovery) are unlikely to be reversible even if appealable
33
Strategic Tips: Appeal Brief
Most appeals turn on briefs, not oral argument
Clarity is key
Preliminary statement is helpful
Explain technology but avoid unnecessary detail
Headings provide a useful roadmap
Statement of facts
Must tell a compelling story
Avoid arguments or case citations
Include accurate record cites; don’t overstate
Court should want to rule for you after reading facts
34
Strategic Tips: Appeal Brief
Argument section
Prioritize – strongest argument usually goes first
Don’t leave the Court guessing at your best precedent –
identify key cases and fully develop them
Address any adverse precedent
Avoid string cites or block quotes
Avoid making substantive arguments in footnotes
35
Strategic Tips: Oral Argument
Start by concisely identifying the reversible error (or
the key reasons for affirmance)
Purpose is to allow Court to ask questions
Listen carefully, be flexible, answer questions
directly
Thorough familiarity with record and relevant case
law is essential
Advance preparation should include brainstorming
to identify possible questions
Don’t interrupt judges; adhere to time limits
36
A Look Ahead: Redundancy
Shaw Industries Group, Inc. v. Automated Creel
Systems, Inc., Nos. 15-1116, -1119 (Fed. Cir.)
PTAB often eliminates alternative grounds challenging
the same patent claims as “redundant.”
Petitioner raised a three-reference obviousness ground
and a single-reference anticipation ground.
The PTAB instituted the obviousness ground and denied
the anticipation ground as redundant.
Petitioner argues that the PTAB’s denial of the
anticipation ground was unlawful.
PTO argues that the Federal Circuit lacks jurisdiction to
review institution decisions.
37
Questions?
38
Thank You
Erika Harmon Arner Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Two Freedom Square 11955 Freedom Drive Reston, VA 20190-5675 Tel +1 571 203 2754 Fax +1 202 408 4400 [email protected]
Michael J. Flibbert Finnegan, Henderson, Farabow, Garrett & Dunner, LLP 901 New York Avenue, NW Washington, DC 20001-4413 Tel +1 202 408 4493 Fax +1 202 408 4400 [email protected]
39
Speaker Information
Erika Arner chairs Finnegan’s patent office practice. She focuses on patent office trials, patent prosecution management, client counseling, and litigation, with an emphasis on electronic technology, computer software, and the Internet. She has also served as lead counsel before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office (PTAB) in more than 20 post-grant review and inter partes review proceedings.
Mike Flibbert is a partner in Finnegan's chemical practice group, which he has chaired. With more than 20 years of experience, he serves as lead counsel in district court litigations, IPRs before the PTAB, and Federal Circuit appeals. Mike handles cases involving pharmaceuticals, biotechnology, chemistry, and chemical engineering. He has particular experience representing pharmaceutical patent holders in Hatch-Waxman Act litigations.
40
Disclaimer
These materials have been prepared solely for educational and
entertainment purposes to contribute to the understanding of U.S. and
European intellectual property law. These materials reflect only the
personal views of the authors and are not individualized legal advice. It is
understood that each case is fact specific, and that the appropriate solution
in any case will vary. Therefore, these materials may or may not be relevant
to any particular situation. Thus, the authors, Finnegan, Henderson,
Farabow, Garrett & Dunner, LLP (including Finnegan Europe LLP, and Fei
Han Foreign Legal Affairs Law Firm) cannot be bound either philosophically
or as representatives of their various present and future clients to the
comments expressed in these materials. The presentation of these
materials does not establish any form of attorney-client relationship with
these authors. While every attempt was made to ensure that these
materials are accurate, errors or omissions may be contained therein, for
which any liability is disclaimed.
