Inter Partes Review

March 13, 2023: In Apple Inc. v. Vidal, the Federal Circuit reversed in part the district court's dismissal. Specifically, the Federal Circuit held that the Director's Fintiv instructions, as well as subsequent instructions rolling back the Fintiv instructions, to PTAB are (1) non-reviewable because institution decisions are non-reviewable by statute, (2) are not arbitrary and capricious. However, the Federal Circuit also found that the instructions fail to adhere to the APA's notice-and-comment rulemaking procedures, and these procedural requirements are indeed reviewable and enforceable by the courts apart from the reviewability of the underlying action. With respect to standing, the court concluded that, “at least Apple has standing to press the challenge to the Director's instructions as invalid for want of notice-and-comment rulemaking.

Stated the court:

• If the Director personally made an institution decision accompanied by an explanation containing the same reasoning as appears in the instructions here at issue, then the decision would be nonreviewable for being contrary to statute or arbitrary and capricious. For the IPR system to function with the delegations that are inevitable and congressionally expected, the same conclusion must follow for the instructions given by the Director to the Board as delegatee.
• The Supreme Court has held that clear and convincing evidence establishes a congressional protection from judicial review of the substance of the Director's institution discretion. That holding does not cover . . . the Director's choice of whether to use notice-and-comment rulemaking to announce instructions for the institution decision. [. . .] In these circumstances, we have been shown no sufficient justification for a conclusion that the high standard of § 701(a)(1) for inferring a preclusion of review is met for this distinct issue.

• Background, Summary, and Analysis
• News story (paywall) (cached - private)
• Background, Summary, and takeaways
• Summary

On June 21, 2022, Director Kathi Vidal issued an official memo that sharply curtails the impact of Fintiv on IPR proceedings where there is a parallel proceeding in court. The memo states:

The memo also states that ”[t]he plain language of the Fintiv factors . . . does not apply to parallel U.S. International Trade Commission (ITC) proceedings“ and ”[c]onsistent with Sotera Wireless, Inc. ¹⁾, the PTAB will not discretionarily deny institution in view of a parallel district court litigation where a petitioner presents a stipulation not to pursue in a parallel proceeding the same grounds or any grounds that could have been reasonably been raised before the PTAB.“

In addition, the memo clarifies thath “when considering the proximity of the district court's trial date to the date when the PTAB final written decision will be due, the PTAB will consider the median time from filing to disposition of the civil trial for the district in which the parallel litigation resides.”

Concurrently with the memo, the PTO release results of a study of PTAB parallel litigation.

In (Currently Amended): California Institute of Technology v. Broadcom Ltd. et al. (revised 2/22/22) a Federal Circuit panel affirmed a lower court ruling of “no invalidity based on IPR estoppel.” In this case, Caltech sued Broadcom, Avago, and Apple of infringing a few of its patents in the Central District of California. Before trial, Apple filed multiple IPR petitions challenging the validity of the claims at issue, but the PTAB concluded that Apple failed to show the challenged claims were unpatentable as obvious. Before the district court, Apple and Broadcom argued that the claims would have been obvious over new combinations of prior art not asserted in the IPR proceedings. The district court held that these challenges were barred by estoppel because Apple and Broadcom were aware of the prior art references at the time they filed their IPR petitions and reasonably could have raised them in those petitions even if they could not have been raised in the proceedings post-institution.

The circuit court noted that in Shaw Industries Group, Inc.²⁾, “this court held that IPR 'does not begin until it is instituted.'” Therefore grounds raised in a petition (or that reasonably could have been raised in a petition) were necessarily not raised ”during the IPR.“ “Only the grounds actually at issue in the IPR were raised, or reasonably could have been raised in the IPR. Thus estoppel did not bar the petitioner in Shaw from presenting a petitioned-for, non-instituted ground in future proceedings because the petitioner could not reasonably have raised the ground during the IPR. In SAS Institute, Inc. v. Iancu ³⁾, the Supreme Court made clear there is no partial institution authority and that it is the petition, not the institution decision, that defines the scope of the IPR. Given the statutory interpretation in SAS, any ground that could have been raised in a petition is a ground that could have been reasonably raised “during inter partes review.” The court concludes, “Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not in the IPR but which reasonably could have been included in the petition.” (See section on revised opinion below.)

UPDATE: On Tuesday, February 22, the Court released a revised decision deleting language that suggested that the AIA estoppel provision applies more broadly than the law states. (See original decision.) Specifically, the appeals court initially wrote that estoppel applies “to all claims and grounds not in the IPR but which reasonably could have been included in the petition.” It has now revised that line to read that estoppel applies to “all grounds not stated in the petition but which reasonably could have been asserted against the claims included.”

The revised wording is aligned with the statute which states that the estoppel applies to “the claim” challenged in the IPR. Accordingly, the estoppel does not apply to non-challenged claims which can therefore be challenged in District Court under the same evidence presented in the IPR or evidence that was not presented but could have been.

• News article (paywall) (private cache)

UPDATE: On June 26, the Supreme Court denied cert. Full coverage at SCOTUSblog.

It should be noted that the scope of estoppel language relating to PGRs in 35 U.S.C. § 282(b)(2) is identical to the IPR language quoted in the box above, and presumably the same reasoning applies.

• '710 and '032 patents
  • The Fed. Cir. upheld the lower court's construction of “repeat” to “simply require bits to be repeated, without limiting how specifically the duplicate bits are created or stored in memory.”
  • The Fed. Cir. uphold the lower court's denial of a JMOL based on substantial evidence supporting the jury's finding of infringement, based largely on opinion testimony of Caltech's expert, Dr. Shoemake.
• '781 patent:
  • The Fed. Cir. quickly dispensed with appellants' arguments of ineligibility under §101, citing Diamond v. Diehr.
  • The majority held that the district court erred in refusing to instruct the jury that the patent's “variable number of subsets” limitation requires irregular repetition, and remanded for further consideration.

Dissent: Judge Dyk parts ways with the majority on the question of the JMOL, stating, “I . . . would reverse the district court's denial of JMOL of no literal infringement [for the '710 and '032 patents]. I would similarly reverse the denial of JMOL rather than remand for a new trial with respect to the infringement of the '781 patent.”

• News article (paywall) (private cache)

In response to Apple's motion for summary judgment in their APA action against the USPTO, the USPTO filed a brief in opposition to summary judgment in which it mounted a strong defense of their adoption of Fintiv factors for deciding whether to institute an IPR proceeding. In large measure, their defense relied on broad non-judicially reviewable discretion granted to the USPTO in the AIA. For its part, Apple filed a brief in opposition to the USPTO's motion to dismiss.

Here is a breakdown of the USPTO's arguments:

1. AIA confers no rights to IPR proceedings as the decision to institute is discretionary and lacks judicial review.
   1. Plaintiffs lack standing. Similar factors were used before adoption of NHK/Finitv decisions, and “Plaintiffs can only speculate that an alternative analysis to the Fintiv factors would be more favorable to them.” Thus, Plaintiffs lack standing and the court cannot redress their alleged injury.
   2. There is a lack of justiciable claim under the APA because:
      1. the AIA precludes judicial review and because the decision to institute is committed to agency discretion by law.
      2. the Fintiv factors are closely tied to the application and interpretation of statutes related to the decision to institute, and they therefore fall within § 314(d)’s preclusion of judicial review.
      3. The decision to institute only determines whether the Board will begin full review of deciding patentability, not a final determination regarding any patent claim. Therefore the APA specifically does not allow for review under 5 U.S.C. §704.
2. Plaintiffs misinterpret the AIA in stating that it leaves “no room for the Director to . . . deny a timely IPR petition based on parallel infringement litigation.” This is contrary to the plain language of the statute which uses permissive terms, without any mandate to institute review, and includes no restrictions on the considerations the Director may take into account when deciding to grant or deny IPR petitions. Therefore, the Director could not have exceeded his statutory authority in adopting the Fintiv factors.
   1. There is no inconsistency between setting an upper limit (per 35 U.S.C. § 315(b) – the 1-year limit) to the time period during which an IPR petition must be filed and giving the Director’s discretion to deny eligible petitions that are filed within that limit.
   2. The statutory discretion is not limited by “the purpose of the IPR.” That is, no canon of statutory construction allows the plain meaning of the language to be limited or modified by a requirement that the goals of the statutory scheme be advanced. Essentially, the USPTO argues that it doesn’t matter whether the FIntiv factors advance or frustrate Congress’ goals in passing the AIA.
3. The factors are not arbitrary and capricious because they reasonably balance policy interests involved in IPRs.
   1. It is not improper, as Plaintiffs contend, for the Board to speculate about the likely course of litigation.
   2. That the factors lead to inefficiency is not dispositive because “efficiency is not the only goal of the AIA or the Fintiv factors.” Congress instructed the Director to take into account, “the effect[s] . . . on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete [IPR] proceedings.”
   3. The factors are “flexible” not “vague.”
   4. Even assuming the costs for conducting IPR proceeding is fully covered by fees, there are other considerations such as limited time and personnel.
4. The factors do not constitute a substantive rule, and therefore they do not require Notice-and-Comment rulemaking under APA because the factors are binding only on the Board – an entity within the agency. It does not affect any legally-enforceable rights.

In Samsung v. Prisua the PTAB invalidated claims under § 103 on remand from the Federal Circuit, after finding the claims indefinite for the following reasons:

• Claims 1-4 and 8 – unclear whether claim covers a device capable of being operated by a user to select at least one pixel (i.e., an apparatus) or covers only the user actually operating the data entry device to select a pixel (i.e., a method of using an apparatus) and therefore indefinite under IXPL Holdings LLC v. Amazon because the statutory class is unclear.
• Claim 1 “digital processing unit” – as invoking §112 ¶6 under Williamson and spec fails to identify corresponding structure

Before the Federal Circuit, Samsung argued that the claims should be invalidated by the PTAB for being indefinite (under some interesting statutory theories) or in the alternative, that the PTAB should have examined the claims for validity under § 103 despite the indefiniteness under IXPL.

The Federal Circuit held:

• The PTAB can’t invalidate a claim based on §112 because that would be out of scope of AIA. Stated the court:

  As such, the proper course for the Board to follow, if it cannot ascertain the scope of a claim with reasonable certainty for purposes of assessing patentability, is to decline to institute the IPR or, if the indefiniteness issue affects only certain claims, to conclude that it could not reach a decision on the merits with respect to whether petitioner had established the unpatentability of those claims under sections 102 or103. It would not be proper for the Board to cancel claims on a ground that is unavailable in an IPR.

• Samsung is correct that even if the claim is invalid under IXPL Holdings, it can still be evaluated for 103 validity.
• The term, “digital processing unit” has a well understood meaning of a general purpose computer processor and therefore the presumption under Williamson that the claim should be construed under § 112 ¶ 6 is overcome.

Because the claim scope is only indefinite with respect to what statutory class of invention it belongs to, the PTAB was able to, on remand, invalidate the claims on the basis of prior art.

It’s worth noting that when PTAB initially looked at the claims, it declared them indefinite sua speonte – neither party to the IPR argued for or against indefiniteness. The claim construction order in the corresponding southern district of Florida case does not mention anything about the claims being indefinite under IPXL or about the claims being drawn to a combination of statutory classes.) This shows a willingness by the judges on PTAB to exercise independent thought on these matters. If the same thing happens to us, the claims will not be invalidated because §112 consideration is out of bounds for PTAB.

• Summary and analysis
• Patexia's Commentary on IPR Catch-22

In a 6-3 ruling in Return Mail. v. U.S. Postal Service, the court ruled that the government is not a “person” under the AIA act and therefore cannot file an inter-partes reexamination. Justice Sotomayor authored the opinion joined by Roberts, Thomas, Alito, Gorsuch and Kavanaugh. Breyer dissented, joined by Ginsburg and Kagan.

• Documents and analysis
• news article (paywall)

In SAS Institute Inc. v. Iancu, the Supreme Court held that the PTO may not institute a PTAB proceed on only a subset of the challenged claims.

• News summary (paywall)
• Analysis

In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the Supreme Court upheld the constitutionality of IPR process enacted by the AIA.

• Excellent analysis of decision

On 01/04/18, attorneys from Finnegan authored a helpful summary of estoppel provisions relevant to IPR proceedings. Here are some notes from that:

• District courts and PTAB agree that estoppel applies only to claims that are addressed in a final written decision of an IPR, that is for claims on which a trial has been instituted.
  • Depomed Inc. v. Purdue Pharma LP, D.N.J. 11/04/16
  • Princeton Digital Image Corp. v. Konami Digital Entertainment, D. Del. 03/30/17
• The Federal Circuit held that estoppel does not apply to invalidity grounds that were denied institution on the basis of redundancy.
  • Shaw Industries Group Inc. v. Automated Creel Systems, Fed. Cir., 2016
  • HP Inc. v. MPHJ Tech. Invs., Fed. Cir. 2016
• A PTAB panel stated in dicta that estoppel does not apply to any ground that was denied institution.
  • Great West Casualty Co. et al. v. Intellectual Ventures II LLC, 2/15/17⁴⁾⁵⁾.
• The PTAB routinely applies estoppel to invalidity grounds based on prior art that the petitioner was aware of or reasonably could have found but did not raise in an earlier IPR petition.
  • Apotex Inc. v. Wyeth LLC, 09/16/15⁶⁾.
  • Ford Motor Co. v. Paice LLP, 09/26/16⁷⁾.
  • Praxair Distribution Inc. v. INO Therapeutics LLC, 08/25/16⁸⁾.
  • Johns Manville Corp. v. Knauf Insulation Inc., 05/08/17⁹⁾.
• District courts have inconsistently interpreted Shaw.
  • In Delaware, the district court found that estoppel only applies to invalidity grounds that were actually raised in the IPR and not to grounds not presented in the petition irrespective of whether the petitioner reasonably could have raised those grounds.
    • Intellectual Ventures I LLC v. Toshiba Corp., 221 F.Supp.3d 534, 553-54 (D. Del. Dec. 19, 2016).

• Law 360 article (paywall)

Orrick posted a great summary of Aqua Products Inc. v. Matal, which addressed when and how amendments should be permitted in IPR practice. Key findings include:

1. When a patent owner proposes an amended claim in IPR, the burden of persuasion with respect to patentability is on the petitioner to show that the patent is unpatentable.
2. Regardless of which party bears the ultimate burden of persuasion, the patent owner bears the burden of producing evidence to support patentability.
3. The PTO is authorized a promulgate a new rule regarding the burden of persuasion to put the burden on the patent owner instead.

• Orrick's post (cached MAFF)

Current caselaw and IPR estoppel strategies are nicely summarized in this Law360 artile (paywall).

• Include all strong invalidity arguments in the petition
• Develop nonpatent and printed publication art prior to filing IPR
• Avoid tainting product art (ensure features can be proved using evidence other than printed documentation)
• Structure stays of litigation (in a stipulation agreement for the stay) to avoid broad estoppel
• Be wary of joining IPR petitions
• Replicate invalidity grounds in district court until PTAB issues a final written decision
• Reuse patents and printed publications in new ways (e.g., in combination with other art)
• In courts with broad estoppel, be prepared to explain why art could not have been raised in the IPR.

In Veritas Technologies v. Veeam Software Corp., the Fed. Cir. vacated the PTAB's refusal to consider an amended claim. The PTAB denied Veritas' motion to add usbstitute claims because it considered the motion and supporting declaration deficient because Veritas “offered no discussion of whetehr the newly added features . . . were separately known in the art” (internal quotes omitted). All that Veritas discussed was that the newly added features in combination with other known features were not in the prior art.”

The Fed. Cir. concluded that because there is no reason to doubt that it is only the combination that was the “new feature” a scenario recognized in a long line of Supreme Court and Federal Circuit cases noting that novel and nonobvious inventions are also only a combination of known individual features. Stated the court: “In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.”

In Cuozzo Speed Technologies LLC v. Lee, the Supreme Court affirmed the Federal Circuit's holding that (1) the decision whether to institute inter partes review is final and non-appealable, and (2) broadest reasonable interpretation of claims is “a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.”

• summary and analysis
• Scotus Blog Page

On April 25, 2016, the Supreme Court heard oral arguments.

• Oral Arguments:
  • mp3
  • Transcript
  • Analysis

In a 6-5 decision, In re Cuozzo Speed Technologies, LLC., the full Federal Circuit denied en banc review of its prior panel decision to let stand broadest reasonable interpretation (BRI) claim construction by the BPAI during inter partes review. Judge Dyk, joined by Lourie, Chen, and Hughes, authored a concurring opinion finding (1) the PTO has applied BRI standard in proceedings for more than a century, and (2) the AIA does not indicate congressional intent to change the prevailing BRI standard.

Judge Prost, joined by Newman, Moore, O'Malley, and Reyna, dissented, arguing that IPR is a new, court-like proceeding designed to adjudicate validity of issued patent claims and in such proceeidngs claims are given their actual meaning, not BRI. According to Prost, the AIA “is a new statutory regime” and Congress' silence as to the proper claim construction standard does not suggest congressional intent one way or the other on this new proceeding.

Newman wrote a separate dissent, highlighting the outlier nature of the majority opinion, noting that ”[a]ll of the amici curiae criticize the panel majority position and urge en banc attention to this “matter of exceptional importance.” Separately she argues that “the legislative purpose [of the AIA] fails if the PTO applies different law than is applied in the courts” and again lists from her panel dissent the reasons BRI is improper in AIA proceedings.

• Panel decision
• Summary, discussion

On February 23, 2015, the S.Ct. denied a petition for certiorari alleging that the America Invents Act is unconstitutional because of its first-to-file provisions.

• News article dated Feb. 23, 2015 (behind paywall)
• Brief summary, discussion

~UPDATED~ Supreme Court granted cert. on June 12, 2017 in Oil States Energy Services LLC v. Greene's Energy Group LLC.

• Summary, analysis
• Case page

In Atlanta Gas Light Company v. Bennett Regulator Guards Inc., the PTAB ruled that, because a privity between an indemnified party and its indemnitor does not begin until the indemnitor's obligation manifests by the indemnified party being sued, the one-year IPR clock did not run out. This suggests that the one-year clock will begin with respect to an indemnitor party upon the indemnified party being sued.

• Summary and analysis (cached MAFF)

In Rexnord v. Kappos, Judge Newman held that a patent was obvious, reversing the Board of Appeals’ holding that the patent was valid, which reversed the interpartes reexam Examiner’s finding that the patent was obvious. It all started around 2003, when Habasit sued Rexnord for patent infringement in Delaware, and Rexnord filed a request for reexamination. The suit was stayed pending the outcome of the reexam. Around 2007 Examiner held that the patent claims were obvious, and Habasit appealed to the PTO Board in response. At some point, the BPAI reversed the Examiner, holding that the patent claims are valid, but Rexnord appealed that decision to the Federal Circuit in 2011.

• Stays:
  • Motions to stay related litigation is granted 70% when contested, as opposed to 60% grant rate for reexaminations.
  • Reexams are not automatically stayed, but the PTAB has stayed each re-exam relating to a patent in an inter partes review.

In Garmin International, Inc. v. Cuzzo Speed Technologies, the PTAB held:

• The PTAB's authorization is not required for a patent holder to conduct routine discovery, but the file histories of prior art patents relied on by Garmin is not included as “routine discovery.” It is sufficient for respondent Garmin to provide copies of the patents relied upon in its petition since Garmin did not rely on the file histories of those patents.. Cuozzo may independently obtain the file histories of the cited prior art patents if it desires. It is also inappropriate for a patent holder to cast a wide net for “information inconsistent with positions Garmin has taken in its Petition.”
• “Routine discovery” under 37 C.F.R. § 41.51(b)(1)(iii) is narrowly directed to specific information known to the responding party to be inconsistent with a position advanced by that party in the proceeding, and not broadly directed to any subject area in general within which the requesting party hopes to discover such inconsistent information.
• Under 37 C.F.R. § 41.51(b)(1)(iii), the time for serving routinely discoverable inconsistent information is concurrent with the filing of documents or things that contains the inconsistency.
• Under 35 U.S.C. § 316 (a)(5) and 37 C.F.R. § 42.51(b)(2), additional discovery “in the interests of justice” is “significantly different from the scope of discovery available under the Federal Rules of Civil Procedure, and:
  • requires more than a possibility or mere allegation
  • cannot include litigation positions and underlying basis – A party may not attempt to alter the Board's trial procedures under the pretext of discovery
  • cannot include requests for material where the requester has the ability to generate equivalent information by other means.
  • the questions should be easily understandable – 10 pages of complex instructions for answering questions is prima facie unclear.
  • the requests cannot be overly burdensome.

• Fish & Richardson - Summary