This Webcast Will Begin Shortly

This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via email at: webcast@ac...
7 downloads 0 Views 438KB Size
This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via email at: [email protected] Thank You!

1

Inter Partes and Covered Business Method Reviews: Lessons from the First Year and a Half May 13, 2014 12:00 pm EDT

Presented By: David Bomzer, Assistant IP Counsel, United Technologies Corporation, Pratt & Whitney Division Wab Kadaba, Partner, Kilpatrick Townsend & Stockton LLP Mike Pavento, Partner, Kilpatrick Townsend & Stockton LLP David Reed, Associate, Kilpatrick Townsend & Stockton LLP

2

Agenda I.

IPR / CBM Overview

II.

Current IPR / CBM Filings

III.

Lessons Learned So Far

3

IPR / CBM Overview

4

IPR / CBM Overview Timing

Bases

Standard

Estoppel

USPTO: raised / reasonably could have; Dist. Ct. & ITC: actually raised

Evidence directly related to factual assertions by either party

No, but immediate interloc. appeal from denial of stay (will delay lit.)

USPTO, Dist. Ct. & ITC: raised or reasonably could have raised

Depos. of declarants & as necessary in interest of justice

Only later actions for patent invalidity filed by petitioner

Once sued or charged w/ infringement C B (After PGR M period for pats. filed on / after 3/16/13)

§§ 101, 102, 103, 112, 251 (102 / 103 art limited for preAIA pats.)

More likely at least 1 claim not patentable; Novel or open legal question

9 mos. after. issue or end of I PGR; w/in 1 P yr. of service R (No wait for pats. filed pre3/16/13)

§§ 102, 103 pats. and printed pubs.

Reasonable likelihood at least 1 claim not patentable

Discovery

Lit. Stays

5

IPR / CBM Timeline (Typical)

3 Mos.

≤ 3 Mos.

3 Mos.

3 Mos.

1 Mo.

≤ 12 Mos. 6

PTO vs. Litigation Factors

CBM

IPR

Litigation

Burden of Proof

Preponderance of Evidence

Clear and Convincing Evidence

Presumption of Validity

No

Yes

Claim scope

Broadest reasonable interpretation (Suitco)

Contextual (narrow) construction (Phillips)

Decision maker

PTAB 3 Judge Panel

Average Juror

7

IPR / CBM vs. Litigation 1.  Compressed time: advantage or disadvantage? 2.  Significant expense, but generally less than litigation 3.  Well-managed discovery effort is very important (information needed, attacking other side’s positions, defending your positions, cost management, …) 4.  Real party-in-interest and privity issues: estoppel 5.  Broadest reasonable interpretation standard applied by the PTO (can often work against the patent holder) 6.  Similar opportunity for advocacy before decision maker 8

Covered Business Methods •  Covered business method patents: “claim a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except … does not include patents for technological inventions” –  “Technological inventions” not statutorily defined •  USPTO promulgated definition: “the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution” •  USPTO will consider AIA legislative history explaining that the definition of CBM was drafted to encompass patents “claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity” 9

Current IPR / CBM Filings

10

IPR and CBM Filings (4/24/14) Petitions Granted

Denied Disposals

IPR

1,110

439 (11 joinders)

99

186 (129 settled; 35 final written decisions; 22 adverse judgments)

CBM

160

56

12

26 (15 settled; 11 final written decision)

•  Patent Owners Preliminary Responses: ~ 75%+ of cases •  Settlements: ~ 25% of cases (majority involved NPE patent owners) 11

Lessons Learned So Far

12

Versata: First CBM Granted SAP America, Inc. v. Versata Development Group, Inc., CBM2012-00001 (Jan. 9, 2013) •  First CBM petition to be granted. PTAB answered several interesting questions: –  Does a petitioner have standing to bring CBM review where patent was found valid and infringed in Dist. Ct. and on-going appeal does not involve validity issues? –  Must a patent claim be directed to or recite a “financial product” or a “financial service”? –  Why were the patent claims in this case not directed to a technological invention? 13

Standing •  In District Court, SAP was found to have infringed Versata’s patent; case is on appeal to CAFC, but appeal does not involve validity issues •  Versata argued that the related litigation had progressed beyond the point where the statute contemplated it would be employed – the validity of the patent had been finally determined •  PTAB gave AIA § 18(a)(1)(B) its literal meaning: a party sued for infringement of a patent, and not otherwise estopped from challenging validity, may file a petition… •  PTAB held that claim preclusion / issue preclusion had not attached because CAFC had not yet rendered final judgment

14

Financial Products / Services –  PTAB: CBM claims do not require literal recitation of the terms “financial products” or “financial services.” The term financial is an adjective that simply means relating to monetary matters –  Versata’s patent claims are directed to methods and apparatuses for determining the price of a product offered to a purchasing organization

Technological Invention –  PTAB: None of Versata’s claim limitations, taken alone or in combination, rises to the level of a technological feature as the claimed method steps could be performed by one of ordinary skill in the art with pencil and paper 15

CBM: Representative Claim 17. A method for determining a price of a product offered to a purchasing organization comprising: arranging a hierarchy of organizational groups comprising… ; arranging a hierarchy of product groups comprising…; storing pricing information in a data source… retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group…; sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups…; eliminating any of the pricing information that is less restrictive; and determining the product price using the sorted pricing information.

16

SAP v. Versata Final Decision •  Trial conducted April 17, 2013 •  Final Written Decision issued June 11, 2013 (Paper No. 70) –  First final written decision issued by PTAB; all challenged claims cancelled as unpatentable under 35 U.S.C. § 101

•  Motion for rehearing denied –  Issues raised: not a CBM patent; §101 not valid basis for review; BRI improper in PTAB trial; claims recite patent eligible subject matter

•  Notice of appeal filed (November 13, 2013) •  SAP faces final judgment of infringement and damages of @ $300M in related litigation… –  Fresenius v Baxter (Fed. Cir., July 2, 2013): cancellation of patent claims by PTO trumps “non-final” litigation judgment 17

More Financial Services; Tech. Inventions Volusion v. Versata CBM2013-00017 (Oct. 24, 2013) • “Database” claims with no financial-oriented limitations • Specification states that “many embodiments… have application to a wide range of industries” including “financial services…” and has additional disclosure that invention is applicable to financial services –  As described in specification, claimed invention has application in the field of e-commerce, in the form of e-catalogs used by potential buyers –  The claimed steps are not limited to any particular product or service –  Therefore, at least one claim covers operations used in the practice, administration, or management of a financial service. –  No technological invention: representing items hierarchically is more an organizational problem for grouping items than a technical problem 18

IPR First Final Written Decision Garmin Int’l, et al., v. Cuozzo Speed Tech. LLC IPR2012-00001 • Challenged claims found unpatentable by PTAB • Observations re: PTAB written decision: –  detailed claim construction analysis –  considered at length issues of priority, conception and reduction to practice –  discounted Owner’s expert testimony as being essentially argument vs. expert opinion supported by significant detailed and factual bases

• Owner’s motion to amend was denied; PTAB did not find adequate support in specification for proposed amendment 19

More from Garmin: Discovery •  Owner requested additional discovery under “necessary in the interest of justice” standard –  Sought interrogatories, document requests and what amounted to a 30(b)(6) deposition of the corporate entity of Petitioner (Garmin)

•  PTAB denied request and set out 5-factors that are important for determining whether an “additional discovery” request will be granted: 1. Provide evidence, rather than “more than a possibility and mere allegation” that something useful will be found; 2. Litigation positions and underlying basis are not “necessary in the interest of justice”; 3. Ask whether equivalent information can be generated by other means; 4. Questions should be easily understandable; and 5. Requests should not be overly burdensome to answer 20

More Discovery Microsoft v. Proxyconn IPR2012-00026 (Sept. 18, 2012) IPR2013-00109 (Jan. 11, 2013) • 

Owner requested additional discovery from petitioner relating to secondary considerations of nonobviousness (commercial success of allegedly infringing product) to support patentability arguments

• 

PTAB required Owner, in support of request, to address relevance of the information sought, including the nexus between the information sought and the allegation of commercial success.

• 

Owner asserted that information required by PTAB was premature. PTAB disagreed (Paper No. 32): interest of justice does not require conclusive showing of nexus, but some showing of relevance necessary –  Showing of relevance especially required where, as in this case, the claimed feature (remote differential compression) was only one characteristic of the allegedly infringing product (Windows Server) 21

Dismissal of Prior Litigation Macauto USA v. BOS GmbH & KG, IPR2012-00004, filed September 16, 2012 • Previous patent infringement suit against petitioner was voluntarily dismissed without prejudice; petition for IPR was granted despite being filed more than 1 year later –  The prior lawsuit was voluntarily dismissed without prejudice and, as such, under Federal Circuit law, the effect of such a dismissal “leaves the parties as though the action had never been brought” –  Also: Owner never filed proof of service or waiver of service in the litigation, so Owner never established service date for complaint; therefore the one year time limitation under Section 315(b) had not yet begun to run and the petition was not time barred 22

Effect of Previous Action by PTO Research in Motion v. MobileMedia Ideas IPR2013-00036, filed October 30, 2012 • Patent at issue was subject of request for Ex Parte Reexam that was denied (3-examiner panel) prior to filing of the IPR –  Some references relied upon in IPR petition were before the examiners who denied the reexamination request

• Owner argued that IPR should be denied on basis that PTO already considered the cited references –  35 U.S.C. § 325(d) provides that PTO “may” take into account whether “the same or substantially the same prior art or arguments previously were presented to the Office” –  PTAB rejected argument that petitioner failed to explain why reexam examiners were wrong in denying request for ex parte reexamination; IPR request is not a renewed request for reexamination 23

DJ Bar and Standing Ariosa Diagnostics v. Isis Innovation, IPR2012-00022, filed Sept. 17, 2012 • 

Petitioner filed DJ Action for non-infringement; Owner asserted infringement and Petitioner raised affirmative defense of invalidity

• 

Petitioner later filed petition for IPR –  Section 315(a)(1): An IPR may not be instituted if petitioner or real party in interest previously filed a civil action challenging validity of the patent –  Section 315(a)(3): a party faced with a claim of infringement can bring a counterclaim of invalidity and still avail itself of inter partes review

• 

PTAB ruled that Petitioner had standing to file IPR petition: –  Filing civil action = filing a complaint with the court to commence the action –  A civil action for DJ of non-infringement is not a challenge of patent validity –  Asserting affirmative defense of invalidity is different than filing counterclaim for invalidity, and thus for the purposes of 315(a)(1) cannot be considered a filing of a civil action for invalidity 24

Joinder or Stay of Related Proceedings •  35 U.S.C. § 315(d): … Director may determine manner in which an IPR or other concurrent PTO proceeding may proceed, including providing for stay, transfer, consolidation, or termination –  PTAB has consistently been staying concurrent ex parte reexam proceedings relating to the same patent pending outcome of IPR •  Does not matter if reexam was requested by Petitioner or a third party •  If IPR is granted, reexam could remain stayed or could be joined with IPR; if IPR denied, stay would likely be lifted

–  Prosecution of related patent applications will continue, however: •  See IPR2013-00028 and others filed by this petitioner: Petitioner requested that PTAB take jurisdiction over, suspend prosecution of, or supervise papers filed in co-pending apps., arguing that inconsistent positions (e.g., claim constructions) could be advanced by Owner if prosecution of the applications proceeded. •  PTAB disagreed and denied request 25

Joinder or Stay of Related Proceedings (cont.) Microsoft v. Proxyconn IPR2012-00026 (Sept. 18, 2012) IPR2013-00109 (Jan. 11, 2013) • In IPR2012-00026, PTAB granted IPR petition with respect to some asserted claims but not others • Petitioner (MS) filed new IPR request (IPR2013-00109) for same patent, asserting invalidity of previously denied claims (and others) at least partially in view of new prior art references; requested joinder with IPR2012-00026 –  New IPR petition was filed more than one year after Owner served infringement complaint against Petitioner

• PTO granted second IPR and joined proceedings (Paper Nos. 14 and 15) –  If joinder was denied, then second IPR request would have been time-barred –  Statutory bar does not apply to requests for joinder (35 U.S.C. § 315(b)) –  1-year time limit may be adjusted in cases of joinder (35 U.S.C. § 316(a)(11)) 26

More Joinder Sony and HP v. Network-1 Security Solutions IPR2013-00495 (Aug. 6, 2013) • Sony filed a “me too” IPR petition following a petition by Avaya • PTAB noted 37 C.F.R. § 42.122(b): request for joinder must be filed ≤ 1 mo. after institution any IPR for which joinder is requested • However, under 37 C.F.R. § 42.5(b), PTAB “may waive or suspend a requirement” of the rules • PTAB granted joinder for 3 reasons: –  Sony’s petition did not raise new issues beyond those already in play –  Sony agreed to not actively participate unless one party settles –  Sony had diligently tried to initiate IPR within time limits (two prior petitions failed) 27

Claim Construction •  Wowza Media Systems v. Adobe Systems, IPR2013-00054 –  PTAB declined petitioner’s proposed construction for a material claim term; petitioner provided no reasoning or evidence as to why the term should not be given ordinary meaning. –  PTAB applied ordinary meaning and denied all grounds of petition

•  Synopsys v. Mentor Graphics, IPR2012-00041 –  Petitioner argued ordinary and customary meaning for all claims terms, but PTAB found an “implicit construction” for a material term in petitioner’s claim charts –  PTAB construed term differently and found that prior art did not disclose

28

Experts •  PTAB desires expert testimony to substantiate arguments in petition •  PTAB will look to the technical qualifications of an expert –  Technical vs. Marketing –  The expert may testify in deposition, so presentation is important –  The expert from a corresponding litigation may be appropriate (but consider conflicting arguments / positions)

•  Expert Deposition –  The deposition is a cross-examination and redirect only –  Limit the affidavit to those aspects that will actually be relied upon •  Limits scope of deposition; minimizes risk of presenting additional arguments and/or exceeding page limits

–  Should you depose the other side’s expert? •  Remember – the expert cannot testify at the Oral Argument 29

Litigation Stays •  About 60% of contested stay motions are granted –  Varies by district: •  42% in E.D. Tex and 68% in D. Del

–  Sometimes stays granted for other defendants too: •  Typically requires some sort of limited estoppel •  See, e.g., Overland Storage, Inc v. BDT AG (Germany) et al., 3-10cv-01700 (CASD), “[defendants] will be estopped from challenging the validity of any claims of [the patent-in-suit] on the same grounds asserted by [petitioner] and relied upon by the USPTO in reaching its final decision in the reexamination[]. Obviously, the full estoppel provision as set out in Section 315 will apply to [petitioner's] challenges to the [patent-in-suit] because it is the petitioner in that IPR proceeding.” (page 7) 30

Privity •  Privity will likely be found where the party exercises control –  Funding may be a factor –  The fundamental issue is control –  Issue often arises in subsidiaries with common legal group

•  Patent aggregators: attempting to insulate their members from estoppel –  Unified Patents, Inc. v. Clouding IP, LLC; IPR 2013-00586 –  RPX Corporation v. Macrosolve; IPR2013-00140 –  RPX Corporation v. VirnetX, Inc.; IPR2014-00171 through 00177

31

Oral Hearing •  PTAB sets time limit for each party •  Parties exchange demonstratives •  Typically one judge takes the lead –  Very technical –  Very prepared

•  Argument centers on the substance –  Counsel must know and understand the record –  Demonstratives must include material in the record

32

Appeals •  PTAB is probably the busiest venue - definitely the fastest •  35 USC §144: Fed. Cir. shall review the decision on the record •  Standard of Review –  Factual issues: substantial evidence –  Legal issues: de novo –  PTAB rules: substantial deference

•  Chenery limitation of legal review: Courts of Appeal are limited to review only on the legal basis used by the Agency •  Fed. Cir.: Judge Gajarsa said appeals usually scheduled in 3-4 months but will now be delayed to 6-7 months

33

Questions? Thank you.

34

Thank you for attending another presentation from ACC’s Webcasts Please be sure to complete the evaluation form for this program as your comments and ideas are helpful in planning future programs. If you have questions about this or future webcasts, please contact ACC at [email protected] This and other ACC webcasts have been recorded and are available, for one year after the presentation date, as archived webcasts at http://www.acc.com/webcasts

35

Suggest Documents