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Category Archives: Patent Trials

Dominion Dealer Solutions Seeks Review Of USPTO Decisions Denying Inter Partes Review

Posted in Patent Trials

On October 15, 2013, Dominion Dealer Solutions, LLC filed a complaint in the U.S. District Court for the Eastern District of Virginia seeking review of the USPTO’s decisions denying petitions to institute inter partes review of five patents granted to Autoalert, Inc. Dominion faces an uphill battle in view of the discretion granted to the USPTO under  35 USC § 324 and the court’s previous decision dismissing Versata’s challenge of the USPTO’s decision to institute post grant review of its patent .

The Petitions For Inter Partes Review 

According to Dominion’s complaint, on October 1, 2012, Autoalert, Inc. sued Dominion for infringement of patents directed to “systems and methods for assessing and managing financial transactions.” On March 28, 2013, Dominion filed petitions for inter partes review of the five patents in suit. Dominion also sought a stay of the district court proceedings, which was granted on May 22, 2013.

On August 12 and 15, 2013, the USPTO denied the petitions. According to the complaint, the USPTO Patent Trial and Appeal Board (PTAB) improperly substituted its own judgment and its own understanding of the cited references for that provided by Dominion’s expert in the declarations submitted in support of the petitions.

Dominion asserts that the USPTO violated the Administrative Procedures Act (5 USC § 706(2)(A) and (C)) by denying the petitions in the face of “unrebutted evidence.”

The Statutory Hurdle

The inter partes review statue includes the following provision, in 35 USC § 314(d):

(d) No Appeal.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

(In the Versata case, the district court rejected Versata’s arguments that a parallel provision in the post grant review statute refers only to the non-availability of direct appeal to the Federal Circuit and not to an interlocutory appeal to a district court.)

The AIA Hurdle

In the Versata case, the district court found that the AIA as a whole precluded judicial review of the USPTO’s decision to institute a post grant review proceeding, because the AIA’s express language, detailed structure and scheme for administrative and judicial review, legislative purpose, and nature of the administrative action evince Congress’s clear intent to preclude subject matter jurisdiction over the PTAB’s decision to institute patent reexamination proceedings.” In particular, the court cited:

  1. The express language of the statute: 35 USC § 324(e) states, “[t]he determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable.”
  2. The structure of the Post Grant Review statutes. The statutes set forth “detailed procedures for post-grant review and a detailed scheme for administrative and judicial review of those post-grant review proceedings,” none of which include district court review.
  3. The statute provides for appeal to the Federal Circuit. 35 USC § 329 provides that “A party dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 328(a) may appeal the decision pursuant to sections 141 through 144 [to the Federal Circuit.”

Dominion will face an uphill battle establishing that these same factors and parallel provisions of the inter partes review statute do not preclude the court’s jurisdiction over its case.

District Court Refuses To Review USPTO Decision To Institute Post Grant Review Of Versata Covered Business Method Patent

Posted in District Court Decisions; Patent Trials

In Versata Development Corp. v. Rea, the U.S. District Court for the Eastern District of Virginia dismissed Versata’s challenge of the PTAB’s decision to institute post grant review of its patent for lack of jurisdiction. The court based its decision on alternative grounds, finding that the America Invents Act (AIA) “precludes judicial review of the PTAB’s decision to institute post-grant review,” and, alternatively, that the decision to institute post-grant review was not a “final” agency decision that could be reviewed under the Administrative Procedures Act (APA).  Continue reading this entry

Fresenius Escapes $25 Million Damages Award, Based on Invalidation of Baxter Patent In Ex Parte Reexamination

Posted in Federal Circuit Decisions; Patent Trials

In Fresenius, USA Inc. v. Baxter International, Inc., the Federal Circuit interpreted the ex parte reexamination statutes (35 USC §§ 301-307) as providing that the final cancellation of claims in a reexamination proceeding is binding on concurrent litigation proceedings, as long as the litigation is still pending. This decision validates the use of ex parte reexamination to launch a collateral attack on patents in litigation. While many defendants hesitate to bring an ex parte reexamination because of the very limited role they would have in the proceedings, because ex parte reexamination is not limited by the timing requirements of inter partes review and post grant review proceedings, and does not carry the same litigation estoppel, it may be worthy of a second look under appropriate circumstances.

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A Quick Look At The First Patent Trial And Appeal Board Decision In a Covered Business Method Patent Proceeding, SAP America, Inc. v. Versata Development Group, Inc.

Posted in Claim Construction; Patent Trials; USPTO Board Decisions

On June 11, 2013, the USPTO Patent Trial and Appeal Board (PTAB) issued its first final decision in a covered business method patent (CBM) proceeding, in SAP America, Inc. v. Versata Development Group, Inc. (CBM2012-00001). Although this case is not in the field of pharmaceuticals or biotechnology, a few aspects of this decision will be of interest to stakeholders across all industries. 

The Patent At Issue

The patent at issue was Versata’s U.S. Patent 6,553,350, directed to methods of pricing products for different purchasers.

Versata sued SAP for patent infringement in 2007. After a jury trial, SAP was found liable for infringement, but the court ordered a second jury trial on damages. Both parties appealed to the Federal Circuit in 2011, and the court affirmed the finding of infringement in a decision issued in 2013, after the PTAB proceeding was commenced. Of note to this review, “SAP did not appeal the district court’s claim construction, and the validity of the ’350 patent was not an issue on appeal.”

The CBM Proceedings

CBM proceedings became available on September 16, 2012, the effective date of Section 18 of the America Invents Act (AIA). A party who has been sued for or charged with infringement of a covered business method patent can petition for Post Grant Review of the patent to challenge the validity of the patent “on any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).”

SAP filed its petition for CBM review of the ’350 patent on September 16, 2012, asserting that certain claims were invalid under 35 USC §§ 101, 102, and 112. The PTAB granted the petition with regard to §§ 101 and 102, and SAP agreed to proceed only with relation to § 101 to obtain expedited review.

Points Of Interest

At least the following aspects of the PTAB decision will be of interest to stakeholders across all industries.

  • The CBM proceeding was brought after two jury trials that found SAP liable for infringement, and while an appeal was pending at the Federal Circuit.

 Did Congress intend CBM proceedings to permit a collateral attack on a patent already found to be infringed in a district court proceeding?

The estoppel provisions of the statute provide that a petitioner in a CBM proceeding “may not assert, either in a civil action … or in a proceeding before the International Trade Commission … that the claim is invalid on any ground that the petitioner raised during [the CBM] proceeding.” However, estoppel may run only one way, from a CBM proceeding to a district court/ITC proceeding, and not from a pending district court/ITC proceeding to a CBM proceeding. A similar issue just was addressed by the Federal Circuit in Fresenius USA, Inc. v. Baxter International, Inc. (July 2, 2013), where the court found that estoppel did not arise from a district court proceeding that still was pending.

  •  The PTAB construed the claims according to its “broadest reasonable interpretation” (BRI) paradigm, even though its claim construction was different from that of the district court.

Did Congress intend the PTAB to apply a BRI claim construction? Even when a district court already has construed the claims? Even when the parties did not appeal the district court’s claim construction?

At least Congressman Goodlatte (R-Va.) thinks otherwise.  The “discussion draft“ of patent reform legislation he released in May would amend the Post Grant Review and Inter Partes Review statutes to require the USPTO to construe a claim in such a proceeding as it “has been or would be in a civil action to invalidate a patent under section 282, including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art, the prosecution history pertaining to the patent, and prior judicial determinations and stipulations relating to the patent.”

 

USPTO Rules Eliminate Inter Partes Review Dead Zone

Posted in Patent Reform; Patent Trials; USPTO Proposed Rule Changes

On March 25, 2013, the USPTO published final rule changes to “Implement the Technical Corrections to the Leahy-Smith America Invents Act as to Inter Partes Review.” The rule changes have an effective date of March 25, 2013, and relate to statutory changes with an effective date of January 14, 2013.

The Dead Zone

The AIA created two new procedures for challenging a patent within the USPTO: Post Grant Review and Inter Partes Review. As enacted, Post Grant Review only can be requested within the first nine months after a patent grants, and Inter Partes Review only could be requested thereafter. However, Post Grant Review only is available for patents examined under the first-inventor-to-file provisions of the AIA (which only apply to certain applications filed on or after March 16, 2013). This created a “dead zone” for patents that are not subject to Post Grant Review, because they could not be challenged within the USPTO within the first nine months after grant or reissue.

The AIA Technical Corrections Act

The AIA Technical Corrections Act stemmed from HR 6621, and eliminated the Inter Partes Review dead zone by providing that the nine month time period restriction does not apply to patents that are were not examined under the first-inventor-to-file provisions of the AIA. Thus, under the AIA Technical Corrections Act, an Inter Partes Review proceeding to challenge a “first-to-invent” patent or reissue can be brought anytime once the patent or reissue is issued.

By the terms of the AIA Technical Corrections Act, these statutory changes took effect on January 14, 2013 (the date of enactment) and apply to proceedings commenced on or after that date.

The USPTO Rule Change

To implement these statutory changes, the USPTO has amended 37 CFR § 42.102(a) to read as follows:

(a) A petition for inter partes review of a patent must be filed after the later of the following dates, where applicable:
(1) If the patent is a patent described in section 3(n)(1) of the Leahy-Smith America Invents Act, the date that is nine months after the date of the grant of the patent;
(2) If the patent is a patent that is not described in section 3(n)(1) of the Leahy-Smith American Invents Act, the date of the grant of the patent; or
(3) If a post-grant review is instituted as set forth in subpart C of this part, the date of the termination of such post-grant review.

A “patent that is not described in section 3(n)(1) of the Leahy-Smith American Invents Act,” is a patent that was not examined under the first-inventor-to-file provisions of the AIA, the applicability of which is set forth in section 3(n)(1) of the AIA. Using the short-hand used in the Federal Register Notice, a “patent that is not described in section 3(n)(1) of the Leahy-Smith American Invents Act,” is a “first-to-invent” patent.

No Notice And Comment Period

As noted above, the USPTO published the final rule changes on March 25, 2013 and the rule changes have an effective date of March 25, 2013. The USPTO explained why this rule change was not subject to a notice and comment period:

Good cause exists to make these procedural changes without prior notice and opportunity for comment and to be effective immediately so as to avoid inconsistencies between regulations and the AIA Technical Corrections Act.

An Important Correction

This correction could be important to patents that may be involved in litigation, because the Inter Partes Review statute requires that a petition for Inter Partes Review be brought within one year after the petitioner has been served with a complaint alleging infringement. Without the correction, an accused infringer would have to wait until nine months after grant to petition for Inter Partes Review, even if  the one year clock was running.

USPTO Board Holds That Complaint Dismissed Without Prejudice Does Not Bar Inter Partes Review

Posted in Patent Trials

In a decision granting (in part) a Request for Inter Partes Review, the USPTO Patent Trial and Appeal Board (PTAB) held that an infringement complaint that was dismissed without prejudice did not bar the Request for Inter Partes Review.

The Statute At Issue

The Inter Partes Review statute includes a limitations period measured from service of an infringement complaint against the petitioner. In particular, 35 USC § 315(b) provides:

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

The Procedural Background

In the case at issue, the Patent Owner (BOS GmbH & KG) had filed a complaint against the Taiwanese parent (Macauto Industrial Co., Ltd.) of the Petitioner (Macauto U.S.A.) in April of 2011, which was more than one year before the Request for Inter Partes Review was filed. According to the PTAB decision, the Taiwanese parent moved to dismiss for lack of personal jurisdiction, and the action eventually was dismissed without prejudice pursuant to a stipulation.

(BOS filed another infringement action against the Petitioner and a related Chinese entity (Kunshan Macauto) on May 30, 2012, which was less than one year before the Request for Inter Partes Review was filed.)

The PTAB Analysis

The PTAB interpreted 35 USC § 315(b) as requiring that “the service date of the complaint be more than a year before the petition was filed,” and turned to the Federal Rules of Civil Procedure to interpret and apply the service requirement.

[T]he infringement suit against Macauto Taiwan was voluntarily dismissed without prejudice under Fed.R.Civ.P. 41(a), pursuant to a joint stipulation. …. The Federal Circuit has consistently interpreted the effect of such dismissals as leaving the parties as though the action had never been brought. …. Accordingly, the dismissal of the earlier action against Macauto Taiwan nullifies the effect of the alleged service of the complaint on Petitioner.

The PTAB therefore concluded that there was no effective service date of the prior complaint on Petitioner, and so 35 USC § 315(b) did not bar the Request for Inter Partes Review.  (Because there was no effective service date, the PTAB did not decide whether service on the Taiwanese parent would have barred the Request by the U.S. Petitioner.)

Who Can Appear In Patent Trials Before The USPTO Patent Trial And Appeal Board?

Posted in Patent Trials; USPTO Board Decisions

Now that new patent trials are being conducted at the USPTO Patent Trial and Appeal Board (PTAB), questions are arising as to who can best represent the parties in such proceedings. Should  it be patent attorneys, who have  experience with Patent Office practice, or should it be litigators, who may have more experience taking depositions of opposing witnesses? The USPTO rules governing practice before the PTAB require designation of “lead counsel” who must be a “registered practitioner” (e.g., a patent attorney or patent agent registered to practice before the USPTO). But, 37 CFR § 42.10(c) permits appearance by a non-patent attorney with a showing that the attorney “is an experienced litigating attorney and has an established familiarity with the subject matter at issue in the proceeding.” A recent Board opinion outlines the requirements for such a motion to appear pro hac vice in an Inter Partes Review proceeding.Continue reading this entry