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Petitioners Must Have Premonition to Win

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Sterne, Kessler, Goldstein & Fox P.L.L.C.

Measure twice cut once – the same can be said of the Petition in American Invents Act (“AIA”) proceedings. Time and again the Board and Federal Circuit[i] have used the Administrative Procedure Act[ii] (“APA”) – guaranteeing parties receive timely notice and opportunity to be heard[iii] – to hold Petitioner to the arguments and evidence found in the Petition for any issues could have been foreseen, disregarding the Petitioner’s Reply. So Petitioner’s need to pre-rebut any expected Patent Owner arguments in the Petition, or at least the Declaration filed with the Petition. Without going through this additional step of determining the weaknesses of the positions and potential Patent Owner arguments at the time of filing the Petition, Petitioners may be stuck with a record that fails to make out a prima facie case of obviousness – and will lose.

Even so, Patent Owner’s cannot rely on the PTAB and Federal Circuit to maintain fairness. Federal Circuit decisions have indicated that the due process guarantees afforded to Patent Owners, particularly after the Petitioner has filed its Reply, is often limited and may be easily waived.[iv] Some of these decisions have even led practitioners to suggest that, in some circumstances, later supplementation of arguments and evidence in an otherwise weak Petition may be appropriate for Petitioners.[v] For example, if a Petitioner failed to make out its prima facie case of invalidity (“case-in-chief”) in its Petition and a trial is instituted, then the Petitioner may, in its Reply, cure these deficiencies that were raised in a Patent Owner Response so long as the Patent Owner is afforded an opportunity to respond.[vi] But given the limited options available to a Patent Owner to respond to a Petitioner’s Reply and the expedited nature of the AIA proceedings,[vii] allowing a Petitioner to make out its case-in-chief after the Patent Owner has already filed its Response would undoubtedly put the Patent Owner at a severe disadvantage.

Fortunately, in parallel with the due process decisions, the Federal Circuit has also made clear that a Petitioner’s case-in-chief must be made in the Petition even if the Patent Owner is afforded opportunities to respond after the Petitioner has filed its Reply. For example, in Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd, after Patent Owner pointed out several weaknesses in the Petition, Petitioner presented new arguments and evidence for the first time in its reply.[viii] The Board found that the Petitioner’s Reply exceeded the proper scope as required by the rules and thus, declined to consider the Petitioner’s Reply and accompanying evidence.[ix] In affirming the Board’s decision not to consider the Petitioner’s Reply, the Federal Circuit concluded that the Petitioner failed to make out its prima facie case of obviousness, which it should have done in its Petition rather than its Reply.[x] In reaching this conclusion, the Federal Circuit specifically noted that “[i]t is of the utmost importance that [P]etitioners in the IPR proceedings adhere to the requirement that the initial [P]etition identify ‘with particularity’ the ‘evidence that supports the grounds for the challenge to each claim.’ 35 U.S.C. § 312(a)(3).”[xi] And as further explained by the Federal Circuit, “[u]nlike district court litigation—where parties have greater freedom to revise and develop their arguments over time and in response to newly discovered material—the expedited nature of IPRs bring with it an obligation for [P]etitioners to make their case in their [P]etition to institute.”[xii]

Similarly, in Wasica Fin. GmbH v. Cont'l Auto. Sys., Inc., after Patent Owner pointed out several weaknesses in the Petition, Petitioner presented several new arguments and evidence as to why the claims would have been obvious in its Reply.[xiii] Unpersuaded by Petitioner’s shift of positions between its Petition and its Reply, the Board found that the Petitioner has failed to establish its prima case of obviousness in its Petition.[xiv] On appeal, Petitioner argued that the Board should not have restricted its arguments to the Petition.[xv] Instead, the Board should have considered Petitioner’s reply because the introduction of new evidence in the course of trial is to be expected in such proceedings so long as the Patent Owner is given notice and opportunity to respond under the APA (for which they were).[xvi] But the Federal Circuit remained unpersuaded by the Petitioner’s attempt to cure the Petitioner’s deficiencies and re-iterated its earlier explanation in Illumina that the Petitioner must make out its case-in-chief in their Petition.[xvii] But here, “[r]ather than explaining how its original [P]etition was correct, [the Petitioner’s] subsequent arguments amount to an entirely new theory of prima facie obviousness absent from the [P]etition . . . .”[xviii] In affirming the Board’s decision not to entertain Petitioner’s new arguments and evidence in its Reply, the Federal Circuit further explained that “[s]hifting arguments in this fashion is foreclosed by statute, our precedent, and Board guidelines.”[xix]

Consistent with the above decisions, the Patent Office has also recently issued an update to its 2012 Office Patent Trial Practice Guide. In particular, the Office Patent Trial Practice Guide August 2018 Update explicitly states that “Petitioner may not submit new evidence or argument in reply that it could have presented earlier, e.g. to make out a prima facie case of unpatentability.”[xx] Thus, a Petitioner’s Reply cannot raise “new theories or arguments necessary to make out [P]etitioner’s case-in-chief for the unpatentability of an original or proposed substitute claim, such as a newly raised rationale to combine the prior art references that was not expressed in the [P]etition.”[xxi] Nor would it be proper “for the [P]etitioner to introduce new evidence in its [R]eply (including new expert testimony) that could have been presented in a prior filing, for example newly cited prior art references intended to ‘gap-fill’ by teaching a claim element that was not present in the prior art presented with the [P]etition.”[xxii]

So what does all this mean for petitioners and patent owners in AIA proceedings?

For Petitioners, the best arguments and evidence to make out its case-in-chief must be set forth in the Petition. Later supplementation, particularly those that would introduce new arguments and evidence run the risk of having them excluded from consideration by the Board.

As for Patent Owners, be particularly mindful of changes in arguments and evidence between the initial Petition and the subsequent Petitioner’s Reply as they may indicate a failure of the Petitioner’s case-in-chief. With the recent update in the Office Patent Trial Practice Guide that allow Patent Owners to file sur-replies instead of motion for observations,[xxiii] explanation of a Petitioner’s change in position should be emphasized in a sur-reply so that any new arguments and accompanying evidence made in a Petitioner’s case-in Reply may be excluded from consideration by the Board. 

[i]Dell Inc. v. Acceleron, LLC, 884 F.3d 1364, 1368 (Fed. Cir. 2018); EmeraChem Holdings, LLC v. Volkswagen Grp. of Am., Inc., 859 F.3d 1341, 1348 (Fed. Cir. 2017); Novartis AG v. Torrent Pharamceuticals, 853 F.3d 1316, 1324 (Fed. Cir. 2017); In re NuVasive, Inc., 841 F.3d 966 (Fed. Cir. 2016); Dell Inc. v. Acceleron, LLC, 818 F.3d 1293 (Fed. Cir. 2016); SAS Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016); Genzyme Therapeutic Products Limited Partnership v. Biomarin Pharmaceutical Inc., 825 F.3d 1360, 1367 (Fed. Cir. 2016); Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064 (Fed. Cir. 2015).

[ii] U.S. Const. amend. V, XIV; 5 U.S.C.A. § 554 (West)

[iii] 5 U.S.C.A. § 554 (West)

[iv] In re NuVasive, Inc., 841 F.3d 966 (Fed. Cir. 2016)(holding that despite Petitioner’s failure to make a clear where a particular limitation is disclosed in the prior art, a citation of the text discussing the relevant figure of the prior art and a reference to that particular limitation of the claims, were sufficient to satisfy Patent Owner’s due process notice requirements); Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064 (Fed. Cir. 2015)(holding that Patent Owner was not denied meaning opportunity to respond to the Petitioner’s new reply expert declaration, when the Patent Owner failed to seek to file a sur-reply, or take action that may be inconsistent with regulations and/or request the Board to waive regulations that Patent Owner believed would have prevented it from adequately responding to the new reply expert declaration)

[v] Matt L. Cutler, “5 Lessons From Rare Fed. Circ. Ruling On Inter Partes Review,” Law360 (November 13, 2015)(available at https://www.law360.com/articles/726708/5-lessons-from-rare-fed-circ-ruling-on-inter-partes-review)(“It was originally thought, by many, that the petitioner was required to put the evidence it intended to rely upon in the petition, but this decision makes clear that later supplementation is appropriate, if carefully crafted. For example, if a petition fails to set forth a prima facie argument of obviousness, and the patent owner points out that fact in its response, the door is opened for petitioner to garner new testimony to fill the hole.”).

[vi] Id.; see also Wasica Fin. GmbH v. Cont'l Auto. Sys., Inc., Cross-Appellants., 2016 WL 4411385 (C.A.Fed.), 16 (Cross-Appellant Reply Brief)(arguing that the Board erred for failing to consider new arguments and evidence in the Petitioner’s Reply because the Patent Owner had meaningful opportunity under APA to respond to these new arguments and evidence pursuant to Belden Inc. v. Berk-Tek LLC).

[vii] Prior to a recent update to the Office Patent Trial Practice Guide, Patent Owners were limited to a fifteen page motion for observations that were typically due one month from the filing date of the Petitioner’s Reply. See e.g., Medtronic, Inc. v. NuVasive Inc., IPR2013-00506, paper 37, at *2-5 (P.T.A.B., Oct. 15, 2014). The Board also imposed a strict form that each observation must follow before their consideration. Id. Except for a deposition transcript of any reply witnesses, no other evidence may be submitted with the motion for observations. Vivint, Inc. v. Alarm.com Inc., IPR2015-01977, paper 37, (P.T.A.B., Oct. 26, 2016) Additionally or alternatively, Patent Owner may request authorization to file a sur-reply, which are typically limited to five pages and cannot include any evidence. LG Electronics, Inc. v. ATI Technologies ULC, IPR 2015-00325, Paper 37 at *4-5 (P.T.A.B., Dec. 15, 2015).

[viii] 821 F.3d 1359, 1367, 1369-70 (Fed. Cir. 2016).

[ix] Id. at 1367. 

[x] Id. at 1369-70.

[xi] Id.

[xii] Id.

[xiii] 853 F.3d 1272, 1286 (Fed. Cir. 2017).

[xiv] Id. at 1278, 1286-87.

[xv] Wasica Fin. GmbH v. Cont'l Auto. Sys., Inc., Cross-Appellants., 2016 WL 4411385 (C.A.Fed.), 16-17 (Cross-Appellant Reply Brief)

[xvi] Id.

[xvii] Wasica Fin. GmbH, 853 F.3d at 1286-87 (citing Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd.)

[xviii] Id.

[xix] Id. (internal citations omitted)

[xx] Office Patent Trial Practice Guide, August 2018 Update, 83 Fed. Reg. 29,989 (Aug. 13, 2018); Trial Practice Guide Update (August 2018) (available at https://www.uspto.gov/sites/default/files/documents/2018_Revised_Trial_Practice_Guide.pdf)

[xxi] Id. at **14-15.

[xxii] Id.

[xxiii] Id.


This article appeared in the August 2018 issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.