Inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB) became available on September 16, 2012 as a post-grant review procedure to challenge the patentability of issued claims based on prior art patents and publications. To help navigate the uncharted waters of this procedure, each edition of IP Buzz - Post Grant Practice will include an installment of our new IPR Spotlight Series, where we will feature a specific event on the IPR timeline, from filing the petition for IPR through oral hearing and final written decision. We will present an overview of the featured filing or procedure, along with practice tips and strategy informed by recent PTAB decisions, statistics, and practical experience. In our sixth IPR Spotlight installment, we focus on IPR discovery tips for patent owners.
Part 6: Top 5 IPR Discovery Tips for Patent Owners
In our last installment of the IPR Spotlight Series, we focused on navigating discovery during IPR proceedings generally, reviewing the three categories of discovery. Moving beyond the basics, this article examines recent PTAB orders that shed some light on how parties can use the IPR discovery periods to their best advantage. Below are five tips and strategies designed to help patent owners get the most out of IPR discovery and avoid common pitfalls.
- Find a new expert: Patent owners should consider engaging a new expert for IPR proceedings. As noted in IPR Spotlight Series Part 5: Navigating IPR Discovery, routine discovery during an IPR proceeding is automatic and does not require a motion or requests for discovery because the producing party has the obligation to provide the material on its own. A party relying on a witness's testimony by declaration or affidavit must make that witness available for cross-examination as a part of routine discovery. However, if the witness's declaration was filed previously in another proceeding (such as prosecution or re-examination), and does not include new testimony prepared specifically for purposes of the IPR, cross-examination of that witness is not provided as routine discovery under 37 C.F.R. § 42.51(b)(1)(ii).[1] Therefore, a petitioner would have to file a motion for additional discovery in order to cross-examine the prosecution expert, as long as the patent owner did not submit a new declaration from the same expert prepared for the purposes of the IPR. On the other hand, if the declaration includes new material involving the IPR, the petitioner would automatically be entitled to a deposition, and that deposition could cover both the new IPR material and the expert’s old declaration. One should also keep in mind that the PTAB may accord less weight to a declaration if the petitioner does not have an opportunity to cross-examine the witness, so the patent owner should consider whether to make the witness available for cross-examination voluntarily in order to give more weight to the testimony.[2]
- Don't delay cross-examination: A patent owner should consider timing for witness cross-exams. As shown in the figure below, the patent owner has two discovery periods during an IPR: (1) the four months between institution of the IPR and the deadline for the patent owner response, and (2) the month between the petitioner reply and patent owner reply.[3] However, the patent owner must be cognizant that these two discovery periods serve different purposes. During the first discovery period, the patent owner can cross-examine witnesses about declarations in support of the petition, but the second discovery period is limited to cross-examination on issues from the petitioner's reply.
In A.C. Dispensing Equipment Inc. v. Prince Castle LLC, the PTAB denied the patent owner's request for authorization to conduct a single deposition at the end of the second discovery period to cross-examine the petitioner's expert on both his petition testimony and any new declaration submitted with the petitioner's reply.[4] According to the PTAB, under 37 C.F.R. § 42.53(d)(2), a party should cross-examine a witness once that witness's direct testimony becomes ripe for cross examination – i.e., after any supplemental evidence relating to the direct testimony has been filed and at least one week before the due date of the party's next substantive paper. The PTAB noted that a witness's reply declaration is not supplemental evidence to the petition declaration because this testimony can only be used to rebut the patent owner's response, not to present new evidence in support of the petition.[5] Consequently, a patent owner should not wait to conduct a deposition at the close of evidence, but should cross-examine a witness during the first discovery period on petition testimony, and then again as needed in the second discovery period in connection with any reply testimony. This procedure avoids "impair[ing] the orderly development of the record, and [delaying] the identification of factual issues to be resolved during trial."[6]
Similarly, in Respironics v. Zoll Medical, the PTAB held that the patent owners motion for observations on cross-examination during the second discovery period should be limited to the witness's testimony about the petitioner's reply to the patent owner response.[7] The Office Trial Practice Guide provides that if a party cross examines a witness after filing its last substantive paper on an issue, the PTAB can authorize the patent owner to file a motion for observations to identify testimony and responses that should be called to the PTAB's attention.[8] The opposing party may then file a response to an observation with prior authorization from the PTAB.[9] For example, in Respironics, the patent owner cross-examined the petitioner's expert about his petition testimony during the second discovery period, after the patent owner had already filed the patent owner response to the petition, and sought to file a motion for observations on that testimony.[10]However, the PTAB held that a patent owner cannot game the system by waiting to depose the petitioner's expert until after the patent owner response is due, in order to introduce new issues after the first discovery period closes and the patent owner response has been filed.[11] As demonstrated in Respironics, the PTAB may limit the patent owner's motion for observations on cross-examination to the expert's testimony concerning the petitioner's reply in order to prevent such gamesmanship.[12] The patent owner should therefore depose petitioner declarants as soon as possible after the petitioner submits the witness's testimony to avoid being barred from doing so in the second discovery period.
- Preserve evidentiary objections with motions to exclude: Evidentiary objections can be powerful tools for a patent owner to exclude petitioner evidence in IPR proceedings. A patent owner must make any objection to evidence submitted with the petition within ten business days of trial institution, and after that, within five days of the introduction of the exhibit into the record.[13] Because the Federal Rules of Evidence apply to IPR proceedings, patent owner objections should include any evidentiary issues.[14] A motion to exclude evidence must be filed to preserve any objections, and may be filed without prior authorization from the PTAB.[15] A patent owner should consider possible evidentiary objections to the petitioner's reliance on exhibits such as instruction manuals, data sheets, application notes and textbooks for lack of authentication and hearsay.
- To get additional discovery on secondary considerations, demonstrate a nexus: In order for the PTAB to grant additional discovery regarding secondary considerations of non-obviousness of the claimed invention, the patent owner must demonstrate a nexus between the secondary consideration, such as alleged commercial success, and the features of the patent claims. In Square, Inc. v. REM Holdings 3, LLC, the PTAB denied authorization to file a second motion for additional discovery, because the patent owner failed to "point to any specific language in the method claims, or otherwise explain how Patent Owner might be able to show a nexus between the features of those claims and any commercial success."[20] As with any request for additional discovery, the moving party must show more than a possibility or mere allegation that something useful will be found. For additional discovery of secondary considerations, that means connecting the dots between the claims at issue and commercial success, long-felt need, failure of others, or unexpected results.
- When in doubt, err on the side of disclosure: IPR proceedings do not provide a procedure for submitting an information disclosure statement, which creates an open question about how a patent owner should comply with its duty of candor and good faith under 37 C.F.R. § 42.11. In PCT International, Inc. v. Amphenol Corporation, the patent owner disclosed during a teleconference that it had recently become aware of additional prior art through an action in a corresponding European patent application.[21] The patent owner had already disclosed the prior art to the petitioner, and inquired whether further action was necessary.[22] The PTAB denied authorization to submit the newly-discovered prior art as supplemental information, taking into consideration the late stage of the proceeding – briefing had already been completed and an oral hearing was scheduled.[23] Because neither party would have an opportunity to address the newly-discovered prior art, the PTAB held that it was "not relevant to a claim for which the trial has been instituted."[24] Nevertheless, patent owners should generally err on the side of caution and disclose newly-discovered prior art to the PTAB, even at a late stage in the proceedings, to ensure that their obligations under the duty of candor are fulfilled.
In addition, a patent owner should consider moving to exclude evidence submitted with the petitioner's reply that should have been presented at the time the petition was filed. Under 37 C.F.R. § 42.23(b), "[a] reply may only respond to arguments raised in the…patent owner response."[16] In Baxter Healthcare Corp., et al. v. Millenium Biologix, LLC,[17] the PTAB excluded petitioner exhibits filed as part of its reply papers as belatedly-presented new evidence, including the declaration of a prior art author describing experiments he conducted and accompanying exhibits. The PTAB held that the petitioner could have presented experimental evidence to support its argument of inherent anticipation at the time the petition was filed, but chose not to do so and was therefore barred from introducing new experimental evidence in its reply.[18] As the PTAB explained, even though "Petitioner's newly submitted evidence might have been stimulated by Patent Owner's Response to the Petition, it was Petitioner who decided to rely on the declaration of its expert without experimental evidence in support of its inherent anticipation argument," and therefore the challenged evidence exceeded the permissible scope of reply.[19] Accordingly, a patent owner should be vigilant for new evidence in the petitioner's reply that exceeds the permissible scope, and move to exclude such evidence in order to preserve the objection.
[1]See, e.g., Mexichem Amanco Holdings S.A. de C.V. v. Honeywell International, Inc., IPR2013-00576, Paper 29 at 2-3 (Aug. 15, 2014) (holding that cross-examination of witnesses was not part of routine discovery because their declarations were filed previously in reexamination proceedings); Gea Process Engineering, Inc. v. Steuben Foods, Inc., IPR2014-00041, Paper 41 at 3 (June 11, 2014) (holding that cross-examination of witnesses was not part of routine discovery because their declarations were prepared several years earlier for purposes of another proceeding).
[2]Id.
[3]Office Trial Practice Guide, 77 Fed. Reg. 48756, 48757-8 (Aug. 14, 2012).
[5]Id. at 3.
[6]Id.
[7]IPR2013-00322, Paper 26 at 4 (May 7, 2014).
[8]Office Trial Practice Guide, 77 Fed. Reg. 48757-8 (Aug. 14, 2012).
[9]Id.
[10]IPR2013-00322, Paper 26 at 3 (May 7, 2014).
[11]Id at 4.
[12]Id.
[13]37 C.F.R. § 42.64(b)(1).
[14]37 C.F.R. § 42.62.
[15]37 C.F.R. § 42.64(c).
[16]See also Office Trial Practice Guide, 77 Fed. Reg. 48767 (Aug. 14, 2012) ("a reply that raises a new issue or belatedly presents evidence will not be considered and may be returned …includ[ing] new evidence necessary to make out a prima facie case for the patentability or unpatentability of an original or proposed substantiated claim, and new evidence that could have been presented in a prior filing.").
[17]IPR2013-00582, Paper 32 at 5-7 (Oct. 13, 2014).
[18]Id. at 5-6.
[19]Id. at 6.
[20]IPR2014-00312, Paper 23 at 5-6 (Sept. 15, 2014).
[21]IPR2013-00229, Paper 27 at 2 (May 21, 2014).
[22]Id.
[23]Id.
[24]Id.