New Declaration Evidence Proper If Rebutting Patentee Arguments to Trial Grounds

The Patent Trial & Appeal Board (PTAB) assesses the content of a patent challenger's petition (in view of any patentee preliminary response) to determine whether or not to institute an AIA trial proceeding.  If trial is instituted, the Patentee may submit a Patentee Response together with any supporting testimonial evidence.  In most cases, the Patentee Response is the last Patentee response on the merits. Thereafter, the Petitioner, which has the burden of demonstrating unpatentability, is given the last substantive filing via its Petitioner Reply. A few months later, the oral hearing marks the conclusion of the formal trial schedule.  

Since the Petitioner is provided with the last substantive response, a common dispute in AIA trial proceedings is the content of the Petitioner Reply.  That is, Patentee's often argue that arguments or testimony of the Petitioner Reply are "new."  This raises the question of whether or not the trial is limited to only that material present in the petition filing, or if it also encompasses rebuttal arguments, and more particularly, new rebuttal testimony of a declarant.

Not surprisingly, Patentees espouse the narrow view that trial is strictly limited to the content of the petition materials. On the other side of the debate, Petitioners point out that rebuttal of the Patentee's arguments, whether via new testimony or argument, is entirely proper— especially as trial is still ongoing. The Board is drawn into this debate via a Patentee request to file a Motion to Strike the rebuttal, or Motion to Exclude as inconsistent with due process, Rule 42.23(b) and certain statements of the Trial Practice Guide. 

This dichotomy was addressed today by the Federal Circuit in Belden Inc., v. Berk-Tek LLC (here).   At issue in Belden was a rebuttal declaration first introduced by the Petitioner in its Reply.  On appeal the Patentee challenged the PTAB's denial of Patentee's Motion to Exclude the declaration as a violation of due process, and inconsistent with the Rules and Trial Guide.  The Court found "new" rebuttal evidence to be lawful and fair, emphasizing the additional procedural safeguards offered by the PTAB to adress such during trial. 

The Court first addressed the argument that the new declaration violated Rule 42.23(b), explaining:

Belden asserts that Berk-Tek’s filing of the Baxter declaration violated 37 C.F.R. § 42.23(b), which states that “[a] reply may only respond to arguments raised in the corresponding opposition or patent owner response.” The Board found no violation, concluding that Mr. Baxter’s declaration “fairly responds to Mr. Clark’s declaration” and is “generally . . . in fair reply to Mr. Clark’s declaration and/or Belden’s response to the revised petition.” We see no error in that ruling.

Next, as to the statements of the Trial Guide, the Court explained:

Belden relies on a passage from the Patent Office Trial Practice Guide that elaborates on the regulation that limits replies to responsive arguments, excluding new issues. The passage states that “[e]xamples of indications that a new issue has been raised in a reply include new evidence necessary to make out a prima facie case for the . . . unpatentability of an original . . . claim.” 77 Fed. Reg. at 48,767. Belden argues that the Baxter declaration, submitted with Berk-Tek’s Reply, was necessary to make out the prima facie case of obviousness and for that reason should have been excluded. Although the Board has recognized that the Guide merely “provides guidance,” Innolux Corp. v. Semiconductor Energy Lab. Co., IPR2013-60, 2013 WL 8595541, at *3 (PTAB May 3, 2013), the Board did not reject Belden’s contention on the ground that the Guide is not a binding regulation. Rather, the Board rejected Belden’s premise “that Mr. Baxter’s testimony was necessary for Berk-Tek to establish a prima facie case.” We see no error in that ruling                                                                                                        

                                                                                            .          .          .         .          .

To be sure, the Board cited Mr. Baxter’s declaration in its Final Written Decision—mostly in explaining why it was rejecting Belden’s arguments,but partly in stating the affirmative reasons to find the motivation required for a prima facie caseBut such citations do not mean that the Baxter declaration was “necessary” for the prima facie case. Evidence admitted in rebuttal to respond to the patent owner’s criticisms will commonly confirm the prima facie case. That does not make it necessary to the prima facie case. And nothing required the Board to write its opinion to separate the material offered by Berk-Tek at different stages of the proceeding.

(emphasis added, internal citatons omitted)

Finally, the Court emphasized additional PTAB procedural mechanisms to address due process concerns for new declarations, noting the failure of Patentee to avail themselves of most:

[I]f the petitioner submits a new expert declaration with its Reply, the patent owner can respond in multiple ways. It can cross-examine the expert and move to file observations on the cross-examination. It can move to exclude the declaration. It can dispute the substance of the declaration at oral hearing before the Board. It can move for permission to submit a surreply responding to the declaration’s contents. And it can request that the Board waive or suspend a regulation that the patent owner believes impairs its opportunity to respond to the declaration. The options are not mutually exclusive. 

In the foregoing respects, the Board’s rules and practices establish standards bearing similarities to those often applied in district-court litigation.  .    .    .Those standards are widely employed to provide the required procedural fairness through careful case-specific application. 

Here, the Board held Berk-Tek to the response-only standard for evidence submitted with a Reply and even held itself to ensuring that the prima facie case did not depend on that evidence. It provided for Belden’s cross examination of Mr. Baxter and for submission of nonargumentative observations on that cross-examination. It accepted Belden’s detailed motion to exclude (and its reply after Berk-Tek’s response). It provided Belden with a meaningful opportunity to respond to the propriety of Mr. Baxter’s evidence submitted with Berk-Tek’s Reply, in that it granted every request Belden made for consideration of the issue. Belden did not seek to file a surreply, to file additional observations on its cross-examination, to make arguments in those observations, or to have the Board waive any other regulations that it believed prevented it from adequately responding to Mr. Baxter’s declaration. With no Board denial of concrete, focused requests before us, we are not prepared to find that Belden was denied a meaningful opportunity to respond to the grounds of rejection, and we find no basis for disturbing the Board’s denial of Belden’s motion to exclude.

(emphasis added,internal citations omitted)

This decision should help provide much needed clarity to the propriety of Petitioner Replies and supporting testimonial evidence.