Redline Detection, LLC v. Star Envirotech, Inc.

Addressing the rules governing admissibility of supplemental information during an inter partes review (IPR) proceeding, the U.S. Court of Appeals for the Federal Circuit affirmed the decision of the Patent Trial and Appeal Board (PTAB or Board) denying petitioner’s motion to submit supplemental information and affirmed the PTAB’s decision finding the claims to not be obvious under § 103. Redline Detection, LLC v. Star Envirotech, Inc., Case Nos. 15-1047 (Fed. Cir., Dec. 31, 2015 (Wallach, J.).

Redline filed an IPR petition challenging patent claims directed to methods of generating smoke to enable detection of leaks in fluid systems. Redline sought review on 12 separate grounds, including obviousness, but did not submit an expert declaration in support of its petition. The PTAB instituted an IPR proceeding on two of the asserted grounds of obviousness. Later Redline filed a motion to add supplemental disclosure of new exhibits, including an expert declaration that included testimony regarding the motivation to combine. The PTAB denied Redline’s motion.

The regulation governing motions to submit supplemental evidence provides that once a trial has been instituted, a party may file such a motion within one month of the institution date if the information sought to be added is relevant to a claim for which the trial has been instituted. In denying Redline’s motion, the PTAB noted that Redline “did not make any attempt to justify the submission of an expert declaration after filing its petition and after a decision to institute has been made” and also did not allege that any of the arguments or evidence in the newly submitted declaration was information that reasonably could not have been submitted with Redline’s IPR petition. Redline acknowledged that cost savings was the “primary driving factor” in its decision to forgo submission of an expert declaration in its IPR petition. By waiting until the institution decision, Redline’s expert declaration need only address the two grounds on which the PTAB had instituted review rather than all 12 grounds asserted in the petition.

During the ensuing appeal, Redline argued that because its motion was submitted within the one-month timeframe, the PTAB was obligated to grant the motion and admit the evidence. The Federal Circuit disagreed. The Court explained that requiring “admission of supplemental information so long as it was timely submitted and relevant to the IPR proceeding would cut against” the mandate of the PTAB to “ensure efficient administration of the Office and the ability of the Office to complete IPR proceedings in a timely manner.” The Court also rejected Redline’s argument that the PTAB’s decision to deny its motion was arbitrary and capricious in view of the PTAB’s rulings in other cases. The Court explained that the case on which Redline relied were distinguishable since in those cases, the supplemental information related to whether or not a particular reference qualified as prior art and were in response to issues raised by the patent owner.

Redline further argued that the PTAB’s decision on nonobvious was improper in that the PTAB impermissibly excluded Redline’s evidence of motivation to combine as provided in its excluded expert declaration. While the PTAB instituted review in the absence of an expert declaration, at trial the patentee’s expert testified that a person of ordinary skill would not have been motivated to combine the references relied upon by Redline. Having no expert testimony of its own on which to rely, Redline was left to counter the patentee’s expert opinion with arguments regarding inferences that should be drawn from the text of the references. The PTAB found that the patent owner’s unrebutted expert testimony regarding lack of motivation to combine overcame Redline’s unsupported arguments to the contrary. Finding that substantial evidence supported the PTAB’s ruling, the Court affirmed.

Practice Note: Best practice is to submit an expert declaration addressing, at a minimum, motivation to combine in support of an IPR petition explaining how any why claims would have been obvious in view of the prior art.