Federal Circuit Finds Admissibility of Supplemental Information a Matter of Discretion

When discussing Patent Trial & Appeal Board (PTAB) trial practice, the topics of supplemental information and supplemental evidence are often confused. Supplemental evidence may be filed as a matter of right within 10 days of a party objection. 37 C.F.R. § 42.64(b)(2).  On the other hand, supplemental information is considered only upon motion of  a party. Typically, supplemental information is filed by a petitioner within one month of trial institution to proactively reinforce an active trial ground. (e.g., information not previously available, recently produced in litigation, etc).  37 C.F.R. § 42.123  

Early on, Rule 42.123(a) was the target of significant patentee criticism. Patentees argued that the Rule provided a potential avenue for gamesmanship and petitioner sandbagging.  The rule provides:

§ 42.123 Filing of supplemental information.

(a) Motion to submit supplemental information. Once a trial has been instituted, a party may file a motion to submit supplemental information in accordance with the following requirements:

(1) A request for the authorization to file a motion to submit supplemental information is made within one month of the date the trial is instituted.

(2) The supplemental information must be relevant to a claim for which the trial has been instituted.

The patentee criticism was that the Rule permitted a petitioner to file supplemental information as long as it was filed within one month of institution— and relevant to a claim under review.  Indeed, patentees in some early IPRs declined to file a preliminary response for fear that it would be used as a roadmap by the petitioner to fashion its supplemental information filing.  

To its credit, the PTAB has been wary of gamesmanship when it comes to supplemental information. As a result, such motions are scrutinized as to the underlying circumstances leading to the submission— such as whether the information could have been submitted earlier. Yet, a small number of panels appeared to admit supplemental information based on only the timing an relevancy requirements of the Rule. 

Last week, In Redline Detection, LLC, v. Star Envirotech, Inc., the CAFC considered whether the Rule is limited to only timing and relevancy, or whether the PTAB may, as a matter of discretion, deny such information that, for example, could have been earlier submitted.   

In Redline the petitioner did not file a declaration supporting its numerous petition trial grounds together with its petition (filed in January 2013). Instead, it sought to add a declaration after institution, as supplemental information. The petitioner explained that it was more cost effective to provide a declaration limited to the trial grounds actually instituted. The PTAB denied the declaration as information that could have been submitted earlier. That is, the PTAB denied the motion despite the fact that Redline’s motion complied with the timeliness and relevancy requirements of the Rule.

On appeal, Redline argued that the PTAB could not consider additional criteria beyond timing and relevancy requirements of the Rule, and pointed to what it argued as inconsistency in the application of the Rule in several other IPR proceedings. Under an abuse of discretion standard of review, the CAFC affirmed the PTAB’s interpretation of Section 42.123(a). Specifically, the CAFC held that:

[t]he PTAB’s interpretation of its governing regulations is not plainly erroneous … [N]othing in § 42.123 or its regulatory history expressly states or implies that all elements of the [PTO’s] mandate are incorporated into § 42.123(a) and that it must be read to the exclusion of the remaining subsections in that regulation and 37 C.F.R. Part 42, Subpart A.” [Timeliness and relevancy are] additional requirements that must be construed within the overarching context of the [PTO’s] regulations governing IPR and general trial proceedings.

Going forward, petitioners seeking entry of supplemental information should be prepared to address the circumstances that necessitate the submission to allay concerns of gamesmanship.