Takeaway: The Board may consider both the need to protect the patent owner from undue harassment and whether the petitioner has had a full and fair opportunity to litigate the prior litigation in determining whether privity existed between two parties.

In its Decision, the Board determined that the Petition was not time barred under 35 U.S.C. § 315(b). The Board granted institution of inter partes review of claims 1-10, 14, 16-21, 25, 27, 29, and 32-36 of the ’435 patent because Petitioner had shown a reasonable likelihood that it would prevail in showing the unpatentability of the challenged claims.

Patent Owner alleged the Petition is time barred because GEA Process Engineering (GEA) is a privy of Petitioner. GEA was sued by Patent Owner for infringement of the ’435 patent on September 24, 2012 (’904 case). The basis of the alleged privity was an Agreement to purchase “Line 8 Equipment” between GEA and Petitioner that was entered into on January 28, 2013. The Board stated that privity considered both the need to protect the patent owner from undue harassment and whether the petitioner had a full and fair opportunity to litigate the prior litigation.

The Board began its analysis of the privity issue by determining whether privity existed at the time the complaint was filed against GEA in the ’904 case. Patent Owner argued that Petitioner need not have been in privity at the time the complaint against GEA was filed. The Board noted that Petitioner has not admitted it was in privity with GEA at any time point and distinguished this case from a non-precedential decision in which privity was found. Despite the relationship between Petitioner and GEA after service of the complaint, the Board determined that privity had not been established.

Next, the Board determined whether privity existed due to a substantive legal relationship. Patent Owner argued that GEA and Petitioner have a deep relationship that extends beyond a typical supplier and customer relationship. Patent Owner noted the large amount of sales from GEA to Petitioner. Patent Owner also relied upon an alleged cooperation between GEA and Petitioner on legal strategy regarding the Steuben patents. Patent Owner also alleged that an indemnity provision in the Agreement was another basis for privity. The Board was not persuaded, because privity is not typically found between a manufacturer and a seller. Further, the alleged information sharing was not sufficient for a privity relationship. Rather, the Board found that type of coordination was typical for parties in a joint defense group. The Board also stated that the indemnification relationship between GEA and Petitioner was different from those recognized by the Supreme Court.

Lastly, the Board addressed whether privity existed based on an assumed control or opportunity to control. Relying on two provisions of the Agreement, Patent Owner asserted that Petitioner and GEA contractually share control over the ultimate disposition of the inter partes review proceedings and the ’904 case. The Board determined that neither provision establishes a level of control sufficient to form privity. The Agreement provided only a limited role, if any, for Petitioner in the ’904 case. Petitioner asserted that the Line 8 Agreement did not pertain to other prior purchases (corresponding to lines 1-6) from GEA, which were the lines accused in the ’904 case. The Board agreed with Petitioner in finding there was insufficient evidence to conclude that Petitioner had control with respect to GEA’s defenses to any significant degree. The Agreement states that GEA may settle the case without Petitioner’s consent and it does not permit Petitioner to direct GEA with regard to an appeal. Thus, the Board determined that the Petition is not time barred under § 315(b).

Turning to the merits of the Petition, Petitioner alleged claims 1-10, 14, 16-21, 25, 27, 29, and 32-36 were obvious over Scholle in view of one or more of Chambers, FDA Regulations, Kelbrick, Elliot, Akai, and Kodera. Petitioner alleged Biewendt anticipated the challenged claims and/or rendered them obvious in view of one or more of Chambers, FDA Regulations, Kelbrick, Elliot, Akai, and Kodera. The ’435 patent relates to providing sterilization zones in an aseptic packaging sterilization tunnel that surrounds containers with pressurized gas. The sterilization tunnel has sterile “zones.” The sterilant used can be hydrogen peroxide at a concentration less than approximately 35%. The Board did not expressly construe any claim terms of the ’435 patent.

Regarding the obviousness challenge based on Scholle, Petitioner asserted that Scholle is configured to prevent hydrogen peroxide from migrating from the sterilizing compartment to the drying and filling compartments. Petitioner relied upon testimony of its Declarant, Dr. Heldman in asserting that one of ordinary skill in the art would understand that the concentration of applied sterilant must necessarily be maintained. Petitioner argued that Chambers and FDA disclose concentrations of hydrogen peroxide within that of claim 1 of the ’435 patent. Patent Owner argued that sterilant concentration in the sterilization zone is a function of the manner in which the sterilant is atomized and vaporized. Patent Owner argued that Petitioner’s Declarant has provided no support to explain how Scholle’s percentage of hydrogen peroxide is translated into the concentration of hydrogen peroxide in the sterilization zone after it has undergone several processes. The Board agreed with Petitioner that an obviousness challenge does not require that the hydrogen peroxide concentration in the sterilization zones must necessarily be maintained at the exact same concentration. The Board concluded Petitioner had established a reasonable likelihood of prevailing with respect to claim 1 and the other challenged claims.

Petitioner asserted that Biewendt anticipates the claims 1-10, 14, 16-21, 25, 27, 29, and 32-36. Petitioner argued that Biewendt discloses hydrogen peroxide is stored at a minimum concentration of 33%, which implicitly requires “maintaining” the concentration at the specified level. Petitioner argued that Biewendt’s sterilant concentration ratio is at least about 330,000 ppm to 1 ppm, which is at least about 5 to 1. The Board disagreed with Petitioner, noting that Biewendt’s disclosure of 33% concentration of hydrogen peroxide before it is sprayed does not necessarily result in a 330,000 ppm concentration in the sterilization machine. Thus, Petitioner had not demonstrated a reasonable likelihood or prevailing on the alleged anticipation grounds.

Petitioner also challenged claims 1-10, 14, 16-21, 25, 27, 29, and 32-36 on obviousness in view of Biewendt and other references. Petitioner argued that it would have been obvious to provide Biewendt with the partitions of Scholle. Patent Owner restated its argument that the sterilant concentration levels in the plurality of zones is maintained at a ratio of at least 5 to 1. The Board agreed with Petitioner for the reasons provided in the obviousness challenge based on Scholle. Thus, Petitioner had established a reasonable likelihood of prevailing with respect to claims 1-10, 14, 16-21, 25, 27, 29, and 32-36.

NESTLÉ USA, INC. v. STEUBEN FOODS, INC., IPR2015-00195

Paper 51: Decision Instituting Inter Partes Review

Dated: June 29, 2015

Patent: 6,475,435

Before: Michael P. Tierney, Beverly M. Bunting, Christopher G. Paulraj

Written by: Paulraj

Related proceedings: Seuben Foods, Inc. v. Nestle, USA, No. 1:13-cv-00892 (filed Sept. 3, 2013), IPR2014-00043 (terminated), GEA Process Eng., Inc. v. Steuben Foods, Inc., Case IPR2014-00043, ex parte reexamination 90/012,135 and 90/013,458.