It has become increasingly common for an accused infringer to file a petition forInter Partes Review (“IPR”) challenging validity of one or more claims of a patent asserted against it in litigation. A petitioner has twelve months from the day it is served with a complaint for patent infringement to file its petition for IPR.1 Once an IPR petition has been filed, the Patent Trial and Appeal Board (“PTAB”) must decide whether to institute trial within six months.2 In the event the PTAB refuses to institute IPR, and if the petitioner’s twelve-month window has expired, filing a request for rehearing is often the petitioner’s only option for maintaining its validity challenge at the PTAB.
Standard of Review
The PTAB’s decision regarding institution of IPR is “final and nonappealable.”3The Federal Circuit has recently confirmed that it cannot immediately review a PTAB decision on IPR institution.4 Thus, the only immediate remedy available to a party dissatisfied with the PTAB’s decision on institution is to file a request for rehearing, in which a panel will review the decision for an abuse of discretion.537 C.F.R. § 42.71(d) sets forth the procedures and deadlines associated with a request for rehearing. Prior authorization from the PTAB is not required to request rehearing, and any request must be filed within 14 days of a non-final decision or a decision to institute a trial as to at least one ground of unpatentability, or 30 days of a final decision or a decision not to institute a trial.6
The request for rehearing must specifically identify all matters the PTAB “misapprehended or overlooked” in its decision and the place in the IPR petition where each matter was “previously addressed.”7 Notably, the statute does not provide a basis for simply challenging the ultimate non-institution conclusion or presenting new arguments or evidence.8 Indeed, the PTAB has noted on several occasions that it cannot “misapprehend or overlook arguments and evidence not presented in the Petition.”9 Though the USPTO’s Office Patent Trial Practice Guide (“Trial Practice Guide”) technically provides for the admission of “evidence not already of record at the time of the decision” upon a showing of “good cause,” this standard has proven difficult to establish.10 The Trial Practice Guide further provides that a party opposing the request for rehearing “should not file a response” unless the PTAB requests that one be filed.11 Absent a need for responsive briefing, the PTAB aims to decide requests for rehearing within one month.12
Not surprisingly, the PTAB has rarely found an “abuse of discretion” sufficient to warrant modifying its initial non-institution decision.13 Nevertheless, despite the high standard of review and low success rate, a request for rehearing is often a petitioner’s most logical (or only) recourse after a negative institution decision—particularly where the petitioner can specifically identify an overlooked or misapprehended argument or fact.
Recent Decisions Granting Rehearing and Instituting IPR
The PTAB has recently granted rehearing where the petitioner successfully argued that the PTAB (1) overlooked or misapprehended arguments or evidence presented in the petitioner’s IPR petition, or (2) overlooked a practical, unintended consequence of the PTAB’s decision.14 Several recent decisions illustrate the types of arguments and factual circumstances that may lead to a successful request for rehearing.
In Handi Quilter, Inc. v. Bernina International AG, the petitioner persuaded the PTAB to modify its decision because the PTAB misapprehended the significance of certain arguments set forth in the IPR petition.15 In refusing to institute IPR, the PTAB rejected the petitioner’s argument that it would have been obvious to combine the teaching of a first prior art reference (Watabe) with those of another reference (Gordon). Specifically, the PTAB found that although the petitioner argued that a person of ordinary skill could have modified Watabeto include features from Gordon, it did not persuasively explain why a person of ordinary skill would have done so.16 The PTAB also did not find persuasive an expert declaration the petitioner submitted in support of its obviousness argument.17 In its request for rehearing, the petitioner argued that the PTAB’s decision not to institute “overlooked Petitioner’s argument that Watabe itself, even without the support of expert testimony, provide[d] sufficient rationale to show a reasonable likelihood that a person of ordinary skill in the art would have found it obvious to combine the teachings of Watabe and Gordon.”18
The petitioner first noted that the law does not require that the “rational underpinning” required by KSR International Co. v. Teleflex Inc. “be further supported by an expert.”19 Regarding the motivation to combine, the petitioner explained that while Watabe left out the details of how its disclosed optical motion sensor works, Watabe referred to the sensor’s use of “a known method.”20 Thus, the petitioner argued that a “person of ordinary skill in the art . . . would have been motivated to determine which among the available off-the-shelf optical sensors would work for the purpose disclosed in Watabe” and “is presumed to have known of Gordon,” which described a suitable sensor.21 In evaluating the petitioner’s request for rehearing, the PTAB analyzed the motivation to combine issue and agreed that it had “misapprehended the significance of this argument in the Petition.”22 The PTAB found that the evidence presented by the petitioner supported a reasonable likelihood that obviousness would be established and thus the petitioner successfully demonstrated the PTAB’s initial decision should be modified to institute IPR.23
The PTAB has granted IPR petitioners’ requests for rehearing after non-institution decisions on at least a few other occasions. In two of those instances, the PTAB was again persuaded to modify its previous non-institution decision and institute IPR because it agreed it overlooked or misapprehended petitioner’s arguments. In Merial Ltd. v. Virbac, the PTAB initially declined to institute IPR as to all three obviousness grounds set forth in the petition.24 The petitioner sought rehearing as to two of the grounds, both of which relied on the same prior art reference, Huet.25 In declining to institute IPR, the PTAB determined that Huet “requires a co-solvent selected from the group consisting of methanol, ethanol, or isopropanol,” whereas the claim at issue “excludes the presence of methanol, ethanol, and isopropanol.”26 In its request for rehearing, the petitioner argued that the PTAB misapprehended or overlooked a specific disclosure in Huet that described the use of a cosolvent as being optional, i.e., not required.27 After reviewing the prior art disclosure in detail, the PTAB agreed that it “overlooked the significance” of that portion of Huet.28 The PTAB noted that, “in [its] view, when [it] recognize[s] that [it has] misapprehended or overlooked a significant fact, the necessary abuse of discretion” is established.29The PTAB dismissed the patent owner’s argument that petitioner raised a “mere disagreement” with the PTAB’s determination because the PTAB’s initial order “never addressed the ‘optional’ nature of the cosolvent.”30 Upon consideration of the request for rehearing and the materials previously submitted by the petitioner, the PTAB instituted an IPR trial on the two grounds for which the petitioner requested rehearing.31
In Daicel Corp. v. Celanese International Corp., the PTAB provided additional guidance regarding the standard of review a party faces in seeking rehearing:
An abuse of discretion may arise if a decision is based on an erroneous interpretation of law, if a factual finding is not supported by substantial evidence, or if an unreasonable judgment is made in weighing relevant factors.32
Following the PTAB’s refusal to institute IPR, the petitioner argued, in part, that the PTAB’s decision “was based on factual findings that are not supported by substantial evidence and that [the PTAB] made unreasonable judgments in weighing relevant factors.”33 The petitioner directed the PTAB to the portion of the IPR petition where the petitioner’s expert declarant (1) explained how the prior art reference disclosed a particular claim limitation and (2) provided support for that opinion from his own calculations and data in two of his published articles.34 Considering petitioner’s arguments, and specifically referencing the portions of the IPR petition to which the petitioner directed the PTAB, the PTAB agreed that it “misapprehended the significance” of that particular argument in the Petition and “overlooked the fact that [the declarant’s] opinion is also based on his own calculations and data in two published articles.”35 The PTAB thus found that the petitioner provided sufficient explanation and evidence to establish a reasonable likelihood that it would prevail, and thus instituted trial as to that ground.36
The PTAB has also been open to modifying its non-institution decision where the petitioner was able to clearly show the PTAB overlooked a practical, unintended consequence of the PTAB’s decision. In Sure-Fire Electrical Corp. v. Yongjiang Yin, the PTAB instituted an IPR of claims 1 and 7 of the ‘279 patent on obviousness grounds based on two prior art references, Gustafsson andHe.37 The PTAB declined to institute an IPR of the same claims based on two other grounds—obviousness over (1) He and Korodi and (2) He and Currie—because the petitioner “did not explain adequately the relative strength or weaknesses” of those grounds.38 The petitioner filed a request for rehearing as to the obviousness assertions relying on He and Korodi and He and Currie. In its request, the petitioner explained that not instituting the IPR on these additional grounds had the potential of allowing the ‘279 patent to survive the IPR based solely on the patent owner’s priority defense as to Gustafsson, avoiding a substantive assessment of the validity of the ‘279 patent.39 That is, if the patent owner succeeded in swearing behind Gustafsson (a contested issue in the case), the one instituted obviousness assertion (Gustafsson and He) would fail.40
In considering petitioner’s request for rehearing, the PTAB recognized that although it determined petitioner “did not fully explain” its obviousness assertions over He and Korodi or Currie, “sufficient argument was provided.”41After a substantive analysis of the petitioner’s additional obviousness assertions, the PTAB granted petitioner’s request as to He and Korodi and modified its decision to include institution of an IPR based on this ground.42 The PTAB agreed with the petitioner that “the asserted ground based on He andKorodi would add only one additional reference” to the IPR and thus, “any additional burden” on the patent owner in responding to this additional assertion “is outweighed by the goal of providing an efficient and cost-effective resolution of this matter.”43 The PTAB declined to institute IPR based on He and Curriebecause there was also a potential for the patent owner to swear behind Curriesuch that the arguments petitioner presented did not apply to the He and Curriecombination.44
Practical Implications for IPR Petitioners Filing Requests for Rehearing
As is evident from the successful rehearing requests discussed herein, a request for rehearing must clearly identify how the PTAB misapprehended or overlooked previous arguments or material facts. The request should include specific citations to the PTAB’s decision on institution, the IPR petition, and any other filing of record, and argue that the PTAB did not properly consider the cited arguments and evidence in its initial decision. Petitioners should not attempt to present new evidence or arguments in requests for rehearing, or merely reargue the position set forth in the IPR petition, as such requests will almost always be denied. To the extent presenting new evidence or arguments is unavoidable, petitioners must adequately address the “good cause” requirement often overlooked by parties seeking rehearing.
A request for rehearing may successfully result in institution if it clearly identifies inadvertent errors in the PTAB’s non-institution decision and sets forth the correct facts or appropriate legal standard, as the request did in Handi Quilter. Further, as demonstrated by the successful requests in Handi Quilter, Merial Ltd., and Daicel Corp., where the PTAB misapprehends the significance of an argument or material fact in its non-institution decision, a potentially successful rehearing request will restructure the original argument to present it in a more persuasive manner. Finally, even where the PTAB has not made an obvious error in its non-institution decision, there may be opportunity for rehearing if the PTAB’s denial produces an illogical, and likely unintended, result, as was the case in Sure-Fire. Thus, petitioners would be well served to think “outside the box” about the practical consequences of the non-institution decision and how to frame those consequences in a way that may be inconsistent with what the PTAB otherwise intended.