Seagate Tech. (US) Holdings, Inc. et al. v. Enova Tech. Corp.

Citing both substantive and procedural reasons, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB or Board) ruled that a party was not entitled to present observations concerning the cross-examination of its own witness and that Fed. R. Evid. 106 does not provide a basis for such a submission. Seagate Tech. (US) Holdings, Inc. et al. v. Enova Tech. Corp., IPR2014–01178 (PTAB, Oct. 28, 2015) (Goodson, ALJ).

The patent owner tried to submit “observations” on the cross-examination of its own witness. More specifically, the patent owner filed a motion to present observation commenting on the cross-examination of its own expert, apparently frustrated by the out-of-context snippets of testimony that the petitioner relied on. Attempting to provide context around the testimony the petitioner cited and having no procedural opportunity for a sur-reply, the patent owner submitted its observations arguing the “observations [were] needed to help the [B]oard by having ‘context-providing statements identified by the adverse party.’”

The petitioner moved to expunge the observations, arguing that the scheduling order only authorized the patent owner to file observations on the cross-examination of a reply witness (not its own expert); and the Zhongshan case, upon which the patent owner relies, is not relevant because here it is the patent owner seeking to file observation a circumstance carved out of the Zhongshan ruling (“The rationale for observations does not apply . . . [when] it is [the] [p]atent [o]wner that seeks to file observations on the cross-examination testimony of its own witnesses.”)

Relying on FRE 106, the patent owner further argued that observations were necessary in order to address discrepancies in the testimony as cited and that the Zhongshan case was indeed applicable. Ultimately, the Board agreed with the petitioner, noting that the expert’s full deposition transcript was available to it.

The Board granted the petitioner’s motion to expunge and also expunged the petitioner’s response to the patent owner’s motion. The Board harshly criticized the patent owner’s procedural transgressions in filing a motion without prior authorization, noting that it has previously determined it is improper for a party to submit observations on the testimony if its own witnesses. As the Board stated: “The [S]cheduling [O]rder states that [a] motion for observation on cross-examination provides the parties with a mechanism to draw the Board’s attention to relevant cross-examination testimony of a reply witness because no further substantive paper is permitted after the reply.” The Board explained that “[t]he party taking the cross-examination files the observations,” while the opposing party may file a response to an observation, it may not file observations without express prior authorization.

Citing to Schott, the Board concluded: “it is the party taking the cross-examination that typically files observations, and the reason for permitting observations is that the cross-examination takes place after the party has filed its last substantive paper, such that the party has no way to bring relevant testimony to the Board’s attention.” But here, just as in Schott, [t]he rationale for observations does not apply . . . because it is [the] [p]atent [o]wner that seeks to file observations on the cross-examination testimony of its own witnesses.

Practice Note: The PTAB’s rules governing inter partes reviews (IPRs) do not provide a mechanism for a party to provide observations on cross-examinations of its own witnesses without express authorization by the panel. A patent owner may try to mitigate the problem confronted by the patent owner here by taking more robust re-direct, making it more difficult for the petitioner to cite out-of-context testimonial snippets.