Square, Inc., v. REM Holdings 3, LLC

Addressing issues of limited discovery and the requirements of a motion for supplemental discovery, the Patent Trial and Appeal Board (PTAB) denied supplemental discovery, finding the patent owner’s discovery requests were unduly broad and burdensome.  The Board concluded that even though the patent owner made a sufficient showing to warrant limited discovery related to secondary consideration of non-obviousness (sales figures), it had not sufficiently narrowed its discovery requests such that there was more than a possibility or mere allegation that something useful would be found.  Square, Inc., v. REM Holdings 3, LLC, Case No. IPR2014-00312 (PTAB, Sept. 15, 2014) (Bisk, APJ).

Square filed a petition challenging the claims of REM’s patent relating to a mobile card reader device (such as those used to process credit card payments).  After the Board instituted an inter partes review, REM sought “additional discovery” related to secondary considerations of non-obviousness.  In particular, REM argued that it required more information regarding copying by Square and the commercial success of Square’s card reader device.  The Board granted REM’s request to file a motion for additional discovery subject to REM specifically identifying the materials that were being requested and why it believed the requested discovery was “necessary in the interest of justice.”  The Board directed REM to the five factor test outlined in Garmin v. Cuozzo Speed Techs.  (IP Update, this issue) and emphasized that the mere possibility of finding something useful would be found insufficient to warrant discovery.

After REM filed its motion for additional discovery relating to evidence of secondary considerations, the Board dismissed its requests finding they were “unduly broad and burdensome . . . and sought information that was publicly available.”  The Board explained that REM did not show that there was more than a possibility or mere allegation that its request would result in evidence “both that there is commercial success, and that the thing (product or method) that is commercially successful is the invention” or “a sufficient relationship between that which is patented and which is sold.” In particular, the Board emphasized that in its motion, REM did not point to any specific language in the claims or otherwise explain how it might be able to show a nexus between the features of the claims and any commercial success.