Non-precedential Decision Faults Long-Standing PTAB Practice

Securing additional IPR discovery at the Patent Trial & Appeal Board is a challenge. This is because, such discovery is not accorded as a matter of right, but in the interests of justice. And, frequently, such requests are speculative attempts to add unnecessary complexity to an otherwise streamlined proceeding.

Often times, the Board simply denies requests to authorize a motion on additional discovery via teleconference. That is, the call to receive authorization to file the motion also functions as a hearing of sorts on the merits of the requested motion.

Earlier this week, the Federal Circuit faulted the Board’s practice of denying motion practice in this manner, holding that parties have a right to file motions.

In VirnetX Inc. v. The Mangrove Partners (here), VirnetX learned that Mangrove was the fifth largest shareholder of RPX, and that Mangrove had met with RPX management. (RPX had an earlier petition against the same patents that failed). Relying on this information and the fact that Mangrove’s attorney had only previously represented RPX, VirnetX requested authorization from the Board to file a motion for additional discovery into the relationship between Mangrove and RPX.

The Board denied authorization for the motion. The Board characterized VirnetX’s allegations on the conference call as amounting “to no more than a mere allegation of some kind of general association between Petitioner and RPX.” Order – Conduct of the Proceeding, IPR2015-01047, Paper 18 at 2 (PTAB Nov. 12, 2015).

In the Federal Circuit’s decision, the Court explained:

While the PTO’s regulations generally require prior authorization before filing any motion, 37 C.F.R. § 42.20(b), they also expressly give a party authorization to move for additional discovery, 37 C.F.R. § 42.51(b)(2)(i). This provision states that “[w]here the parties fail to agree [to additional discovery], a party may move for additional discovery.” Id. VirnetX must show that such discovery is in the interests of justice for that motion to be granted. Id. The Board, however, denied that VirnetX had made such a showing without ever permitting a motion allowing VirnetX to show the evidence that it had and to state the discovery sought. Because § 42.51(b)(2)(i) authorizes a motion for additional discovery, the Board abused its discretion in denying VirnetX the ability to even file a motion.

(emphasis added)

Although non-precedential, this guidance is likely to invigorate motion practice in PTAB trial proceedings. While the Board may still deny the discovery at the conclusion of motion practice, an expansion of motion practice will certainly increase costs.