L.P. v. Cronos Technologies LLC

Addressing the showing required to institute covered business method (CBM) proceedings based on obviousness, the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB) denied the petitioner’s request for rehearing of the PTAB’s prior denial to institute CBM proceedings, finding that the petitioner had failed to meet its burden of demonstration and refusing to consider arguments newly raised in support of the petition. L.P. v. Cronos Technologies LLC, Case No. CBM2014-00082 (PTAB, Oct. 16, 2014) (Arpin, APJ).

The PTAB found that “because Petitioner failed to identify the differences between each of the applied references and the subject matter recited in the challenged claims, Petitioner failed to demonstrate why a person of ordinary skill in the relevant art would combine the references in the manner proposed to achieve the recited subject matter, as required by Graham.”  The PTAB elaborated, “without knowing what limitations of the recited claims are alleged to be missing from one reference and supplied by another, we concluded that Petitioner’s proffered reasons for combining [the applied references] to teach or suggest the challenged claims are insufficient.”

The PTAB agreed with the petitioner that the record included evidence of a motivation to combine the applied references.  However, “[i]nformation contained in exhibits or portions of exhibits, but not discussed in the Petition, is not incorporated into the Petition merely by the exhibits’ presence in the record.”  Thus, the PTAB refused to consider the petitioner’s argument based on the evidence because the argument was not presented prior to the petitioner’s request for rehearing.

In response to the petitioner’s argument that the PTAB overlooked the patent owner’s failure in its preliminary response to argue that the petition failed to provide substantive grounds to combine the teachings of the applied references, the PTAB noted that “Petitioner bears the burden of demonstrating that it is more likely than not that Petitioner would prevail in showing unpatentability on the grounds asserted in its Petition,” and that the patent owner was not required to file a preliminary response.  “Therefore, contrary to Petitioner’s assertion, nothing may be gleaned from the Patent Owner’s challenge or failure to challenge the grounds of unpatentability for any particular reason.”

Finally, in response to the petitioner’s argument that the PTAB failed to apply the correct legal standard for finding obviousness over a single reference, the PTAB found that the petitioner had not previously asserted “any grounds of unpatentability based on any of the applied references individually.”  Consequently, the PTAB refused to consider these newly raised grounds of unpatentability of the challenged claims.

Practice Note: Petitioners may be loath to acknowledge that a prior art reference lacks any feature of a claim.  If a petitioner believes that a reference discloses all features of a claim, but that combination with another reference provides an alternative and possibly stronger ground of unpatentability, both grounds can and should be included in the petition.  If properly executed, this approach can avoid detrimental acknowledgments while providing sufficient identification of the differences between the references and the claims to permit evaluation of the reasons for combination.  The petitioner here omitted from its petition grounds of unpatentability based on individual references “to simplify the number of grounds for trial.”  Inclusion of an excessive number of grounds is a legitimate concern, as highlighted by Canon Inc. v. Intellectual Ventures I LLC (IP Update, Vol. 17, No. 10) (49 grounds across three petitions for inter partesreview were too many).  However, the addition of only a few additional grounds to the petition may have better served the petitioner here.