Stretching Prior Art Grounds Fatal to Petitioners
In district court, 102 grounds are highly preferred to even the strongest 103 ground. This is because of the uphill battle in demonstrating invalidity in a forum that not only applies a presumption of patent validity, but also requires clear and convincing evidence of invalidity. Obviousness just not resonate with non-technical fact finders as well as anticipation. For this reason, patent challengers in the district court will often creatively argue 102 grounds on the basis of “inherency.”
Now that patent validity disputes are increasingly heading to the Patent Trial & Appeal Board (PTAB), challengers find themselves in a difficult situation. That is, where a 102 ground has been “stretched” in the co-pending litigation, for consistency, the same position is being advanced at the PTAB. This practice has led to some unfortunate results for those allowing their district court case to drive their PTAB strategy.
Flawed inherency arguments are a favorite target of petition denials. Whether a result of attorneys seeking to track their preliminary invalidity contentions, or just hoping to present a 102 rejection, the end result can be quite significant as recently demonstrated in The Procter & Gamble Company v. Team Technologies, Inc. et al, 1-12-cv-00552 (OHSD July 3, 2014, Order) (Black, J.). In this case, after filing invalidity contentions with the court, the defendant pursued the same argument before the PTAB. On the basis of the PTAB’s denial of inherency based challenges, the Court granted partial summary judgement of no invalidity, explaining:
As further evidence that Defendants cannot meet their burden of showing that claims 1-3 and 7 of the ’017 patent and claims 2-3, 6-9, 11 and 18 of the ’453 patent are invalid, the PTAB recently rejected the same inherency arguments, with respect to the same references, under a lower standard of proof. . .
In this litigation, Defendants bear the burden of establishing invalidity by clear and convincing evidence. (Id.) In order to show that the challenged claims are invalid in the IPR proceeding, however, [defendant] must only meet a preponderance of the evidence standard. 35 U.S.C. § 316(e). Further, for the PTAB to institute proceedings in the first place, [Defendant] needed only to show a reasonable likelihood that it would ultimately succeed under the lower “preponderance of the evidence” burden. 35 U.S.C. § 314(a). Nevertheless, under this “reasonable likelihood” standard, which is significantly lower than the “clear and convincing” burden in this litigation, the PTAB found that [defendant and same expert evidence] inherency arguments were insufficient. . . .
The PTAB rejected [defendant’s] inherency arguments, under a lower standard of proof, not once, but twice. On January 23, 2014, [defendant] requested rehearing of the PTAB’s institution decisions in IPR2013-00438 and IPR2013- 00448. (Doc. 88-1 at 33).
In explaining the weight accorded to the PTAB decisions, the court explained that opinions from administrative agencies may be properly considered as evidence under Fed. R. Evid. 803(8) if the findings are trustworthy and probative of the issues —the Court took judicial notice of the PTAB’s findings.