The America Invents Act, which went into effect September 2012, introduced new proceedings for challenging a patent before the U.S. Patent and Trademark Office. Inter partes review (“IPR”) is one such proceeding. In the short time that IPRs have been available, more than 1000 petitions have been filed, with more than 600 petitions filed thus far in 2014 alone.
IPRs provide a new forum in which persons accused of infringement can contest the validity of patents in view of prior art. IPR proceedings are an administrative form of litigation, taking place before the Patent Trial and Appeal Board (“PTAB”) that includes written arguments, motion practice, expert testimony, depositions and oral arguments.
IPRs are labor-intensive proceedings that require an intimate understanding of patent law, a firm grasp of IPR complexities and procedures and a detailed strategy mapped out in advance. Without a strong foundation at the beginning, arguments may be lost or rendered unavailable to either the petitioner or the patent owner.
IPR proceedings have, to date, proved to be a mighty sword in the hands of defendants in patent litigations. Most of the PTAB decisions have resulted in the cancellation of all of the challenged patent claims. As of May 2014, the PTAB has instituted and decided 28 proceedings, with the petitioners enjoying better than an 80% success rate.
The length of the proceeding from the initiation of the IPR to the final oral arguments is, as mandated by the rules governing the process, a rapid twelve months. Indeed, the speed of disposition is one reason that patent defendants are increasingly likely to file IPR petitions when facing litigation. Another reason, of course, is the high rate of success so far for petitioners in IPRs that go to decision.
If you are a patent owner, all is not lost. For one thing, the PTAB allows the initiation of an IPR only when the board believes there is a reasonable likelihood that the petitioner will prevail on at least one of the challenged claims. The PTAB has reported that in more than 60 petitions the petitioner failed to meet the threshold burden of proof for instituting the IPR, while more than 70 other IPRs have resulted in a settlement favoring the patent owner.
Thus, the success of petitioners must be seen in context. Although they have won 80% of cases that have gone to decision, petitioners have failed to get out of the box in a large percentage of their challenges. The PTAB has taken up a total of 167 petitions and has not instituted 63 of the petitions. In these cases, patent owners prevail without the public fanfare of a written decision.
For example, last month, the PTAB refused to institute an IPR requested by Twitter, Yelp and Facebook for a patent owned by Evolutionary Intelligence LLC. In related decisions, the board ruled that the petitioners failed to establish a reasonable likelihood that they would prevail on at least one of the patent claims challenged.
In even better news for patent owners, the PTAB recently upheld the validity of all the patent claims under challenge, a sweeping triumph that was the first of its kind in an IPR. The board held that ABB Inc. failed to establish by a preponderance of the evidence that the claims of a patent owned by Roy-G-Biv Corp. (RGB) were obvious in view of the prior art. All of the patent claims survived all of the challenges.
Particularly remarkable in the ABB case is that even though the IPR was initiated – with the implication that the board believed it likely that the ABB would prevail on at least one of the challenged claims – RGB was able to overcome this initial impression through arguments and evidence.
Claim construction is essential to a successful defense in an IPR proceeding. In its initial petition, ABB proposed a construction for many of the terms used in the independent claims and argued eight separate grounds for invalidity of the patent. In its preliminary response, RGB challenged ABB’s claim construction with respect to only two terms. Because ABB’s construction went largely unchallenged, the board accepted as reasonable ABB’s proposed interpretation of the remaining claim limitations.
Although RGB’s strategy of largely not challenging ABB’s claim construction may have prompted the PTAB to institute the IPR in the first place, RGB mounted a formidable defense in its preliminary response to the petition and succeeded in disposing of seven of ABB’s eight arguments before the IPR was even instituted. As a result of its success with the preliminary response, RGB focused on attacking a single obviousness argument during the IPR and directed the board to important claim terms ignored by ABB.
The PTAB’s ruling turned on the interpretation of two of those claim terms. When construing claims, the board must, by regulation, apply “the broadest reasonable construction in view of the specification.” As the terms at issue were not ordinary terms of art, the board based its interpretations on quoted passages of the specification. RGB in effect served as its own lexicographer.
A lesson for patent owners in drafting their preliminary responses to IPR’s is to focus the PTAB on errors made by the petitioner. Showing that the petitioner made procedural errors or cited references that lack material elements can be persuasive to the PTAB. Although claim construction can be addressed in the preliminary response as well, the patent owner will have a second opportunity to propose claim construction after the IPR is instituted. What’s more, the patent owner may present expert testimony in support of its claim construction.
There’s another lesson for inventors, especially those in the computer software area, in the fact that the PTAB relies heavily on the specification for determining claim construction: It is imperative that the terminology used in patent claims be either expressly or implicitly defined within the patent specification, but with appropriate narrowness. Otherwise, an overly broad interpretation may be imposed, leading to the claims being held invalid.
Great care should be taken in drafting claims and providing the necessary support within the specification for the intended scope of the invention. Although an inventor desires the broadest possible claims, the patent drafter must keep one eye on the prior art and focus the claims so that they are not overreaching and subject to invalidation challenges.
In sum, all is not lost when a patent owner is faced with an IPR proceeding. While the headlines suggest that these challenges are nearly always successful, the reality is more nuanced. A well-conceived defense in an IPR can be successful.