To Predict How the Board Will Decide Issues in Inter Partes Review Proceedings, Look to Prior Board Decisions in Contested Cases
By Michael T. Siekman and Chelsea A. Loughran
Michael Siekman is a shareholder and co-chair of the Biotechnology Group and Chelsea Loughran is an associate in the Litigation Group at the Boston intellectual property firm of Wolf, Greenfield & Sacks P.C. They can be reached at firstname.lastname@example.org and email@example.com, respectively.
As we gain more experience with the inter partes review proceedings under the America Invents Act, patent practitioners are rightly watching Patent Trial and Appeal Board rulings for clues as to how these new proceedings will be handled by the administrative patent judges of the board’s Trial Section. What many within the patent bar may not know is that the answers already exist … in the form of a large body of case law and years of board experience in other contested cases.1 As discussed below, a review of board decisions in IPRs reveals that the board is deciding issues in IPRs just as those with years of practice trying cases before the board predicted.
In reality, this should not come as a surprise. The board thoroughly overhauled its rules and procedures for contested cases (almost exclusively interferences) in 2004 with the express purpose of providing a “test bed for cancellation proceedings.” And, in creating the Trial Rules that govern IPRs,2 the board expressly mirrored those contested cases rules. Indeed, that rulemaking contains myriad references to the board’s experience with contested cases as justification for adopting highly similar rules for IPRs. This similarity in IPR rulemaking was unsurprising given that it was driven by APJ Michael Tierney, who serves as the lead APJ of the Trial Section of the board, which handled contested cases and now handles IPRs as well.
As would be expected, the Trial Section APJs are applying the same standards to IPRs that they apply in contested cases–even when those standards are not set forth in the IPR Trial Rules or Trial Practice Guide. Just as with district court litigation, companies anticipating involvement in IPRs should consider their counsel’s familiarity with contested case proceedings, especially since such experience implicates a large body of authorities the board is likely to consider, most of which would be unknown to those new to trial practice before the board.
Discovery practice is one of the most misunderstood aspects of IPRs. This litigation-like overlay (as compared to inter partes reexamination) prompted many to suggest there would be robust discovery necessitating litigation-experienced counsel. However, as predicted by those with experience trying cases before the board, the Trial Section APJs have applied the “interest of justice” standard for obtaining “additional discovery” in an IPR just as narrowly as they have applied the same standard in interferences. Most importantly, the party requesting discovery “should already be in possession of evidence tending to show beyond speculation that in fact something useful will be uncovered.”3
This standard mirrors the standard the Trial Section applies in contested cases.4 Indeed, in Garmin, the board repeated for IPRs its characterization from the Standing Order for contested cases that the scope of discovery is “significantly different” from the scope of discovery generally available under the Federal Rules of Civil Procedure.5
Litigators expecting broad discovery in IPRs have been surprised. In denying additional discovery, the board repeatedly cites both the one-year time limit for IPRs and the more general provision that the Trial Rules are to be construed to secure the “just, speedy, and inexpensive” resolution of IPRs. This mirrors the board’s repeated citation to the analogous two-year goal and the identical “just, speedy, and inexpensive” rule of construction for contested cases. While these time considerations may seem to take on inordinate weight to litigators, the board was clear from the beginning that the legislative history required that additional discovery be restricted to limited situations justified by special circumstances and that the board was expected to be conservative in granting such discovery in light of these time constraints.6 The board continually relies upon this same legislative history in its decisions denying discovery requests.
Not only were those with experience trying cases before the board able to predict how the board would treat discovery in IPRs, they are, today, aware of a vast body of authorities that will influence how the board treats discovery disputes (and other issues) in IPRs in the future. For example, a large body of board case law is quickly developing that is not reported in official reporters. The board posts “Representative Orders, Decisions, and Notices” for IPRs,7 but those only scratch the surface. However, this has long been standard practice in contested cases where the board posts precedential and informative opinions. While several electronic services have arisen to enable searching and following of decisions in IPRs, no such services followed decisions in contested cases well. For those cases, counsel could only become familiar with this body of case law through years of experience.
In addition, the board has repeatedly relied upon a few favored sources of secondary authorities, particularly articles published by PTO personnel in the Journal of the Patent and Trademark Office Society. The “interests of justice” standard to obtain additional discovery is a perfect example. The Sernyk case cited above to illustrate the origin of the Garmin factors in prior board jurisprudence relies heavily upon Tropix v. Lumigen.8
Tropix in turn cites a JPOS article by Senior APJ Fred E. McKelvey as the primary support for the proposition that discovery before the board under the “interests of justice” standard is not the same as discovery before a federal district court under the Federal Rules of Civil Procedure, and it provides real and hypothetical examples illustrating application of that standard.9 Counsel with experience trying cases before the board will know to look to these authorities during discovery disputes, just as the Trial Section APJs will be familiar with seeing them cited.
Cross-Examination by Deposition
A central aspect of IPRs is the nature of its trial: direct testimony comes in by declaration (submitted as an exhibit), and cross-examination (and redirect) comes in by deposition (also submitted as an exhibit). But the nature of that cross-examination is markedly different from both Rule 30 depositions and trial witness cross-examinations. The board has long imposed unique prohibitions on counsel for both sides in contested cases in the form of the cross examination guidelines.10 Those guidelines strictly prohibit many activities that are common in depositions taken in district court litigation, but the board is quite willing to enforce these unusually restrictive prohibitions strictly.
In Pevarello v. Lan,11 the Trial Section issued an opinion of an expanded panel to provide the patent bar with clarification as to what actions fell within and outside of the cross examination guidelines. Although the expanded panel remanded to the merits panel for action based on its opinion rather than taking action itself, its highly critical language leaves no doubt that it strongly disapproved of the actions of counsel for both parties. Counsel are prohibited from stipulating to or making blanket objections; arguing the basis for objections rather than just making the objection and addressing it with a new question, if necessary; making any statements that suggest the answer, or stopping an answer, to the witness; repeatedly arguing a disputed issue throughout a deposition rather than contacting the APJ by telephone to resolve the issue; and inquiring into how the declaration was prepared.12
The board reproduced the substance of its contested cases cross examination guidelines in the Testimony Guidelines included in the Trial Practice Guide.13 Nonetheless, the seriousness with which the board takes these guidelines–not to mention their strict interpretation as articulated in Pevarello–is likely under-appreciated by those not experienced with trials before the board. The board has already enforced its guidelines in one IPR, ordering counsel to refrain from instructing a witness not to answer questions unless counsel first receives board authorization to do so.14 Counsel with experience trying cases before the board will be familiar with the guidelines and the board’s strict interpretation of them.
Another largely misunderstood aspect of IPRs is the ability of a patent owner to amend claims. While misunderstandings on discovery and depositions noted above stemmed from importing expectations from district court litigation, misunderstandings about the ability to amend claims come from importing expectations from inter partes reexamination. The board’s IPR decisions regarding the ability of a patent owner to amend claims have created significant unrest among those who thought the procedures would be analogous to inter partes reexamination. But they are unsurprising to those with experience trying cases before the board
This issue gets to the core of the similarities between the board’s procedures for interferences and IPRs; they are both motion-based trials providing an opportunity to amend claims to address an asserted ground of unpatentability. 37 C.F.R. §42.121 and the Trial Practice Guide provide detailed requirements on what must be included in such a motion to amend, but they do not explicitly specify that the motion must explain how the proposed amendment distinguishes the claim over the prior art. As a result, several attorneys unfamiliar with trial practice before the board have filed motions that do not sufficiently distinguish over the prior art. The board has dismissed those motions as failing to meet the movant’s burden.15
Those unfamiliar with trial practice before the board have found two aspects of decisions denying motions to amend surprising. First, the board relies upon the general requirement in 37 C.F.R. §42.20(c) that the movant bear the burden of proof in demonstrating that the proposed claim amendment distinguishes over the prior art.16 Second, the board requires the movant to establish patentability over both prior art of record and prior art not of record but known to the patent owner.17 Neither rationale, however, was surprising to those familiar with trial practice before the board; they originate in prior board jurisprudence.
The board has long taken the view that mere compliance with procedural requirements of a motion does not satisfy the substantive requirements of movant’s burden of proof.18 And the board has long taken the view in contested cases that a party proposing amended claims needs to establish in its motion the patentability of its proposed claim over the prior art of record, as well as the prior art known to it, even going so far as to acknowledge that this “may require a negative proof.”19 Indeed, in the 2004 rulemaking creating the contested cases rules, the board specifically rejected the same criticisms as have been leveled at these IPR decisions regarding the need to establish patentability over prior art that is not even of record and the effective requirement of proving a negative.20
The predictions of those experienced trying cases before the board regarding the requirement that a patent owner show the patentability of proposed amended claims over both the prior art of record and any other prior art known to the patent owner have been realized, to the surprise of many.
37 C.F.R. §42.24 sets detailed page limits for petitions, responses, motions, oppositions, and replies. The board set those limits based on its experience with similar page limits in contested cases, and it considered those page limits to be “a significant factor” in explaining the shorter pendency of contested cases than of inter partes reexaminations.21 Indeed, the board explained that contested cases were subject to lengthy and unacceptable delays in the early 1990s before the board introduced page limits.22
Here too, the misunderstanding of those lacking experience trying cases before the board has resulted in predictable rejections by the board. For example, in Innolux v. Semiconductor Energy Laboratory,23 the board denied a patent owner’s request for additional pages in which to lay out its motion to amend claims. Citing the motives behind the IPR rules, including the desire to conduct such proceedings in a “just, speedy and inexpensive” manner, the board refused to allow the patent owner to (1) deviate from the required double-spaced formatting, (2) incorporate material by reference, or (3) enlarge the page limit for its motions to amend claims.24 Reasoning that a single claim per motion to amend would likely suffice given the patent owner’s apparent desire to add a number of claims, the board referred the patent owner to an ex parte reexamination (or reissue) if it truly needed additional space to argue its desired amendments.25
While those who have been litigating patent cases in federal district court (where motions to enlarge page limits are not uncommon and often granted) may read the board’s decision in Innolux as surprisingly stringent, it was not surprising to those with experience trying cases before the board. In addition to the board’s historical perspective discussed in the IPR rulemaking, the board has long taken its page limits quite seriously. Indeed, the board has repeatedly warned practitioners not to circumvent page limits by incorporating arguments from elsewhere, such as a declaration.26 The board has stricken and refused to consider portions of improperly formatted papers that would have exceeded the page limits if they had been properly formatted with the correct font size and line spacing, even where the formatting errors were credited as inadvertent.27
As expected by those experienced trying cases before the board, the board is taking its rules on page limits in IPRs seriously, and those limits will rarely be waived.
37 C.F.R. §42.23 provides that a reply must only respond to arguments raised in the opposition (or patent owner response), and the rulemaking makes clear that this restriction applies to supporting evidence as well.28 While that may not be surprising, the Trial Practice Guide gives a flavor of how seriously the board takes this prohibition against late-filed arguments and evidence. A “reply that raises a new issue or belatedly presents evidence will not be considered and may be returned.”29 Thus, the improper argument or evidence will result in the entire reply being ignored, not just the portions relying upon improper argument or evidence.
This aspect of the Trial Practice Guide may not be fully appreciated by those who do not have experience trying cases before the board or the benefit of knowing the long history of the board’s views in this area. The board has long condemned what it characterizes as such sandbagging.30 The board even specifically addressed this issue in an opinion by an expanded panel that serves as binding precedent of the Trial Section on this issue.31 The board summarized its ongoing concern about inappropriate replies going back to rulemaking in 1984, including past proposals by the board that required authorization from the presiding APJ before filing any reply.32 The Trial Section then announced, “we will strictly enforce the reply brief practice as of the date this opinion is published, after which, noncompliant replies will be struck and returned.”33
Those without experience trying cases before the board are unlikely to appreciate the depths of the Trial Section’s long-held concern about the potential for a petitioner or movant to sandbag an opponent by withholding arguments and evidence until the reply stage, when an opponent has no opportunity to respond.
37 C.F.R. §42.21(a) provides for a notice of basis for relief, which must “include sufficient detail to place the board and each opponent on notice of the precise relief requested.” The Trial Practice Guide makes clear that the contemplated notice will generally be a motions list, but it does not provide any further details as to the required content of the motions list.34 Those with experience trying cases before the board are very familiar with motions lists, which the Trial Section introduced in the late 1990s as a tool to help APJs manage contested cases. To others, this element of IPRs will be quite foreign.
In CRS v. Frontline,35 the board noted (to its surprise) that, rather than submit a list of motions as expected, each party filed the motion itself, arguing for its requested relief rather than seeking authorization to file the proposed motion. One such improper listing included six pages of facts and argument in support of the ultimate motion–fully ignoring the requirement to seek and gain authorization to file such a motion.36 Had counsel for either party been experienced with trying cases before the board, they would have understood what was required for this well known procedural tool. Indeed, the contested cases rulemaking makes clear that a motions list “is not a substitute for a motion.”37
37 C.F.R. §42.10(c) provides for disqualifying counsel, but the rulemaking expressly declines to adopt specific procedures for disqualification proceedings.38 Given the number of IPRs involved in concurrent litigation, the number of IPRs serving as a predicate to litigation, and the inclination of some companies to use separate firms for litigation and IPRs, disqualification issues are likely to arise. Indeed, the board has already considered one such motion, deciding it was premature in light of potential developments in the concurrent district court litigation.39
How would the board decide such a motion, if ripe? Again, the board has already decided this issue in a contested case. In that case, the board again turned to an article that a PTO employee published in JPOS as providing guidance on how two disqualification proceedings would be conducted procedurally and substantively.40 Substantively, a resulting decision makes clear that the board will be very reluctant to disqualify counsel: “the moving party bears a heavy burden of proving facts showing that disqualification is necessary.”41
Counsel without experience trying cases before the board are not likely to be aware of these decisions, the high standard they have applied for disqualification, or the JPOS articles providing guidance on the procedures the board has followed for disqualification proceedings.
Early signs indicate that the new IPR proceedings will be an extremely attractive alternative (or complement) to district court litigation, and practitioners and clients are smartly gathering all available data on how to most effectively and efficiently navigate the board’s expectations for IPR practice. However, given early board decisions, it certainly appears that such expectations will align with those set years ago for contested cases. Practitioners with experience trying such cases before the board are well-positioned to apply such experience advantageously for their IPR clients.
2 77 Fed. Reg. 48,612 (Aug. 14, 2012) (157 PTD, 8/15/12). A consolidated set of final rule changes is available at http://pub.bna.com/ptcj/PTORevocationRules2012final12Aug14.pdf.
4 Sernyk v. Debonte, 72 U.S.P.Q.2d 1355, 1361 (B.P.A.I. 2004) (“If the basis upon which discovery or testimony is made is speculative, discovery or testimony may not be appropriate …, [b]ut, if a party can reasonably establish that its opponent or some third-party can supply a missing link to make out a prima facie case, then discovery or testimony may be appropriate.”); Standing Order at ¶ 150.2 (additional discovery “requires specific bases for expecting that the discovery will be productive”), available at http://www.uspto.gov/ip/boards/bpai/interf/forms/standingordermar2011.pdf.
15 E.g., Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 26 (P.T.A.B. June 11, 2013); Avaya Inc. v. Network-1 Security Solutions, Inc., IPR2013-00071, Paper 38 at 2 (P.T.A.B. July 22, 2013); Medline Indus. v. Paul Hartmann AG, IPR013-00173, Paper 22 (P.T.A.B. July 25, 2013).
18 Hillman v. Shyamala, 55 U.S.P.Q.2d 1220, 1221-22 (B.P.A.I. 2000) (rejecting argument that compliance with rule enumerating requirements for specific motion was sufficient as “simply wrong” because “the movant has the burden of proof” and it “would be impossible to list all of the substantive requirements for each kind of motion specifically and exhaustively.”); Standing Order at ¶ 208 (“Motions must, however, also be substantively sufficient. Thus, even perfect compliance with this guidance does not assure that a movant will satisfy its burden of proof.”).
26 E.g., Leveen v. Edwards, 57 U.S.P.Q.2d 1406, 1412 (B.P.A.I. 2000) (per curium, precedential) (“through incorporation by reference, an attorney can avoid page limits applicable to motions”); see also Standing Order ¶ 106.2 (“Incorporation of arguments by reference amounts to a self-help increase in the length of the brief and a pointless imposition on the board’s time.”).
28 77 Fed. Reg. 48,612, 48,620, col. 2 (Aug. 14, 2012) (“Reply evidence, however, must be responsive and not merely new evidence that could have been presented earlier to support the movant’s motion.”)
40 Anderson v. Eppstein, Int. No. 103,708, Paper 334 (B.P.A.I. July 16, 1998) (stating that “Attorney Disqualification Cases in the USPTO”, 62 JPOS 625 (1980), “would serve as a guide for these [disqualification] proceedings.”).