Inter Partes Review Proceedings October 9, 2012

Inter Partes Review ProceedingsOctober 9, 2012

John Murnane Christina Schwarz

FITZPATRICK, CELLA, HARPER & SCINTO © 2012 | www.fitzpatrickcella.com 2

Initiating Inter Partes Review (IPR)

Who can seek IPR?

•Non-owner of patent (petitioner) may file a petition to institute IPR (§ 311(a)) unless the petitioner/real party in interest (RPI):

• Previously filed a civil action challenging validity of a claim of the patent (§ 315(a)(1)), or

• Was sued for infringement of a claim of the patent and more than 1 year has elapsed since receipt of complaint (§ 315(b))

Filing deadlines?

•A petition shall be filed after the later of either:

• 9 months after the grant or reissue of a patent (§ 311(c)(1)) or

• Termination of any post-grant review (PGR) (§ 311(c)(2))

Grounds for cancellation?

•Grounds under 35 U.S.C. §§ 102, 103 (limited to prior art patents and printed publications) (§ 311(b))


Initiating Inter Partes Review (IPR) –Petition

Petition requirements (§ 312(a); 37 CFR § 42.104)

•Payment of fee: $27,200 for 20 or fewer claims ($600 for each additional claim) (37 CFR § 42.15)

•Certification that patent is subject to IPR and petitioner is not estopped from requesting IPR

•Identification of all “real parties in interest” (RPIs) (see 77 FR at 48759-60)

•Identification of each claim challenged, grounds on which challenge is based, how challenged claim is to be construed, and supporting evidence

•Copies of all patents or printed publications and any affidavits with supporting evidence or expert opinion

•Petition and all supporting evidence must be supplied to the patent owner

Public proceeding

•Petition will be made available to the public (§ 312(b))

• Petitioner may file motion to seal confidential information (37 CFR § 42.55)


Initiating Inter Partes Review (IPR) –Patent Owner’s Response

Patent owner may file a preliminary response to the petition (§ 313)

•Response must be filed within 3 months; patent owner can expedite proceedings electing to waive preliminary response (37 CFR § 42.107(b))

•Response limited to providing reasons why the petition fails to meet the requirements for grant, such as: (see 77 FR at 48764)

• Petitioner is statutorily barred from pursuing review (e.g., petition is untimely; petitioner previously filed declaratory judgment action)

• Asserted references are not prior art; prior art lacks a material claim limitation; prior art teaches away

• Petitioner’s claim interpretation is unreasonable

•Patent owner not permitted to present any testimonial evidence, unless “necessary in the interests of justice” (37 CFR § 42.107(c); 77 FR at 48764)

•No adverse inferences will be drawn where patent owner elects not to file a response or elects to waive the response (77 FR at 48689)


Mandatory Initial Disclosures

• Trial Practice Guide sets forth two options for “Mandatory Initial Disclosures” (77 FR 48761-62)

• Parties may agree to provide the mandatory initial disclosures set forth in the Trial Practice Guide (37 CFR § 42.51(a)(1))

• Parties’ agreement must be submitted by filing date of the patent owner preliminary response or due date for that response if no response is filed

• If parties fail to agree on mandatory initial disclosures, a party may file a motion seeking such disclosures (37 CFR § 42.51(a)(2))

• Protective Order may be entered to protect exchange and submission of confidential information (37 CFR § 42.54)


Mandatory Initial Disclosures

Patent Trial Practice Guide’s options for initial disclosures: (77 FR at 48761-62)

• Option 1: identification of (a) persons likely to have discoverable information and (b) documents/things that may be used to support a claim or defense (similar to FRCP Rule 26)

• Option 2: Where petition seeks cancellation of claims based on a non-published public disclosure or obviousness (secondary considerations), identification of:

• All persons reasonably likely to know of the disclosure/have information relevant to secondary considerations, and whether they are within the petitioner’s control and represented by counsel (excludes persons offering affidavits)

• All documents and things relating to the disclosure/secondary considerations within petitioner’s possession, custody, or control

• All things relating to the disclosure/secondary considerations, their locations, and whether petitioner will produce them for inspection/testing


The Director’s Decision to Grant IPR

• Director must render a decision within 3 months of receiving patentee's response, waiver or expiration of the time period to file a response (§ 314(b))

• Standard for granting IPR: “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged” (§ 314(a))

• Claim terms are to be given their broadest reasonable construction in light of the specification (37 CFR § 42.100(b))

• PTO must provide written notice of the decision to the parties and public (§ 314(c))

• Board will identify, on a claim-by-claim basis, the grounds on which the trial will proceed (see 77 FR at 48757)

• Director's decision is final and cannot be appealed (§ 314(d))

• Party may request rehearing as to points believed to have been overlooked or misapprehended (37 CFR §§ 42.71(c), (d))


Relationship to Other Proceedings

Multiple Proceedings

• Director can consolidate petitions in the case of multiple filings (§ 315(c))

• During pendency of IPR, Director can stay, transfer, consolidate or terminate other proceedings or matters involving the same patent(s) (§ 315(d))


Conduct During IPR – The Scheduling Order

• If review is instituted, proceedings are conducted by the Patent Trial and Appeal Board (§ 316(c))

• Scheduling Order will be entered concurrent with decision to institute IPR (77 FR at 48636)

• Approximately one month after institution of IPR, Board will hold a conference call to discuss Scheduling Order and anticipated motions (77 FR at 48758)


Representative Timeline for IPR

Discovery & BriefingPre-Review Motions

(77 Fed. Reg. at 48757)

Petition Filed

PO Preliminary Response

Decision on Petition

PO Response & Motion to

Amend Claims

Petitioner Reply to PO Response &

Opposition to Amendment

PO Reply to Opposition to Amendment

Oral Hearing

Final Written Decision

3 months No more than 3 months

3 months 3 months 1 month Hearing Set on Request

PO Discovery

Period

Petitioner Discovery

Period

PO Discovery

Period

Period for Observations &

Motions to Exclude Evidence

No more than 12 months


Discovery & Briefing

Due date 1: Patent owner’s response to petition and/or motion to amend patent to cancel or amend challenged claims

•Evidence cited in reply/response may include compelled testimony (e.g. cross-examination transcripts) and uncompelled testimony (affidavits) (37 CFR § 42.53)

•Prior to due date 1, patent owner may engage in limited discovery: (37 CFR §§ 42.51, 42.53)

• Initial Disclosures: discovery of information identified in mandatory initial disclosures

• Routine discovery: evidence directly related to factual assertions advanced by parties: (a) exhibits cited, (b) cross-examination of affiants, (c) relevant information inconsistent with a position advanced by the party

• Additional discovery: a party may move for additional discovery where it is “in the interests of justice”

•Sanctions may be imposed for: abuse of discovery (e.g., failure to disclose prior inconsistent statement), improper purpose, abuse of process (37 CFR § 42.12; 77 FR at 48618)


Discovery & Briefing – e-Discovery

• Practice Guide contains a Model Order Regarding E-Discovery (Appendix C), which is expected to supplement the Scheduling Order

• Model Order: (77 FR at 48771-72)

• Cost-shifting for disproportionate ESI production requests and dilatory discovery tactics

• Production of ESI shall not include metadata other than the document date, time, and distribution list, if available

• Production of ESI shall not include email, absent agreement or Board Order

• Where authorized by agreement or Board Order, email searches limited to five custodians using five search terms per party, with five additional terms permitted if need shown

• Party seeking to modify Model Order must show “good cause”


Discovery & Briefing – Motion to Amend

Motion to amend patent to cancel or amend challenged claims

• Requirements (§ 316(d); 37 CFR § 42.121):

• Only one motion to amend may be filed absent Board authorization

• Additional motions may be permitted for “good cause” or upon joint request “to materially advance settlement”

• Patent owner must confer with Board prior to filing motion

• Motion must be filed no later than the filing of the patent owner’s response unless other date specified by Board

• Must set forth support in original patent disclosure for each claim

• Amendments must respond to an asserted ground of unpatentability

• Amendments cannot be used to enlarge scope of claims or add new subject matter

• Rebuttable presumption that only one substitute claim would be needed to replace each challenged claim


Discovery & Briefing

Due date 2: Petitioner’s reply to patent owner’s response and/or motion to amend

• Evidence cited in reply/response may include compelled testimony (e.g. cross-examination deposition transcripts of patent owner’s deponents) and uncompelled testimony (affidavits) (37 CFR § 42.53)

• Prior to due date 2, petitioner may engage in limited discovery to support reply to response and/or motion to amend (77 FR at 48757-58)

Due date 3: Patent owner’s reply

• Prior to due date 3, patent owner may engage in further discovery to support reply (77 FR at 48757-58)

• Reply limited to arguments raised by petitioner (37 CFR § 42.23(b))


Post-Discovery Motions

Due date 4: Additional motions (e.g., observation on cross-examination of reply witness, motion to exclude, request for oral argument)

• Either party may request a conference call to discuss additional motions as they arise (77 FR at 48767)

• Motion for observation on cross-examination allows petitioner to draw Board’s attention to relevant testimony (77 FR at 48767-68)

Due date 5: Responses to additional motions

Due date 6: Replies to additional motions

Due Date 7: Oral argument

• Parties have the right to an oral hearing before at least 3 Board members (77 FR at 48768)

• Board does not expect that live testimony will be necessary; however, parties can file a motion for live testimony in appropriate circumstances (77 FR at 48768)


Settlement

• IPR shall be terminated with respect to any petitioner upon joint request of the petitioner and the patent owner, unless PTO has decided the merits of the proceeding before the joint request is filed (§ 317(a))

• PTO may terminate IPR or proceed to final written decision if no petitioner remains (§ 317(a))

• No estoppel shall attach to petitioner if IPR is terminated (§ 317(a))

• Any agreement or understanding between the patent owner and petitioner, made in connection with, or in contemplation of, the termination of an IPR shall be in writing and filed in the PTO (§ 317(b))

• Upon request, settlement can be treated as business confidential information (§ 317(b))


The Board’s Decision & Appeal

Final Decision

• Board must determine whether petitioner has proven unpatentability by a preponderance of the evidence (§ 316(e))

• Board must issue final written decision within 1 year of institution of IPR, with up to a 6-month extension permitted for “good cause” (§§ 316(a)(11), 318)

Appeal

• Either party may appeal the Board’s decision to the Federal Circuit (§ 319)

Certificate

• After the time for appeal has expired, or any appeal has terminated, the Director shall issue and publish a certificate: (§ 318(b))

• Canceling any claim of the patent finally determined to be unpatentable

• Confirming any claim of the patent determined to be patentable

• Incorporating any new or amended claim determined to be patentable


Intervening Rights

• Any amended or new claim determined to be patentable and incorporated into a patent following an IPR shall have same effect as that for reissued patents with respect to the right of any person who, before the issuance of the certificate:

• Made, purchased, or used within the United States anything patented by the amended or new claim

• Imported into the United States anything patented by the amended or new claim

• Made substantial preparation therefor

(§ 318(c))


Relationship to Other Proceedings - Estoppel

Petitioner Estoppel

• Where review results in final written decision:

• Petitioner/RPI/privy cannot “request or maintain a proceeding before the Office with respect to [a claim involved in an IPR] on any ground that the petitioner raised or reasonably could have raised during that inter partes review” (§ 315(e)(1))

• Petitioner/RPI/privy cannot assert in an action under 28 U.S.C. § 1338 or an action before the ITC, that “[a claim involved in an IPR] is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review” (§ 315(e)(2))


Relationship to Other Proceedings - Estoppel

Patent Owner Estoppel

• Where adverse judgment is rendered against patent applicant or owner:

• “A patent applicant or owner is precluded from taking action inconsistent with the adverse judgment, including obtaining in any patent:

(i) A claim that is not patentably distinct from a finally refused or canceled claim; or

(ii) An amendment of a specification or of a drawing that was denied during the trial proceeding, but this provision does not apply to an application or patent that has a different written description.”

(37 CFR § 42.73(d)(3))

• Potential implications for continuation applications?


Relationship to Other Proceedings – Parallel Litigation

• Recall that petitioner/RPI cannot file a petition if it has previously filed a declaratory judgment action (§ 315(a)(1), (3))

• If the petitioner/RPI later files a civil action challenging validity, the civil action will be “automatically” stayed until: (§ 315(a)(2))

• Patent owner moves to lift the stay

• Patent owner files a civil action or counterclaim alleging infringement by the petitioner/RPI

• Petitioner/RPI moves to dismiss the civil action

• Courts will likely stay infringement litigation during pendency of IPR

• Final decisions in IPR may simplify litigation by limiting validity challenges, or resolving dispute if patent claims are cancelled

• If court declines to grant stay, there is a possibility for different outcomes on validity issues before the Board and District Court

• ITC may be more inclined to stay proceedings during pendency of IPR


Inter Partes Review Post-Grant Review

Eligible Patents

Any patent Patents with an effective filing date on or after March 16, 2013

Filing Deadline

Can file anytime after 9 months after patent issues/ re-issues

Must file within 9 months after patent issues/ re-issues

Grounds for request

Grounds that could be raised under §§ 102 or 103 (must be based on prior art patents / printed publications)

Any grounds under revised § 282(b)(2) or (3) (§§ 101, 102, 103, 112, 251)

Threshold to Initiate Proceeding

Reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged

Information that if not rebutted, demonstrates that it is more likely than not that a claim is unpatentable OR a novel / unsettled legal question

Discovery Evidence directly related to parties’ factual assertions (exhibits cited, cross-examinations of affiants) Additional discovery available where it is in the “interests of justice”

Evidence directly related to parties’ factual assertions (exhibits cited, cross-examinations of affiants)Additional discovery available for “good cause”

Key Differences Between IPR and PGR


Inter Partes Reexamination - PTO Statistics (as of June 30, 2012)

• Requests filed 11/29/1999 – 6/30/2012: 1659Chemical (17%) Electrical (52%)Mechanical (30%) Design (1%)

• Annual Filings:2010: 2812011: 3742012: 270 (up to June 30) (over 200 filings in the final week)

• Number of requests filed where patents known to be in litigation: 67%

• Inter partes reexamination requests granted: 94%

• Average time from filing date to certificate issue date: 36.1 months

• Certificates issued:• All claims confirmed: 11% • All claims canceled (or disclaimed): 42% • Claims changed: 47%

• Percentage of examiner decisions appealed to BPAI: 33% 77 FR at 48715;PTO IP Quarterly Report


Inter Partes Review Inter Partes Reexamination

Patents Any patent Patents issued from applications filed on/after November 29, 1999

Tribunal Patent Trial and Appeal Board (Administrative Law Judges)

Central Reexamination Unit (primary patent examiners)

Grounds for request

Grounds that could be raised under §§ 102 or 103 (must be based on prior art patents / printed publications)

Grounds based on prior art patents / printed publications; double patenting challenges have been permitted

Threshold to Initiate Proceeding

Reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged

Substantial new question of patentability

Average cost for requester

Expected to cost more than inter partes reexam given higher filing fees and ability to conduct discovery

$128,000 (AIPLA 2011 Economic Survey)

Time to completion (pre-appeal)

1.5–2 years (decision by 1 year from initiation date, with possible 6 month extension)

About 3 years (no statutory time limits for completion)

Key Differences Between IPR andInter Partes Reexamination



Discovery Limited discovery permitted No right to discovery

Patent owner’s ability to amend claims

1 motion to amend permitted; due with patent owner response (additional motion for “good cause”/to promote settlement); must respond to validity challenges; “reasonable number” of substitute claims

Broad right to amend and add claims throughout proceedings

Requester’s right to participate

Petitioner submits briefs and accompanying evidence; has right to oral hearing

Requester can respond to patentee’s arguments; no right to interview Examiner

Parties’ right to terminate

Parties can terminate proceedings by settlement

No right to terminate (consent judgment in parallel litigation may terminate)

Appeal Appeal to Federal Circuit Appeal to BPAI (now PTAB), then to Federal Circuit

Validity finding in parallel litigation

If court action concludes first, failure to prove invalidity will not impact IPR

First to conclude after all appeals wins, i.e., if litigation concludes first, inter partes reexam vacated under 317(b)

Key Differences Between IPR andInter Partes Reexamination



Estoppel - triggering event

Written decision by the Board Exhaustion of all appeals

Estoppel - triggering outcome

Applies irrespective of outcome Applies only where claim confirmed to be valid or allowable

Later proceedings subject to estoppel

Applies to PTO, District Court and ITC proceedings

Applies to District Court and PTO proceedings (second re-examination while first is pending)

Scope of estoppel

Issues the party “raised or reasonably could have raised”

Issues the party “raised or could have raised”

Key Differences Between IPR andInter Partes Reexamination - Estoppel


Timing Considerations for ANDA Filers where Drug has NCE Status

Yr 4 Yr 5 Yr 2 Yr 3 Yr 0 Yr 1

NCE Exclusivity (5 yrs)

NDA Approval

PatentIssues

ANDAFiling

IPR Appeal

PGR Appeal

If patent is invalidated in early-filed PGR/IPR, ANDA filer loses opportunity to obtain 180 day exclusivity

IPR Appeal

Stay

Late-filed IPR may result in stay of litigation, potentially extending length of litigation

Litigation

LitigationLitigation stay

Typical Litigation Appeal

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Timing Considerations for ANDA Filers Where Drug has NCE Status

Yr 4 Yr 5 Yr 2 Yr 3 Yr 0 Yr 1

NCE Exclusivity (5 yrs)

NDA Approval

Patent #1Issues

ANDAFiling

IPR – Patent 1 Appeal

PGR – Patent 1 Appeal

Where additional patents are in play, ANDA filers may challenge additional patents by PGR/IPR without risking opportunity to obtain 180 day exclusivity

Litigation

Patent #2Issues


PGR – Patent 2 Appeal



IPR, PGR and District Court Litigation – Key Considerations

• Patent challengers will need to carefully consider the best forum in which to raise invalidity arguments (IPR, PGR, District Court) in view of the following considerations, among others:

• Timing

• Grounds for review

• Cost

• Threshold to initiate review

• Need for discovery and extent of discovery required or desired

• Decision maker’s technical expertise

• Burden of proof

• Need or desire to have formal claim construction

• Time to decision

• Estoppel

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Inter Partes Review Proceedings October 9, 2012

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Transcript of Inter Partes Review Proceedings October 9, 2012