By Eleanor M. Yost and April E. Weisbruch
Eleanor M. Yost is a partner and April E. Weisbruch is an associate in the Washington, D.C., office of Goodwin Procter LLP, in the firm's Intellectual Property Group. Yost practices before state and federal courts, the International Trade Commission and the Patent and Trademark Office. Weisbruch focuses on all aspects of intellectual property, including patent prosecution, litigation and opinions.
The Patent and Trademark Office has strictly enforced page limits on petitions to initiate the new inter partes and covered business method review proceedings. These limits apply whether the challenged patent has one or 100 claims, or whether the petitioner wants to rely on one or 100 prior art references. As a result, patent practitioners are often forced to condense technically and legally complex arguments into the permitted 60 to 80 pages.
To bypass these limits, patent challengers have begun using a variety of strategies, including filing multiple petitions. This increasingly common practice--approved by both Congress and the Patent Trial and Appeal Board (PTAB)--has numerous strategic advantages and will undoubtedly grow in popularity in the years to come.
The Leahy-Smith America Invents Act, which made sweeping changes to the U.S. patent system, was signed into law on Sept. 16, 2011. Among other things, the AIA established important new PTO proceedings to challenge the validity of an issued patent. The four new proceedings are: (1) inter partes review (IPR), (2) the transitional program for covered business method patents (CBM), (3) post-grant review and (4) derivation proceedings.
IPR and CBM proceedings quickly became popular with patent practitioners during the first year of their availability. They are administered by the PTAB, another AIA creation. A panel of administrative patent judges presides over the proceedings and makes rulings regarding institution of a trial, discovery matters and ultimately, the patentability of the claims.
Previously, third parties could challenge a patent's validity using other vehicles, such as inter partes reexamination. These procedures, however, were exceedingly slow and limited in scope. Now, the four new proceedings--which bear little resemblance to reexamination practice--allow for much more prompt resolution of a challenge to a patent's validity.
The process of initiating an IPR begins with a third party filing a petition asking the PTAB to determine whether one or more claims in a patent are anticipated or rendered obvious in view of prior patents or printed publications.
The PTAB will institute the proceeding upon a showing that there is a reasonable likelihood that the petitioner would prevail with respect to at least one challenged claim. Otherwise, the PTAB will dismiss the petition. Upon institution, a final determination will be issued within one year (extendable for good cause by six months).
If a party has been sued or charged with infringement of a business method patent related to financial services, it may file a petition asking the PTAB to invalidate one or more claims under any ground (excluding a subset of references which only qualify as prior art under 35 U.S.C. §102(e)). The AIA specifies that a “covered business method patent” is a “patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”1 A CBM review may be instituted upon a showing that it is more likely than not that at least one claim challenged is unpatentable. If instituted, the PTAB will issue a final determination within one year (extendable for good cause by six months).
This transition program is only intended to last for a short duration of time, and will sunset for new petitions on Sept. 16, 2020.
Both the IPR and CBM proceedings require the requesting party to file a petition in order to initiate the review process. These petitions must meet a number of strict statutory and regulatory requirements, such as identifying all real parties in interest, grounds for standing, all claims challenged and all grounds for each challenge. In addition, the petitioner must identify and include copies of all evidence relied upon and set forth a claim construction for each challenged claim.
Problematically for IPR petitioners, all of this information (and more) must be explained in only 60 pages of double-spaced, 14-point text. The page limit for a petition for CBM review is only slightly higher, at 80 double-spaced pages. In both cases, the required claim charts may be single spaced, but still count toward the page limit.
Before the post-grant review proceedings even became available to the public, the PTAB made it clear that it fully intended for these page limits to impose meaningful restrictions on the number of substantive positions that might be taken in a petition:
Comment 91: Several comments suggested that the page limits should be based on the complexity of the proceeding. Several comments suggested that the page limits should be based, in whole or in part, on the number of claims challenged and consequently the fees paid. Several comments suggested that the page limits be based, in whole or in part, on the number of grounds raised or number of proposed rejections in a petition.
Response: These comments are not adopted. Providing for additional pages merely because additional claims are added to a petition where the pages are used on the primary target claims would reduce the page limit rule effect in many proceedings and reduce the ability of the Office to conclude proceedings timely. Where a petitioner can demonstrate how a waiver of the page limit is in the interests of justice, a motion to waive the page limit should be considered. Alternatively, the filing of multiple petitions directed to subsets of related claims should be considered.2
Unsurprisingly, in light of this guidance, petitioners started filing multiple petitions directed towards the same challenged patent. This practice allows a challenger to present more arguments and more prior art, while at the same time keeping the petition within the established page limit requirements.
On Sept. 16, 2012--the very first day that CBM review became available to the public--Liberty Mutual Insurance Co. filed multiple petitions challenging the validity of patents owned by Progressive Casualty Insurance Co. (180 PTD, 9/18/12). The two petitions (CBM2012-00002 and CBM2012-00004) challenged the validity of Progressive's U.S. Patent No. 6,064,970, which relates to a system for determining the cost of car insurance based on recorded data associated with the operator and vehicle.
Liberty Mutual, making certain that there could be no doubt as to its intentions, included a footnote in both petitions explaining that it had “simultaneously filed a Petition seeking a covered business method review of the '970 Patent requesting judgment against these claims based on different prior art references.”3 Both cases were instituted and proceeded through discovery and oral hearing.
The scheduling orders in both cases coincide with each other and both cases have been scheduled for oral argument on the same day. Counsel for the parties were informed that there will be a single oral argument held for both cases and that the Board expects to enter judgment in both cases on the same day. Counsel for the parties further agreed to coordinate with each other so that cross examination of the same witness can be conducted just once with the transcript thereof being useable for both cases.
Liberty Mutual has successfully continued to use multiple petition practice. For instance, Liberty Mutual filed two sets of petitions within days of each other, the first challenging U.S. Patent No. 7,124,088 (CBM2012-00010 and CBM2012-00011), and the second challenging U.S. Patent No. 7,877,269 (CBM2013-00001 and CBM2013-00002), both owned by Progressive.
One petition in each pair was denied, and so no proceedings were instituted in CBM2012-00011 and CBM2013-00001. In the remaining proceedings that were left standing--CBM2012-00010 and CBM2013-00002--the PTAB determined that because the patents were related, the oral arguments for both should be combined.5
By any account, the multiple petitions approach has been a success, at least in terms of increasing Liberty Mutual's chances of having review instituted by the PTAB. For example, in the tandem petitions filed in CBM2013-00003 and CBM2013-00004 (challenging the validity of U.S. Patent No. 8,090,598 to Progressive), review was instituted in CBM2013-00004, but not CBM2013-00003. If Liberty Mutual had instead relied solely on the arguments enumerated in the petition for CBM2013-00003, for example, it may have resulted in a complete denial of the petition, and Progressive's patent would have remained in force. But because Liberty Mutual filed multiple petitions, it still has the opportunity to invalidate Progressive's patent.
Although Liberty Mutual adopted multiple petition practice from (literally) day one, other petitioners have also met with similar success (at least in terms of having the petitions granted).
Apple, for example, filed two sets of petitions on the same day against two patents owned by SightSound LLC: U.S. Patent Nos. 5,191,573 (CBM2013-00019 and CBM2013-00020) and 5,966,440 (CBM2013-00021 and CBM2013-00023). Unlike Liberty Mutual, however, Apple divided its multiple petitions on the basis of the grounds for invalidity asserted. For instance, CBM2013-00019 challenged the validity of U.S. Patent No. 5,191,573 on unpatentable subject matter (Section 101) and indefiniteness (Section 112) grounds, whereas CBM2013-00020 challenged the validity of the same patent on anticipation (Section 102) and obviousness (Section 103) grounds.
Although Apple's approach was slightly different than Liberty Mutual's, the outcome was the same: the PTAB decided that review would not be instituted under 35 U.S.C. §§101 and 112 in either case, and denied Apple's petitions in CBM2013-00019 and CBM2013-00021 in toto. But the petitions in CBM2013-00020 and CBM2013-00023 were granted in part.
Another company, Chimei Innolux Corp. also successfully employed its own version of multiple petition practice in the IPR context. Chimei filed two petitions in tandem for inter partes review of U.S. Patent No. 7,923,311, owned by Semiconductor Energy Laboratory. The '311 patent was one of six patents-in-suit in a co-pending district court litigation,6 all six of which are directed toward “substantially similar technology.”7
Unlike Liberty Mutual (which divided its petitions by prior art references) or Apple (by invalidity grounds), Chimei divided the petitions in IPR2013-00064 and IPR2013-00065 based on the challenged claims of the patent. For instance, the petition in IPR2013-00064 requested review of claims 9-11, 15, 17-19 48 and 51-52 of the '311 patent, while IPR2013-00065 requested review of claims 23-24, 26-40, 42-44, 46, 49-50 and 53-54 of the same patent. Oral argument is scheduled for both cases on January 23, 2014.
Although filing multiple petitions is a popular way of ensuring that all of a challenger's arguments are presented to the PTAB while conforming to the page limit requirements, it is not the only way. In IPR2013-00080, Apple filed a single petition for inter partes review of Achates Reference Publishing's U.S. Patent No. 6,173,403. The petition was filed without the required claim charts, but included a 167-page expert declaration in an appendix with a claim chart exhibit.8
Apple was thereby able to dedicate its 60 double-spaced pages to evidence and argument, as opposed to having to devote many pages to the cumbersome, but necessary, claim charts. Apple's creative approach avoids some of the disadvantages of multiple petitions discussed below (particularly, the doubling of already significant filing costs). The petition was accepted, and review subsequently initiated by the PTAB.
Filing multiple petitions is an acceptable method of presenting arguments to the PTAB that will not fit in a single petition. But, a patent challenger may not immediately see the challenges that filing multiple petitions may present for practitioners.
For example, the fees alone for instituting these proceedings are quite high, beginning at $23,000 for a single instituted IPR, and $30,000 for a single instituted CBM review. Filing multiple petitions, obviously, causes these costs to be (at least) doubled. Additional fees increase the costs by hundreds of dollars on a per-claim basis (which would trigger a dramatic rise in costs, where, for instance, the patent being challenged contains many claims). And these numbers do not even take into account attorneys' fees, which--for complex technologies and for petitions requiring a significant amount of evidence to be processed and applied--can also be significant.
Prosecuting related proceedings in parallel will not necessarily lessen expenses. Counsel will be required to maintain separate proceedings and filings. And even if the occasional motion or conference call applies to all related proceedings, this practice alone will not significantly lower costs.
The common practice of combining proceedings at the oral hearing stage also presents serious challenges for counsel. For instance, at a CBM or IPR hearing, the parties are required to argue claim construction as well as the significance of the prior art and other evidence uncovered during discovery (including, in most cases, expert testimony). And still further, each side must reserve some of its own time to respond to the other side's arguments.
To have to do this for multiple petitions, which may cover two patents, or a significant number of prior art references, presents a fresh new set of challenges for practitioners working with very limited argument time. In a combined hearing, an attorney who decides to focus, for instance, more on one patent or set of references, risks not having reserved enough time to address issues related to the second due to active questioning from the PTAB. On the other hand, treating, for instance, a continuation application and its parent as similar also presents its own risks (i.e., the patents may suddenly rise or fall together).
Multiple petition practice has potential advantages--in particular, a perceived increased likelihood of having review granted on at least some claims, while remaining in compliance with the page limit constraints. In addition, the practice at present is fairly flexible, and allows the challenger to decide based on the facts of the particular case at hand whether to divide the petitions by prior art references, by proposed statutory grounds for rejection or by subsets of claims. We expect the filing of multiple petitions to continue growing in popularity.
5 CBM2013-00002, Doc. No. 54 (Order) at 2 (Oct. 17, 2013) (“The oral argument for CBM2012-00010 and for CBM2013-00002 will be merged and conducted at the same time, i.e., not in seriatim. Each party will have one hour of total oral argument time for both proceedings.”).
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