U.S. Patent Trial and Appeal Board Decisions: Secondary Considerations of Non-Obviousness—More on the Likelihood of Getting Discovery

The third in a series, this article continues the discussion of how the U.S. Patent Trial and Appeal Board (“PTAB”) is approaching secondary considerations of non-obviousness in inter partes review (“IPR”) and covered business method patent (“CBM”) decision-making. This article provides further insight into how the PTAB is handling requests for discovery seeking information supporting secondary consideration arguments. To date, the PTAB has begun to formulate a strict but still-evolving standard for how and when it will grant discovery regarding secondary considerations evidence.

This article is based on a search of the PTAB’s decisions and notices from our firm’s proprietary in-house database of PTAB decisions, orders, and notices. In seven of these decisions, the PTAB analyzed requests for discovery directed to secondary considerations. Those seven decisions form the basis for this article. In none of them did a party find success in its request for discovery regarding secondary considerations.

A decision from the first case filed—Garmin International, Inc. v. Cuozzo Speed Technologies LLC, IPR2012-00001, Paper No. 26 (PTAB Mar. 5, 2013)—offers important lessons. In Garmin, the PTAB concluded that the party requesting discovery failed to establish that it was already in possession of a threshold amount of evidence or reasoning tending to show beyond speculation that something useful would be uncovered.  Specifically, the PTAB concluded that:

“[patent owner] offered no evidence or sufficient reasoning tending to show beyond speculation that [petitioner] copied [patent owner’s] invention, that [petitioner] had attempted but failed to develop a device having the features of [patent owner’s] claimed invention, that [petitioner] achieved commercial success ‘because of’ any inventive feature recited in [patent owner’s] claims under review, or that [petitioner] recognized that there was a long-felt but unresolved need in the art for a feature implemented by [patent owner’s] claimed invention.” Id. at 8.

Further, the PTAB said that requesters should tell the Board of their own ability to generate the requested information without need of discovery. Id. at 6.

So far, Garmin has set the stage for a trend of similar denials of requests for discovery regarding secondary considerations. In six decisions since Garmin, the PTAB has used similar rationale set out in Garmin to deny requests for discovery regarding secondary considerations.

Nexus to Commercial Success

A patent owner that fails to present detailed arguments about nexus will likely see the PTAB reject its request for discovery. In Garmin, the PTAB explained that “there is an insufficient showing of nexus between the claimed invention and [patent owner’s] discovery requests. [Patent owner] has not made a sufficient threshold showing that the requested sales and pricing information are for units that sales of which are due to an inventive feature claimed by [patent owner].” Garmin at 8.

Similarly, in Microsoft Corp. v. Proxyconn, Inc., the PTAB concluded that patent owner had failed to provide a sufficient showing of nexus to warrant discovery regarding commercial success. IPR2013-00026, Paper No. 32 (PTAB March 8, 2013). As explained by the PTAB: “Where, as here, the patent is said to cover a feature or component of a product, the patent owner has the additional burden of showing that the commercial success derives from the feature. … Further, especially where the feature is found in the product of another, there must be proof that it falls within the claims.” Microsoft at 5.

The PTAB is loath to evaluate secondary considerations if to do so would require it to find infringement. See Apple Inc. v. SightSound Technologies, LLC, CBM2013-00020, Paper No. 40 at 6 (PTAB December 11, 2013) (denying  discovery that “would result in a trial within a trial on the issue of infringement, with associated evidence, arguments, and (potentially) declarants from [patent owner], and then the same from [petitioner] in response”). Accordingly, in Apple, the PTAB was not willing to accept an expert’s report regarding infringement to show nexus: “The fact that these documents exist … is not evidence of nexus (i.e., that the alleged commercial success of the [feature] was the result of claimed and novel feature of the challenged patents.” Id.; cf. Omron  Oilfield & Marine, Inc. v. MD/Totco, a Division of Varco, L.P., IPR2013-00265, Paper No. 11 at 15 (PTAB Oct. 31, 2013) (declining to institute a trial in the face of patent owner’s argument that a product covered by the claims—as determined in district court litigation—was commercially successful).

Failure of Others

A patent owner seeking discovery about the petitioner’s alleged failure to solve the problem that the patent solves who fails to demonstrate that there were widespread efforts by others, and resulting failure, will likely see the PTAB reject its request for discovery. In Garmin, the PTAB noted that “an allegation of failure by others is not evidence of nonobviousness unless it is shown that widespread efforts of skilled workers having knowledge of the prior art had failed to find a solution to the problem. … Any failure by [petitioner] alone does not establish widespread failure by skilled workers in the art attempting to solve the same problem.” Garmin at 9; see also Smith & Nephew, Inc. v. Convatec Technologies, Inc., IPR2013-00102, Paper No. 24 at 7 (PTAB Aug. 21, 2013).

Copying

A patent owner that fails to demonstrate evidence of efforts to replicate a specific product that falls within the scope of the claims at issue will likely see the PTAB reject its request for discovery.  In Garmin, the PTAB cited Federal Circuit case law that establishes that “not every competing product that arguably falls within the scope of a patent is evidence of copying, because otherwise every infringement suit would automatically confirm the nonobviousness of the patent.” Garmin at 12. In Garmin, the patent owner had submitted a declaration that suggested only that petitioner’s lawyer had reviewed the patent with respect to potential infringement, but the declaration did not suggest that the evaluation took place before the products were manufactured. Id. at 11. Accordingly, the PTAB denied the discovery request related to copying.

On similar grounds, the PTAB denied discovery for failure of patent owner to provide evidence establishing that any of petitioner’s employees “downloaded or copied any of the software programs claimed in the [patent at issue].” Google Inc. v. Jongerius Panoramic Technologies, LLC, IPR2013-00191, Paper No. 27 at 5-8 (PTAB September 30, 2013); see also Smith & Nephew at 4-7; Zodiac Pool Systems, Inc. v. Aqua Products, Inc., IPR2013-00159, Paper No. 26 at 4-6 (PTAB Oct. 18, 2013).

As with commercial success, the PTAB has explained that it will not allow for discovery regarding copying that would result in “a trial within a trial” on infringement. Apple at 6. Nor will it permit discovery that “would require negotiating and implementing complex confidentiality protections … and would be unduly burdensome and prejudicial ….” Id.

Long-Felt But Unresolved Need

A patent owner that fails to explain why it could not rely on its own analysis of the state of the art or on an analysis by independent analysts will likely see the PTAB reject its request for discovery. See Garmin at 14. (“[Requester]  has not adequately explained why it needs Garmin’s views to establish what [requester] believes had been a long-felt but unresolved need with regard to speed limit indicators. [Requester]  can rely on its own analysis of the state of the art or on the opinions of independent analysts.”); see also Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005, Paper No. 32 at 11 (PTAB May 29, 2013) (same).

Conclusion

The post-grant procedures established by AIA have created an emerging jurisprudence as to how discovery requests will be handled with respect to secondary considerations of non-obviousness. The PTAB decisions to-date show that the PTAB sets a high standard for granting discovery regarding secondary considerations. To be successful, a patent holder’s request for discovery must be supported by sound evidence that satisfy concerns that the allegations made are based on speculation. Otherwise, the request will likely be denied. Understanding the interplay between the PTAB’s evolving jurisprudence and the facts of a case will better set expectations for probable success when making or challenging requests for discovery.

Bryan J. Vogel is a trial lawyer and partner in the New York office of Robins, Kaplan, Miller & Ciresi L.L.P. He is a registered patent attorney with a background in chemical engineering. He helps clients in litigation and arbitration and provides legal counsel in a broad range of industries, including life sciences, emerging technologies, polymer and chemical arts, telecommunications, software, consumer products, electronics, and media and entertainment. Mr. Vogel’s full bio can be found at http://www.rkmc.com/lawyers/bryan-vogel, and he can be reached at bjvogel@rkmc.com or 212.980.7400.

Miles A. Finn is a trial lawyer and associate in the New York office of Robins, Kaplan, Miller & Ciresi L.L.P. He has a Ph.D. in physics, and before becoming a lawyer worked for 15 years as a medical device and software engineer. He is a registered patent attorney. He has litigated in the areas of internet and software, and medical, electronic, electromechanical and semiconductor devices.  Dr. Finn’s full bio can be found at  http://www.rkmc.com/lawyers/miles-finn, and he can be reached at mafinn@rkmc.com or 212.980.7400.

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