Microsoft Resists Discovery in Inter Partes Review

Scott Daniels | March 18, 2013

The APJs continue to show their resolve to keep a narrow focus in inter partes review proceedings.  Last week, in Microsoft v. Proxyconn, IPR2012-00026 & IPR2013-00109, the APJs denied a motion by the patentee Proxyconn for additional discovery on the issue of secondary considerations, again demonstrating their distaste for expansive, litigation-style discovery requests.

Inter partes review proceedings entail two types of discovery, “routine” and “additional.” The former is defined narrowly in Rule 41.51(b)(1):

(i) Unless previously served or otherwise by agreement of the parties, any exhibit cited in a paper or in testimony must be served with the citing paper or testimony.

(ii) Cross examination of affidavit testimony is authorized within such time period as the Board may set.

(iii) Unless previously served, a party must serve relevant information that is inconsistent with a position advanced by the party during the proceeding concurrent with the filing of the documents or things that contains the inconsistency. This requirement does not make discoverable anything otherwise protected by legally recognized privileges such as attorney-client or attorney work product. This requirement extends to inventors, corporate officers, and persons involved in the preparation or filing of the documents or things.

The parties may also agree to “additional discovery,” and when they cannot agree, the party seeking discovery must show that its requests are “in the interests of justice.”  Rule 41.51(b)(2)(i).

Here, Proxyconn moved for additional discovery regarding Microsoft’s sales data and related information, looking for evidence that the “Remote Differential Compression” (RDC) feature of Windows Server enjoys strong commercial success.  Proxyconn asserted that its patent claims under review cover RDC and that RDC’s success in the market supports the patentability of those patent claims.

Microsoft opposed, of course, contending that Proxyconn had shown no nexus between RDC and its Windows Server sales.

The APJs agreed with Microsoft.  They began by citing the portion of the AIA legislative history to the effect that the “interests of justice” were “limited to minor discovery and special circumstances.”  In the case of secondary considerations, the patentee must show nexus, i.e., “proof that the sales were a direct result of the unique characteristic of the claimed invention.”  Nexus thus entails “proof that [the commercial product] falls within the claims.”  Despite Proxyconn’s arguments that requiring such proof of nexus was “premature,” the APJs explained that “a showing of relevance [must] be made by the party seeking additional discovery before the request is granted.”  (Emphasis in original).  The APJs added that it “is particularly so here, where RDC is itself not a product but one feature of a complex software product … with thousands of features.”

In response to Proxyconn’s argument that the information it sought from Microsoft was “non-public,” the APJs noted that much of it was available from public sources.  Further, the APJs found that the individual discovery requests were not “narrowly tailored” – they were not time-limited, and they were “imprecise and unfocused.”

As guidance, the APJs included a reference to their decision earlier this month in Garmin International, Inc., et al. v. Cuozzo Speed Technologies LLC, IPR2012-00001, which lists five principles for additional discovery:

 (1)   There must be more than a mere possibility or speculation that the discovery will produce relevant information;

(2)   Discovery seeking the opponent’s litigation positions and proof for those positions is not proper;

(3)   Discovery is not appropriate where the information might be had from other sources;

(4)   Discovery requests and accompanying instructions should be clear (“ten pages of complex instructions for answering is prima facie unclear”); and

(5)   Discovery requests must be focused on the information needed and not overly burdensome.

 These principles should be the starting point, and end point, for any party seeking discovery.

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