Board Takes “Hard Line” with Patent Owners in IPR Institution Decisions

Scott Daniels | May 6, 2013

We have previously commented that the Board has been strict with petitioners in its decisions on whether to institute inter partes review.  Inter partes review is denied where the petition fails to abide by all the formal requirements prescribed by the PTO Rules, or where it fails to clearly explain and link the claim limitations to specific prior art disclosures.  Proposed grounds for review are rejected, as well, where they appear to overlap other proposed grounds.

We also see that the Board is equally strict with patent owners.  The Board’s decision last Tuesday instituting inter partes review in Innolux v. Semiconductor Energy Laboratory, IPR2013-00064 is a good example.  In that case, the patent owner SEL filed a preliminary response asserting that the proposed combinations of prior art references did not justify review, but also asserting that review should not be instituted because of two other, “more procedural,” reasons.  With the same rigor as it applies to petitioners’ arguments, the Board looked at the patent owner’s arguments and found them lacking.

First, the patent owner contended that the petition was improper under 35 U.S.C. § 325(d) because each of the cited references, except for a cumulative secondary reference, had been cited during the prosecution of the application leading to the patent.  The Board was not persuaded – it explained that the fact that the references were considered in the original prosecution is a factor which the Board “may take into account” under 35 U.S.C. § 325(d).  The patent owner, however, failed to show that the original examiner had considered “substantially the same . . . arguments,” as presented in the petition.  “Absent a showing of ‘substantially the same . . . arguments,’ id., and considering that petition includes evidence not before the original patent examiner,” including the secondary reference, even if cumulative, and an expert declaration, the patent owner “does not show that the inter partes review of the ‘311 Patent would be improper under 35 U.S.C. § 325(d).”

Second, the patent owner asked that review be denied because the petition had failed to identify all the real parties-in-interest as required by 35 U.S.C. § 312 (a)(2) and 37 C.F.R. § 42.8(b)(1).  The Board noted the Trial Practice Guide list of the factors to consider in determining whether a party is a real party-in-interest. Specifically, “a primary consideration includes whether a non-party exercises control over a petitioner’s participation in a proceeding … Other considerations may include whether a non-party, in conjunction with control, funds the proceeding and directs the proceeding.”

 SEL asserts that co-defendants with CMI, “CMO USA,” “Acer America,” “ViewSonic,” “VIZIO,” and “Westinghouse”, in the pending CMI Case (see supra § IC), represented to the district court that the co-defendants all participated in filing the instant Petition in support of a district court motion to stay, and that the co-defendants all agreed to be bound by the Inter Partes Review … SEL focuses on statements to the district court in which the co-defendants refer to “‘their’” Petition which “‘Defendants have moved expeditiously to prepare and file.’” … Notwithstanding SEL’s assertions, SEL does not set forth persuasive evidence that the district court co-defendants CMO USA, Acer America, ViewSonic, VIZIO, and Westinghouse necessarily have any control over this proceeding. The statements to which SEL refers do not show that these other co-defendants had control over the Petition, or will exert control over the proceeding. 

(Emphasis added).  The Board continued that the “statements made in connection with the joint motion to stay may have been a short-hand explanation (e.g., speaking as one unified voice as opposed to explaining in great length who controlled the contents of the Petition, etc.) to the district court of the events leading up to the filing of the instant Petition. Toward that end, only lead counsel for [the petitioner] signed the Petition … which “certifies that CMI is the real party-in-interest” (Pet. 1). Accordingly, the collective filing of a motion to stay and other assertions do not prove control by each party.”

The Board repeated that the patent owner:

has not shown, for example, that the co-defendants CMO USA, Acer America, ViewSonic, VIZIO, and Westinghouse necessarily co-authored the Petition or exerted control over its contents, or will exert any control over the remaining portions of this proceeding. SEL has failed to provide persuasive evidence that each of the co-defendants in the CMI Case provided funding for the instant Petition, let alone exercised control and funding.

Thus, the patent owner “SEL has not demonstrated that [the petitioner] CMI has failed to list all the real parties-in-interest under 35 U.S.C. § 312 (a)(2) and 37 C.F.R. § 42.8(b).

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