On February 23, 2018, the Patent Trial and Appeal Board (PTAB) issued two decisions regarding an inter partes review (IPR) of patents covering Allergan’s Restasis© (Cyclosporine ophthalmic emulsion) filed by Akorn Pharmaceuticals, Mylan Pharmaceuticals, and Teva Pharmaceuticals. The first opinion denied the Saint Regis Mohawk Tribe’s Motion to Terminate the Proceedings, while the second denied Allergan’s Motion to Withdraw from the IPR, even though it purported to assign its patent rights to the Tribe. Mylan Pharmaceuticals Inc. v. Allergan, Inc., IPR2016-01127, -01128, -01129, -01130,, 01131, -01132, Paper Nos. 129 and 131 (Feb. 23, 2018 PTAB)
The two decisions were issued just months after an Eastern District of Texas decision finding that the Restasis patents were invalid as obvious (currently pending appeal at the United States Court of Appeals for the Federal Circuit). Just prior to the district court decision, Allergan attempted to assign its patent rights to the Saint Regis Mohawk Tribe, who granted Allergan an exclusive license to the Restasis© patents. The Tribe then filed a motion to terminate the IPRs based on the doctrine of tribal sovereign immunity. Shortly thereafter, Allergan filed a motion to withdraw from the proceedings, stating Allergan was no longer the patent holder. The PTAB denied both motions.
The PTAB provided two reasons for denying the Tribe’s Motion to Terminate. First, the PTAB held that the Tribe failed to establish that it was entitled to assert its tribal immunity in inter partes review proceedings. Citing the Supreme Court, the Board noted that the Tribe’s sovereignty “is of a unique and limited character…[existing] only at the sufferance of Congress and is subject to complete defeasance.” United States v. Wheeler, 435 U.S. 313, 323 (1978). The PTAB’s analysis relied on the premise that “general Acts of Congress apply to Indians…in the absence of a clear expression to the contrary.” IPR2016-01127, Paper no. 129 at 11. The Act of Congress here provides that “any patent (regardless of ownership) is ‘subject to the conditions and requirements of [the Patent Act].’” Id. Because patents are, by law, inherently subject to IPRs, the Board made clear that any sovereign immunity enjoyed by the Tribe did not eliminate the PTAB’s right to conduct an inter partes review.
Second, the Board held that the proceedings may continue with Allergan as the patent owner, and that the Tribe was not an indispensable party to the proceedings. According to the terms of the patent assignment, Allergan retained substantially all of its rights in the patents, leaving the Tribe with nothing more than “an illusory or superficial right to sue for infringement of the challenged patents.” See Paper no. 131 at 22. Furthermore, Allergan’s rights as the exclusive licensee gave Allergan “at least an identical – if not more of an interest of the effective patent owner…in defending the challenged patents.” Paper no. 131 at 37. Therefore, the PTAB found that the assignment did warrant granting the Tribe’s Motion to Terminate the IPRs.
Disclaimer: Sughrue Mion represented Akorn Pharmaceuticals in the District Court Litigation and is currently representing Akorn in the Appeal and IPR proceedings.
Benjamin M. Cappel
Email: email@example.comBenjamin Cappel is an associate in the Litigation group and concentrates his practice on pharmaceutical patent litigation under the Hatch-Waxman Act. Mr. Cappel has experience litigating cases before the International Trade Commission and federal district courts. He has also assisted in contested case proceedings before the Patent Trial and Appeal Board (PTAB) including IPR and CBM reviews.
Not a member of the DC Bar. Supervised by members of the DC Bar.
Federal Circuit No. 2016-1599 (Fed. Cir. May 11, 2017)
In Aylus Networks, Inc. v. Apple Inc. (Fed. Cir. No. 2016-1599, May 11, 2017), the Federal Circuit held that statements made by a patent owner during an IPR proceeding, whether before or after an institution decision, can be considered for claim construction and relied upon to support a finding of prosecution disclaimer.
The Federal Circuit explained that because prosecution disclaimer is applied to i) pre-issuance prosecution, ii) reissue applications and ii) reexamination applications, “[i]t follows that we should apply the doctrine in IPR proceedings before the PTO. Extending the prosecution disclaimer doctrine to IPR proceedings will ensure that claims are not argued one way in order to maintain their patentability and in a different way against accused infringers.”
The patent at issue is directed to a method of controlling and delivering media content from a media server (MS) to a media renderer (MR) utilizing a wide area IP Multimedia Subsystem (IMS) network for control. Specifically, the claims (claims 2 and 21 depending from claims 1 and 20, respectively) at issue describe an embodiment where a control point (CP) is located in a wide area network via a service provider and a control proxy point (CPP) is located within a user premise thereby the method invokes the CPP logic and the CP logic to cooperatively negotiate media content delivery if one of the MS and MR are not in communication with an user endpoint (UE) via a local wireless network while the method invokes the CPP logic if the MS and MR are both in communication with the UE.
In the court below, the district court construed the limitation of the claims 2 and 21 at issue to require that only the CPP logic is invoked to negotiate media content delivery between the MS and the MR, in contrast to claims 1 and 20 which require both the CP and CPP to negotiate media content delivery. In construing the limitation of claims 2 and 21, the district court relied on statements made by Aylus in its preliminary responses to Apple’s petitions for IPR of the ’412 patent, finding the statements “akin to prosecution disclaimer.”
The Federal Circuit held that because the patent owner (Aylus) explained that the claims at issue “require that only the control point logic (or only the control point proxy logic) be invoked if it is determined that neither (or both) the MS or the MR are in communication with the UE via the local wireless network” during their preliminary response in the IPR proceeding, prosecution disclaimer indeed applies and agreed with the district court’s claim construction.
Mr. Chon is a member of the firm’s Electrical/Mechanical Patent group. Mr. Chon’s practice focuses on the preparation of the Mechanical patent applications as well as the prosecution of these applications before the U. S Patent and Trademark Office.
Mr. Chon was previously employed with Pratt & Whitney, a United Technology Corporation Company, and he has more than 10 years of aerospace industry experience in engineering, strategy / business development and operations. His roles have included Joint Strike Fighter F-135 Senior Engineer, Commercial Engines (CE) Technology Licensing Specialist, CE Joint Ventures and Partnerships Specialist and Operations Export Compliance Manager.
Mr. Chon is an inventor listed on several patents in the art of gas turbine airfoil design.
On June 12, 2017, the Supreme Court granted certiorari to review whether the America Invents Act’s provisions on inter partes review (IPR) violate the Seventh Amendment right to jury by extinguishing patent claims through a non-Article III court. Oil States Energy Services LLC v. Greene’s Energy Group LLC.1 The USPTO’s authority to decide IPRs does not stem from Article III of the Constitution. Rather, this authority is firmly rooted in Article I. Article I gives Congress the authority “To promote the Progress of Science and useful Arts, by securing for limited Times to Writers and Inventors the exclusive Right to their respective Writings and Discoveries.” In other words, Article I grants Congress the power to make patent laws. The IPR provision comprises a major part of Congress’ most recent patent legislation, the America Invents Act.
In a short time, the USPTO, via its Patent Trial and Appeal Board (PTAB) has reviewed thousands of IPR petitions and has effectively invalidated several thousand patent claims. Given the importance of patent rights, aggrieved Patent Owners have already raised this constitutionality challenge — without success.
In 2015, the Federal Circuit issued a detailed decision indicating that IPRs do not violate the Seventh Amendment right to jury trial. MCM Portfolio v. Hewlett Packard.2 There, the aggrieved Patent Owner also sought Supreme Court review of the constitutionality question. However, the Supreme Court declined.
Notably, in MCM Portfolio, the Federal Circuit explained the public rights doctrine and its applicability to patents and IPR administrative proceedings, and the inapplicability of the Seventh Amendment in such situations. The Federal Circuit noted:
We followed Supreme Court precedent that affirmed the “constitutionality of legislative courts and administrative agencies created by Congress to adjudicate cases involving “public right.” [ ] We found that “the grant of a patent is primarily a public concern. Validity is often brought into question in disputes between private parties, but the threshold question usually is whether the PTO, under the authority assigned to it by Congress, properly granted the patent.”
. . . .
The Supreme Court has stated that “the Seventh Amendment is generally inapplicable in administrative proceedings, where jury trials would be incompatible with the whole concept of administrative adjudication and would substantially interfere with [the agency’s] role in the statutory scheme.
In the current case, Patent Owner Oil States spends a significant amount of its briefing explaining the “common law,” or in equity origins of patent law, as opposed to legislative basis of IPRs. Patent Owner must adopt this position to have its case fit the Seventh Amendment criteria for a mandatory jury trial.
Not surprisingly, Respondent Greene’s Energy Group relies on the Federal Circuit decision and rationale of MCM Portfolio.
The Supreme Court will likely render its opinion in Spring 2018.
As an additional note, Patent Owner Oil States also requested the higher court to review multiple questions on the PTAB’s conduct of proceedings in the underlying case. These procedural issues include 1) the PTAB’s requirements on Patent Owners for amending patent claims during an IPR and 2) the application of the correct claim construction under “broadest reasonable interpretation.” Given that the Federal Circuit simply affirmed the PTAB decision without a written opinion, it seemed unlikely that the Supreme Court would take up review of these detailed administrative issues, and it did not do so.
1 (Docket 16-712)
2 812 F. 3d 1284 (Fed. Cir. 2015) cert. denied (Docket 15-1330).
Susan P. Pan
Email: firstname.lastname@example.orgMs. Pan specializes in patent portfolio building for large and small companies, including patent preparation, prosecution and appeals. Ms. Pan’s legal expertise also extends to multi-party complex patent litigation before several U.S. federal district courts, the U.S. International Trade Commission, and the U.S. Federal Trade Commission. Ms. Pan counsels clients in patent licensing and valuation, taking into account probabilities of infringement and invalidity.
On April 1, 2016, the USPTO published final amendments to the Rules of Practice for PTAB AIA trials. The amendments are effective May 2, 2016, and apply to all AIA petitions, whether they were filed before, on or after the effective date. Highlights include:
1) 37 C.F.R. § 42.11: The amended rules require that every paper be signed and that the signature complies with the signature requirements set forth in 37 C.F.R. § 10.18(a). The act of presenting a paper to the PTAB will be considered a certification as set forth in 37 C.F.R. § 10.18(b). Under rule 10.18(b), the party presenting a paper certifies that all statements made are believed to be true and that the party shall be subject to criminal penalties for any knowingly and willfully false statements or representations. The amended rules allow the PTAB to impose sanctions on an attorney that violates this rule and provides a procedure for the opposing party to file a motion for sanctions.
Recently, in an Inter Partes Review proceeding, patent owner Honeywell International Inc., failed in its attempt to obtain additional discovery under 37 C.F.R. § 42.51(b)(2). Mexichem Amanco Holdings S.A. de C.V. v. Honeywell International, Inc. (IPR2013-00576, Paper No. 36, September 5, 2014). However, the real outcome of the decision denying the request proved to be in the patent owner’s favor. While denying the request for additional discovery based on a third party declaration prepared for another proceeding, the PTAB noted that the declaration will be afforded little or no weight because the patent owner did not have a fair opportunity to challenge the declaration testimony. (Paper No. 36 at p. 3).
PTAB Finds Business Method Claims Reciting “Generic Computer Technology” Unpatentable Under 35 U.S.C. § 101
In CRS Advanced Technologies, Inc. v. Frontline Technologies, Inc. (CBM2012-00005, Paper No. 66, entered January 21, 2014), a transitional covered business method (CBM) review, the Patent Trial and Appeal Board (PTAB) held all instituted claims 3, 6, 7, 16, 24 and 33 of U.S. Patent No. 6,675,151 C1 (“the ‘151 patent”) unpatentable under § 101. Id. at 3.
Petitioner Winning Streak Continues as PTAB Cancels All Reviewed Claims in Liberty Mutual Final Decisions
In two final decisions dated January 23, 2014, the Patent Trial and Appeal Board (PTAB) canceled all reviewed claims of U.S. Patent No. 6,064,970, including both a single claim that the PTAB found to be directed to a business method and the patent’s other claims. Liberty Mutual Insurance Co. v. Progressive Casualty Insurance Co., (CBM2012-00002, Paper No. 66 and CBM2014-00004, Paper No. 60). The final decisions were entered 363 days after the PTAB had instituted the covered business method (CBM) reviews of the ‘970 patent, meeting the 35 U.S.C. § 326(a)(11) requirement for a final determination within one year of the trial being instituted by two days.
IPR Claim Amendment Limitations Apply to Covered Business Method Patent Review and Amendments for 35 U.S.C. §101 Purposes
As discussed previously, the Board has imposed significant limitations on a Patent Owner’s ability to amend a claim in inter partes review. See Idle Free Systems, Inc. v. Bergstrom (IPR2012-0027 Paper 26). These limitations include a requirement for a Patent Owner to show patentability of the proposed amendments over the prior art. Idle Free at 7-8. Recently, the Board has imposed these limitations to amendments made solely for 35 U.S.C. § 101 purposes in a CBM.
35 USC §317 allows parties to terminate an instituted inter partes review (IPR) “unless the Office has decided the merits of the proceeding before the request for termination is filed.” See 35 U.S.C. §317; see also Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48768 (August 14, 2012)(“the Board expects that a proceeding will terminate after the filing of a settlement agreement, unless the Board has already decided the merits of the proceeding”). Recent orders from the Patent Trial and Appeal Board (PTAB) reveal that the PTO may refuse to terminate an IPR even though the parties have negotiated a settlement agreement. In particular, that the Office may decide that a settlement agreement between the parties does not terminate the IPR if the proceeding has advanced into the late stages, without a final decision. Thus a final written decision need not be issued for the Office to have “decided the merits of the proceeding.” See Blackberry Corp., et al v. Mobilemedia Ideas, LLC (IPR2013-00016)(Paper No. 31); Starwood Hotels & Resorts v. LoneStar Wifi, LLC (IPR2014-00101)(Paper No. 11) and Blackberry Corp et al., v. Mobilemedia Ideas, LLC (IPR 2013-0036)(Paper No. 64). The Board’s Orders make clear that settling an IPR early may be just as important as negotiating the terms of the agreement.
PTAB Relies on the Patent Owner’s Failure to Establish General Patentability in Denying Motion to Amend
In Idle Free, the Board relied on the stringent requirements for establishing “general patentability” and denied Bergstrom’s renewed motion to amend the claims. The Board’s decision exemplifies the strict nature of these proceedings by denying Bergstrom’s motion to amend despite agreeing that the proposed claims distinguish over the art of record.