USPTO Signals Heightened Scrutiny of Second-Bite-at-the-Apple Petitions for Inter Partes Review

This article appeared in the November 5, 2014 edition of The Legal Intelligencer

Inter partes review (IPR) is a powerful alternative or supplement to patent litigation that permits a party to challenge a patent’s validity before the Patent Trial and Appeal Board (PTAB). The “preponderance of the evidence” standard for invalidating a patent before the PTAB is lower than the “clear and convincing” standard before a district court in patent litigation. The statistics reflect this significant advantage: In the vast majority of cases where the PTAB institutes an IPR (which happens 78 percent of the time), one or more claims of the patent are invalidated.

As IPR continues to gain popularity, it has not been uncommon for parties to file multiple petitions requesting IPR of the same patent. Recent decisions indicate the PTAB’s diminished tolerance for taking a second bite at the apple by relitigating essentially the same issues previously decided or under review in an earlier petition.

The PTAB highlighted its heightened scrutiny of these “second-bite-at-the-apple” petitions by designating seven decisions as “informative.” “Informative” means that the decision has persuasive value and illustrates procedural and other norms. The seven decisions are Intelligent Bio-Systems v. Illumina Cambridge, IPR2013-00324; ZTE v. ContentGuard Holdings, IPR2013-00454; Prism Pharma v. Choongwae Pharma, IPR2014-00315; Medtronic v. Robert Bosch Healthcare Systems, IPR2014-00436; Medtronic v. NuVasive, IPR2014-00487; Unilever v. Procter & Gamble, IPR2014-00506; and Unified Patents v. PersonalWeb Technologies, IPR2014-00702.

In all but one case, prior to filing the petition under consideration (the subsequent petition), an earlier petition for IPR of the same patent (the earlier petition) had been filed. The PTAB denied the subsequent petitions based on its statutory discretion to reject a petition where “the same or substantially the same prior art or arguments previously were presented to the office.”

In Unilever, the PTAB instituted an IPR on less than all of the patent claims requested by Unilever Inc. Unilever’s subsequent petition requested IPR of the claims for which the PTAB denied review, relying on new prior art references as well as those relied on in the earlier petition. According to the PTAB, Unilever “present[ed] no argument or evidence that [the new references] were not known or available to it at the time of filing of the [earlier petition].” Notably, many of the invalidity grounds relied on references previously presented in the earlier petition. The PTAB concluded that the subsequent petition presented “the same or substantially the same prior art.” The denial was equally supported by the PTAB’s conclusion that Unilever’s petitions advanced “substantially the same” arguments.

In Intelligent Bio-Systems, the PTAB observed that “we granted [the earlier petition] on several grounds that mirror closely those presented in the [subsequent petition].” With respect to a new primary reference in the subsequent petition, the PTAB observed that its teachings were “substantially the same” as several other references in the earlier petition. Intelligent Bio-Systems Inc. also failed to provide “any justification for filing the instant petition” beyond “that it became aware of the relevance” of the new reference after filing the earlier petition. Nor did Intelligent Bio-Systems identify how the teachings of the new reference differed from the references supporting the earlier petition.

In ZTE, the PTAB cautioned that a “decision to institute review on some claims should not act as an entry ticket, and a how-to guide, for the same petitioner … for filing a second petition to challenge those claims which it successfully challenged in its first petition.” ZTE Corp. also admitted in the subsequent petition that “half the grounds of invalidity” asserted “are based on the same prior art references” used in the earlier petition while the remaining grounds combine a new reference with previously presented references. Such a strategy, the PTAB concluded, is “disfavored by … 35 U.S.C. 325(d).”

Medtronic concerned an earlier petition filed by a party that Medtronic Inc. later acquired. Medtronic’s subsequent petition requested IPR for a number of claims, including those for which the PTAB had previously instituted IPR. The PTAB found redundant the grounds for those claims for which IPR had already been instituted, as they relied on references submitted in the earlier petition. The PTAB’s denial took into account that Medtronic was a “real party in interest” to the earlier petition and that the “overlap between the arguments and evidence” between the two petitions was “substantial.” Finally, the subsequent petition failed to “account for this substantial overlap or persuade [the PTAB that it] should not exercise [this] discretion under Section 325(d).”

The petitioner in NuVasive had previously filed two IPR petitions challenging the same patent. One of those petitions had been granted and the trial thereby instituted was ongoing. The other had been denied due to certain deficiencies. The petitioner argued that the subsequent petition remedied those deficiencies by providing new evidence and argument as to how the previously supplied prior art invalidated the claims. The PTAB, however, disagreed, finding that the proposed challenges to the claims were “nearly identical” to the proposed challenges in the earlier-denied petition. Moreover, the PTAB found that the petitioner did not provide any specific reasoning why the asserted grounds of invalidation were not redundant to those on which the ongoing IPR proceeding had been instituted, even though those grounds were based on different prior art references and different arguments.

In Unified Patents, the PTAB refused to institute an IPR for a patent that had been the subject of earlier petitions filed by different third parties. In reaching this decision, the PTAB pointed out that it had already held in one of the prior IPR proceedings that all but one of the claims being challenged in the subsequent petition are rendered unpatentable by the same prior art reference relied upon in the subsequent petition. The remaining claim was being reviewed by the PTAB in another IPR proceeding, wherein the asserted grounds of unpatentability were again based on the same prior art reference. The PTAB concluded that it would be a waste of time, effort and resources to relitigate the same issues in a new proceeding, even though this would effectively deny the new challenger the opportunity to submit arguments or evidence with respect to the patent.

The Prism Pharma decision illustrates that the PTAB may elect to deny institution of an IPR even in situations where an earlier petition had not been filed. In its IPR petition, the petitioner had argued that the subject matter recited in the challenged claims was not supported by the parent application and thus was anticipated by a reference published before the effective filing date of the subsequent application where support for the challenged claims was allegedly first introduced. The PTAB concluded that the same prior art and substantially the same arguments of unpatentability were presented to the USPTO previously during prosecution and denied the IPR petition.

The cautionary tale made evident by these decisions is that petitioners should not expect free rein to remedy deficiencies of a first petition in a subsequent petition. Rather, the PTAB will need to be convinced that a compelling reason exists to institute an IPR based on a subsequent petition advancing “the same or substantially the same prior art or arguments” as an earlier petition. Even then, beyond simply demonstrating the differences between the new prior art reference and arguments, the PTAB may, consistent with Unilever, require an explanation why the new positions were not submitted in the earlier petition. Moreover, as demonstrated by Medtronic and Prism Pharma, the PTAB may extend this logic to scenarios where different parties filed the earlier and subsequent petitions.

As the number of IPR petitions continues to skyrocket, it is now more important than ever to make certain that a first-filed IPR petition is both procedurally compliant and substantively sound to maximize the chance that the PTAB will institute an IPR. If the IPR petition is denied or granted only in part, the petitioner may not be given a second bite at the apple.