October, 25th, 2016

By Michael A. Lavine

At the PTAB, new testimony evidence (NTE) is evidence that was prepared specifically for the purposes of the IPR, CBM, or PGR proceeding at issue, and it often includes declarations from an expert retained by the patent owner. Previously, the PTAB prohibited patent owners from relying on NTE in their preliminary responses, unless such evidence was already of record in another proceeding or previously authorized by the PTAB. On May 2, the PTAB removed these restrictions. Submitting NTE with a preliminary response gives patent owners a critical opportunity to rebut the opinions of the petitioner’s expert, which ideally would undercut the petition enough to persuade the PTAB to deny institution. However, as recent PTAB decisions show, a patent owner’s NTE–even if found reasonable by the PTAB–is unlikely to foreclose institution if it creates genuine issues of material fact.

In PTAB proceedings, a genuine issue of material fact is essentially an outcome-determinative, factual dispute. A patent owner’s submission of NTE does not always create genuine issues of material fact at the pre-institution stage. But when it does, the PTAB views those issues in the light most favorable to the petitioner for the purposes of deciding whether to institute a trial. 37 C.F.R. § 42.108(c). For example, in recent institution decisions the PTAB found genuine issues of material fact where patent owners’ NTE competed with the petitioners’ declarant testimony regarding (1) a reasonable expectation of success, (2) unexpected results, (3) ambiguous prior art disclosures, (4) motivation to combine, (5) inherency, and (6) how a person of ordinary skill in the art (POSITA) would interpret or use the prior art. See, e.g., IPR2016-00704, Paper 7 at 17-18; IPR2016-00840, Paper 11 at 23-24; IPR2016-00712, Paper 9 at 14-15; IPR2016-00717, Paper 15 at 15-16; IPR2016-00694, Paper 7 at 17-18; IPR2016-00763, Paper 14 at 14-15; IPR2016-00751, Paper 8 at 16; IPR2016-00764, Paper 16 at 14-15. In those instances, the PTAB resolved the conflicting declaration testimony in the petitioners’ favor and instituted review on the invalidity grounds at issue, occasionally noting that the lack of deposition testimony from the parties’ declarants at the pre-institution stage factored into their decision. See, e.g., IPR2016-00717, Paper 15 at 15-16 (finding that it would be premature to weigh the declarants’ competing testimony before they were deposed); IPR2016-00647, Paper 7 at 16-17 (resolving the conflicting declaration testimony in petitioner’s favor “[a]t this preliminary stage, with neither declarant having been cross-examined”); IPR2016-00694, Paper 7 at 17-18 (finding it “appropriate to institute trial so that the disputed testimonial evidence may be tested by cross-examination.”).

Practice Pointers:

Patent Owners: Pre-institution NTE appears unlikely to cause a major shift in institution rates at this point, but it is still a valuable tool that if properly wielded can position patent owners for post-institution success. To that end, NTE should aggressively target the petitioner’s declarant testimony that embellishes or fills gaps in the prior art disclosures, especially testimony regarding the motivation, knowledge, and understanding of a POSITA. Wherever possible, the NTE should be supported by documentary evidence, especially contradictory evidence from the petitioner’s prior art and declarant testimony. Even if the PTAB finds that the NTE raises genuine issues of material fact, patent owners should treat those issues as potential weak points in the petition that can–and should–be exploited in post-institution depositions of the petitioner’s declarant.

Petitioners: Even though NTE may not foreclose institution, the PTAB’s identification of genuine issues of material fact created by NTE may uncover vulnerabilities in the petition that may be difficult to remedy in a reply to a patent owner’s preliminary response (if granted) or during the post-institution stage. To limit those vulnerabilities, petitioners should ensure that their declarant’s testimony (1) has a strong basis for all invalidity grounds, (2) is supported explicitly by documentary evidence in the prior art, and (3) addresses any major ambiguities in the prior art or how a POSITA might interpret and use it. That way, if a patent owner’s NTE raises any genuine issues of material fact, the petitioner’s declarant will be well-positioned to defend their testimony without introducing new–and likely excludable–invalidity arguments.

WHIPgroup will continue monitoring the evolving impact of pre-institution NTE as the PTAB issues more decisions analyzing this type of evidence.

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