U.S. Patent Trial and Appeal Board Decisions: Secondary Considerations of Non-Obviousness—What Is the Likelihood of Getting Discovery?

The second in a series, this article continues the discussion of how the U.S. Patent Trial and Appeal Board (“PTAB”) is approaching secondary considerations of non-obviousness in inter partes review (“IPR”) and covered business method patent (“CBM”) decision-making. Our first article showed the PTAB has taken a very strict view of secondary considerations— in fact, so far, the PTAB has only denied institution of trial because of the sufficiency of a secondary considerations argument one time. See Omron Oilfield & Marine, Inc. v. MD/Totco, Case No. IPR2013–00265, Paper No. 11 (PTAB, Oct. 31, 2013).

This article focuses on the very first step a party might take in order to make a secondary considerations argument: winning prior authorization from the PTAB to file a written motion seeking discovery. Prior authorization before filing discovery motions is usually mandatory. See 37 C.R.F. § 42.20(b); Markets-Alert, Case No. CBM2013–00005, Paper No. 27 at 3 (PTAB May 17, 2013) (expunging papers and exhibits requesting authorization to file a motion for discovery made without prior authorization).We illustrate the factors that the PTAB has considered when a party seeks prior authorization. This article is based on a search of the PTAB’s decisions and notices from our firm’s proprietary in-house database of PTAB decisions, orders, and notices.

In a few circumstances, prior authorization is not required. Pursuant to Rule 42.51(b)(1), routine discovery (which requires production of “relevant information that is inconsistent with a position advanced by the party during the proceeding”) is mandatory, and no motion need be filed to obtain it. Markets-Alert, Paper No. 27 at 2. Similarly, if the parties have agreed to provide mandatory initial disclosures pursuant to 37 CFR 42.5(1), then a party may obtain that discovery without seeking permission. Id. at 3. (The Trial Practice Guide anticipates that mandatory initial disclosures will include information relevant to secondary considerations. 77 FR 48756, 48762 (Aug. 14, 2012).) But, if the parties have not agreed to make mandatory initial disclosures (and any party having information relating to secondary considerations should think twice before agreeing to making these initial disclosures), the PTAB will view any request for initial disclosures as a request for additional discovery pursuant to Rule 42.51(b)(2). In those circumstances, the PTAB will require the requestor to first seek prior authorization for a motion seeking this discovery. Markets-Alert, Paper No. 27 at 3.

Typically, a party requests prior authorization during in a telephonic meeting with the PTAB and opposing counsel. See, e.g., Google Inc. v. Jongerius Panoramic Techs. LLC, IPR2013–00191, Paper No. 19 at 2 (PTAB Sept. 13, 2013). Ex parte requests are not allowed. Rule 42.5(d). The PTAB encourages parties to confer before this telephonic meeting. Rule 42.51(b)(2)(i) (“The parties may agree to additional discovery between themselves. Where the parties fail to agree, a party may move for additional discovery.”); Schott Gemtron Co., Inc. v. SSW Holding Co, Inc., IPR2013–00358, Paper No. 17 at 3 (PTAB Nov. 26, 2013) (encouraging parties who had been discussing discovery to keep talking, and to then request a second teleconference with the PTAB if they fail to agree).

Though Rule 42.51 states that “[w]here the parties fail to agree, a party may move for additional discovery,” the party seeking discovery must know what showing it will need to make in the telephonic meeting because authorization to file a motion will not be routinely given. The Garmin case lays out the standard for winning a discovery motion in an IPR. Garmin Int’l, Inc. v. Cuozzo Speed Technologies LLC, IPR2012–00001, Paper No. 26 at 6–7 (PTAB Mar. 5, 2013). The Market-Alerts case lays out the standard for winning a discovery motion in a CBM. The respective standards are “in the interest of justice” and “good cause.” Garmin, Paper No. 26 at 5; Market-Alerts, Paper No. 27 at 4. The PTAB has explained that:

[g]ood cause and interests-of-justice are closely related standards, but on balance, the interests-of-justice standard is a slightly higher standard than good cause. While a good cause standard requires a party to show a specific factual reason to justify the needed discovery, interests-of-justice would mean that the Board would look at all relevant factors. The interests-of-justice standard covers considerably more than the good cause standard, and in using such a standard the Board will attempt to consider whether the additional discovery is necessary in light of ‘the totality of the relevant circumstances.

77 FR 48679, 48693 (Aug. 14, 2012).

Despite these differences, the PTAB considers the same five factors in evaluating discovery requests in IPRs and CBMs. They are: (1) “More than a possibility and mere allegation,” (2) “Litigation position and underlying basis,” (3) “Ability to generate equivalent information by other means,” (4) “Easily understandable instructions,” and (5) “Requests not overly burdensome to answer.” Garmin, Paper No. 26 at 6–7; Markets-Alerts, Paper No. 32 at 5.

As the next article in this series will explain, a party requesting discovery can easily lose this five–factor analysis. So too can a party lose during the telephone call. Most commonly Factors 1, 3 and 5 are used to defeat requests for prior authorization.

Factor 1 is a large obstacle, as many parties cannot state that there is more than a possibility that responsive information exists. For example, in Tandus v. Interface, Inc., IPR2013–00333, Paper No. 30 at 3 (PTAB Feb. 3, 2014), the patent owner explained to the PTAB during a teleconference that it sought discovery into petitioner’s alleged copying the patented invention and long-felt need, and said that relevant information “might exist.” The PTAB denied patent owner’s request to file a motion seeking discovery, as “a party requesting discovery must already possess evidence tending to show beyond speculation that something useful will be discovered.” Id. Further, the PTAB noted, “during the conference, Patent Owner was unable to provide any more specific basis for its discovery requests and was unable to identify a specific document it seeks to discover.” Id. Prior authorization was, accordingly, denied. Id.

In St. Jude Medical v. The Board of Regents of the Univ. of Michigan, IPR2013–00041, Paper No. 20 at 3 (PTAB July 31, 2013), the PTAB said that one factor strongly in favor of denying prior authorization was movant’s speculation: “[f]oremost, University of Michigan has not established beyond speculation that the requested documents will contain useful information.”

On the other hand, patent owner in Smith & Nephew, Inc. v. ConvaTec Techs., Inc. was able to win prior authorization to seek discovery. IPR2013–00102, Paper No. 13 at 5 (PTAB July 3, 2013). There, the patent owner’s belief that petitioner had copied its patented invention arose from discovery in concurrent litigation request and was, accordingly, found not to be speculative. Id. at 3. Similarly, in Schott Gemtron v. SSW Holding Co., IPR 2013–00358, Paper No. 28 (PTAB Jan. 13, 2014), patent owner used its own knowledge of petitioner’s sales volume to successfully justify filing a motion concerning commercial success. Id. at 3. But, with respect to six other categories of documents concerning copying, the PTAB found the request to be based on mere possibility or speculation, and briefing concerning those requests was not authorized. Id. at 4.

A party seeking discovery can also lose at the teleconference stage if its requests might prove to be unduly burdensome (factor 5). Schott Gemtron, Paper No. 28 at 4; Tandus, Paper No. 30 at 3 (“The lack of specificity in Patent Owner’s requests is also an unjustified burden on Petitioner.”). The decision in Zodiac Pool Sys., Inc. v. Aqua Products, Inc. shows how factor 3 can trip up a party. There, the PTAB denied discovery of communications between that parties, because “Patent Owner fail[ed] to demonstrate why the requested information could not be figured out or assembled from internal sources.” IPR2013–00159, Paper No. 26 at 7 (PTAB Oct. 18, 2013). Similarly, the PTAB has cautioned that “a request should not encompass publicly available information that the party has the ability to obtain without the need for discovery.” Apple Inc. v. SightSound Techs., LLC, CBM2013–00020, Paper No. 24 at 3 (PTAB Nov. 13, 2013).

Discovery in IPRs and CMs is far more limited that in district court litigation. Still, given the PTAB’s high kill rate, patent owners should use every argument they can to preserve validity. To do so, patent owners should pay close attention to the PTAB’s guidance on discovery and then craft a request for discovery focused on information that only the opposing party possesses—and that avoids any fishing expeditions.

This article was first published on the Law.com Contributor Network on April 28, 2014.
Reprinted with permission. © 2014