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Appeal from the United States Patent Trial and Appeal Board,
Patent Trial and Appeal Board in No. IPR2013-0007,
Administrative Patent Judges Fitzpatrick, Bisk and Wood.
APPELLANTS PETITION FOR REHEARING EN BANC
Edward D. Manzo
Lead Counsel for Appellant
George S. Pavlik
Daniel Kim
HUSCH BLACKWELL LLP
120 S. Riverside Plaza, Suite 2200
Chicago, Illinois 60606
Telephone: 312-655-1500
CERTIFICATE OF INTEREST
The undersigned counsel for Appellant certifies the following:
1.
All parent corporations and any publicly held companies that own 10
The names of all law firms and the partners or associates that
appeared for the party now represented by me in the trial court or are expected to
appear in this court are:
HUSCH BLACKWELL LLP
Edward D. Manzo, Lead Counsel for Appellant
George S. Pavlik
Daniel Kim
120 S. Riverside Plaza, Suite 2200
Chicago, Illinois 60606
Goldberg Cohen LLP
Morris E. Cohen
Lee A. Goldberg
1350 Avenue of the Americas, 4th Floor
New York, New York, 10019
TABLE OF CONTENTS
Page
CERTIFICATE OF INTEREST ................................................................................ i
TABLE OF CONTENTS .......................................................................................... ii
TABLE OF AUTHORITIES ................................................................................... iv
RULE 35 STATEMENT OF COUNSEL ..................................................................1
ARGUMENT .............................................................................................................1
I.
II.
III.
A.
B.
C.
B.
C.
ii
D.
2.
CONCLUSION ........................................................................................................14
ADDENDUM ............................................................................................................1
CERTIFICATE OF SERVICE ..................................................................................2
iii
TABLE OF AUTHORITIES
Page(s)
Cases
Armstrong v. Manzo,
380 U.S. 545, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965) ....................................... 8, 15
Boumediene v. Bush,
553 U.S. 723 (2008) ...........................................................................................1, 7
Chicago, Milwaukee, St. Paul and Pacific Railroad Co. v. United States,
585 F.2d 254 (7th Cir. 1978) ...............................................................................10
Christopher v. SmithKline Beecham Corp.,
132 S.Ct. 2156 (2012) ........................................................................................1, 6
Clear Pine Mouldings, Inc. v. NLRB,
632 F.2d 721 (9th Cir. 1980),
cert. denied, 451 U.S. 984 (1981) ........................................................................11
Dickinson v. Zurko,
527 U.S. 150, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999) ........................................5
General Electric Co. v. U.S. EPA,
53 F.3d 1324 (D.C. Cir. 1995) ...........................................................................7, 8
Hall v. Florida,
134 S.Ct. 1986 (2014) ............................................................................................7
In re Biedermann,
733 F.3d 329 (Fed. Cir. 2013)......................................................................... 1, 12
In re Leithem,
661 F.3d 1316 (Fed. Cir. 2011)..................................................................... 11, 12
In re Stepan Co.,
660 F.3d 1341 (Fed.Cir.2011)................................................................... 1, 11, 12
J.C. Penney Co. v. NRLB,
384 F.2d 479 (10th Cir. 1967) .............................................................................10
iv
vi
This Court has applied similar due process principles with respect to appeals to the
PTO Board. E.g., Rambus Inc. v. Rea, 731 F.3d 1248, 1255-56 (Fed. Cir. 2013).
The same rule should apply to PTAB trials especially where, as here, the patent
owner has no opportunity to muster new evidence to answer the new issues.
The PTAB rules forbade LNC from introducing further evidence at (or after)
the hearing. If LNC had received timely notice about the new issues, it could have
retained a technical expert to provide testimony to support the patent. It never had
that chance. An agencys substitution of an issue at the hearing and addition of
another issue after the hearing are prohibited in other circuits and warrant en banc
correction and guidance for future PTAB trials.
I.
PTAB authority to conduct administrative inter partes trials in which patent claims
could be declared invalid. E.g., 35 U.S.C. 318. The PTO adopted a set of trial
rules, 37 C.F.R. Part 42, to govern such trials and added an Office Patent Trial
Practice Guide. 77 Fed. Reg. 48756-73 (Aug. 14, 2012) (Trial Practice Guide).
The Trial Practice Guide opens, This practice guide applies to inter partes review
Id. at 48756. The statute, rules, and Trial Practice Guide govern an expeditious
PTAB mechanism for testing the validity of a patent claim. To do this, the PTAB
reviews petitions to institute trials and selects the issues that it will try. Thus,
2
Neither the Third Oval Ring Nor the Spout Size Were Identified
as Issues in the Decision to Institute
shaped or oval-shaped and (2) slits in the spout tip and vent openings. A97. The
PTAB gave no notice about the third oval ring or the spout size being issues.
B.
At the Final Hearing, Judge Fitzpatrick asked about the third concentric
oval, conceding that this was not identified as an issue in the Decision to Institute:
JUDGE FITZPATRICK: *** I know we're moving on to the
motion to amend, but in the challenged claim, the spout tip has
three concentric ovals, which I am not sure that exists anywhere
in the 106 application and that was not pointed out in the
decision to institute, but that doesn't mean that it's not relevant.
***
JUDGE FITZPATRICK: What is relevant to me is that in
the issued claim the spout has three concentric ovals. And you
don't have to be you don't have to talk about Figure 3. You
can talk about any of the 106 application, and I'm asking what
is the 112 support in the 106 application for those three
concentric ovals? Setting aside the fact of whether they're
racetrack ovals or not racetrack ovals, just focusing on the three
concentric rings.
A274, lines 18-24; A275, lines 12-18 (emphasis added). The attorney for LNC, Mr.
Cohen, protested, this is a new issue that wasnt raised by the Petitioner. A275,
lines 21-22. In rebuttal, Mr. Cohen commented on the third oval, but he never had
the chance to consult with a technical expert on this issue or offer evidence.
C.
The PTAB Relied on the Third Oval in the Final Written Decision
and Added the Second New Issue the Spout Size
In the Final Written Decision, the PTAB wholly abandoned the slits issue,
used the racetrack versus oval issue, and added two new issues, stating:
4
patent owner cannot be deprived of one without due process of law. U.S.
Constitution, Amend. 5; 5 U.S.C. 706(2) (Administrative Procedure Act (APA)
requirement for timely notice). The PTO is subject to the APA and its notice
requirements. Dickinson v. Zurko, 527 U.S. 150, 154, 119 S.Ct. 1816, 144 L.Ed.2d
143 (1999). LNC was required to rely on the PTABs statement of issues for trial
announced in the decision to institute trial. When the PTAB decided the case on
two other issues, with LNC never having had notice and the opportunity to provide
5
evidence on the issue, this violated due process and the APA. 1
A.
Although the panel decision was under Rule 36, the due process violation was
not harmless error. Addressing the racetrack/oval issue on appeal, LNC showed
enlargements of several figures of the parent application and demonstrated that the
oval shape is indeed supported by the parent application. See enlargements at Blue
Brief (BB) pp. 59-62. The PTABs racetrack finding is not supported by
substantial evidence.
Addressing the new spout size issue, LNC showed why that ruling also lacks
support by substantial evidence. Briefly, LNC showed that the relative size of the
spout compared to the size of the top in the several figures of the parent application
is the same. BB at 24-25, 58 (34% relative length in both design patent and parent
application; relative width in design patent of 22% is within range of parents
illustrations of 15%-25%). Munchkin did not argue otherwise in its Red Brief.
6
It has long been established that due process requires notice reasonably
calculated, under all circumstances, to inform the private party of the nature of the
government action so as to allow an opportunity to challenge the action. Wright,
8222, Vol. 32, pp. 350-51 (citing e.g., General Electric Co., supra, 53 F.3d at 1329
(Fair notice requires clear expression of the regulations in dispute.), Simons v.
City of Grand Forks, 935 F.2d 981, 983 (8th Cir. 1993) (due process requires
reasonable notice of the adverse contentions and access to the evidence for an
adequate opportunity to participate.); Yellow Freight System, Inc. v. Martin, 954
F.2d 353, 357 (6th Cir. 1992) (To satisfy the requirements of due process, an
administrative agency must give the party charged a clear statement of the theory
on which the agency will proceed with the case.)). See also, Rodale Press, supra.
Fairness also requires that the notice be given sufficiently prior to the
adjudication so as to allow the party to adequately participate. Wright, 8222,
Vol. 32, pp. 351-52 (citing e.g., Lane Hollow Coal Co. v. Director, OWCP, 137
F.3d 799, 807 (4th Cir. 1998) (notice must afford reasonable time to respond)).
Thus, a fundamental requirement of due process is the opportunity to be
heard at a meaningful time and in a meaningful manner. Armstrong v. Manzo,
380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965).
B.
7th Cir.: In NRLB v. Complas Industries, Inc., 714 F.2d 729, 734, 736 (7th
Cir. 1983), an employer was denied due process when the NRLB was allowed to
amend its original complaint during a one-day administrative proceeding, where
the employer repeatedly objected to the amendment of complaint, and the
proceeding was not adjourned to give the employer a meaningful opportunity to
meet the amended claim. Citing Rodale, the court stated:
[I]t is well settled that an agency may not change theories in
midstream without giving respondents reasonable notice of the
change.
The evil ... is not remedied by observing that the outcome
would perhaps or even likely have been the same. It is the
opportunity to present argument under the new theory of
violation, which must be supplied. [citation omitted]
Id. at 734. See also, NLRB v. Quality C.A.T.V., Inc., 824 F.2d 542, 548-49 (7th Cir.
1987) (vacating and remanding); Stokely-Van Camp, Inc., v. NLRB, 722 F.2d 1324
(7th Cir. 1983); and Chicago, Milwaukee, St. Paul & Pacific Railroad Co. v.
United States, 585 F.2d 254, 260 (7th Cir. 1978) (agency action was arbitrary and
capricious without adequate notice).
10th Cir.: In J.C. Penney Co. v. NLRB, 384 F.2d 479 (10th Cir. 1967), the
court declined to enforce the portion of an order based on a charge not in the
complaint, where the issue had not been fairly litigated. The court explained,
Failure to clearly define the issues and advise an employer
charged with a violation of the law of the specific complaint he
must meet and provide a full hearing upon the issue presented
is, of course, to deny procedural due process of law. We
10
This Court and One of its Predecessors Apply the Same Due
Process Requirements to Appeals at the PTO Board
This Court and the Court of Customs and Patent Appeals have long applied a
similar rule with respect to the PTO Board raising new grounds for decision on
appeal from a patent examiner. The Court should extend that rule to IPRs at the
PTAB. The error is the same relying on new issues to reach a decision, with the
inventor never having had timely notice or the opportunity to respond. This Court
has admonished:
The Board also exceeded its limited role to review of the
examiner's decisions during prosecution. In re Stepan Co., 660
F.3d 1341, 1344 (Fed. Cir. 2011). Under the Administrative
Procedure Act, the PTO must ensure that the parties before it
are fully and fairly treated at the administrative level. In re
Leithem, 661 F.3d 1316, 1319 (Fed. Cir. 2011). Namely, the
2
NLRB v. H. E. Fletcher Co., 298 F.2d 594, 600 (1st Cir. 1962) (In sum, the
Board made a finding of a violation which was neither charged in the complaint
nor litigated at the hearing.); Stanley Works v. FTC, 469 F.2d 498, 508 n.24 (2d
Cir. 1972), cert. denied, 412 U.S. 928 (1973); Clear Pine Mouldings, Inc. v. NLRB,
632 F.2d 721, 728 (9th Cir. 1980) (six week adjournment to allow preparation of
defense to new charge allowed a meaningful opportunity to defend and full and fair
litigation of the new claim), cert. denied, 451 U.S. 984 (1981).
11
In federal district court, pleadings frame the issues for trial. The trial is an
evidentiary proceeding where parties introduce evidence through witnesses at the
12
hearing. That is nothing like an IPR hearing before the PTAB. A PTAB trial,
like a district court case, refers to the contested case as a whole and begins with a
written decision to institute. 37 C.F.R. 42.2. The PTAB hearing is the
consideration of the trial. Id. It is simply the oral argument. See id. 42.70. It is
not an evidentiary hearing.
In a Decision to Institute, the PTAB selects issues to be tried in a
streamlined proceeding. Issues not specified there are not part of the trial. Thus,
the parties thereafter litigate those issues only. The patent owner provides evidence
with its response pursuant to 37 C.F.R. 42.120. This occurs months before the
hearing. (The petitioners evidence is already part of the record because it
accompanied the petition. Id. 42.104.) 3
Receiving notice at the final hearing of a new issue is insufficient for at least
the reason that the rules deny the Patent Owner the right to present new evidence at
the hearing. Indeed, the Trial Practice Guide prohibits new evidence at the oral
argument, as quoted supra at 3. This regulation made it impossible for LNC to
present evidence on the substitute issue(s), even if it had received timely notice.
Notice of a new issue in a Final Written Decision is even more defective.
2.
When the issue is entitlement to an earlier filing date and the PTAB has
declared specific priority issues, a patent owner is not on notice that all other
potential priority issues could be addressed also. When the issue is, for example,
the support for the existence (or absence) of slits in a design patent figure, a patent
owner would not be alerted to questioning the location of a different feature of the
drawings. And when the stated issue is the roundness (oval shape) of one feature in
a drawing, the patent owner is not on notice that the existence of another feature
that drawing, or another one, is also an issue.
Thus, when the PTAB identifies specific issues in the Decision to Institute,
and the challenged patent is a design patent, many other potential issues that might
have been litigated are put aside and not chosen for trial. The patent owner does
not have notice of the potential issues. It cannot lawfully be forced to guess what
new issues the PTAB might interject at a future time, after the evidence period.
CONCLUSION
The PTAB must adhere to the APA and due process standards. When it
conceded at the Final Hearing that the third ring issue was not in the Decision to
Institute, that should have ended that issue. It was off limits not fair game in this
IPR unless the PTAB made a new evidence period available to LNC. The PTAB
14
compounded this error by adding another new issue (the spout size) in its Final
Written Decision (as in Rodale Press).
The addition of two new issues denied LNC the opportunity to be heard at a
meaningful time and in a meaningful manner. Armstrong v. Manzo, supra. LNC is
entitled to address the new issues, as many courts of appeal hold. This Court calls
for notice and an opportunity to present evidence when the PTO Board raises new
issues in ex parte appeals. Whether the outcome here might have been the same
(which LNC denies) is not a concern. See NLRB v. Complas, supra.
Rehearing en banc is needed to align this Courts law with other circuits
which hold that agencies cannot switch theories midstream (or thereafter) without
giving proper notice and an opportunity to defend. The PTAB must not be allowed
to decide an IPR on new issues. Either the new issues must be eliminated from the
case, or the patent owner must be given a timely notice and opportunity to present
evidence. The PTAB ruling must be vacated.
Respectfully submitted,
ADDENDUM
Allen J. Poplin
Lathrop & Gage, LLP
10851 Mastin Boulevard
Suite 1000
Overland Park, KS 66210
913-451-5100
Jpoplin@lathropgage.com
Paper copies will also be mailed to the above principal counsel on this date.
Additionally, sixteen paper copies will be filed with the Court within the
time provided in the Courts rules.
May 12, 2015