Having the Last Word: Exploring the Good Cause Standard for Permitting Replies to Patent Owner Preliminary Responses - JD Supra Business Advisor

During the institution phase of a post-grant proceeding, the patent owner has the option of filing a preliminary response to the petition. 37 C.F.R. §§ 42.107(a), 42.207(a). The petitioner may then request leave to file a reply to the preliminary response. 37 C.F.R. §§ 42.108(c), 42.208(c). Such a request requires a showing of good cause. Id. Recent Patent Trial and Appeal Board (PTAB) decisions discussed below illustrate developing trends concerning the PTAB's treatment of such requests and its interpretation of the good cause standard.

Misstatements and Inconsistencies in Patent Owner's Preliminary Response

In Xactware Sols., Inc. v. Pictometry Int'l Corp., IPR2016-00593, Paper 11 (PTAB Jul. 1, 2016), the panel denied the petitioner's request to file a reply to the patent owner's preliminary response. The petitioner sought to reply to "alleged misstatements of the facts" in the preliminary response. Id. at 2. The panel stated:

[I]dentifying and evaluating statements or misstatements of the facts and law are well within  the purview of the Panel of Judges assigned to these proceedings. It may always be the case that a Petitioner is unhappy with how Patent Owner characterizes the facts and law presented in the Petition. Our rules, however, provide for a Petitioner Reply only when good cause exists. Petitioner has not established good cause and as such, we do not authorize the filing of any Replies.

Id. at 3. The panel concluded that mere alleged misstatements in the preliminary response do not give rise to good cause.

In Mylan Pharmaceuticals Inc. v. Janssen Oncology, Inc., IPR2016-01332, Paper 16 (PTAB Oct. 26, 2016), the petitioner sought to file a reply to the preliminary response to point out alleged inconsistencies in the patent owner's arguments. The PTAB denied the petitioner's request, stating that "[t]he Board is capable of evaluating the parties' proposed positions relative to the asserted inconsistencies and related issues in this case based on the information already in the record." Id. at 2. Similarly, in The Clorox Co. v. Auto-Kaps, LLC, IPR2016-00821, Paper 7, (PTAB Aug. 9, 2016), the panel stated that "[t]he Board is capable of evaluating the parties' proposed claim constructions and any supporting evidence," and thus concluded that good cause did not exist to authorize a reply.

Issues that Could Have Been Addressed in the Petition

The issue of good cause may also turn on whether the petitioner had notice and an opportunity to raise the issue in its petition. In ARM, Ltd. v. Godo Kaisha IP Bridge 1, IPR2016-00825, Paper 11 (PTAB Sep. 29, 2016), the petitioner sought to reply to the patent owner's argument that the claims are entitled to the foreign priority date. The panel denied the petitioner's request, explaining that "Petitioner had notice and opportunity to raise this issue" as demonstrated by the fact that the petition "makes clear that Petitioner at least contemplated the possibility" that the patent owner would rely on foreign priority. Id. at 3.

Circumstances Giving Rise to Good Cause

In other instances, PTAB panels have determined that there was good cause to grant the petitioner leave to file a reply to a preliminary response. In NRT Technology Corp. v. Everi Payments Inc., CBM2016-00080, Paper 9 (PTAB Sep. 29, 2016), petitioner sought to file a reply to address the implications of a Federal Circuit decision which issued after the petition was filed. The panel permitted the petitioner to file a reply narrowly tailored to the issues raised by the intervening Federal Circuit decision.

In General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 10 (PTAB Sep. 14, 2016), the patent owner in its preliminary response argued that institution should be denied under 35 U.S.C. § 325(d) in light of the fact that the petitioner had filed an earlier petition challenging the same claims of the patent. The petitioner requested leave to file a reply limited to addressing the § 325(d) issue. The panel granted the motion in light of "the Board's recognition of the case-dispositive nature of the issues." Id. at 2.

Other examples of "case-dispositive" issues include real party-in-interest (RPI) and privies of the petitioner. For example, in D-Link Systems, Inc. v. Chrimar Systems, Inc., IPR2016-01425, Paper 10 (PTAB Nov. 3, 2016), the petitioner requested to file a reply to address "factual and legal errors" concerning the patent owner's argument that the petition fails to identify all RPIs. The panel concluded there was good cause, stating that "to the extent the Preliminary Response contains alleged factual inaccuracies relating to the real party-in-interest issue, Petitioner could not have been expected to anticipate and address those alleged inaccuracies in the Petition." Id. at 3. Thus, in contrast to Xactware, the panel in D-Link held that misstatements made by the patent owner in the context of an RPI dispute gave rise to good cause. Similarly, in Illinois Tool Works Global Tire Repair Inc. v. Tek Global S.R.L., IPR2016-01474, Paper 7 (PTAB Oct. 26, 2016), the panel granted the petitioner leave to address assertions made in the preliminary response concerning whether the petitioner was time-barred due to privity issues.

Conclusion

The above decisions reflect the highly fact-dependent nature of the PTAB's interpretation of the good cause standard in the context of §§ 42.108(c) and 42.208(c). See 81 Fed. Reg. 18,750, 18,757 (Apr. 1, 2016). The decisions suggest that the PTAB may be reluctant to grant permission to file a reply when the sole purpose of the reply is to point out misstatements in the preliminary response or to raise issues that could have been addressed in the petition. It appears that the PTAB is more receptive to requests which limit the scope of the reply to narrowly tailored issues, such as the effect of intervening case law. In other cases, panels have allowed replies in situations that involve "case-dispositive" issues such as the Board's discretion to deny the petition under 35 U.S.C. § 325(d) or whether the petitioner is time-barred due to the petitioner's RPI or privies. While post-grant practice continues to rapidly evolve, the above decisions provide valuable guidance on the circumstances which may give rise to good cause for filing a reply to a patent owner preliminary response.