PublishedAugust 30, 2019

Nartron IPRs a Touchstone For Understanding PTAB Discretion

Image of touchscreen

The Patent Trial and Appeal Board (PTAB) recently issued institution decisions in a number of petitions filed against U.S. Pat. No. 5,796,183, a touchscreen patent owned by Nartron.  In the process of determining which petitions had met the required threshold, the PTAB judges provided a detailed explanation of how to apply the PTAB’s discretion to institute in situations with multiple petitions.  Particularly given the re-introduction of the STRONGER Patents Act and its bar against more than one petition ever being filed against a given patent, it’s helpful to examine the multiple reasons why the PTAB found that multiple petitions were justified in this case.

First, Nartron Had To Fix Its Own Patent

Nartron claims that it “is credited with inventing the electronic touch screen in 1995.”  (The electronic touch screen is generally recognized as having been first invented by E.A. Johnson in 1965, with various refinements such as multitouch and capacitive multitouch displays made over the intervening three decades by many other innovators.  Nartron is not part of any of those histories.)  The ‘183 patent was filed in 1996 and expired in 2016.  For much of its life it sat there, apparently ignored.[1.  Ignored—that is, other than Nartron filing a lawsuit against the patent’s inventor to force him to add additional co-inventors.  The inventor has publicly stated in a letter to the PTO that the other individuals were not actually inventors and that he only settled the case because Nartron “had been threatening [him] by lawsuit and thousands of dollars in attorney fees”.] But in 2012, Nartron began to prepare for assertion.[2.  Historically, Nartron has been a litigious company, with lawsuits against companies ranging from Amway to General Motors. The former resulted in a judgment that Nartron had stolen trade secrets while the latter resulted in over $4 million in discovery sanctions against Nartron.]  

First, Nartron filed a pair of requests for its own patent to be reexamined.  This allowed Nartron to put relevant prior art on record and amend its claims—claims that they had had, unchanged, for 15 years—to avoid being invalidated by that prior art when asserted.  These reexaminations also resulted in the addition of more than 80 claims to the original patent, resulting in a patent with 114 total claims.

And then Nartron began filing lawsuits.

Nartron v. Samsung

Nartron started out by suing Samsung in 2015.  Samsung took a look at Nartron’s patent, said “wait a minute, these guys didn’t invent this”, and filed a petition for inter partes review explaining how everything in the relevant claims of Nartron’s patent had been known in the prior art and was obvious.  The PTAB initially determined that Samsung had shown a reasonable likelihood that Nartron’s patent was invalid, but ultimately decided that Samsung had not shown sufficient evidence that an ordinary artisan would have combined two of the references and upheld the patent.  

That decision issued October 18, 2017.  (The PTAB’s determination was reversed by the Federal Circuit on June 18, 2019.  The Federal Circuit held that an ordinary artisan would have combined those references and remanded the case for further proceedings.)

Nartron v. Apple

In November 2017, more than 18 months after the ‘183 patent had expired and a month after the PTAB’s determination, Nartron sued Apple.  [3. Despite Nartron’s admission that the ‘183 patent is expired, it still requested that an injunction issue against Apple and that the court award a compulsory ongoing royalty.  Injunctions are unavailable after the expiration of a patent.  Ongoing royalties after patent expiration are also barred.  (See Kimble v. Marvel.)]  Faced with 114 claims that could potentially be asserted against them by Nartron, Apple made a reasonable request—that Nartron narrow the number of claims to be asserted so that Apple could fully address the relevant claims in IPRs it intended to file.

Nartron refused to do so for a significant period of time, finally identifying claims only one month before the deadline by which Apple had to file IPRs or be time-barred.  (Based on my own experience with IPRs, that meant that Apple effectively had to prepare to file IPRs against all claims, as it takes a significant amount of time to prepare and file an IPR.)

Apple eventually filed a total of six IPRs against Nartron.  Their petitions took into account the PTAB’s decision in the Samsung IPR and provided new and different prior art to address the denial in that case.  All six petitions were filed on November 29, 2018. The six petitions are split into two sets of three, each set based on a particular combination of references; within each set of three, there is essentially zero overlap in challenged patent claims.  Nartron repeatedly requested that the PTAB deny all of Apple’s IPRs because of the Samsung IPR.

At the end of July 2019, shortly after the Federal Circuit’s opinion in the appeal of the Samsung IPR, the PTAB denied institution of one set entirely and instituted two of three challenges in the other set.  The denials were entirely based on determinations by the PTAB that the merits of the challenge did not justify institution; no petition was denied based on Nartron’s request for discretionary denial.

The Institution Decisions

In particular, in the instituted IPRs (IPR2019-00358 and –00359), the PTAB engaged in a detailed discussion of the General Plastics factors.  The General Plastics factors are used to determine whether to issue a discretionary denial of institution.  The PTAB’s analysis explains how those factors weighed against discretionary denial in the Apple IPRs.  This detailed discussion is useful in understanding how the PTAB can be expected to address other situations with multiple simultaneous petitions, especially when a later petitioner may be able to benefit from a decision on an earlier petition.

Factor 1: Whether Petitioner Previously Filed a Petition Directed to the Same Claims of the Same Patent

While this seems to be a simple factor—Apple had not previously filed a petition—the PTAB has recently begun to include analysis of petitions previously filed by other petitioners into this factor.  In particular, a relationship between the current and previous petitioner may weigh in favor of denial.

But here, Nartron simply stated that both Apple and Samsung had been sued on the same patent and asserted that that was a sufficient relationship based on this common posture.  Unlike in previous denials based on related party petitions, Apple and Samsung did not work together on the relevant portion of Apple’s phones, have completely separate products, and were never co-defendants against Nartron.

Based on the simple fact that Apple and Samsung’s relationship with respect to this patent is not significant (personally, I would characterize it as non-existent with respect to this patent), the PTAB weighed this factor against a discretionary denial.

Factor 2: Whether Petitioner Knew of or Should Have Known of the Prior Art Asserted in the Instant Petition When the Prior Petition Was Filed

The second factor addresses whether an additional petition is necessary.  For situations in which a single petitioner filed the earlier petition and the later petition, it makes sense to look at the situation when the prior petition was filed.

But in situations like this one, where the prior petition was filed by a different party (Samsung) before the petitioner (Apple) was even sued, that isn’t the relevant inquiry.  As the PTAB discusses, there was little reason for Apple to have identified prior art at the time Samsung filed its petition, having not yet been charged with infringement.

Factor 3: Whether Petitioner Had Patent Owner’s Preliminary Response and the Board’s Institution Decision on the Prior Petition When Petitioner Filed the Instant Petition

The third factor is intended to prevent gamesmanship—situations where a party files an IPR, gets an institution decision, and then uses that decision as a “roadmap” for a second institution decision.  While this situation is rarely relevant, given the one-year time bar and the six-month institution timeline, it is of even less relevance in this case. The PTAB explicitly notes that the reason that Apple had access to the institution decision is because Nartron chose to wait to sue Apple.  

The PTAB goes on to note that, while Apple might have studied the Samsung IPR while developing its own challenges, there is no policy reason to deny on that basis when the reason Apple had access to that information is because Nartron chose to delay its lawsuit.  The third factor is intended to protect against gamesmanship by a petitioning party, not to prevent a petitioner from use of previous decisions to guide its own challenge. (In fact, as I’ve previously written, barring petitions simply because a petition had already been addressed would incentivize gamesmanship by patent owners.)

Factor 4:  The Elapsed Time Between the Time Petitioner Learned of the Prior Art Asserted in the Instant Petition and the Filing of the Instant Petition

The fourth factor is intended to avoid a petitioner waiting to file their petition simply because of prior art.  But the PTAB again rejected Nartron’s argument on this factor, noting that Apple filed its petitions within the one-year timeframe specified in statute and that there was no reason Apple would have searched for prior art prior to being sued.

And in fact, while the PTAB did not include this factor, Apple had (as described above) attempted to get Nartron to narrow the asserted claims.  That provides another reason why Apple might have delayed filing—after all, even if you ignore attorney’s fees, an IPR still costs a significant amount just in filing costs at the PTO (currently $15,500), with the attorney’s fees adding significantly to that number.

Factor 5: Whether Petitioner Has Provided Adequate Explanation For the Time Elapsed Between the Filings of Multiple Petitions Directed to the Same Claims of the Same Patent

Again, this factor is intended to avoid petitioner delays and gamesmanship.  But here, Apple filed all of its own petitions on the same day. And the PTAB noted that any delay between the Samsung IPR filing and Apple’s IPR filings was due purely to Nartron’s own decision to file the Apple lawsuit only after the Samsung IPR concluded.

Factors 6 and 7: Board Considerations 

Finally, factors 6 and 7 look at impacts on PTAB operations from multiple petitions.  Nartron argued that Apple’s filing of multiple petitions created an inappropriate burden on the PTAB and was intended to circumvent PTAB word limit rules.[4.  The word limit rules are an artifact of the PTO’s user fee-funded structure. They’re designed to ensure that a given petition is commensurate in workload to the amount of money that the PTAB has available for addressing that petition.  The PTAB could easily operate without a word limit and simply set its fees by the word—in fact, doing so would likely eliminate a large portion of multiple petitions. For example, the current word limit is 14,000 words in a $15,500 petition; charging $1.10 per word in the petition would provide an equivalent amount of resources while not requiring splitting filings across multiple petitions.]

The PTAB flatly rejected this contention.  In fact—and in keeping with their analysis of Nartron’s responsibility for much of the posture of the case—the PTAB stated that “Patent Owner bears some responsibility for this, however, given that it obtained 117 claims during two reexaminations, many of which are asserted against Petitioner.”  Going further, the PTAB noted that “filing of multiple petitions challenging the same patent may be appropriate where, as here, Petitioner has reasonable justification for multiple filings due to the multiplicity of claims to be challenged.”

Given that the PTAB could not identify a single factor that weighed in favor of discretionary denial of institution, the PTAB proceeded to institute on those petitions where they had found that Apple had shown a reasonable likelihood that the challenged claims were invalid.

The Normal Situation For Multiple Petitions

This was just one set of IPRs.  But it’s also the normal situation for multiple petitions—they’re almost always this kind of case, where the multiple petitions were filed to deal with large numbers of claims or to address a couple different prior art arguments.  Despite pressure on the PTAB to deny these petitions, the Nartron decisions illustrate that the PTAB is capable of taking a balanced approach and ensuring that abuse of the process can be eliminated while not harming the ability of petitioners to access the cost-effective and accurate IPR process that the PTAB provides.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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