Failing to Use Post-Grant Review as a Bully Club

by Dennis Crouch

Inter Partes Review of U.S. Patent No. 7,582,051 (Heart Failure Technologies,LLC v. CardioKinetix, Inc.) (P.T.A.B. IPR 2013-00183)

In early 2013, Akin Gump attorney Sanford Warren sent an interesting letter to the medical device start-up company CardioKinetix on behalf of Akin Gump's clients Heart Failure Technologies. Heart Failure is a non-practicing entity looking to license its U.S. Patent No. 7,485,088. Oddly, Heart Failure did not threaten to sue CardioKinetix but rather threatened to file an inter partes review against one or more of the company's unrelated patents. Warren wrote: "If we have not received a substantive response by [1:00pm Central Time on December 21, 2012], we will file an inter partes review petition against one or more of CardioKinetix's patents on [December 21]." File Attachment: AkinGumpThreatLetter.pdf (1481 KB). Heart Failure eventually did file the IPR against CardioKinetix's U.S. Patent 7,582,051 – alleging that two of the claims were invalid as obvious based upon a combination of three prior art references.

At the outset, the Patent Trial and Appeal Board (PTAB) must determine whether to grant or deny a petition for inter partes review. Here, the PTAB denied the petition – finding that "the record … does not demonstrate that there is a reasonable likelihood that Petitioner would prevail with respect to at least one challenged claim. We consequently deny the petition and decline to institute an inter partes review of the '051 patent." File Attachment: PTABDecision.pdf (438 KB).

The decision is somewhat interesting – the basic failure of the petition was that the petitioner gave no reason why someone of skill in the art would combine the elements taught by the various references (other than the fact that they all relate to heart treatments).

The fact that [the three prior art references] all concern human heart repair is not in itself sufficient rationale for making the combination. Many heart repair devices exist. That fact alone would not make it obvious to combine their features. Petitioner must show some reason why a person of ordinary skill in the art would have thought to combine particular available elements of knowledge, as evidenced by the prior art, to reach the claimed invention. See KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 418 (2007). This, the Petitioner has not done. That the references relied upon all relate to human heart repair does not amount to "some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness." See id. (internal quotations omitted).

At this point, Heart Failure can ask the Board to review its decision. However, under 35 U.S.C. §314, the decision is "nonappealable."

I corresponded with CardioKinetix outside counsel Rick Shoop (ShayGlen) who indicated that the defense was fairly inexpensive (compared with patent litigation) at roughly three times more costly than filing an ex parte appeal to the PTAB.  

* Note –  A reader asked if I meant to use “bully club” or instead the more common “billy club.”  My intent here was to focus on the potential for bullying and so I thought the term fit.  

34 thoughts on “Failing to Use Post-Grant Review as a Bully Club

  1. 34

    EU300 is negotiated/discounted rate based only on office time for reviewing/drafting documents. We’ve been working with this firm for 25 years.

  2. 33

    By the way: EUR 300? Wow. That’s cheap!

    No kidding. But keep raising those rates, Max – that’s one reason why the ghost-writing part of my business is going up, year after year.

  3. 32

    For an EPO Chairman, as anybody else, the first time is always the hardest. It is hard to write your first Costs Order, and extra work of course. But when your Chairman gets open to the idea that he might give an Order awarding costs, he will start to enjoy that thought.

    EPO Examiners in the past lacked the gumption to refuse a case. But now they enjoy it. Perhaps it has to do with getting two disposal Points for a refusal but only one for an allowance. Or because EPO management these days is constantly exhorting them to “raise the bar”, or because they are increasingly finding that exercising power is seductive, or because their heads have been filled with the idea that “The EPO is the world’s Best in Class”.

    By the way: EUR 300? Wow. That’s cheap!

    Incidentally, why do you bother coming to Munich? Does your presence help? In my experience, the case is done and dusted already, the day before the oral proceedings, when the EPO Panel meets to decide how to manage the proceedings the next day. In Oppositions at the EPO the written proceedings are almost always the decisive thing. Orals are just to decide what text the reasoned Decision shall contain.

  4. 31

    Good Point. I was thinking that such extrinsic matters do concentrate minds, when push comes to shove.

    Companies fund litigation differently from prep and pros. When they require every stone to be turned, and every stop to be pulled out, so that under no circumstances shall the litigation be lost, the outcome can be different from that of humdrum PTO proceedings, no?

  5. 30

    Do Americans know this Max.  Most of us see requests for reexamination being granted on with a lot of hand waving at important limitations.  We are cynical and somewhat embittered, that is, unless one is an infringer or their lackey.
     

  6. 29

    “That is where patent disputes get serious, with infringement, loss of paid employment near where the judge works, and so on.”

    Surely no right-thinking judge uses extrinsic matters such as potential loss of local employment to so skew their judgment into finding invalidity to prevent such job loss?

    What happened to “adjudicating disputes properly”, as per your first paragraph?

    😉

  7. 28

    “had to prepare” you say. Why? Why not just show confidence in your patent by telling the Opposition Division why the opposition is rubbish, and deliberately not request oral proceedings?”

    I still have to pay EPC-qualified counsel in Munchen EU300/hr to prepare such documents as are necessary to tell the OD why the Opponent is rubbish. (Oops, maybe I meant to say “opposition” is rubbish. Maybe not.) But yes, I agree that if the opponent withdraws sufficiently ahead of the hearing, we save any refundable travel costs and of course legal costs for the hearing prep and hearing itself.

    As for awarding costs, I’ve only asked once and in very egregious circumstances under which an appeal hearing ended up re-scheduled for a late-filed document that we managed to show the opponent had possession of all along. The chairman declined, mumbling something about how large companies should just count it a cost of doing business to fly 4 people back and forth to Munich from US needlessly. But this was 3 or more years ago. Maybe they are more willing now.

  8. 27

    There was a period when the EPO upheld most every patent. These days it is more willing to contemplate revocation. But you are right; the English court sees the EPO Opposition process as a coarse filter, lacking good forensic fact-finding processes. Judges in national courts everywhere naturally see themselves as superior to a mere Patent Office, in adjudicating disputes properly. they wouldn’t be judges if they didn’t.

    The general impression, you sniff. Are you saying that the general impression that has been gained by the less sophisticated strata of patent society is not accurate?

    But, again, of course there are patents that survive Opposition in the EPO but then get revoked in infringement proceedings in national courts. That is where patent disputes get serious, with infringement, loss of paid employment near where the judge works, and so on.

  9. 26

    “had to prepare” you say. Why? Why not just show confidence in your patent by telling the Opposition Division why the opposition is rubbish, and deliberately not request oral proceedings? Opponent withdrew didn’t he?

    The EPO is ever more willing to consider favourably a request for an award of costs against parties who abuse the “oral proceedings” part of the process.

    But I grant you, I am being somewhat frivolous to Ned and you. True it is, that it is cheap to file an Opposition at the EPO, and thereby burden the patent owner with heavy expense.

  10. 25

    MaxDrei also said, “Out of it you come, with an enhanced presumption of validity, throughout Europe. There is no cheaper way to build patent rights in infringement-happy Europe that get real respect.”

    This also does not align with my experiences. I’ve seen patents upheld though both opposition and appeal, only to be found invalid in DE, AT, GB, etc.

    Although I will agree that what you’ve written is the general impression folks have.

  11. 24

    MaxDrei said, “Just sit back and wait for an EPO decision rejecting the opposition. “.

    Maybe in the art areas you work. In mine, even the most frivolous are not rejected outright.

    Even in cases where the preliminary opinion says, “Our preliminary opinion is that the patent is novel and inventive, and Dear Opponent, we strongly urge you to withdraw”. (And I’ve had more than one just like that. Complete rubbish yet we had to go to the trouble to make our replies and prepare for the hearings – even though the opponents did withdraw as suggested; by that time we had wasted plenty of money needlessly.)

  12. 23

    Ned there is no expense. Just sit back and wait for an EPO decision rejecting the opposition. Opponent carries the burden of proof. The EPO doesn’t lightly terminate its own new-born babies.

    Unless, that is, the Opponent has a case. But then be happy that the Opponent has done you a favour. Amend the claims to cure the invalidity and ask for maintenance on those improved Claims. Out of it you come, with an enhanced presumption of validity, throughout Europe. There is no cheaper way to build patent rights in infringement-happy Europe that get real respect.

    Be wary of opposing at the EPO any patent that troubles you, unless in so doing you can wipe the patent out.

  13. 22

    I’ve had the same experience as did the patent owner here, but with European oppositions. My client was threatened by a European company to invoke an opposition on a patent as leverage during a negotiation. Their position was not that the patent was invalid, but simply they would put us to the expense of defending the opposition.

  14. 17

    As I understand it, there is no equitable estoppel clock related to IPR. There is estoppel, but no clock.

  15. 15

    “The fact that [the three prior art references] all concern human heart repair is not in itself sufficient rationale for making the combination. Many heart repair devices exist. That fact alone would not make it obvious to combine their features. Petitioner must show some reason why a person of ordinary skill in the art would have thought to combine particular available elements of knowledge, as evidenced by the prior art, to reach the claimed invention. See KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 418 (2007). ”

    Hey! Wouldn’t it be a good idea if Supervisors ensured that Examiner’s met the same requirement before mailing an Office Action?

  16. 14

    Good question, Igor. I recall one case in Delaware a couple of years ago that was really close, but I don’t think I’ve seen a case where the patentee was actually estopped due to unjustifiable delays. I would be interested in seeing one, if it exists.

  17. 8

    Doesn’t Heart Failure’s attorney realize that now he has started the equitable estoppel clock ticking against CardioKinetix? He better file that complaint!

    I’m sure Sanford is totally on top of this. This re-exam was just a pawn in his awesome chess game.

  18. 7

    Heart Failure is a non-practicing entity looking to license its U.S. Patent No. 7,485,088. Oddly, Heart Failure did not threaten to sue CardioKinetix but rather threatened to file an inter partes review against one or more of the company’s unrelated patents.

    It’s a very strange threat. Why not threaten to Googlemap all of CardioKinetix employees and publicize any improvements to their homes that aren’t compliant with code?

    Same difference. Plus you can hire some high school flunkie to do that without surprising the client with your ineptitude.

  19. 6

    Ummmm… Doesn’t Heart Failure’s attorney realize that now he has started the equitable estoppel clock ticking against CardioKinetix? He better prepare that complaint!

  20. 5

    Heart Failure is a non-practicing entity looking to license its U.S. Patent No. 7,485,088. Oddly, Heart Failure did not threaten to sue CardioKinetix but rather threatened to file an inter partes review against one or more of the company’s unrelated patents.

    I had to check this out and it’s true: these Texas (surprised?) trollsters actually sent a letter saying, “If we don’t hear from you regarding our offer to license our cr*p patent to you by X date, we will put one of your unrelated patents into re-exam”.

    And then they filed a worthless petition where they simply hand-waved the motivation to combine. It’s almost as if they just had a summer associate (or perhaps one of their wives) just google search for similar patents, made a couple wordy charts, and voila! instant petition.

    Someone upthread (“Fish Scales”) alleged that the petitioner’s brief is how “most of their obviousness rejections look.” That person should consider him or herself lucky. It’s really not that hard to provide a rational motivation to combine. It helps to start with one reference (the “closest reference”, although there may be many such “closest” references), explain what’s missing and what’s not from that reference, find another reference with the missing element or elements, then explain that one would be motivated to combine the closest reference with the other reference(s) to achieve the additional benefits taught by the other reference(s). Especially in mechanical, medical device and computer-implemented cases, this is pretty straightforward as there’s nothing unexpected about the combinations (requiring a password will make unauthorized or unintended access less likely? yes, it’s true, even if the system is computerized — someone tell the PTO; portability is useful if you need to use the device in more than one area — really? yes, it’s true! the list goes on …). That’s not to say that the patent that was tossed into re-exam here is obvious. That’s just to say that these Texas trollsters are miserable failures, either way. Is that a surprise to anybody?

  21. 1

    Sounds like the petitioner is overworked, just found a way to let everyone know.

    link to scientopia.org

    Ran into an old boy today at the bus stop, said he was an independent inventor. I said, are you close to a million yet? He replied, I’m at a fork in the road, don’t know the maneuver to align my options. So I said, sounds kinda vague to me; why don’t you come over for a beer? (a.nawp!) Gotta get my service dog home. Well, it’s a d*mned good brew, “F*LLEN ANGEL”, here take a couple of my cards, I think there might be a reference to the Jeff Schox mission statement on the back (o) one of ’em.

    link to youtube.com

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