Recent Cases Warn Of Dangers Of Trying For Second Bite At The IPR Apple

December 22, 2014

John L. Strand, Stuart V.C. Duncan Smith

(as published in Intellectual Property Watch)

The American Invents Act of 2011 (AIA) created inter partes review (IPR), a new opposition-like proceeding conducted at the US Patent Trial and Appeal Board (PTAB) in the US Patent and Trademark Office to challenge the validity of patent claims based on prior art patents and printed publications. Since then, conventional wisdom has advised filing a petition for IPR quickly after being sued for patent infringement, because any deficiencies or mistakes the PTAB identifies could be corrected with a second petition later on. Several recent decisions from the PTAB reveal limits to that strategy.

Butamax v. Gevo

In Butamax Advanced Biofuels LLC v. Gevo, Inc.—a case involving genetically engineered yeast with improved biosynthetic properties—Gevo had sued Butamax in US federal court and Butamax responded with an initial IPR petition. The PTAB instituted an IPR, but rejected parts of the petition for failing to properly cite and introduce into evidence a prior art reference and for failing to show that another cited prior art reference was sufficient to invalidate part of the patent.

Butamax responded with a second petition for IPR, attempting to correct the flaws in its first petition by joining the corrected arguments to the already instituted IPR. Although the PTAB could have simply rejected the second petition for complicating the already pending IPR—as it has in similar situations in the past—it took the opportunity to articulate broader limits to a petition that attempts to correct deficiencies in an earlier petition.

PTAB Reasoning for Rejection

In rejecting Butamax’s second petition, the PTAB faulted Butamax for including arguments that were identical to those that failed in the first petition, except for the attempts to correct the prior deficiencies.

The PTAB also went further, stating that to allow Butamax to correct the deficiencies in its prior petition would be to allow it an axiomatically impermissible “second bite at the apple.” The PTAB worried that successive petitions, each one containing arguments that are only minor tweaks of failed arguments from prior petitions, would amount to harassment of patent owners and would undermine one purpose of IPRs—to provide a quick and cost-effective alternative to litigation in federal court.

This holding will be welcome news to patent holders who have become increasingly frustrated with the new proceedings created by the AIA. High rates of institution and invalidation have earned the proceedings the reputation in some circles for being “patent death squads.” This decision from the PTAB will be a tool to curtail some of the perceived abuses and can provide some helpful lessons for petitioners.

Unilever v. The Procter & Gamble—A Growing Trend?

Butamax v. Gevo appears to be the vanguard of a developing policy in the PTAB to curb the use of successive petitions against a particular patent from the same challenger. Just about a week after the decision in that case, the PTAB issued a decision in Unilever v. The Procter & Gamble Company, a case involving conditioning shampoo. There, the PTAB rejected Unilever’s second petition, faulting it for relying on arguments and prior art similar to those in its first petition. The PTAB also “reasonably inferred” that Unilever withheld prior art for use in its second petition and criticized it for doing so. The PTAB concluded that maneuvers designed to facilitate successive attempts provide “no persuasive reason” to utilize the PTAB’s time.

Lessons Going Forward

Planning IPR strategy early is still critical. Although these decisions appear to dull one benefit of an early IPR petition (although time will tell whether other panels of the PTAB will accept the Butamax and Unilever reasoning), an early petition for IPR still has many benefits. For example, an early petition allows an early motion to stay the litigation, increasing the chance that the district court will grant the motion.

Don’t rely on correcting mistakes with a second petition. The PTAB did not offer much sympathy for either Butamax’s or Unilever’s situation, since each second petition was aimed at correcting deficiencies in a prior petition. Be prepared to draft a thorough and well-vetted IPR petition in the first instance.

If you’re a petitioner filing a second petition, distinguish the new arguments from those already asserted. The PTAB faulted Butamax for emphasizing that its new arguments were minor variations of prior arguments. The PTAB also faulted Unilever for presenting substantially similar arguments in both its petitions. Each petition’s arguments should be meaningfully distinct and presented as such.