District Court: Instituted IPR Defeats Motion for Preliminary Injunction

Author: Jon T. Self, Ph.D.
Editor: James D. Stein

On remand from the Federal Circuit, the district court in Murata Machinery USA, Inc. v. Daifuku Co., Ltd., 2016 WL 4287040 (D. Utah Aug. 15, 2016) reaffirmed its earlier decision to deny Murata’s motion for a preliminary injunction. The litigation had been stayed pending resolution of instituted IPR proceedings involving Murata’s asserted patents. The Federal Circuit remanded the case because the district court did not “provide an adequate reason for its decision [denying the preliminary injunction] beyond merely noting that the case has been stayed,” but the Federal Circuit did not say that the district court’s conclusion was wrong.

Now articulating its reasoning, the district court said that the USPTO’s “[a]cceptance of the patents for IPR raises a question about the validity of the patents, which is one of the key considerations in determining whether a plaintiff is able to demonstrate a likelihood of success on the merits.” And “[a]s long as the IPRs are pending before the Patent Trial and Appeals Board, the court concludes that Murata will not be able to demonstrate a likelihood of success on the merits”—one of the requirements to show entitlement to a preliminary injunction. Observing the tension between the requirements for a stay and a preliminary injunction, the district court also noted that “the main reason that a court should not ordinarily grant both a preliminary injunction and a stay [at the same] time is that the factors that weigh in favor of issuing a stay are often the same factors that weigh against issuing a preliminary injunction.”
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Laziness, Copyright, & Hearsay – Oral Arguments over Packet Switching Take Some Interesting Turns

Author: Jon T. Self, Ph.D.
Editor: Jason E. Stach

Talk of laziness, copyright, and hearsay peppered oral arguments last week in Intellectual Ventures I LLC v. Ericsson Inc., No. 2015-1947 (Fed. Cir., filed Aug. 26, 2015). This appeal from an inter partes review (IPR) seeks to overturn the Patent Trial and Appeal Board’s decision canceling Intellectual Ventures’ claimed methods for secure packet switching. The Board primarily relied on a reference by Stadler, which is a document alleged to be published by the Institute of Electrical and Electronics Engineers (IEEE) that bears a copyright notice date of 1998. IEEE publishes some of its documents, and the Board relied on the copyright notice date as the publication date for Stadler.

Hearsay in the Hot Seat

Intellectual Ventures contends the copyright notice is not sufficient to show public accessibility and that the date within the copyright notice constitutes “inadmissible hearsay not within any exception [to the hearsay rule] when used to prove when Stadler was made publicly available.” (Appellant’s Reply Brief at 15.) Ericsson contends that the Board properly relied on the copyright notice date because Stadler fits within the market-report hearsay exception in Federal Rule of Evidence (FRE) 803(17), which applies to “[m]arket quotations, lists, directories, or other compilations that are generally relied on by the public or by persons in particular occupations.” (Appellee’s Brief at 30-31.) Ericsson also contends that Stadler fits within the “residual exception” of FRE 807, which allows the admission of hearsay if it meets several requirements, including showing that “it is more probative on the point for which it is offered than any other evidence that the proponent can obtain through reasonable efforts.” (Appellee’s Brief at 34.) Intellectual Ventures argues that these exceptions do not apply because “Stadler (and its copyright) was not a compilation under [the market-report exception of] FRE 803(17),” and “that the requisite levels of probativeness and necessity are not present here” to qualify under the residual exception. (Appellant’s Reply Brief at 16, 19.)

During last week’s oral hearing, the bulk of the panel’s questions, and in particular Judge O’Malley’s, were directed to this hearsay issue.

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Federal Circuit Clarifies the Burden of Proof in Magnum Oil

Author: Shayda Shahbazi*
Editor: Aaron J. Capron

In its recent decision, In re Magnum Oil Tools International, No. 2015-1300, the Federal Circuit clarified the burden of proof for IPR proceedings. In particular, it held that the PTAB improperly shifted the burden of proof to the patent owner to disprove obviousness.

When filing its petition with the PTAB, McClinton argued that the claims at issue would have been obvious over a first and second set of prior art. While McClinton and its expert appeared to have fully addressed the first set of prior art, they only “incorporated by reference” the arguments from the first set onto the second set of prior art. In responding, patent owner Magnum contended, among other things, that McClinton’s analysis for the second set of prior art failed to “specify where each element of the claim is found” and to describe how a skilled artisan would have modified the second set of prior art. Despite these shortcomings, the PTAB found that McClinton had established a reasonable likelihood of success based on only the second set of prior art and instituted the IPR. Relying on that analysis in the Final Written Decision, the PTAB held that the claims at issue were invalid as being obvious over the second set of art.

Subsequently, McClinton and Magnum settled the dispute, in which McClinton agreed to not participate in any appeal.

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