August 28, 2017

“A Reasonable Adjudicator Would have Wanted to Review this Evidence.”

By Bryan K. Wheelock, Principal

In Ultratec, Inc. v. Captioncall, LLC., [2016-1706, 2016-1707, 2016-1708, 2016-1709, 2016-1710, 2016-1712, 2016-1713, 2016-1715, 2016-2366] (August 28, 2017), the Federal Circuit vacated and remanded Board decisions invalidating Ultratec’s patents relating to systems for assisting deaf or hard-of-hearing users to make phone calls, in a group of IPRs, finding that the Board failed to consider material evidence and failed to explain its decisions to exclude the evidence.

Captioncall submitted the testimony of an expert Benedict Occhiogrosso in the IPR’s.  Ultratec moved to supplement the record with the conflicting Mr. Occhiogrosso trial testimony, but because Ultratec did not first request authorization to file the motion, the Board expunged the motion from the record.

Within a week of the jury trial in which Occhiogrosso testified, Ultratec requested authorization to file a motion to submit portions of Mr. Occhiogrosso’s trial testimony to the Board.  Ultratec alleged that Mr. Occhiogrosso’s trial testimony addressing a prior art reference was inconsistent with his IPR declarations.  The Board held a conference call to consider Ultratec’s request for authorization to file a motion to supplement the IPR record with Mr. Occhiogrosso’s trial testimony, but did not review the testimony when deciding whether it could be admitted.  The Board denied the request, promising a written order that was never provided.

After refusing to admit Mr. Occhiogrosso’s trial testimony, the Board issued final written decisions, holding that every challenged claim was either anticipated or would have been obvious, relying heavily on the Board’s belief that Mr. Occhiogrosso was a credible witness, citing his declaration more than thirty times, at least once as to each of the eight patents.

Under the PTO’s regulations, a party seeking to submit supplemental information more than one month after the date an IPR is instituted must request authorization to file a motion to submit the information.  37 C.F.R. § 42.123(b). The request to submit new information must show: (1) why the supplemental information reasonably could not have been obtained earlier, and (2) that consideration of the supplemental information would be in the interests of justice.  The PTO considers the interests of justice as slightly higher than good cause:

Good cause and interests-of-justice are closely related standards, but the interests-of-justice standard is slightly higher than good cause.  While a good cause standard requires a party to show a specific factual reason to justify the needed discovery, under the interests-of-justice standard, the Board would look at all relevant factors.  Specifically, to show good cause, a party would be required to make a particular and specific demonstration of fact. Under the interests-of-justice standard, the moving party would also be required to show that it was fully diligent in seeking discovery and that there is no undue prejudice to the non-moving party.

The Federal Circuit said that the record affords but one reasonable conclusion: Ultratec satisfied both of § 42.123(b)’s requirements for allowing Ultratec to file a motion to admit Mr. Occhiogrosso’s trial testimony. First, the evidence could not have been obtained earlier. Ultratec emailed the Board requesting authorization to file a motion to supplement the record the week after the jury trial concluded. This is not evidence that could have been located earlier through a more diligent or exhaustive search; it did not exist during the IPR discovery period.

The Federal Circuit said that the fact that Ultratec could have, but did not, depose and obtain inconsistent testimony from Mr. Occhiogrosso during the IPR itself is not a basis for concluding otherwise. Ultratec argues that during cross examination at trial in front of the jury Mr. Occhiogrosso offered testimony that is inconsistent with his IPR testimony. That inconsistent testimony did not exist sooner and thus could not have been proffered to the Board sooner.

The Federal Circuit said that:

The Board offers no reasoned basis why it would not be in the interest of justice to consider sworn inconsistent testimony on the identical issue. Ultratec sought to offer recent sworn testimony of the same expert addressing the same patents, references, and limitations at issue in the IPRs.  A reasonable adjudicator would have wanted to review this evidence.

The Federal Circuit noted that conflicting testimony by Mr. Occhiogrosso would be highly relevant to both the Board’s analysis of the specific issues on which he gave inconsistent testimony and to the Board’s overall view of his credibility. His testimony was critical to the Board’s fact findings, and under such circumstances, no reasonable fact finder would refuse to consider evidence of inconsistent sworn testimony.  The Federal Circuit further noted that admitting and reviewing Mr. Occhiogrosso’s trial testimony would have placed minimal additional burden on the Board.

A number of problems with the Board’s procedures contributed to its errors in this case.  First, the Board lacked the information necessary to make a reasoned decision.  Second, the Board’s procedures allowed it to make significant evidentiary decisions without providing an explanation or a reasoned basis for its decisions.  Third, the Board’s procedures impede meaningful appellate review of the agency decision-making.

The Federal Circuit noted a significant difference between court proceedings and proceedings before the Board:

In district court litigation, a party dissatisfied with a ruling excluding evidence is allowed to make an offer of proof to preserve error. Fed. R. Evid. 103. Parties in IPRs are not given similar protections.

The Federal Circuit concluded that the Board abused its discretion when it refused to admit and consider Mr. Occhiogrosso’s trial testimony and when it refused to explain its decision.