PTAB Provides Framework Limiting the Number of "Redundant" Grounds of Rejection

Written by David Holt, Karl Renner, and Dorothy Whelan

Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.

In Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., the PTAB set forth a framework by which it would limit the number of "redundant" grounds of rejection that may be sustained in patent trials.  The decision is important because the PTAB forecasts that it will only sustain more than one ground of rejection per claim if the Petition provides a particular type of description for why multiple grounds are not redundant.

Congressional mandates called for Director prescription of regulations "requiring that the final determination in any post-grant review be issued not later than 1 year after the date in which the Director notices the institution of a proceeding."  See 35 U.S.C. § 326(a)(11).  Similar mandates required Director consideration of "the effect of the regulations on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings."  See 35 U.S.C. § 326(b).  Within this framework, 37 C.F.R. § 42.1(b) provides that Part 42 of the PTAB's rules "shall be construed to secure the just, speedy, and inexpensive resolution of every proceeding."  Moreover, 37 C.F.R. § 42.20(c) establishes that the Petitioner has the burden of proof to establish that it is entitled to the requested relief.

Applying these requirements for efficiency to the Petitioner's burden, the PTAB declared its authority to eliminate redundant grounds of rejection from patent trials.  Indeed, the PTAB declared redundant grounds unworthy of consideration. 

Slip op., p. 2, ll. 16-19.

The Petitioner in Liberty Mutual filed a petition for covered business method patent review of claims 1-20 of U.S. Patent No. 8,140,358.  The petition included 422 total grounds of rejection based on 10 references.

In evaluating the multitudinous grounds for rejection in this petition, the PTAB determined there existed "numerous redundant grounds [that] would place a significant burden on the Patent Owner and the Board, and would cause unnecessary delays."  Slip op., p. 2, ll. 6-7.  As a result, the PTAB took the opportunity "to note that multiple grounds, which are presented in a redundant manner by a petitioner who makes no meaningful distinction between them, are contrary to the regulatory and statutory mandates, and therefore are not all entitled to consideration."  Slip op., p. 2, ll. 16-19.

The PTAB identified that Liberty Mutual included two types of redundancy: (1) horizontal redundancy and (2) vertical redundancy.  Horizontal redundancy exists where a plurality of prior art references applied not in combination to complement each other but as distinct and separate alternatives.  For example, where a petition relies upon references A, B, C, and D as prior art, simultaneously applied obvious rejections of a single claim based on A+B, A+C, and A+D would be horizontally redundant.  Similarly, simultaneously applied anticipation rejections of a single claim based on A, B, C, and D would also be horizontally redundant.

To illustrate horizontal redundancy, assume that a first reference is directed to a car and that a second reference is directed to a truck.  Horizontal redundancy would exist if they are both applied against a claim that recites a vehicle with four wheels, unless the petitioner were able to furnish an explanation of how the first reference more closely satisfies the claim in some respects than the second reference, and vice versa.  That is, in describing horizontal redundancy, the PTAB noted that "[a]ll of the myriad references relied on provide essentially the same teaching to meet the same claim limitation, and the associated arguments do not explain why one reference more closely satisfies the claim limitation at issue in some respects than another reference, and vice versa."  Slip op., p. 3, ll. 11-14.

Vertical redundancy exists where there is assertion of an additional prior art reference to support another ground of unpatentability when a base ground already has been asserted against the same claim without the additional reference and the Petitioner has not explained what the relative strengths and weaknesses of each ground are.  For example, where a petition relies upon references A, B, and C as prior art, simultaneously applied rejections of a single claim based on A, A+B, and A+C would be vertically redundant.  In this example, reference A is used in an anticipation rejection of the claims (i.e., the "base ground"), while references B and C are included in two additional obviousness type rejections (i.e., grounds with additional references).  Hearkening back to a slightly modified version of the example earlier referenced, assume the first reference is directed to a car with four wheels and the second reference is directed to a truck with eight wheels.  Vertical redundancy would exist if the first reference were applied alone (anticipatory) and in combination (obvious) against a claim reciting a vehicle with four wheels.

The PTAB articulates two methods for handling horizontal and vertical redundancies.  If any one ground can be determined to be "better from all perspectives, Petitioner should assert the stronger ground and not burden the Patent Owner and the Board with the other."  Slip op., p. 12, ll. 14-16.  Alternatively, if the Petitioner requires multiple grounds be sustained with regard to the same claim, the Petitioner must set forth a clear description in the petition explaining why the grounds are not redundant.  Specifically, the PTAB requires a "bi-directional explanation" of why each ground is better in some respect than each other ground.  For example, in a case of two redundant grounds: "[o]nly if the Petitioner reasonably articulates why each ground has strength and weakness relative to the other should both grounds be asserted for consideration."  Slip op., p. 12, ll. 17-19.

We expect the PTAB's holding in this case to apply equally to inter partes reviews, as 35 U.S.C. § 316(a)(11) contains a similar mandate of efficiency for IPRs.  In fact, recent decisions make clear that even where the grounds proposed in a petition are far fewer than the 422 present in the Liberty Mutual petition, the PTAB will deny all but one ground for each claim, unless the petition includes the above-described "bi-directional explanation."  See, e.g., MicroStrategy, Inc. v. Zillow, Inc., slip op. IPR2013-00034, p. 13 (PTAB Apr. 2, 2013).  Therefore, if a Petitioner seeks to maintain more than one proposed ground of rejection for a given claim during a patent trial, the petition should include some "bi-directional explanation" justifying the redundancy.  It is worth noting that the petition in Liberty Mutual met the page-limit requirement associated with petition, which is another mechanism for limiting the scope of a patent trial.