Federal Circuit Underscores the Importance of Complying With PTAB Procedural Rules in Parus Holdings v. Google

Authored by Mark Chapman and Thomas Feil

The Federal Circuit’s recent precedential decision in Parus Holdings v. Google¹ underscores the importance of complying with the PTAB’s procedural rules in an IPR and the potentially serious consequences of not doing so.

The specific PTAB rule at issue in Parus was 37 C.F.R. § 42.6(a)(3), which prohibits incorporating arguments by reference from another document.²  The Federal Circuit affirmed the Board’s decision to not consider the patent owner Parus’s arguments and evidence seeking to antedate a prior art reference, for failing to comply with Rule 42.6(a)(3), because they were not presented in any of Parus’s briefs but instead merely incorporated by reference from several declarations.³

As a result of Parus’s failure to antedate the prior art reference, the Board relied on the reference to find the claims unpatentable in its final written decision, which the Federal Circuit affirmed.⁴

The Federal Circuit’s Parus decision addressed Parus’s appeal from the Patent Trial and Appeal Board’s final written decisions in two IPR proceedings, in which the Board found the challenged claims unpatentable based in part on a prior art reference (Kovatch) with an earliest possible priority date of January 4, 2000.⁵

Parus’s claims claimed priority to an application filed on February 4, 2000.⁶  However, during the IPRs, Parus argued to the Board that Kovatch is not prior art because the claimed invention had been conceived by July 12, 1999, and reduced to practice by December 31, 1999.⁷  Parus also argued that the inventors had worked diligently to reduce the invention to practice.⁸  In support, “Parus submitted approximately 40 exhibits totaling 1,300 pages, in addition to claim charts exceeding 100 pages.”⁹  However, “Parus only minimally cited small portions of that material in its briefs without meaningful explanation.”¹⁰

The Board declined to consider Parus’s arguments and evidence seeking to antedate Kovatch, on the ground that Parus had failed to comply with 37 C.F.R. § 42.6(a)(3).¹¹  The Board explained that Parus did not present its arguments in its patent owner response or sur-reply but instead did so “in several declarations and improperly incorporate[d] those arguments by reference into its Response and Sur-reply, in violation of Rule 42.6(a)(3).”¹²  The Board noted that Parus did not provide any “meaningful explanation” in its briefs, did not cite any evidence or testimony “with specificity,” and did not explain the basis for its conclusion or cite any evidence to support it.¹³  Therefore, the Board concluded that Parus had failed to meet its burden of production, such that Kovatch qualified as prior art.¹⁴

In an opinion authored by Judge Lourie and joined by Judges Bryson and Reyna, the Federal Circuit affirmed the Board’s decision to not consider Parus’s arguments and evidence seeking to antedate Kovatch because Parus had failed to comply with Rule 42.6(a)(3).¹⁵

Parus conceded on appeal that it had incorporated arguments by reference and therefore violated Rule 42.6(a)(3).¹⁶  Nevertheless, Parus argued to the Federal Circuit that the Board erred by failing to consider Parus’s evidence, for three reasons.

First, Parus argued that the IPR statute and rules require “specific and persuasive attorney argument” only from the petitioner, not the patent owner, and that the patent owner is not even required to file a response.¹⁷  The Court disposed of this argument quickly, explaining that although a patent owner is not required to file a response, once it chooses to do so, it has to comply with all the applicable rules, including Rule 42.6(a)(3).¹⁸

Second, Parus argued that the Board had improperly placed the burden of persuasion on Parus.¹⁹  The Court disagreed, explaining that once Parus attempted to antedate Kovatch, it assumed a temporary burden of production.²⁰  Judge Lourie explained that this burden of production “cannot be met simply by throwing mountains of evidence at the Board without explanation or identification of the relevant portions of that evidence,” and that “[o]ne cannot reasonably expect the Board to sift through hundreds of documents, thousands of pages, to find the relevant facts.”²¹  He then quoted the Seventh Circuit’s colorful statements that judges “are not like pigs hunting for truffles buried in briefs”²² and should not be “ask[ed] to play archaeologist with the record.”²³  Judge Lourie concluded by stating that “[t]he burden of production cannot be met without some combination of citing the relevant record evidence with specificity and explaining the significance of the produced material in briefs.”²⁴

Finally, Parus argued that the Administrative Procedure Act required the Board to consider Parus’s evidence.²⁵  The Court disagreed, explaining that the APA does not require the Board to “review evidence and issues introduced by a party in violation of its rules or not introduced at all.”²⁶  Judge Lourie added that “[j]ust as a district court has the power to strike or not consider submissions that exceed its page limits, are untimely filed, or otherwise do not comply with its orders and rules, so too does the Board.”²⁷

The Parus decision is a useful reminder about the importance of complying with the Board’s procedural rules and the potentially serious consequences of failing to do so.  It should go without saying that counsel practicing before the PTAB should be intimately familiar with these rules and ensure that they comply with both their letter and spirit.  In particular, the Parus decision reinforces the importance of presenting clear and specific arguments to the Board with specific evidentiary support—in the briefs.