On April 19, 2019, Red Diamond requested post-grant review (“PGR”) of claims 13, 18, and 19 of U.S. Patent No. 10,071,852, directed to beverage brewing products. In Red Diamond, Inc. v. Southern Visions LLP, PGR2019-00045, Paper 9 (P.T.A.B. Oct. 15, 2019), a PTAB panel of Administrative Patent Judges, Crumbley, Abraham, and Kennedy, granted Red Diamond's PGR petition (“Institution Decision”). Earlier, on Sept. 28, 2018, Southern Visions sued Red Diamond for patent infringement, and on June 19, 2019, the district court stayed the case pending the outcome of the PGR.

Claim 13 recites:

A beverage brewing product for producing a sweetened beverage comprising: at least one water permeable sieve for placement [sic] a container; beverage particles and granulated sugar contained in said at least one sieve; wherein said granulated sugar includes particles having a size in the range of U.S. mesh sieve no. 35 or lower; said permeable sieve having openings being generally smaller than the size of the beverage particles and said sugar for the retention of said beverage particles and said sugar; so that said particles of said sugar are dissolved during steeping in water to produce a sweetened beverage.

Claim 18 adds a limitation that “at least one sieve” is an open filter. And, in Claim 19, the “at least one sieve” is formed from a material selected from a group consisting of polymer, cotton, cellulose, and metal.

Red Diamond challenged the claims as anticipated under 35 U.S.C. §102(a)(1), as obvious, and as failing to meet the enablement and written description requirements of §112(a). Red Diamond also challenged Southern Visions' evidence of unexpected results presented during prosecution as incorrect, not commensurate in scope with the claims, and not surprising.

In a Patent Owner Preliminary Response, Southern Visions argued that institution should be denied under 35 U.S.C. §325(d) for raising the same or substantially the same art and arguments as already considered during prosecution. With respect to the asserted grounds that were based on references not previously before the examiner, Southern Visions argued that the references were not enabling. Red Diamond, Inc. v. Southern Visions LLP, PGR2019-00045, Paper 8 (P.T.A.B. July 17, 2019) (“POPR”).

The PTAB instituted the PGR and rejected both the Petitioner's and Patent Owner's proposed claim constructions. Specifically, the claim limitation in question was “wherein said granulated sugar includes particles having a size in the range of U.S. mesh sieve no. 35 or lower.” The Petitioner argued that the term should be construed as “includ[ing] sugar particles having a size exclusively in the range of U.S. Mesh Sieve No. 35 or lower.” The PTAB stated that, “[i]n effect, Petitioner asks us to replace the word ‘includes' in the disputed term with the words ‘consists exclusively of.'” Institution Decision at *9. Patent Owner proposed the construction as “cover[ing] particles from a source having an average size that is U.S. Mesh sieve no. 35 or lower (i.e., larger particles on average), where the source of the particles is determined at the time the particles are placed into the sieve.” In response, the PTAB further stated that, “[i]n effect, Patent Owner asks us to read an ‘average particle size' limitation into the claim, and … how the average particle size is evaluated[.]” Id. at *10. In the institution decision, the PTAB construed the limitation according to its “plain and ordinary meaning” as “granulated sugar that includes any number of particles having a size of U.S. mesh sieve no. 35 or lower.” Id. at *16.

Furthermore, the PTAB rejected Patent Owner's §325(d) argument, finding that although Becton factors (a)-(d) supported Patent Owner's position, Becton factors (e) and (f) did not. In particular, the PTAB credited Petitioner's explanation of the errors in the expert declaration used to support the unexpected results that led to allowance of the claims. Id. at *20. The PTAB held that Petitioner met the threshold for institution with respect to its anticipation and obviousness arguments. Although the PTAB held that the §112 arguments did not meet the threshold for institution, the PGR was instituted because, under SAS, at least some of the grounds in the petition satisfied the threshold.

The Patent Owner then filed a Motion to Amend, proposing to cancel claims 13, 18, and 19 and substitute three new independent claims (claims 20, 21, and 22). Red Diamond, Inc. v. Southern Visions LLP, PGR2019-00045, Paper 17 (P.T.A.B. Oct. 15, 2019) (“Patent Owner Motion to Amend”). Claim 20 recites configurations with 1.5-3 lbs. of sugar in the mesh sieve and that at least 61 percent by weight of the sugar must be “within the range of U.S. mesh sieve nos. 3-20.” Independent claim 21 has (a) a higher top end of the range of the sugar weight limitation (3.75 lbs.); and (b) a different percentage limitation, requiring that at least 50 percent of the sugar must be in the range of mesh nos. 3-18. Independent claim 22 includes (a) a higher bottom end of the range of the sugar weight limitation (1.25 lbs.); and (b) the same percentage limitation as claim 20 (at least 61 percent of the sugar between mesh nos. 3-20), but has a narrower the percentage limitation, requiring that less than 30 percent of the sugar is larger than U.S. mesh sieve no. 3.  Id.

Taking advantage of the PTAB's pilot program on motion to amend practice, the Patent Owner sought preliminary guidance from the panel. Patent Owner Motion to Amend at *2.

The PTAB provided the requested guidance. Red Diamond, Inc. v. Southern Visions LLP, PGR2019-00045, Paper 26 (P.T.A.B. April 28, 2020) (“Preliminary Guidance”).

The PTAB first rejected the Patent Owner's position that it had proposed a reasonable number of substitute claims. Preliminary Guidance at *3. The PTAB agreed with the Petitioner that substituting three independent claims for one independent claim and two dependent claims is not appropriate when the two additional proposed independent claims did not include the limitations of original dependent claims 18 and 19. The PTAB noted that substitute claims need to be traceable to an originally challenged claim. Id. at *5. Although the PTAB found that the amendment did not seek to enlarge the scope of the claims, it found that the amendment added new subject matter that did not have written description support in the specification. Id. at *6. According to the PTAB, “Patent Owner's arguments do not show that the originally-filed disclosure of the '852 patent reasonably conveys to one of ordinary skill in the art that the inventors had possession of the subject matter of the proposed substitute claims as of the filing date.” Id. at *8.

The PTAB went on, however, to advise that the Petitioner had not demonstrated the unpatentability of the proposed substitute claims under §103 or §112(b). Id. at *11-14. The panel nevertheless addressed the Patent Owner's objective evidence of nonobviousness, advising that the evidence was conclusory and not persuasive. Id. at *15.

Finally, the PTAB addressed the Petitioner's assertion that the Patent Owner's motion to amend should be denied due to “fraud.” According to the Petitioner, the Patent Owner submitted a false declaration to the examiner during prosecution. The PTAB noted:

Petitioner does not establish a reasonable likelihood of success on this issue at least because Petitioner fails to establish that “fraud” or inequitable conduct is a basis on which we may decide any issue that is before us in this Motion. Relevant statutes, regulations, and our Trial Practice Guide indicate that neither is such a basis. … The authority cited by Petitioner, 37 C.F.R. § 1.56 … concerns patent grants during prosecution, not amendment of claims during an AIA trial proceeding.

Id. at *17.

Take-aways

This case provides an excellent opportunity for PTAB practitioners to see how the PTAB is handling the motion to amend practice pilot program, including the detail provided in the Preliminary Guidance. It is also interesting for the Petitioner's attempt to introduce “inequitable conduct” or “fraud” concept into a post-grant proceeding, starting with the attack on the truthfulness of the prosecution declaration in the petition and continuing through the opposition to the motion to amend proposing substitute claims.

Note that Patent Owner also brings up the duty of candor under Rule 42.11 (PTAB Rules) in its Motion to Amend at p. 24, “Southern Visions submits Exhibits 2034-2038 pursuant to 37 C.F.R. §42.11.” These exhibits are under seal so cannot be examined at the present time.

Originally published 5 May, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.