Square, Inc. v. REM Holdings 3, LLC
Addressing a patent owner's request for additional discovery, the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (Board) denied the patent owner's request and instructed the parties to resolve future discovery disputes on their own. Square, Inc. v. REM Holdings 3, LLC, Case No. IPR2014-00312 (PTAB, Sept. 15, 2014) (Bisk, APJ.).
The patent owner, REM Holdings, sued the petitioner, Square, for infringement of a patent directed to a magnetic card reader that interfaces with a mobile device to take credit card payment information. The Board instituted inter partes review (IPR) of the patent based on the petitioner's arguments that the challenged device and method claims were rendered obvious by multiple references. The Board authorized the patent owner to seek limited discovery of secondary considerations of non-obviousness.
The patent owner requested discovery related to, among other things, the design, manufacture, costs and distribution of the card reader device, importance of the device in acquiring investors and customers, number of customers, transactions and revenue, and various communications and engineering-related documents. The Board found that, while the patent owner was entitled to some sales information related to the device, the discovery request was unduly broad and burdensome to the petitioner, denied the request and remanded the issue to the parties to try to come to an accord as to a reasonable amount of discovery.
The parties again found themselves in disagreement over a second set of discovery requests related to, among other things, the commercial success of the challenged method claims, including the estimated dollar value of credit card transactions processed by the petitioner. The Board denied the second request because, in part, the patent owner did not provide any evidence that the petitioner practiced the claimed method, or that demonstrated a nexus between the alleged commercial success and the method claims. Instead, the patent owner compared petitioner's card reader to the device claims and concluded that the petitioner infringed the method claims. The patent owner was required to show more than a possibility or mere allegation that the discovery request would result in the missing evidence for the claims at issue. The Board also found that the patent owner failed to follow the Board's previous instructions to limit the discovery requests (including excluding requests for publicly available information). The Board again instructed the parties to make reasonable efforts to resolve discovery disputes on their own, with the caveat that any further request to involve the Board should include a report of why an agreement could not be reached.
Specificity And Negotiation Are the Buzz Words For IPR Discovery
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