Bloomberg v. Markets-Alert (CBM2013-00005, Paper 32): The Good Cause Standard for Additional Discovery

Discovery in AIA trials is deliberately limited. Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005, Paper 32 (entered May 29, 2013), is an early decision explaining how the Board applies the “good cause” standard for additional discovery in a covered business method (CBM) review, the standard that also governs post-grant review. It is listed here with the Board’s precedential decisions; designations can change, so readers should check the USPTO’s list of precedential and informative decisions.

Background

A group of financial companies led by Bloomberg petitioned for CBM review of a Markets-Alert patent. After institution, the Board authorized Markets-Alert, the patent owner, to move for additional discovery. It sought five categories of material:

1. prior art known to the petitioners but not submitted;
2. documents the petitioners reviewed in preparing the petition;
3. everything the petitioners’ expert considered in preparing his declaration;
4. documents about licensing or commercially adopting embodiments of the patent from 2000 to 2011; and
5. documents about licensing or adopting similar technology over the same period.

Its instructions defined the responding party to include present and former employees, agents, consultants and others acting on the petitioners’ behalf.

What the Board decided

The Board granted the motion in part.

The standard. In an inter partes review, additional discovery must be “necessary in the interest of justice” (35 U.S.C. § 316(a)(5); 37 C.F.R. § 42.51(b)(2)). In post-grant and CBM reviews, the standard is good cause (35 U.S.C. § 326(a)(5); 37 C.F.R. § 42.224), and discovery is limited to evidence directly related to factual assertions advanced by either party. The Board described the IPR standard as slightly higher, reflecting that IPR grounds are limited to patents and printed publications. Both standards, it said, reflect a strong policy of limited discovery, and the moving party bears the burden under § 42.20(c).

The factors. The Board adapted the five factors from Garmin v. Cuozzo (IPR2012-00001, Paper 26) to the good cause standard: more than a possibility or mere allegation that something useful will be found; no requests for the other side’s litigation positions; information not reasonably available by other means; easily understandable instructions; and requests not overly burdensome.

Applying them.

• Expert materials (granted). The request was narrow, aimed at one declarant and one declaration, and Markets-Alert gave two specific examples suggesting the expert relied on something beyond the cited art. The Board ordered production of what the expert reviewed or considered, to the extent of his recollection, and held that the broad instructions did not apply.
• Undisclosed prior art and petition materials (denied). The argument that unsubmitted art would help was speculative. The material was not relied on for the instituted grounds and was at best cumulative. The petitioners confirmed they had produced inconsistent information as routine discovery under § 42.51(b)(1)(iii). Asking why some art was used and not other art sought litigation positions, and Markets-Alert did not explain why its own search could not serve. The instructions reaching every former employee were unduly burdensome.
• Licensing and commercial information (denied). Markets-Alert hoped to support secondary considerations but identified no specific license, copying or failure of others, and did not address nexus. The requests covered vague activities over eleven years.

Why it matters

The decision shows that the good cause standard, though somewhat more forgiving than the interest of justice standard, still requires a specific factual reason to expect useful evidence. Requests tied closely to evidence the other side has put in the record, such as an expert’s declaration, fare far better than requests for everything an opponent might know. For a comparison of the two standards, see discovery in post-grant review vs. inter partes review.

Later developments

The transitional CBM program expired for new petitions on September 16, 2020, but the good cause standard in 37 C.F.R. § 42.224 continues to apply in post-grant reviews. Readers should check the current rules and Trial Practice Guide.

Key takeaways

• Additional discovery in CBM and PGR requires good cause; in IPR it must be necessary in the interest of justice.
• The Board applied a modified version of the Garmin factors to the good cause standard.
• A narrow request for materials the opponent’s expert considered was granted, limited to the expert’s recollection.
• Speculative requests for undisclosed prior art and broad licensing records were denied.
• Overbroad instructions defining the responding party can sink a request on burden grounds.