The Board admitted hearsay testimony as qualifying under the “state of mind exception” after previously excluding the testimony.
With inter partes review proceedings applying the Federal Rules of Evidence (FRE), hearsay testimony can be excluded if not otherwise subject to one of the hearsay exceptions. In a recent decision ruling on a motion for reconsideration, the Board reversed an earlier decision and admitted evidence that had been excluded under FRE 802 as inadmissible hearsay.
In Semiconductor Components Industries, LLC v. Power Integrations, Inc., IPR2016-00809 (PTAB Dec. 22, 2017) (Paper 72), the patent owner submitted direct testimony in support of its assertions of secondary considerations of nonobviousness. The testimony contained statements regarding what customers said to the witness about important features that influenced their decision to purchase the patent owner’s products. When the petitioner moved to exclude portions of the testimony, the Board ruled that the testimony regarding the customer statements were “the epitome of hearsay” and excluded them under FRE 802.
The patent owner requested reconsideration of the decision to exclude the testimony, arguing that the Board misapprehended arguments regarding the hearsay statements qualifying under a hearsay exception of FRE 803. According to the patent owner, the excluded statements were admissible as falling into the “state of mind” exception of FRE 803(3). The patent owner also highlighted the fact that a district court had considered the same statements and concluded that they were admissible under the “state of mind” exception.
In the decision on the motion for reconsideration, the Board agreed that it had overlooked the patent owner’s arguments regarding the “state of mind” exception. Although the Board maintained its characterization of the testimony as “the epitome of hearsay,” the Board admitted the evidence as falling into the exception of FRE 803(3). Accordingly, the Board modified its Final Written Decision to deny the petitioner’s motion to exclude.
However, the newly admitted evidence did little to change the Board’s ultimate obviousness conclusion. The Board found that the testimony of the previously excluded statements was outweighed by other evidence showing that customers purchased products for reasons other than the claimed features. Additionally, the Board concluded that, even with the newly admitted testimony, there was insufficient evidence of commercial success. Therefore, the Board’s original conclusion of obviousness remained unchanged.