In recent months there has been much discussion of the USPTO’s decision to open satellite offices in Dallas-Fort Worth, Denver, and Silicon Valley. The Detroit office opened in July 2012 and hosts about fifty examiners and ten administrative patent judges (APJs). A location has been selected for the Dallas-Fort Worth office and the site selection process is underway for the Silicon Valley Office.
As currently managed, the satellite offices are designed to process patent applications, i.e., ex parte prosecution and appeals therefrom. Post grant patent proceedings, save perhaps some patent reissue proceedings, will remain at the USPTO main campus in Alexandria Virginia. That is, the new patentability trials of the America Invents Act (AIA), patent reexamination, supplemental examination and derivation proceedings will be processed at the main campus in Alexandria. Patent reexamination and supplemental examination proceedings are handled at the Central Reexamination Unit (CRU) and the Trial Section of the Patent Trial & Appeal Board (PTAB) handle contested proceedings of the AIA. There do not appear to be any current plans to migrate Contested Proceedings or CRU functionality to satellite offices.
Estoppel Arising from Inter Partes Review (IPR) Will Have Minimal Practical Impact
The new patentability trial proceedings of the Patent Trial & Appeal Board (PTAB) have been met with great enthusiasm by many science and technology innovators as the first true alternative to patent litigation; especially those faced with costly “patent troll” assertions. Still, there are a small minority of patent challengers that look on these “new” proceedings with great fear and skepticism. These naysayers will often dismiss the speedier, lower cost PTAB proceeding as being too much of an estoppel risk.
The estoppel concern is almost always distilled down to two unenlightened propositions. That is, a fear of a “new, untested and unpredictable” proceeding, and the belief that the USPTO may somehow give short shrift to the submitted prior art.
Both criticisms are easily demonstrated as misguided. Read the rest of this entry »
Stayed Litigations to Drive Joinder Practice
Inter partes reviews (IPRs) are now understood to be effective tools for parties defending against patent infringement suits filed by non-practicing entities, sometimes called “patent trolls.” Typically patent trolls launch suits against multiple entities and district courts commonly consolidate such cases for purposes of discovery. In some cases, this leads to the formation of joint defense groups, which provide various efficiencies and advantages on the litigation side of the fence. However, joint defense group members almost always have differing views when it comes to the decision whether and when to file an IPR.
In the typical situation, a “deep pocket” defendant with the most to lose will move forward in filing the IPR, then move to stay the costlier litigation proceeding. The Patentee will then oppose the motion, pointing out that the litigation is unlikely to be simplified by a stay because any potential estoppel stemming from the IPR is binding only with respect to the real party in interest (i.e. deep pocket filer). Faced with the prospect of the motion for stay being denied on this ground, the remaining defendants will begrudgingly stipulate to be bound by the same estoppel as that attaching to the real party in interest. Yet, this stipulation now places such defendants in the unenviable position of being bound by a proceeding they may not have wanted in the first instance.
In the past case of inter partes patent reexamination, such “me too’ defendants were forced to sit on the sideline and place their fate in the hands of the real party in interest; such situations proved quite problematic. For example, should the deep pocket defendant settle with the Patentee, the reexamination could then proceed unopposed and the inter partes reexamination would transform into a statistically less desirable, pseudo, ex parte reexamination proceeding. In other words there was no way for the other defendants to secure a right to participate along side the real party, or substitute themselves in the place of the real party should settlement occur— not so in IPR. Read the rest of this entry »
First IPRs Advancing at Light Speed
The PTAB has now issued several decisions instituting trials. The initial decisions suggest that post-grant practitioners may in many instances receive a final written decision in about a year from petition filing (rather than about 18 months as initially projected) and that the PTAB decisions instituting trials will provide useful findings regarding claim construction roughly 4-5 months from the time of petition filing.
For instance, the PTAB granted the IPR petition filed by Garmin in early January and has the oral hearing set for August 16th. That should yield a final written decision in 12-13 months from the filing date of the petition. In that case the patent owner waived its right to file a preliminary response but waited almost the full three months before it did so. If the patent owner had promptly filed a waiver of the preliminary response that would have sped up the entire process by about three months.
This suggests that the PTAB intends to remain true to its stated intention of moving these patentability trials along at a brisk pace (even faster than that required by the controlling statute, 12-18 months from institution). The PTAB is well aware that Read the rest of this entry »
Over the years, the PTAB has shed it’s “super-examiner” role to more of that of an umpire— calling balls and strikes. That is to say, the PTAB has drifted toward a relatively narrower view of the scope of issues it will substantively review on appeal, perhaps as a matter of necessity in dealing with the crushing weight of the growing appeal backlog.
Yesterday, in Rexnord Industries v. Kappos (2011-1434), the Federal Circuit shifted the focus of the PTAB away from their recent umpire-like practices toward a more traditional judicial review model.
The Federal Circuit reversed the PTAB for failing to consider all theories raised by an appellee in support of an examiner’s decision in an inter partes patent reexamination irrespective of whether the theory or ground was adopted by the examiner. Rexnord, the third party requester, had proposed rejections based on a combination of references with the added rationale that a certain claimed feature – a gap of less than 10 mm – was merely an obvious design choice. The examiner rejected the claims on the proposed combination of references but did not adopt the design choice theory, instead, opting to substitute his own reasoning. Namely, the examiner’s rejection was premised on an interpretation of the claims which permitted the gap to be 0 mm, or nonexistent.
The PTAB reversed the examiner but refused to consider Rexnord’s “obvious design choice” argument as an alternative basis for affirming the examiner. The PTAB reasoned that its role on appeal Read the rest of this entry »
Mandatory Disclosure Option Disregarded
Now that over one hundred inter partes reviews (IPRs) and covered business method proceedings (CBMs) have been filed, the parties to those proceedings are actively considering their rights and duties with respect to the limited discovery available at the Patent Trial & Appeal Board (PTAB). PTAB Trial Practice and Procedure Rule 51 provides for two options for “mandatory initial disclosures.” The options are akin to initial disclosures provided by the Federal Rules of Civil Procedure.
As a reminder, the major bar associations lobbied for the USPTO to include the option in the final rules.
Perhaps, not surprisingly, parties are not agreeing to voluntarily participate in discovery for trials that are yet to be instituted. Likewise, as discovery is “limited” if and when a trial begins, there is little motivation to volunteer information that an adversary may not be entitled to in the first instance. To date, the mandatory initial disclosure option has been largely ignored in IPR filings, but may be worth a closer look for those involved in a CBM.
Rule 51(a) provides the option, and generally tracks Rule 26(a)(1) of the Federal Rules of Civil Procedure. Read the rest of this entry »
The EDTex Conundrum Presented by Inter Partes Review
The Eastern District of Texas is a favorite forum of patent trolls in substantial part because its judges have demonstrated a substantial disinclination to stay litigation pending reexamination. Many presume that this historical bias will translate into a similar disinclination to stay litigation pending pending inter partes review. However, refusing to stay a case pending inter partes review will give rise to various case management conundrums.
The practical reality is that the petitioner (usually the defendant in the lawsuit) will be estopped from pursuing at trial any validity defense which reasonably could have been raised in the inter partes review. The time to trial in the Eastern District of Texas is around 25 months, which is about seven months after an inter partes review filed contemporaneously with the complaint should result in a final written decision. (assuming the maximum six month “front end” and assuming further that the PTAB does not extend the one year period in which the trial is to be completed by statute). Under the new inter partes review model, estoppel attaches at the time of the written decision. In most cases this would be amount to a 5-6 years acceleration of estoppel as compared to the old, inter partes reexamination system. Unless the parties settle the inter partes review (in which case they will likely also settle the lawsuit) the defendant will be estopped from pursuing any defenses at trial which could have been raised in the inter partes review proceeding.
That in turn creates a conundrum: Read the rest of this entry »
Federal Circuit Unlikely to Open the Door to Discovery via Subpoena in Inter Partes Patent Reexamination
Generally speaking, “discovery” is a litigation process by which information or facts pertinent to a case can be systematically obtained from an opponent or third party prior to trial. Historically discovery has not been permitted in patent reexamination proceedings because, according to the USPTO, patent reexamination does not qualify as a “contested proceeding” in accordance with 35 U.S.C. §§ 23-24. This argument makes perfect sense for ex parte patent reexamination, but perhaps less so for inter partes patent reexamination proceedings. Since much of the case law denying discovery in patent reexamination came about decades ago in the ex parte patent reexamination context, it is surprising that it took this long for the applicability of discovery in the inter partes context to make it up to the CAFC. (although the lack of discovery in inter partes patent reexamination has been recently emphasized in Lingamfelter v. Kappos)
Last week the Federal Circuit heard oral argument (here) in Abbott Laboratories v. Cordis Corp. (12-1244) on the issue of whether parties can subpoena documents or testimony in an inter partes patent reexamination proceeding before the USPTO under 35 U.S.C. § 24. Read the rest of this entry »
Business executives routinely wrestle with whether to defend a patent infringement suit in court, settle the dispute for less than the cost/risk of defending it (especially in the case of patent “troll” suits), or seek the help of the USPTO to address the problem patent via a post grant patent proceeding. Patent litigation is a well-worn path and the variables and risks associated with it are relatively well understood. The same can, to an extent, be said of patent reexamination at the USPTO. But now that inter partes reexamination has been replaced with inter partes review (IPR), an entirely new mechanism of the America Invents act, CEOs and CFOs around the world are asking how this new option alters the existing landscape.
The primary business distinctions between IPR and court proceedings are cost, predictability, effectiveness, and speed. With respect to cost, according to statistics published by AIPLA and others defending a patent lawsuit through trial costs well in into the millions of dollars for cases involving substantial financial exposure. IPR, in the vast majority of cases, will cost in the hundreds of thousands of dollars. As a business rule of thumb, Read the rest of this entry »
CAFC Re-considers Disclaimer Based Intervening Rights Defense
During a post grant proceeding, an amendment of an originally issued claim could create an intervening rights defense for potential infringers. That is to say if the amended or new claim introduced by the post grant proceeding is not substantially identical in scope relative to a previously issued claim, potential infringers of the amended/new claims may be provided with an absolute and/or equitable intervening rights defense (35 USC § 252). Whether or not a claim change in post grant patent proceeding results in the an intervening rights defense is far from a straightforward determination as evidenced by the recent decision Marine Polymer Technologies, Inc. v. Hemcon, Inc..
The earlier panel ruled that disclaimer of claim scope is equally effective in creating an intervening rights defense as an explicit amendment. As such, the decision may be distorted to suggest that even if the patent owner is merely urging a claim interpretation that is consistent with the manner in which the term would have been understood at the time the underlying patent application was filed, intervening rights are created For example, in cases where the post grant record simply clarifies the way in which a skilled artisan would have understood a claim term at the time of filing, or reiterates the positions of the previous intrinsic record, the scope of the claims cannot properly be said to have been altered during the subsequent proceeding.
Will the en banc ruling provide for such needed flexibility? Read the rest of this entry »