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  • The opinions, commentary and characterizations provided to this online forum by the authors and moderators are provided for encouraging discussion, thought and debate on important post grant issues. These postings are in no way representative of the opinions of Oblon Spivak et al., or its clients.

Settling Post Grant Patent Proceedings

Posted On: Jul. 17, 2012   By: Scott A. McKeown
terminating IPR Will Contesting Parties Embrace the New Post Grant Settlement Provision?

One of the more intriguing provisions of the new post grant patent proceedings of the America Invents Act (AIA) is the ability to settle these patentability disputes by agreement. Unlike existing patent reexamination practices, the USPTO will terminate an Inter Partes Review (IPR), Post Grant Review (PGR), or Transitional Proceeding for Covered Business Method Patents (TPCBMP) upon joint request of the parties. (cfterminating an inter partes patent reexamination by operation of estoppel).

Certainly, the USPTO would greatly benefit from the ability to terminate post grant patent proceedings. This is because agency resources could moved away from proceedings that are no longer commercially relevant (as to the present parties) to those newly initiated. In this way, the USPTO would operate in much the same way as a court, no longer being responsible for continuing the patentability proceeding on behalf of the public.

But, will contesting parties embrace the new provision as written?

The settlement provision of the AIA provides:

‘‘§ 317. Settlement
‘‘(a) IN GENERAL.—An inter partes review instituted under this
chapter shall be terminated with respect to any petitioner upon
the joint request of the petitioner and the patent owner, unless
the Office has decided the merits of the proceeding before the
request for termination is filed. If the inter partes review is terminated
with respect to a petitioner under this section, no estoppel
under section 315(e) shall attach to the petitioner, or to the real
party in interest or privy of the petitioner, on the basis of that
petitioner’s institution of that inter partes review. If no petitioner
remains in the inter partes review, the Office may terminate the
review or proceed to a final written decision under section 318(a).
‘‘(b) AGREEMENTS IN WRITING.—Any agreement or understanding
between the patent owner and a petitioner, including
any collateral agreements referred to in such agreement or understanding,
made in connection with, or in contemplation of, the
termination of an inter partes review under this section shall be
in writing and a true copy of such agreement or understanding
shall be filed in the Office before the termination of the inter
partes review as between the parties. At the request of a party
to the proceeding, the agreement or understanding shall be treated
as business confidential information, shall be kept separate from
the file of the involved patents, and shall be made available only
to Federal Government agencies on written request, or to any
person on a showing of good cause.
§ 317. Settlement
(a) IN GENERAL.—An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).
(b) AGREEMENTS IN WRITING.—Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding, made in connection with, or in contemplation of, the termination of an inter partes review under this section shall be in writing and a true copy of such agreement or understanding shall be filed in the Office before the termination of the inter partes review as between the parties. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents, and shall be made available only to Federal Government agencies on written request, or to anyperson on a showing of good cause.
(emphasis added)
The IPR statute above is expressed in proposed PTAB Rule 42.74, covering PGR and TPCBMPs. As emphasized above there are a few points worth considering. First, settlements agreements must be in writing, and submitted to the USPTO before the USPTO will terminate the proceeding as a matter of right. While the USPTO will maintain the settlement as business confidential, any person can, at least in theory, access to the agreement for good cause shown.

Is good cause satisfied if a member of the public points out that they have recently been accused of infringement, are in licensing negotiations pertaining to the patent, seek to establish a reasonable royalty in a related case, etc? In a litigation context, such agreements are very rarely made available to outside parties. As such, it seems very unlikely that parties will find a discretionary mechanism, controlled by the government, at all attractive.

Alternatively, the statute additionally notes that the USPTO may terminate a proceeding where no petitioner remains. In such a case, however, it may be that estoppel would still apply to the “no show” petitioner. Of course, as is the case when current inter partes patent reexamination challengers walk away, there is typically a settlement in place that moots the present and future assertion of the patent at issue. A fair reading of the statute (and proposed rule) is that filing of the settlement agreement is only required if termination is desired as a matter of right. On the other hand, a challenger can simply settle their dispute and walk away….and depending upon how close the proceeding is to a written decision, the USPTO may also choose to walk away from the dispute. In such cases, parties would be able to maintain control over the disclosure of their confidential settlement terms.

It would seem that rather than risk disclosure of confidential business agreements, contesting parties are far more likely to settle their dispute privately, and simply alert the USPTO to the lack of further participation by the challenger. In order to encourage this practice, the USPTO would be wise to liberally exercise their discretionary termination power.

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