Preliminary Responses: Just Because You Can Doesn’t Mean You Should

The new post grant patentability challenges of the America Invents Act (AIA) have been warmly embraced by the public as a cost effective patent dispute resolution tool. Patent challengers have quickly leveraged these new proceedings of the USPTO’s Patent Trial & Appeal Board (PTAB) to circumvent the high cost of patent litigation and to accelerate opportunities for settlement. Patentees, on the other hand, have been largely caught unaware of the significant threat presented by these new road blocks to patent monetization.

While many of the new PTAB proceedings are only now getting underway a significant number of preliminary proceedings have been concluded. It is during these preliminary proceedings, and shortly thereafter, that many patentees have been committing significant strategic errors.

First, when Congress fashioned the statutes for the new PTAB proceedings it was well aware of the criticisms pertaining to the patent reexamination model. For example, patentees pointed out that reexamination was commenced without receiving any input from the patentee. As a result, the new PTAB proceedings were designed to include the option for a patentee to file a “preliminary response” to a challenger petition. In this way, the PTAB may receive input from both parties before deciding to institute trial. While this new option sounds like a great opportunity for patentees, it’s not the “no-brainer” it seems.

While almost every petition for IPR/CBM filed to date includes declaration evidence of the challenger, a preliminary response may not include such evidence from the patentee. (42.107/207). Thus, attorney argument of a patentee preliminary response is weighted against the declaration evidence of the challenger’s petition As can be appreciated the “reasonable likelihood of success” in this system is significantly skewed in favor of the challenger. Not surprisingly very few grounds of unpatenability have been declined to date as a result of patentee preliminary responses.

Further, should the patentee scramble in the short, statutory time frame to file a preliminary response and fail to persuade the PTAB to deny the petition, once instituted, the third party may be permitted to file supplemental information (42.123/223). In some cases such supplemental information could allow a challenger to further refine their positions based on the preliminary response of the patentee.

Another consideration is that a successful preliminary response may just win the patentee follow-on petitions. On the other hand, if the challenge is overcome after a Trial order, estoppel would serve as a safeguard from such refined attacks.

Failed preliminary responses provide the challenger a 4-6 month preview of the patentee’s positions (patentee response not due until months after Trial Order) for very little strategic value. Indeed, when coupled with a request for rehearing 14 days after a Trial Order, the patentee has essentially provided a nice package to the challenger for purposes of deposition preparation (requests for rehearing in the PTAB, as in most courts, are almost never successful and patentee discovery essentially begins upon Trial Order).

The decision to file a preliminary response depends on many factors, some considerations that impact the decision to file include:

1.    Will the challenger be outside the 12 month window of 42.101 (IPR only) if the preliminary response is successful?
2.    Does the petition include declaration evidence to support the grounds of unpatentability?
3.    Is there a motion to stay pending in a parallel litigation so that a response is necessary for optics?
4.    Are there issues of standing? (precluding a second filing)
5.    Are there weak grounds for some claims that if declined by the PTAB would prevent a stay in a parallel litigation? (if so, prelim. response is best focused on that subset).
6.    Is it clear that the claims need to be amended? (not possible in prelim. response)
7.    In view of the likelihood that the preliminary response will not move the Board off of the challenger’s grounds in most cases, does it make sense to provide advance notice of your arguments for little in return?
8.    Are there multiple defendants likely to seek joinder? Can the dispute be settled with the challenger outside the 12 month window (IPR only) but before trial institution?
9.    Do you need more time than available to develop an adequate response?
10. Will filing an optional paper complicate a parallel proceeding in later stages?

While some have argued that a preliminary response should be made to argue against an adverse claim construction proposed in the petition, the PTAB construction presented at the time of the Trial Order is preliminary and best rebutted by patentee evidence on point.

Later this week I will touch upon another common patentee mistake— filing a Request for Rehearing.