Scott McKeown

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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.
Continue Reading Multi-Defendant Troll Suits to Drive Joinder Filings at PTAB

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…
Continue Reading PTAB Trial Proceedings Will Outpace Copending Litigation

ptabOver 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 
Continue Reading CAFC Finds PTAB More Than Mere Umpire

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.  …
Continue Reading Voluntary Discovery Option in PTAB Post Grant Proceedings Proves Unpopular

USPTO Exercises Fee Setting Authority to Decrease Patent Reexamination and Post Grant  Trial Fees

Based upon the fee setting authority provided in Section 10 of the America Invents Act (AIA), the USPTO has now issued final rules to reduce fees for patent reexamination and post grant proceedings of the Patent Trial & Appeal Board (PTAB). The new fees are discounted from existing rates, and take effect on March 19, 2013. (final rules here)

The fees for PTAB proceedings will be broken up into petition and trial phases. The apportionment enables the office to more precisely calibrate costs so that refunds may be provided, where appropriate. The petition portion of the fees correspond to the cost of considering the petition filing. The trial portion of the fees corresponds to the cost of conducting the trial.

A more detailed explanation of the fee changes is provided below.
Continue Reading Post Grant Patent Challenge Fees Set to Drop on March 19th

Failure to Focus Means Plus Function Debate in Patent Reexamination

Last week in In re Avid Identification Systems Inc., the CAFC affirmed the USPTO’s rejection of certain claims of U.S. Patent 5,499,017 in ex parte patent reexamination. Of particular note in the appeal was the proper construction of  “means for storing.” The Patentee argued that the “means for storing” language invoked 35 U.S.C. § 112 6th paragraph (now known as 35 U.S.C. § 112(f)), and as such, required particular structure of the specification. The USPTO took the position that, since this claim construction position was not seasonably raised in the briefing to the PTAB, nor was the required claim mapping presented in the opening brief as required by 37 C.F.R. § 41.37(c)(1)(v), that the argument was waived for purposes of appeal.

In a stinging dissent, Judge Clevenger found the PTAB’s practice to be “random” as it relates to the proper examination of means-plus-function (MPF) claims. He was particularly disappointed that the PTO chose to “hide behind” 37 C.F.R. § 41.37(c)(1)(v), labeling such behavior a public detriment. (decision here)

The fact pattern in Avid is troubling on many levels. Not only is such a practice a public detriment as to predictability, but interpreting MPF claims to have a broader scope is arguably an ultra vires action in the context of patent reexamination. And, above all else, a simple rule change would avoid most such issues from reaching the appellate level.
Continue Reading PTO Scolded for Lax Patent Reexamination Practices

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:  …
Continue Reading Patent Troll Advantage to End in Texas?

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.  …
Continue Reading CAFC Considers Lack of Discovery in Patent Reexamination

First Covered Business Method Challenge Ordered Based on SAP Petition

The Patent Trial & Appeal Board (PTAB) has ordered the very first business method patentability trial of the America Invents Act. The first petition for a Covered Business Method Patent Challenge (CBM) was filed on September 16th by SAP (CBM2012-00001). The petition (here)…