High Value Disputes Spawning Wild-West Antics
I previously explained how Fintiv discretionary practices had spawned a new, cottage industry. That is, with fully developed PTAB petitions being available to the public — denied only as a matter of discretion unique to the original filer— profiteers formed to simply refile such petitions. The apparent goal being to leverage the publicly available petition materials where high-value verdicts had been subsequently secured on the subject patent. With IPR institution leverage (or threat thereof) co-pending with a high-value verdict, this business model presumes that a patent owner would be open to a quick cash settlement.
One such profiteer, a company identifying itself as “Open Sky Industries,” recently leveraged early petition materials of Intel that pertained to its patent dispute with VLSI. That dispute went to trial in the district court after Intel’s IPR petitions were denied under Fintiv. At trial, a $2 billion+ verdict was entered. Thereafter, Open Sky was successful in refiling Intel’s IPR materials, getting trials instituted on the subject patents with little to no cost or investment of its own. The propriety of such re-filing practices is subject to an outstanding POP panel request.
If the optics of this practice weren’t bad enough for the PTAB….it has just gotten worse.
As detailed on IPWatchdog last Friday, in opposing a motion of joinder to an instituted Open Sky IPR, VLSI has cited a recent email communication from Open Sky’s attorney. The email communication (here) proposes a “construct” under which Open Sky will proceed such that the IPR fails (in exchange for cash payment.) VLSI’s Opposition to Joinder (here) does not mince words. The Opposition explains the proposed email construct is an attempt at “fraud on the office,” and that Open Sky “has no apparent business other than extortion.” VLSI compares Open Sky to the “1919 Black Sox,” agreeing to tank its own case, or sabotage it for joining parties.
Needless to say this now public development is a huge black eye for the agency. Absent swift and immediate action, this email will be sensationalized as representative of the PTAB’s “anti-patent” practice.
As noted above, the POP request challenging this overall business model remains pending. Presumably, this type of high-level policy determination is awaiting the appointment of the new Director. But, the PTAB cannot afford to wait for the new Director for this particular matter. Potential ethics issues aside, this email should draw a swift and severe sanction — a power possessed by the assigned panel of APJs. The PTAB would be wise to terminate the Open Sky proceedings as a sanction. The optics of this particular matter must be corrected immediately if the agency is to retain credibility.
There are, of course, other organizations trying their hand at this business model. Those filings will be ripening in the months ahead for proper POP panel consideration.