Understanding Court, PTAB Interplay Key in Today’s Patent Litigation Environment

By Tony Dutra
November 20, 2015

gavel_335Understanding the relationship between patent cases in court and validity challenges at the Patent Trial and Appeal Board is essential for success in litigation today, according to a Nov. 12 Bloomberg BNA conference held at the offices of Wiley Rein LLP, Washington.

David E. Killough, assistant general counsel at Microsoft Corp., said PTAB issues are among the top issues in patent law today.

Panelists at the conference, co-chaired by James H. Wallace Jr. and Brian H. Pandya of Wiley Rein, zeroed in on the main take away for both challengers and patent owners: do everything you can upfront, because the PTAB’s trial institution decision, which comes about six months after a petition is filed, is critical.

Interplay of PTAB and District Court

The PTAB has seen more than triple the number of inter partes review (IPR) petitions—now the preferred way for a company accused of infringement in court to challenge a patent’s validity—than it projected when the challenge first became available in 2012. But the fact that proceedings can run simultaneously presents challenges, as discussed by attorneys on the panel ‘‘Interplay of PTAB and District Courts’’:

  • Declaratory judgments. Companies that anticipate being sued for patent infringement often want to file a declaratory judgment action in a local court to force the patent owner to travel, but those companies should now think twice, Scott A. Felder of Wiley Rein, said. The statute bars a party that filed for a declaration of invalidity to file an IPR.
  • Informing the court. Let the court know as soon as possible that you intend to file an IPR. James F. Sherwood, litigation counsel at Google Inc., recommended proposing a schedule to the district court judge to winnow down the claims the patent owner is going to assert. ‘‘That allows you to file an IPR against a reasonable number of claims,’’ rather than the entire patent, he said.
  • IPR filing timing. You have 12 months from the time the patent owner filed the court complaint to file an IPR, and the PTAB takes roughly six months to reach a trial institution decision. If the PTAB grants your petition only in part—i.e., not all claims or not all arguments—you want to leave yourself time to file a second petition ‘‘to pick up the pieces,’’ Felder said.

But, Linda J. Thayer of Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Boston, said, ‘‘The PTAB is getting very hostile to second bites at the apple.’’

And Felder acknowledged that petitioners can be better off waiting until they know how a patent owner will argue for claim construction in court. Otherwise, he said, ‘‘You don’t know what you want to shoot at [in your IPR petition].’’

He also recommended bringing a remedies discussion earlier in the court case if different damage calculations would be relevant to different claims. That might be relevant to your strategy if the PTAB trial begins on less than all the claims you challenged.

  • Real party in interest/privity. Sherwood and Richard L. Rainey of Covington & Burling LLP, Washington, focused on getting the real parties-in-interest right in the initial petition. The issue comes up often when a customer is sued, but companies like Google are unaware of the lawsuit. The one-year time bar may pass and the PTAB may not accept Google’s petition on behalf of its customer, saying Google was in privity with the customer.
  • Rainey said there was no easy answer, as ‘‘the doctrine of privity leaves a lot of room for flexibility and the [PTAB] judges are already overwhelmed with substantive issues.’’
  • Preliminary patent owner response. Felder highly encouraged the optional response, submitted before the PTAB’s first decision, even though the patent owner has another shot at it later. ‘‘Trial institution is the most important decision,’’ he said.
  • Settlement. If you settle with the patent owner, dismiss the case without prejudice and fail to cover future products, ‘‘You can’t go back to the PTAB’’ if you’re sued again, Thayer said. The one-year time bar will apply in that case.

The Author

Tony Dutra

Tony Dutra came to the legal profession after a 25-year career in the software and computer networking industry. He joined Bloomberg BNA in 2008 after graduating from the George Washington University Law School. He writes about all IP topics for the Patent, Trademark & Copyright Journal, but focuses on patent law. He received the Mark T. Banner award, given by the American Bar Association’s Section of Intellectual Property Law for impact on IP law and practice, in 2015. Tony received a bachelor's degree from Harvard University and an M.S. in Management from the Massachusetts Institute of Technology in the 1970s, and he is an inventor listed on seven U.S. patents. He can be reached at adutra@bna.com.

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Discuss this

There are currently 6 Comments comments.

  1. Matt November 20, 2015 11:49 am

    I don’t think this following point is accurate:

    Settlement. If you settle with the patent owner, dismiss the case without prejudice and fail to cover future products, ‘‘You can’t go back to the PTAB’’ if you’re sued again, Thayer said. The one-year time bar will apply in that case.

    The PTAB has repeatedly found that dismissals without prejudice render the prior action a nullity and do not trigger a statutory bar, whether it’s the DJ or the 1-year bar. That includes dismissals without prejudice pursuant to a settlement agreement — see, e.g., Microsoft Corporation v. Parallel Networks Licensing, LLC, IPR2015-00483 (July 15, 2015). As the Board said there, if you want to avoid an IPR petition in that situation, include a clause in your settlement agreement.

  2. Edward Heller November 20, 2015 2:34 pm

    What is the point of an IPR if one goes to trial in 7 months? (E.D. of Virginia.) Trial will be over before the PTAB even makes a decision on whether to institute. See, Lemley’s guide to forum shopping:

    Lemley, Mark A., Where to File Your Patent Case (October 27, 2010). Aipla Quarterly Journal, Vol. 38, No. 4, p. 1, Fall 2010; Stanford Public Law Working Paper No. 1597919. Available at SSRN: http://ssrn.com/abstract=1597919 or http://dx.doi.org/10.2139/ssrn.1597919

  3. Edward Heller November 20, 2015 3:26 pm

    “You have 12 months from the time the patent owner filed the court complaint to file an IPR, ”

    Not accurate.

    Not “filed,” “served.”

  4. Edward Heller November 20, 2015 3:35 pm

    Matt, if an accused infringer files a DJ action for invalidity, but does not serve the complaint, then files an IPR, which is opposed by the patent owner based on 315(a), but prior to a decision by the PTAB, the petitioner/infringer then obtains dismissal of the DJ action without prejudice, I think the PTAB should deny institution nevertheless.

    So I think the time for dismiss must be prompt and must be before the complaint is served. There has to be “no” prejudice to the patent owner as well.

    If this is not how the PTAB is conducting its affairs, I think the Feds should review the situation by mandamus if necessary.

  5. Paul F. Morgan November 21, 2015 10:28 pm

    Re: “Companies that anticipate being sued for patent infringement often want to file a declaratory judgment action in a local court to force the patent owner to travel” ? Isn’t a far more common reason is for the defendant to thereby pick the D.C. forum instead of the patent owner picking E.D.TX?
    Another good reason not to file a D.J. is that it is rarely just a validity contest like an IPR, it triggers an infringement suit counterclaim.

    Ned: “What is the point of an IPR if one goes to trial in 7 months? (E.D. of Virginia)”
    Well, you might get a stay of the suit if the IPR petition is granted? And note how few PAEs bring suit in that unusual “rocket docket” compared to E.D.TX.

  6. Linda Thayer November 30, 2015 5:47 pm

    Matt: But see IPR2015-00960, Paper 6, in LG Electronics v. Mondis, dated September 17, 2015.

    “As we explained previously, § 315(b) requires a petitioner to file a petition within one year of service of a complaint alleging infringement of a patent. The purpose of § 315(b) is “to ensure that inter partes review is not used as a tool for harassment by repeated litigation and administrative attacks.” See Loral Space & Commc’ns., Inc., v. ViaSat, Inc., Case IPR2014-00236, 239, 240, slip op. at 8 (PTAB Apr. 21, 2014) (Paper 7) (alteration and quotations from the legislative history omitted). In this case, LG chose to negotiate a settlement agreement
    with Mondis that specifically excluded “Unreleased Products.” In addition, LG has the option of filing an ex parte reexamination, which Mondis asserts they already did twice.Prelim. Resp. 17 (citing Ex. 2004, 5; Ex. 2006; Pet. 2). Accordingly, we are not persuaded that equitable and public policy considerations favor a “broad” interpretation of § 315(b).”

    “In summary, the Petition is barred because it falls outside the one-year time bar for pursuing an inter partes review set forth in § 315(b).”