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

Understanding 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.