Several years ago TransData filed a patent infringement lawsuit in the U.S. District Court for the Eastern District of Texas. TransData, a digital electricity meter developer, is located in Carrollton, TX. The suit names three defendants: Liberty Lake, WA-based energy tech company Itron, Inc. (NASDAQ:ITRI); Fairfield, CT-based energy giant General Electric (NYSE:GE); and Landis+Gyr AG, a Swiss energy management firm owned jointly by Japanese tech giant Toshiba Corporation (TYO:6502) and the Innovation Network Corporation of Japan, a public-private partnership.
The lawsuit filed by TransData alleges that these three companies have engaged in willfully infringing upon three of TransData’s patents through the U.S. sale or importation of digital electric meters, specifically those including internal wireless communication circuits and antenna. These are U.S. Patent No. 6181294, entitled Antenna for Electric Meter and Method of Manufacture Thereof; U.S. Patent No. 6462713, same title as previous; and U.S. Patent No. 6903699, titled Wireless Communication Device for Electric Meter and Method of Manufacture Thereof. The patents claim technologies related to the wireless transmission of electric meter data to reduce the amount of time spent reading the meter manually, especially when those meters are in places that are tough to reach.
That TransData filed a patent infringement lawsuit some time ago and in the Eastern District of Texas is in and of itself not newsworthy. What makes this case newsworthy now, at least marginally so, is the fact that a trial date has just been set. The trial is scheduled to begin July 18, 2016, before Judge Robert W. Schroeder, III, in Tyler, Texas.
What makes this particularly noteworthy, however, is the fact that in the nearly six years since the lawsuits were originally filed, these TransData patents have collectively prevailed in thirteen separate patent validity challenges at the U.S. Patent and Trademark Office with all asserted claims remaining intact. Indeed, the ‘294 patent was reexamined twice with a third request for reexamination denied. The ‘713 patent was reexamined twice, also with a third request for reexamination denied. The ‘699 patent was reexamined twice, and had two requests for reexamination denied. By any measure prior to the creation of the Patent Trial and Appeal Board (PTAB) these patents would have been considered very strong.
What is further interesting about this case is that is that not only have each of the patents survived multiple reexaminations, but each has also had a request for inter partes review (IPR) denied by the PTAB. See IPR2014-01559 (regarding the ‘294 patent), IPR2014-01505 (regarding the ‘713 patent), and IPR2014-01380 (regarding the ‘699 patent).
In the ‘699 patent, the IPR petition included challenges to claims relating to communication circuits communicating over cellular frequencies to communicate information on power quality, power outages, energy usage, power demand and diagnostics. Claims challenged in the ‘294 patent included those related to an electric meter chassis with electric meter circuitry, a wireless communications circuit, antenna elements and a balance circuit causing the antenna elements to function as an antenna. In the ‘713 patent, denial of IPR institution left intact claims related to an antenna conforming to a portion of the internal surface of a dielectric housing and having a wireless communication circuit which has a carrier frequency of between 700 megahertz and 950 megahertz.
The denial of three IPR petitions relating to the same litigation is significant because, as we’ve reported here on IPWatchdog in the past, about 80 percent of petitions filed at PTAB are instituted. You can just about guarantee that TransData will argue something like this — even the PTAB, which has been exceptionally hostile to patent owners and has been called a patent death quad, thought these patents were fine.
The fact that these three patents have been adjudicated by administrative patent judges who eventually found that the claims would remain intact by denying the IPR is significant. Once an IPR filing is instituted by PTAB, there’s an incredibly high likelihood that the patent will not leave PTAB unscathed. Back in March 2014, we reported that PTAB cancelled more than 80 percent of all claims initially challenged by a petitioner and then about 95 percent of all claims for which trial was instituted. Those numbers are likely different now, and the USPTO statistics show a kinder, more friendly PTAB, but they largely ignore the patent claims abandoned because the fight isn’t worthwhile given the extreme inhospitable environment for patent owners at the PTAB. Still, these IPRs were filed in 2014 and denied in April 2015, well before any possible recent shift.
Regardless, of whether the PTAB has or is in the process of turning over a new leaf, the narrative that the PTAB has been mowing down patent claims still holds strong sway. District court judges seem unlikely to seriously consider invalidity challenges when patents have survived IPR or the PTAB hasn’t even instituted proceedings. This is true because the standards employed by the federal district courts and the PTAB are quite different. Patents are not given a presumption of validity at the PTAB, although in federal court patents are presumed valid as required by 35 U.S.C. 282. Furthermore, in federal court the patent claims are given a narrow construction more likely to find them valid, while at the PTAB patent claims are interpreted using the broadest reasonable interpretation of the claims, which is more amenable to finding claims invalid. So when the PTAB does not want to institute an IPR, or a patent escapes an IPR unscathed, the patent has survived what is a much easier challenge for the infringer.
The likelihood that the district court will view these patents as stronger and less likely to seriously consider a validity challenge rises because in each of these IPR cases the main petitioner behind the challenge was GE. While the estoppel provisions of 35 U.S.C. 315(e) only apply to a final written decision, General Electric is one of the three defendants named in the TransData patent infringement suit. Therefore, GE had the opportunity to raise whatever prior art they wanted the PTAB to consider, which will make it quite difficult, if not impossible, for them to distance themselves for the IPR petition or claim that it was defective for not raising the best available prior art. They can certainly try, but that type of argument typically tends to fall on unreceptive ears in front of a judge.
There has been some discussion in intellectual property circles over the past several years about what constitutes a strong patent grant. Given the volatility of the American intellectual property system in the wake of legislative changes, while also experiencing a rising tide of patent reform debate on Capitol Hill, it’s understandable that patent owners are more anxious about the prospects for their IP holdings, particularly their patent portfolios, than they have been in the recent past. That said, the fact that these three TransData patents have stood tall at the PTAB should say something about the strength that these patents will have during the upcoming court proceedings this summer.