Use of PTAB Decisions in District Court Litigation

Gavel chessAiming to bring about an objective, transparent, and less expensive patent system, the Leahy-Smith America Invents Act (“AIA”) created inter partes review (“IPR”), covered business method (“CBM”) review, and post-grant review (“PGR”) proceedings before the Patent Trial and Appeal Board (“PTAB”). The results have been mixed after five years of enactment of the AIA. For instance, some litigants have noted that rather than serving as mere alternatives to litigation, these proceedings have emerged as important strategic supplements to patent disputes. And as parties test the bounds of how PTAB decisions may be used in federal courts, judges’ reactions have been mixed.

As one might expect, district courts have been willing to consider litigants’ arguments concerning final outcomes of PTAB proceedings. For example, in XY, LLC v. Trans Ova Genetics, LC, the jury found that the defendant had willfully infringing ten patents in suit, opening the door to enhanced damages. No. 13?cv?876, at 1–2 (D. Colo. Apr. 8, 2016). The court, however, took note of the PTAB’s “finding of invalidity as to” one of the infringed patents and an upcoming PTAB hearing “as to the possible invalidity of” another infringed patent. Id. at 14. It thus determined the defendant’s invalidity defenses to be objectively reasonable and vacated the willfulness finding. Id. at 15.

But when district courts consider final outcomes at the PTAB, those outcomes are not always dispositive. For example, in Credit Card Fraud Control Corp. v. MaxMind, Inc., a defendant attempted to recover attorney’s fees under 35 U.S.C. § 285, citing the patent owner’s request for adverse judgment of the asserted claims in a related CBM review as evidence of “an improper intent to use the litigation to extract a nuisance settlement.” No. 3:14-cv-3262, 2016 WL 3355163, at *2 (N.D. Tex. Apr. 4, 2016). Disagreeing that the plaintiff’s conduct was unreasonable so as to justify an award of fees, the court acknowledged the plaintiff’s “business explanation for terminating its defense before the PTAB” (i.e., the patent’s imminent expiration and the potential for low damages due to the defendant’s low revenue). Id. at *3.

Taking a step further, some litigants have asked district courts to consider and admit into evidence preliminary PTAB decisions regarding whether to institute post-grant proceedings. Such requests have had mixed success.

On one end of the spectrum are district courts that have embraced the use of PTAB institution decisions. In doing so, they have taken measures to mitigate potential drawbacks of the approach. For example, in Universal Elecs., Inc. v. Universal Remote Control, Inc., the court held that the PTAB’s decision not to institute the defendant’s petition for inter partes review was admissible, and that “any potential confusion can be addressed by appropriate jury instructions on the standard of proof applicable to patent invalidity defenses and counterclaims.” No. 12?cv?329, at 12 (C.D. Cal. Apr. 21, 2014). Indeed, federal judges have recognized that the PTAB’s adherence to different legal standards does not necessarily undermine how they might inform issues before the district court. For instance, in Procter & Gamble Co. v. Team Techs., Inc., the district court granted a defendant’s motion for partial summary judgment of no invalidity based on, among other things, a PTAB institution decision’s rejection of “the same inherency arguments, with respect to the same references, under a lower standard of proof.” No. 12-cv-552, at 21 (S.D. Ohio July 3, 2014). Moreover, despite the PTAB’s lack of authority to invalidate a claim in an IPR on indefiniteness grounds, some district courts have looked to the PTAB’s refusal to institute based on indefiniteness issues. For example, in Cayenne Med., Inc. v. Medshape, Inc., the court granted summary judgment of invalidity in large part based on the PTAB’s refusal to institute because of indefiniteness issues with the asserted claims. No. 2:14-cv-0451, at 7–8 (D. Ariz. May 6, 2016); see also Fortinet, Inc. v. Sophos, Inc., No. 13-cv-05831, at 14 (N.D. Cal. Oct. 28, 2015) (finding the PTAB’s analysis regarding the lack of corresponding structure for an alleged means-plus-function limitation to be “persuasive,” though “not binding in any way”).

On the other end of the spectrum are district courts that have declined to use PTAB institution decisions. That reluctance may arise from the notion that institution decisions do not reflect the outcome of full-fledged adjudication. For example, in Adidas AG v. Under Armour, Inc., the court explained that the “PTAB’s choice not to institute an IPR is not the type of adjudication that leads to issue preclusion.” No. 14-cv-00130, at 2 (D. Del. Dec. 15, 2015). Other times, reluctance stems from potential evidentiary problems. Indeed, in Wis. Alumni Research Found. v. Apple, Inc., the court found that “any probative value of [a non-instituted IPR] is substantially outweighed by the risk of unfair prejudice, as well as the risk of jury confusion.” No. 14-cv-062, at 14 (W.D. Wis. Sept. 29, 2015). Likewise, in Personalized Media Commc’ns, LLC v. Zynga, Inc., the court explained “that the danger of undue prejudice [with an institution decision] is extremely high, and that the danger of unfair prejudice cannot be mitigated simply by the use of a limiting instruction.” No. 2:12-cv-00068, at 2 (E.D. Tex. Nov. 8, 2013). And in Allure Energy Inc., v. Nest Labs, Inc., the court noted “the danger of misleading the jury and waste of time involved in [instructing the jury].” No. 9:13-cv-00102, at 2 (E.D. Tex. May 18, 2015).

In the middle of the spectrum are district courts that draw a line between permissible and impermissible use of PTAB institution decisions, rather than fully embracing or declining to use them. For instance, in Ultratec, Inc. et al. v. Sorenson Commc’ns, Inc., the court barred the defendant from relying on a PTAB institution decision (and related evidence) during the damages phase to argue that the asserted patents were entitled to diminished value. No. 3:13?cv?00346 at 4 (W.D. Wisc. Oct. 8, 2014). In particular, the court indicated that “because of the different standards, procedures and presumptions applicable to IPR proceedings, evidence concerning the proceedings is irrelevant and highly prejudicial to the jury’s determination of the validity of the patents.” Id. The court did, however, allow the defendant to use the PTAB’s findings outside the presence of the jury, to rebut allegations of willfulness. Id.

As the above cases illustrate, PTAB decisions have affected district court cases in different ways. Determining whether the use of a PTAB decision is likely to be permitted or will have any effect requires a multifactorial analysis that considers at least the nature of the PTAB outcome (e.g., final or preliminary), factors contributing to that outcome (e.g., whether they were based on the merits of the case), and potential drawbacks attached to the requested use (e.g., jury confusion). Additional considerations might include, for example, the level of sophistication of the technology already being considered by the jury, which might factor into a court’s analysis of the likelihood of jury confusion. Parties seeking to rely on PTAB decisions in district court should consider these factors. The AIA has only been in place for five years and the law in this area will continue to develop over the next several years.

Michael Stramiello, Daniel Zeilberger, and Joseph Palys also contributed to this article. 


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Join the Discussion

4 comments so far.

  • [Avatar for Eric Berend]
    Eric Berend
    September 23, 2016 07:14 am


    The first resort of those who benefit from a criminal racket, is to mock and denigrate those who object to the exploits involved. The resort to public opprobrium is a time-tested rhetorical tactic, known before the Greeks and Romans. In this ‘social media’ saturated era, the temptation to utilize such a tactic, is amplified by electronic acceleration.

    Since you went so over-the-top in your derogation, it implies you are heavily invested in the positions of infringers’ cabal. A word of advice for the next time you attempt to ‘smack down’ on an genuine, honest, independent inventor: try to ply your hand with more subtlety. This “ton of bricks” lobbed against a mere opinion, with no facts to rebut the allegations or presumptions involved, is but a neon sign to those of us who truly are the real innovators: “Inventor plunderer sycophant here!”

  • [Avatar for Seth Abrahms]
    Seth Abrahms
    September 20, 2016 09:21 pm


    You forgot to include the Illuminati, the Bilderberg Group, the Masons, and that military base under the New Mexico desert that house the Reptilian Overlords.

    The similarities between @2 and that woman who always posts on WaPo about her SPE trying to slit her throat are so close that it’s difficult to tell them apart

  • [Avatar for Prizzi's Glory]
    Prizzi’s Glory
    September 19, 2016 07:11 am

    Analyzing PTAB documents indicates that PTAB APJs lie in decisions (federal crime of falsification) at behest of senior USPTO officials including those in the office of the director. Thus APJs and senior USPTO officials including some in the Office of the Director are committing the federal crime of conspiracy.

    When district court and CAFC judges take PTAB decisions into account, USPTO corruption spreads from the USPTO into the federal court system. It is harder to think of a graver threat to the US legal and governing system.

    Here is one example but hardly the only one. In Appeal 2015-001667 of Application 07/773,161, the Board states.

    We have read each of the Examiner’s rejections, responsive arguments and each of Appellants’ claims, contentions, and Appellants’ responses to the Examiner’s rejections and responses to arguments. We find Appellants’ colorful commentary regarding the level of skill in the art to be unnecessary and unsupported by the relevant prior art teachings and relevant evidence at the time of the invention. Appellants have had ample time in the prosecution to provide relevant evidence of the proper interpretation of the claimed invention and have chosen to rely upon undated evidence that was not in existence at the time of the claimed invention. Therefore, the proffered evidence cannot form a valid basis to show error in the Examiner’s findings and conclusions.

    Yet the APJs upheld rejections that the examiner had withdrawn. The patent prosecutor gave the APJs a chance to admit their lie on request for reconsideration, but the APJs compounded their document falsification by blaming “the confusion” on the difficulty of understanding the Examiner’s documents.

    While the Examiner has severe problems with English, he was explicitly clear in withdrawing those rejections.

    In this case the USPTO concealed evidence of document falsification and conspiracy by keeping the Board decision on appeal and request for reconsideration out of the FOIA Reading Room.

    How can the legal system work when article III judges pay attention to APJs, who have not looked at the case documents that they claim to have read?

    At present the patent and legal system are broken and will remain broken until the criminals in the PTAB and throughout the USPTO including the director’s office are purged, arrested, and standing trial.

    The summary document indicates that culpable current and former USPTO personnel probably include without limitation:

    Chris Grant, Chau Nguyen, Beatriz Prieto, Ted Swarm, Emmanuel L Moise, Joseph L. Dixon, James R. Hughes, Eric S. Frahm, Wellington Chin, Edan Organ, Margaret Focarino, Andrew Faile, Drew Hirshfeld, Timothy Callahan, Yao Kwang, Steven HD Nguyen, and John LeGuyader.

    Possibly Michelle K. Lee was not involved, but she would have to have been an incredibly incompetent director not to have been aware of the criminality. Involvement of Penny Pritzker and Barack Obama are less likely but not improbable.

    Is it not amazing that during a presidential campaign the media are focused on a stupidity like birtherism when criminality pervades the USPTO, which is a critical point, where the executive branch, the judicial branch, the economic system, and technological innovation all meet?

  • [Avatar for Patent Investor]
    Patent Investor
    September 18, 2016 02:54 pm

    Does your firm have any data on the “average days before deadline” Final Written Decisions are issued for IPRs that invalidate every claim? A little over one month seems like it is WAY out of whack, most of them I’ve seen are less than a week.