Conversations with practitioners and inside patent counsels about PTAB have unveiled some concerns. While the USPTO claims that sequential challenges are not the problem that they have been made out to be, the drumbeat about weak estoppels after a final decision at the PTAB are echoing in the patent-holder community.
Below is a case in point.
TCL Communications (TCL), a Chinese smartphone developer and manufacturer filed 3 IPRs against Ericsson US Patent No. 7,149,510 (or the‘510 patent). The patent survived the challenges at the PTAB. In December of 2017, a court found that TCL Communications willfully infringed that patent and awarded Ericsson $75M in damages (the award was subsequently enhanced to $100M).
In October of 2017, 18% of the shares of TCL were transferred to Unisplendour Technology Venture Capital which is a subsidiary of Tsinhua Unigroup. Spreadtrum Communications is also a subsidiary of Tsinghua Unigroup and is a shareholder in Shanghai Lunion Information Technologies (SLIT). On April 30, 2018 SLIT filed another IPR on the ‘510 patent. SLIT is a Chinese consortium of integrated circuit design and manufacturing companies. SLIT runs the Mobile China Association, a business association for the mobile phone industries in China. TCL is also a member of the Mobile China Association.
What a dizzying web!
After TCL lost its IPRs against Ericsson in a written decision at PTAB, it was barred from filing subsequent IPRs against the ‘510 patent. TCL was then hit with a very large verdict for infringement of the patent in court. Then, four months after the verdict the same patent is challenged at the PTAB again by a consortium that has some relationships to TCL.
The USPTO has been touting the fact that the percentage of subsequent filings of IPRs is relatively low as follow-on petitions in IPRs are only permitted by the same petitioner when there was no written decision in a previous case. The Office claims that “gang tackling” of patents is not occurring at the rates patent owners argue that it is happening. Recent statistics show that 67% of the patents challenged at PTAB have only one petition. Another 20% of the patents facing challenges have two petitions, leaving only 13% challenged by 3 or more petitions. But it does seem that some are trying to find ways around the estoppel.
Section 314 of the Patent Act does provide discretion to the USPTO to deny follow-on attacks, but sometimes a subsequent petition is not clearly from the same entity. And section 325(d) addresses same arguments and evidence, but not different evidence.
It is the patents that seem to have some value, like those that are likely to be deemed valid and infringed in court that may be the victim of some gamesmanship on the challenger’s side.
With the very limited discovery permitted in the PTAB, it is sometimes difficult for the patent holder to determine who has the interest when the entity filing the petition is so complex.
Perhaps we need to permit more discovery of the “real party of interest” early in the case or to tighten estoppel.
But we need to make sure this gets fixed.
Image Source: Deposit Photos.