Over the past decade, the Patent Trial and Appeal Board (PTAB) has emerged as a critical and much-relied-upon tool for those facing patent infringement allegations. Some say that’s exactly what Congress intended with the America Invents Act—a defendant can file a validity challenge at the PTAB and get an expedited ruling on invalidity in a forum with specialized technical expertise and before judges with relevant technical backgrounds, at a lower cost than litigating validity issues in district court. And in fact, district courts will often stay infringement actions pending PTAB review of a patent at issue in a particular case.
But the district courts and the PTAB are not the only fora in which patent issues are adjudicated. The United States International Trade Commission (ITC)—an independent, quasi-judicial federal agency based in Washington, DC—has become a forum of choice for patent owners seeking fast and effective relief for patent infringement. Because of its statutory mandate to adjudicate disputes quickly, the ITC does not stay cases pending parallel PTAB proceedings. So-called “Section 337” investigations at the ITC also proceed on a very similar timeline to PTAB proceedings culminating in a potential exclusion order barring the infringing goods from being imported into the United States. For these reasons, the ITC can be viewed as an antidote of sorts to the PTAB—and it is essential for potential litigants and attorneys to be aware of the complexities arising from the interplay of these two administrative agencies.
An accused infringer in an ITC case should not expect to be able to file an IPR petition and receive a stay. The ITC is mandated to decide Section 337 investigations “as early as practicable,” which typically means within 16-18 months after the filing of the complaint. For this reason, the ITC rarely stays its investigations for any reason, and to date, has never granted an opposed motion for a stay pending a parallel PTAB proceeding.
The ITC’s refusal to defer to its fellow administrative agency is emblematic of the Commission’s independent nature. But that does not mean that an IPR petition serves no benefit to an ITC respondent. The Commission and the presiding administrative law judge will often admit PTAB decisions as evidence and consider them in evaluating validity issues in a Section 337 proceeding. And a successful IPR petition can serve a backstop to a victory for a respondent at the ITC, forcing the patent owner to prevail in multiple proceedings on appeal.
Furthermore, in instances where the PTAB’s Final Written Decision comes before the ITC reaches its Final Determination, but the ITC disagrees with the PTAB’s conclusions on validity, the ITC has typically elected to suspend the enforcement of an exclusion order concerning the patent that is the subject of the Final Written Decision pending the patent owner’s appeal of the PTAB Final Written Decision to the Federal Circuit.
But where the Section 337 proceeding wins that race, and the ITC’s Final Determination comes first, the ITC has declined to suspend the imposition of remedies—even if the PTAB issues a Final Written Decision of unpatentability just days after the ITC’s contrary decision. Thus, accused infringers who suspect that the patent owner may file an ITC complaint or escalate an existing dispute to the Commission should strongly consider filing IPRs as early as practicable.
On some occasions, the existence of a parallel ITC proceeding has created a de facto bar to institution of an IPR, under a rigid application of Fintiv. Because ITC trials take place 10-12 months after the filing of a complaint, and the Final Determination within 16-18 months, it is rare that the PTAB will reach a decision on validity before the ITC. The ITC’s validity findings, however, are not binding on either the PTAB or the district courts—and for this reason, the PTAB used to reject requests for discretionary denials of institution based on parallel ITC proceedings.
Over the last couple years, the pendulum swung back, and the PTAB began applying Fintiv to deny institution in many instances where a parallel ITC proceeding involved the patent at issue. More recently, however, the PTAB has softened its approach—especially where the petitioner has chosen to limit the invalidity grounds at issue in the ITC investigation, or has entered into a Sotera stipulation. With widespread legislative scrutiny of Fintiv and a new PTO Director coming on board soon, there are bound to be more developments on this front.
The estoppel provisions prohibiting a petitioner from raising invalidity grounds that were raised or reasonably could have raised during an inter partes review resulting in a Final Written Decision apply at the ITC as well as in district court. And in fact, in multiple investigations, presiding administrative law judges have held that the estoppel bars even successful IPR petitioners from raising invalidity grounds that were actually raised or could have been raised in an IPR—so-called “winner estoppel.”
And in some ITC investigations, there is a third party present—an attorney from the ITC’s Office of Unfair Import Investigations (OUII), a neutral party representing the “public interest.” These OUII attorneys have been found not to be barred by PTAB estoppel even if the respondent is so bound. Thus, there may be cases where a patent owner successfully fends off a PTAB challenge, prohibits the accused infringer from raising the same invalidity issue at the ITC, and nonetheless finds himself fighting OUII on the very same invalidity arguments.
These are just some of the many complexities involved in litigating parallel ITC and PTAB actions. Ropes & Gray’s podcast series Talkin’ Trade explores the world of Section 337 unfair import investigations at the U.S. International Trade Commission—including the interplay between the ITC and the PTAB. In this episode, Scott McKeown—the chair of Ropes & Gray’s Patent Trial & Appeal Board group and host of the award-winning blog Patents Post-Grant, Scott McKeown, joins IP litigation partner and Section 337 practice chair Matt Rizzolo and associates Matt Shapiro and Brendan McLaughlin to discuss the issues arising when a patent asserted in an ITC investigation also has its validity challenged at the PTAB—including whether and to what extent the respective agencies defer to each other’s decisions or schedules, and what considerations are important for litigants to keep in mind to get the optimal resolution.
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