Inter Partes Review vs. District Court Litigation

Transcription

1 Inter Partes Review vs. District Court Litigation February 19, PM ET Ha Kung Wong

2 Inter Partes Review vs. District Court Litigation February 19, PM ET Ha Kung Wong

3 Debbie Gibson v. Tiffany 2

4 Agenda Introduction: Inter Partes Review ( IPR ) IPR and Article III Court Litigation Litigation Stays Two Venues: Burden of Proof Two Venues: Deference Estoppel Practice Tips 3

5 What does this have to do with IPRs? 4

6 2011, America Invents Act created inter partes review ( IPR ) to replace inter partes reexamination ( IPX ). What is an IPX? Inter Partes Review 5

7 What is an Inter Partes Review? A person who is not the owner of a patent may file a petition with the PTO to institute an IPR of an issued patent nine months after the grant of a patent or issuance of a reissue. The petitioner in an IPR may request to cancel as unpatentable claims of a patent only on a ground that could be raised under 35 U.S.C. 102 or 103 and only on the basis of prior art consisting of patents or printed publications. See 35 U.S.C. 331(b). 35 U.S.C. 101 and 112 grounds are not available. 6

8 Requirements for Inter Partes Review Petition A petition for IPR must satisfy the following conditions: The petition must be accompanied by payment of the fee. The petition must identify all real parties in interest. 7

9 Requirements for Inter Partes Review Petition A petition for IPR DOES NOT require Gerber Singles: 8

10 Requirements for Inter Partes Review Petition A petition for IPR must satisfy the following conditions (continued): The petition must identify each claim challenged, the grounds, and the evidence, including: Copies of patents and printed publications that the petitioner relies on and Affidavits or declarations of supporting evidence and opinions, if the petitioner relies on expert opinions. Such other information as the Director may require by regulation. Copies of any of the documents required must be provided to the patent owner or the designated representative. 9

11 Inter Partes Review 2011, America Invents Act created inter partes review ( IPR ) to replace inter partes reexamination ( IPX ). How is the IPR different from the IPX? 10

12 Standard for Instituting IPR AIA changed the standard for granting a request Pre-AIA IPX: Substantial New Question of patentability Post-AIA IPR: reasonable likelihood that the requester will prevail with respect to at least one of the claims challenged in the request. 11

13 Time Limitation on IPR Decisions New Time Limitation to Decision IPX: no statutory time-limit. 95% resolved within 80 months.* IPR: statutorily mandated to be end 24 months post filing petition. *Data from Central Reexamination Unit, Ex Parte and Inter Partes Proceedings Fiscal Year

14 Timeline of an IPR Note: final decision may be extended up to six months for good cause. *Timeline provided by USPTO. 37 CFR Part 42, Vol. 77 No. 157 (08/2012) 13

15 IPR Has Been Popular First IPR filed on September 16, *Data from 14

16 IPR Has Been Popular The PTAB is the most active patent court in the country, recently outpacing the Eastern District of Texas and District of Delaware by both the number of orders issued and by the number of cases. Most Active Court by Number of Cases Most Active Court by Number of Orders 2015 (YTD) (YTD) PTAB TXED DED *Data from as of 02/12/

17 What does this have to do with IPRs? 16

18 Litigation Stays 17

19 Reasons for Seeking a Stay Reasons for seeking a stay pending a USPTO proceeding USPTO review of critical prior art Potential resolution of discovery issues Cultivation of admissible USPTO proceeding record Potential dismissal of civil action (if patent found invalid) Increased potential for settlement Reduction of issues and costs 18

20 Reasons for Opposing a Stay Reasons for opposing a stay pending a USPTO proceeding Avoid prejudice Stale case (e.g., dim memories, missing witnesses) Exhaustion of other stays (e.g., 30-month regulatory stay of generic drugs) Delay in resolving non-ipr issues Infringement OTDP Inequitable Conduct 19

21 Post-AIA Litigation Stays Statutory authority (35 U.S.C. 318) Patent owner (but not third party) could obtain a stay, unless court determines a stay would not serve the interest of justice. Inherent authority (for a court to manage its docket) Landis v. N. Am. Co., 299 U.S. 248 (1936) IPR/PGR/EPX: Traditional three-factor test (case law) See, e.g., Star Envirotech v. Redline Detection, 2013 WL (C.D. Cal. 2013) (granting stay pending IPR) CBM: Statutory four-factor test (AIA 18(b)(1)) NEW!!! Fourth factor: litigation burden 20

22 Litigation Stays - Factors Federal courts apply a three-factor test to determine whether to grant a stay of litigation: Whether a stay would simplify issues being litigated Whether a stay would cause undue prejudice or provide a clear tactical disadvantage to the non-moving party Stage of litigation Courts have differed as to how much weight is given to each factor. 21

23 Litigation Stays - Timing An important difference between IPR & IPX is time: IPR: maximum 24 months IPX: Up to or more than 80 months.* How does this shortened time-frame impact litigation stays in parallel district court actions? *Data from Central Reexamination Unit, Ex Parte and Inter Partes Proceedings Fiscal Year

24 Litigation Stays - Likelihood Sept 16, 2012 February 19, 2015: Some preliminary statistics on motions to stay pending IPR: 44% granted 40% denied 10% granted in part/denied in part There is a real possibility of staying a related patent litigation, thus potentially shifting a key aspect of the dispute from district courts to an administrative agency. *Data from 23

25 What does this have to do with IPRs? 24

26 Two Venues to Challenge Patents USPTO vs. Article III Courts 25

27 USPTO vs. Article III Courts Proof & Deference USPTO Review Court Review Patentchallenger s Burden of Proof No presumption that issued patent is valid Broadest reasonable interpretation in claim construction. Challenger needs to establish invalidity by a preponderance of evidence Patent is presumed valid No broadest reasonable interpretation in claim construction. Challenger has burden under 35 U.S.C. 282 to prove invalidity by clear and convincing evidence A Question of Deference USPTO not bound by prior determinations of validity by Art. III courts. In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012) Final determinations by USPTO on invalidity are binding on concurrent and subsequent litigations. In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012); Fresenius USA, Inc. v. Baxter Int l Inc., 721 F.3d 1330 (Fed. Cir. 2013). 26

28 USPTO vs. Article III Courts Claim Construction Both USPTO and District Courts conduct claim construction: USPTO: Broadest reasonable interpretation in claim construction District Court: no broadest reasonable interpretation standard Recently in In re Cuozzo Speed Tech. LLC., (Fed. Cir. Feb. 4, 2015), the Federal Circuit confirmed this discrepancy: No section of the patent statute explicitly provides that the broadest reasonable interpretation standard shall be used in any PTO proceedings. Nonetheless, the broadest reasonable interpretation standard has been applied by the PTO and its predecessor for more than 100 years in various types of PTO proceedings There is no indication that the AIA was designed to change the claim construction standard that the PTO has applied for more than 100 years It can therefore be inferred that Congress impliedly adopted the existing rule of adopting the broadest reasonable construction. Id. at *

29 USPTO vs. Article III Courts Burdens of Proof Same statutory basis (35 U.S.C. 101, 112, etc.), but very different burdens of proof. USPTO: invalidity proved by preponderance of evidence Article III: invalidity proved by clear and convincing evidence 28

30 USPTO vs. Article III Courts Deference In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012) 29

31 In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012) At the N.D. California: Competitor brought declaratory judgment action against patent owner, asserting that the claims in the patent were invalid and not infringed. Patent-owner counterclaimed for infringement. Patent-owner prevailed on validity at both district court and at the Federal Circuit on appeal At the USPTO: Parallel to the civil action, competitor also filed for re-examination. Examiner found that the same references provided at trial rendered the same challenged claims invalid. Despite the different outcome at the Federal Circuit, the Board affirmed the examiner s decision. On appeal, the Federal Circuit affirms the Board s decision: fundamentally, the PTO in reexamination proceedings and the court system in patent infringement actions take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions. In re Baxter Int l Inc., 678 F.3d 1357, 1364 (citation omitted). 30

32 In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012) Decision leaves patentees and challengers in an interesting situation: While determinations of Article III courts have full collateral estoppel effect in subsequent litigations, they are not necessarily binding on subsequent administrative agency decisions. On the other hand, cancellation of claims by the USPTO is binding in pending district court litigation. 31

33 In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012) The majority's view of finality is not without controversy. In both the Federal Circuit's ruling that the cancellation of claims by the USPTO was binding in the pending district court litigation and its denial of rehearing en banc, Judge Newman, in dissent, criticized the majority's rulings permitting an administrate agency to reverse a prior Article III court determination: [majority ruling] destabilizes issued patents, by ignoring the rules of finality." 32

34 In re Baxter Int l Inc., 678 F.3d 1357 (Fed. Cir. 2012) Baxter petitioned the Supreme Court to address: 1. whether an Article III court's final judgment may be reversed based on the decision of an administrative agency; and 2. whether a final determination of liability that has been affirmed on appeal may be reversed based on the decision of an administrative agency, even if an appeal regarding the postverdict remedy is pending. Supreme Court denied certiorari on May 19,

35 What does this have to do with IPRs? 34

36 What does this have to do with IPRs? 35

37 IPR Can Help Patentee - Estoppel for IPR If challengers are unsuccessful at the USPTO (despite the lower standard of proof): Challengers are estopped in subsequent USPTO proceedings and subsequent district court or International Trade Commission actions from challenging the reviewed claims on any ground that was raised or reasonably could have been raised during the inter partes review. 36

38 IPR Can Help Patentee Support Validity Aside from estoppel, favorable outcome for the patentee during inter partes review can hinder invalidity challenges in pending district court litigations. At least one district court has cited defendant s failure to meet the USPTO s lower standard of proving invalidity during IPR to support its ruling of no invalidity on summary judgment. Proctor & Gamble Co. v. Team Techs., Inc. No. 1:12-cv-552 (S.D. Ohio 2014): PTAB rejected [defendant s invalidity arguments], under a lower standard of proof, not once, but twice. 37

39 Advantages - Statutorily mandated short timeframe. - No presumption of patent validity. - Lower standard for proving invalidity. - May help stay co-pending litigation in district court. - Early indications suggest propetitioner forum. Final Overview: IPR Limits - Denial of petition by the PTAB is not appealable. ( 314(d)) - Limited discovery compared to litigation: - Denial of petition may become trial evidence. - See Universal Electronics Inc. v. Universal Remote Control Inc., 8-12-cv (CACD April 21, 2014, Order) - Adverse outcome may become trial evidence. - See Proctor & Gamble Co. v. Team Techs., Inc. No. 1:12-cv- 552 (S.D.Ohio 2014) 38

40 Practice Tips Take IPRs Seriously About 80.9% of claims instituted were cancelled. About 67% of IPRs with decisions on the merits challenged all patent claims and invalidated all patent claims. 39

41 Practice Tips Don t Take Tiny Pomeranians Seriously 40

42 Practice Tips Take Home Points Patent Owners: Conduct Pre-suit Investigation IPR does not include Inequitable conduct and OTDP Litigation Stay / Settlement Estoppel Patent Challengers: Consider early validity challenge. One sided No risk to noninfringement position Lower Burden and No presumption Litigation Stay / Settlement Estoppel 41

43 Chloe Jiang (212) NEW YORK 1290 Avenue of the Americas New York, NY WASHINGTON 975 F Street, NW Washington, DC CALIFORNIA 650 Town Center Drive, Suite 1600 Costa Mesa, CA

44 Paul W. Kalish (212) NEW YORK 1290 Avenue of the Americas New York, NY WASHINGTON 975 F Street, NW Washington, DC CALIFORNIA 650 Town Center Drive, Suite 1600 Costa Mesa, CA

45 Ha Kung Wong (212) NEW YORK 1290 Avenue of the Americas New York, NY WASHINGTON 975 F Street, NW Washington, DC CALIFORNIA 650 Town Center Drive, Suite 1600 Costa Mesa, CA

46 John Doe (555) NEW YORK 1290 Avenue of the Americas New York, NY WASHINGTON 975 F Street, NW Washington, DC CALIFORNIA 650 Town Center Drive, Suite 1600 Costa Mesa, CA