5 Things To Consider Before Heading To PTAB

Those familiar with Patent Trial and Appeal Board proceedings are no doubt aware of some basic trends with respect to post-grant challenges: Institution rates have dropped over the past two years to around 60 percent, and the likelihood of at least some challenged claims surviving a PTAB proceeding has correspondingly increased. This article, rather than focusing on statistics, analyzes recent case law developments, rule changes and shifting legal frameworks, and presents five factors that companies facing patent infringement claims should consider when determining how to best leverage the advantages of PTAB proceedings.

SAS Institute Inc. v. Iancu

The U.S. Supreme Court’s SAS decision generated significant debate over whether petitioners or patent owners will benefit more from the decision. Regardless of the overall balance, it is clear that the threat of estoppel with respect to prior art has grown significantly, and petitioners can no longer expect that printed prior art will be available at trial. Petitioners can alleviate estoppel concerns by (1) investigating system art early, because that art is not subject to potential estoppel; (2) conducting more intensive and thorough prior art searching earlier in cases, so that the best art is presented in an inter partes review petition; and (3) preparing high quality IPR challenges shortly after a patent lawsuit has been filed.

In addition to estoppel, SAS requires that the parties address grounds which the PTAB found unlikely to be successful at institution. While this provides a petitioner an additional opportunity to change the panel’s view
on a ground that otherwise would not have gone forward, it will require both petitioners and patent owners to make difficult strategic decisions regarding how much effort and attention to place on such grounds. For example, when preparing a patent owner response and during the deposition of the petitioner’s expert, the patent owner will have to decide whether to spend time attacking grounds that the PTAB has already found unlikely to succeed, which will likely reduce the patent owner’s ability to attack and focus on other grounds.

SAS will also require petitioners to carefully consider whether to include potentially weaker grounds in petitions, as such grounds can still result in estoppel even if the board finds them unlikely to succeed at the institution stage. Previously, the denial of such grounds at institution would not have triggered estoppel.

35 U.S.C. § 314, 325, and the Evolving General Plastic Analysis

SAS changed the estoppel landscape and increased the need to present stronger prior art arguments at the PTAB. Additionally, the board has limited the prior art grounds and arguments available to petitioners with the factors set forth in General Plastic Industrial Co. Ltd. v. Canon Kabushiki Kaisha.[1] These General Plastic factors not only limit the ability of a petitioner to file a second or “follow-on” petition, but also are being used by patent owners to greatly limit the prior art arguments available for IPR challenges. This includes prior art “previously considered” by the U.S. Patent and Trademark Office, which patent owners argue not only includes art used in office actions, but also anything cited on the face of the patent or used in other post-grant challenges of the claims (including those filed by separate parties).

While the decision may be an outlier, the General Plastic test has even been used to deny institution of an IPR by a company that had not previously challenged the claims.
In NetApp,[2] the board decided that NetApp had waited too long to file its own IPR petition while other companies moved forward with IPRs of their own. While the factual history underlying NetApp is unique and complicated, it still leaves open the question of how broadly panels will utilize the General Plastic test.

PTAB Rule Changes (Sur-Replies and the Phillips Standard)

Beyond case law changes, the structure of PTAB proceedings continues to change, resulting in additional challenges that petitioners must be equipped to handle. With a recent rule change, IPR proceedings will now include sur-replies for patent owners, allowing patent owners to have the last word in written briefing before the oral hearing. Petitioners must factor in this change — including its many ramifications on strategy, counter-strategy, and potential new arguments — when preparing a petition, lest they be caught off-guard later in the proceeding, when it is too late to change course.

Last week, the PTAB instituted a rule change to switch from the “broadest reasonable interpretation” standard to the Philips claim construction standard. This switch will create additional implications that defendants must consider and account for when preparing a petition. To date, petitioners have been able to utilize the BRI standard to challenge the claims using the same — often broad — interpretation of claims from the patent owner’s infringement allegations, while at the same time preserving arguments in the district court that such a construction is not proper under the Philips standard. With the PTAB’s switch to the Philips standard, petitioners must carefully consider the strategy implications of, for example, filing an IPR that challenges the claims with a broad construction consistent with the patent owner’s interpretation in district court; filing an IPR under a narrower and proper construction under Philips; or to avoid certain IPR challenges (at least some claims) to preserve arguments for district court. Additionally, the Philips standard for PTAB proceedings will require defendants to determine much earlier in litigation — at higher costs and disruption to its business — whether to prioritize noninfringement or invalidity arguments, and what proposed constructions will be needed when a Markman hearing is likely still at least a year away.

Federal Circuit Decisions: Applications in Internet Time and Click-to-Call 

Two recent Federal Circuit opinions have increased the difficulty for IPR petitioners in ways beyond technical and legal arguments. In Applications in Internet Time LLC v. RPX Corp.,[3] the Federal Circuit raised numerous questions on real-party-in-interest and privity issues but left ambiguity as to the boundaries defining an RPI. Because failure to identify an RPI can result in denial of a petition, companies facing patent infringement allegations will need to take extra care to analyze the positions of co-defendants and other business relationships to avoid an allegation of an undisclosed RPI. Particular care must be paid to these issues when multiple companies join a single petition, as the actions or relationships of a single company could result in the petition being denied for all companies.

With Click-to-Call Technologies LP v. Ingenio Inc.,[4] the Federal Circuit also created uncertainty for companies served with a complaint for patent infringement and subsequently dismissed without prejudice. In such situations, companies must now assess whether to file an IPR before the one-year window runs out, despite no lawsuit existing. This may result in gamesmanship by at least some plaintiffs by filing lawsuits against numerous companies, serving complaints, and then dismissing without prejudice, thereby creating the potential to file suit a year later, after the defendants are precluded from filing IPR petitions.

Hiding Patent Claims 

The success of IPR proceedings has forced patent owners to adopt new tactics, including attempts to make IPR proceedings more difficult and expensive. One tactic (which is growing in popularity) is asserting a larger number of patents and claims in a complaint while attempting to stall the identification of which claims the patent owner realistically plans to pursue in litigation. Particularly with patent litigation becoming more dispersed across different venues after TC Heartland, with varying disclosure requirements in each venue, this tactic can, absent intervention by litigants or judges, allow patent owners to waste time and resources by forcing petitioners to file IPRs on large sets of claims that the patent owners never plan to truly pursue.

Approach Going Forward 

PTAB proceedings remain powerful tools for companies accused of patent infringement, providing the opportunity to challenge asserted claims in front of three technically trained judges. However, recent changes from the Supreme Court and Federal Circuit, and PTAB rule and analysis changes have increased the challenges and hurdles faced by petitioners. Petitioners must understand and account for the impact of these changes when developing their PTAB strategy. Careful consideration must be paid at the early stages of litigation to determine what published and system art is available, push for a narrowing of claims, select prior art grounds that will prevail not only at the PTAB but at the Federal Circuit, and avoid RPI issues. More than ever, these new hurdles will require adept and sophisticated IPR counsel for a petition to be successful.

This post was originally published as an article by Law360 on October 16, 2018.

[1] General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357 (PTAB Nov. 21, 2013)(Paper 19).

[2] NetApp, IPR2017-01196 (PTAB Oct. 13, 2017).

[3] Applications in Internet Time, LLC v. RPX Corp. , 897 F.3d 1336 (Fed. Cir. 2018).

[4] Click-to-Call Techs., LP v. Ingenio, Inc. et al. , 899 F.3d 1321 (Fed. Cir. 2018).

UPDATE: The Federal Defend Trade Secrets Act vs. The California Uniform Trade Secrets Act

We first wrote on this topic nearly a year ago[1]. Since then, courts have had an opportunity to interpret some of the provisions of the federal Defend Trade Secrets Act (DTSA). Indeed, since it was signed into law, more than 360 DTSA claims have been filed, with more than 343 complaints filed in federal court. California has seen more of these cases than any other state, finding itself host to over 15% of all DTSA claims.

As we addressed in our previous blog, there are some key distinctions between the DTSA and California’s Uniform Trade Secret Act (CUTSA) that may inform companies how to run their businesses and prepare for litigation should it be necessary. Some of these distinctions have come into greater focus as courts have interpreted the DTSA, at times with surprising results. Continue Reading

An Uphill Battle Protecting Fashion Designs In Nigeria and Abroad

Growing frustration in the fashion community regarding weak or non-existent intellectual property laws has finally caught the attention of some nations. Nigeria is one nation that currently is trying to alleviate this frustration by reforming its intellectual property laws. This reform is driven, in part, because, Lagos, Nigeria has quickly risen as a fashion hub, and has been compared with such fashion centers as London, Paris, Milan, and New York. Nigerian designers have recently experienced great global success and visibility. For example, Amaka Osakwe has been pushing the limits of Nigerian fashion and has gained the attention of fashionistas in the United States and abroad. In 2014, she was invited to the White House by Michelle Obama, an admirer of her work, and her “Maki Oh” designs have been worn by Lupita Nyongo and other A-list celebrities. Last year, Ms. Osakwe was named a LVMH Louis Vuitton Moët Hennessy Finalist, placing her among the most notable young fashion designers in the world today. Other talented Nigerian designers include Duro Olowu, Deola Sagoe, Lisa Folawiyo, and Lanre DeSilva-Ajayi. As these designers continue to gain worldwide recognition, they must protect their designs from infringement both within Nigeria and globally. Continue Reading

Patent Strategies for Cryptocurrencies and Blockchain Technology

Cryptocurrencies and blockchain technology are rapidly emerging as disruptive technologies. As has happened with many new technologies, particularly disruptive ones, a patent arms race is occurring. The number of patents being filed for these technologies is rapidly increasing.

The number of published applications shows roughly a tenfold increase over the number of issued patents.

Despite this increase in patent filing activity, many companies are unaware of what aspects of this technology can be patented and many myths and misconceptions exist. In addition to the usual misconceptions about patents (detailed below), the open source aspect of many blockchain-based inventions leads to greater confusion. The patentability of software and technology platforms does not cease just because some or all of the software is open source or built on a known protocol. Continue Reading

Cesari S.R.L. v. Peju Province Winery L.P.: Relying on Supreme Court Precedent, District Court Holds that Trademark Trial & Appeal Board Finding of Likelihood of Confusion has Preclusive Effect

Federal district courts continue to apply the Supreme Court’s ruling in B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S.Ct. (2015) with unpredictable results. The latest such example comes from the Southern District of New York, where Judge Buchman, in reliance on B&B Hardware, precluded the defendant from contesting likelihood of confusion. Cesari S.R.L. v. Peju Province Winery L.P., 1:17-cv-00873-NRB (S.D.N.Y. Dec. 11, 2017). Continue Reading

An EC Communication on SEPs – Not More Not Less

A summary of the European Commission’s Policy Document on standard essential patents (SEPs).

After considerable preparations and consultation the European Commission has on 29 November 2017 issued a Communication [1] “setting out the EU approach to standard essential patents”. This Communication is part of the wider Europe’s Digital Single Market initiative. Notably, however, this long-awaited paper is not likely to change the current landscape of FRAND litigation and licensing, and intentionally does not address the most controversial issues of the current debate. Continue Reading

Florida Now Follows New York to Find No Common Law Public Performance Right For Pre-1972 Sound Recordings

A few months ago, we brought to your attention a case initiated by The Turtles, seeking royalties in New York for the unauthorized performance of their pre-1972 sound recordings. In that decision, the Court of Appeals of New York decided, on a question certified to it by the Second Circuit, that New York state law did not recognize a public performance right in pre-1972 sound recordings. We observed that other courts considering this issue, most notably the Supreme Courts of California and Florida (likewise on certified questions respectively from the Ninth and 11th Circuits) may decide likewise, namely, that under their own state laws, there is no public performance right in pre-1972 sound recordings. We now have the most recent pronouncement from the Florida Supreme Court, handed down on October 26, 2017, confirming our observation by failing to find a public performance right in pre-1972 sound recordings under Florida state law. The Court found that Florida never recognized such a right and that it would be inappropriate for a state court to create a new common law right that should normally be the province of the legislature. Continue Reading

Deadline Approaching: Action Required by December 31 To Avoid Losing DMCA Safe Harbor Protection

The U.S. Copyright Office is making changes to the Digital Millennium Copyright Act (DMCA) safe harbor agent registration process. The changes impact both new online service providers as well as existing online service providers who have already registered an agent. Read on for details about what you will need to do. Continue Reading

The Southern District of New York Finds “Work Made For Hire” Under Italian Copyright Law

Musical scores incorporated into films are usually produced with the specific film in mind. In the U.S., we call such works “works made for hire,” meaning that the artist does not retain authorship rights to the music. Instead, the commissioning party, which is typically the film producer or music publisher, is the author of the musical score for copyright purposes.

Internationally, however, most countries attribute authorship only to natural persons. To permit the exploitation of collaborative works, like motion pictures, the legal regimes of most of these countries grant the commissioning party the right to exclusively exercise the economic rights in the work. This does not, however, change the status of each individual creator as the “author” of his or her distinct contribution to the work. Continue Reading

Metallizing Forfeiture Post-Helsinn

This article was originally published on PatentlyO.com.

In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the Federal Circuit had its first opportunity to address the impact of the “or otherwise available to the public” clause contained in post-AIA 35 U.S.C. § 102. In finding that the AIA “did not change the statutory meaning of ‘on sale’ in the circumstances involved here,” the Federal Circuit provided insight into the continued relevance of the forfeiture doctrine of Metallizing Engineering v. Kenyon Bearing. Continue Reading


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