Because the Board is not a party to a settlement agreement, parties seeking to terminate a post-grant proceeding pursuant to a settlement agreement should attempt to resolve the matter prior to completion of the briefing to avoid a final written decision from Patent Trial and Appeals Board (the Board). In Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, the Board terminated involvement of the petitioner pursuant to a settlement agreement but decided that it will proceed to a final written decision because of the late stage of the proceeding.
Under 37 C.F.R. § 42.74(a), "parties may agree to settle any issues in a proceeding, but the Board is not a party to the settlement and may independently determine any question of jurisdiction, patentability, or Office practice." See also 35 U.S.C. §§ 317, 327. However, "[i]f no petitioner remains in the proceeding, the Board may terminate the review or proceed to a final written decision." Trial Practice Guidelines, Vol. 77, No. 157, 48757 (Aug. 14, 2012). The Board recognizes the public policy reasons in favor of settlement and "expects that a proceeding will terminate after the filing of a settlement agreement, unless the Board has already decided the merits of the proceeding." Id. 48768.
In Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, Paper 47, the parties requested that the involvement of the petitioner in the proceeding be terminated pursuant to a settlement agreement. At the time the request was filed, the matter was fully briefed and ready for oral hearing. The patent owner also explained that there was ongoing litigation on the patent subject to this proceeding that did not involve the petitioner. Given the circumstances, the Board terminated the petitioner's involvement in the proceeding pursuant to the settlement agreement. The Board decided, however, that because "the Board is not a party to the settlement and may independently determine any question of patentability" and "[i]n view of the advanced stage of the proceeding, rather than terminate the proceeding, the Board will proceed to a final written decision." In the same decision, the patent owner was permitted to file a request for oral hearing.
The Interthinx order provides another time marker for informing parties' settlement talks. Up until now, motions to terminate have largely been submitted prior to the patent owner response. For example, in Midland Radio Corp. v. Cobra Electronics Corp., IPR2013-00021, the parties sought termination of the proceeding after institution but prior to the filing of the patent owner response. There, the Board found that "this matter was in the preliminary stages at the time the parties moved to terminate" and therefore, granted the motion to terminate. IPR2013-00021, Paper 18. Additionally, in both Apotex Inc. v. Alcon Pharmaceuticals, Inc., IPR 2013-00012, Paper 73, and Ranbaxy Laboratories, Ltd v. Vertex Pharmaceuticals, Inc., IPR2013-00024, Paper 71, the Board granted the parties' motions to terminate after the patent owner response was filed, but just prior to when the petitioner's reply was due. These orders demonstrate that the Board is willing to settle post-grant proceedings, before and sometime soon after the patent owner response. How far beyond that deadline the Board is willing to go is still unknown. However, the Board has noted that "trial before the Board is conducted on paper." CBS Interactive Inc. v. Helferich Patent Licensing, IPR2013-00033, Paper 18. That is, once the last paper is filed, the trial phase is complete. While a party may then request oral argument, once the last paper is filed, the Board may decide the merits of a proceeding. The Board's position that proceedings are conducted on the papers combined with the Interthinx order seems to suggest that the filing of the last paper on the merits establishes the outer limit for the termination of a proceeding through settlement.
With this probable outer limit in mind, petitioners and patent owners seeking to terminate a proceeding pursuant to a settlement agreement should work diligently to finalize the terms of the settlement and to terminate the proceeding prior to the completion of the briefing. Early settlement may allow the parties to terminate the proceeding and to avoid a final written decision from the Board.
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