In an inter partes review ("IPR") proceeding,
a petitioner challenging a patent and the patent owner often reach
settlement before a final decision has been reached. Out of
the 117 IPR cases that have settled to date, 45% settled even
before institution of the IPR, and 55% settled after institution of
the IPR trial.
If an IPR has already been instituted, the parties must request
that the Patent Trial and Appeal Board ("PTAB") terminate
the proceeding under 35 U.S.C. § 317, which provides that an
IPR "shall be terminated with respect to any petitioner upon
the joint request of the petitioner and the patent owner, unless
the Office has decided the merits of the proceeding before the
request for termination is filed." The parties must file
a written settlement agreement with the PTAB under 35 U.S.C. §
317(b) and 37 C.F.R. § 42.74(b), along with a request to treat
the agreement as business confidential information if
necessary. See 37 C.F.R. §
42.74(c).
Once the parties file the request to terminate, if the merits have
yet to be decided, the PTAB must dismiss the petitioner from the
proceeding, but retains discretion as to whether to dismiss the
proceeding with respect to the patent owner. See 37
C.F.R. § 42.74(a) ("The parties may agree to settle any
issue in a proceeding, but the PTAB is not a party to the
settlement and may independently determine any question of
jurisdiction, patentability, or Office practice."). When
deciding whether to terminate the proceeding with respect to the
patent owner, the PTAB appears to consider primarily how far along
the proceeding has advanced by the time of the motion to
terminate. Full briefing from both sides, even before a
hearing, may be sufficient for the PTAB to refuse to
terminate.
For instance, in Blackberry Corporation and Blackberry Limited
v. MobileMedia Ideas, LLC (IPR2013-00036, Paper 64), the
patent owner filed a response to the PTAB's decision to
institute the IPR proceeding, the petitioner filed a reply to the
response, and an oral hearing was held. The PTAB decided
that, because the issues for trial had already been fully briefed,
the PTAB would proceed to a final written decision. A similar
result was reached in IPR2013-00016, a related Blackberry v.
MobileMedia proceeding, despite the cancelation of the oral
hearing in view of the impending settlement. See
IPR2013-00016, Paper 31.
Similarly, in a Covered Business Method ("CBM") review
decision, the PTAB again refused to terminate the proceeding with
respect to the patent owner, citing the advanced stage of the
trial. In that case, the parties filed the joint motion to
terminate after the petitioner had filed its reply brief, but
before the PTAB held oral arguments. Nevertheless, the PTAB
refused to terminate the proceeding with respect to the patent
owner. The patent owner was still provided the opportunity to
request an oral hearing. See CBM2012-00007, Paper
47.
If a proceeding is dismissed with respect to the petitioner, but
proceeds with the patent owner to a final written decision, no
estoppel would apply to the petitioner even if the claims are
upheld. See 35 U.S.C. § 317(a) ("If the
inter partes review is terminated with respect to a petitioner
under this section, no estoppel under section 315(e) shall attach
to the petitioner, or to the real party in interest or privy of the
petitioner, on the basis of that petitioner's institution of
that inter partes review."). No estoppel means that the
petitioner can assert the same arguments against the patent owner
again as a defendant in district court.
With this in mind, patent owners considering settlement should move
quickly to initiate settlement negotiations with petitioners,
before the issues have been fully briefed. Further, because
PTAB continuation of IPR proceedings is always a possibility in
spite of settlement, patent owners should consider this contingency
in crafting a settlement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.