United States: 10 Reasons Every Defendant in Patent Litigation Should Consider Inter Partes Review

Numerous articles and practitioners are touting inter partes review (IPR) proceedings, and for good reason.  Here is a quick breakdown of why these proceedings are considered pro-petitioner and why every patent infringement defendant should give IPR serious consideration.

1. Presumption of Validity Does Not Exist:  Unlike in district court, patents are not assumed to be valid at the Patent Trial and Appeal Board ("PTAB").  See 35 U.S.C. § 282 ("[a] patent shall be presumed valid").  In IPR, patentability of the claims is being challenged, rather than validity.

2. Burden for Finding Unpatentability is Lower:  The burden is lower for the petitioner to challenge patentability in front of the PTAB than for a defendant to challenge the patent's validity in district court.  In district court, a defendant must prove invalidity by clear and convincing evidence.  See Microsoft Corp. v. i4i Partnership, 131 S. Ct. 2238, 2242 (2011).   In contrast, at the PTAB, the petitioner must prove unpatentability by a mere "preponderance of the evidence" standard.  See 35 U.S.C. § 316(e).

3. Claim Construction is Broader:  The PTAB sets forth that claims will be granted their "broadest reasonable construction in light of the specification of the patent in which it appears."  37 C.F.R. § 42.100(b).  This is broader than the "ordinary and customary meaning" to a person of ordinary skill in the art at the time of the invention, as applied at the district court under Philips v. AWH Corp., 415 F.3d 1303, 1312-1313 (Fed. Cir. 2005).  The broader the claim, the more likely prior art exists that will render the patent anticipated or obvious.

4. Time-Sensitive Ability to Terminate Pressures Settlement:  The petitioner and the patent owner can reach settlement and request that the PTAB terminate the IPR proceeding under 35 U.S.C. § 317.  If the merits are 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.  37 C.F.R. 42.74(a).  When deciding whether to terminate, the PTAB primarily considers how far along the trial has proceeded.  The longer the patent owner waits to settle, the greater the risk that the PTAB will not terminate the proceeding, and may cancel the claims despite a request to terminate.  Petitioners can use this time crunch to pressure the patent owner into earlier settlement in order to save the patent from IPR. 

5. Statistics Show the PTAB is Pro-Petitioner:  Approximately 80% of petitions for IPR have been granted for at least some of the challenged claims, with about 60% of all challenged claims being instituted.  Further, a recent district court decision from the Eastern District of Virginia explicitly states that the USPTO's decision to institute an IPR trial cannot be overturned by a district court.  See Dominion Dealer Solutions LLC v. Focarino, 3:13-cv-00699 (E.D. Va) (holding that the plain language of 35 U.S.C. § 314(d) is "quite clear" that the USPTO's decision to institute IPR is "final and nonappealable").  The Federal Circuit ruled similarly on April 24, 2014, that under the AIA, it does not have authority to hear appeals on whether to institute IPR, at least not until after a final decision, and perhaps not even then.  See St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp., et al, (Fed. Cir. Case No. 2014-1183, Appeal of IPR2013-00258) (pointing to the plain language of the statute, 35 U.S.C. § 314(d), particularly "whether to institute an inter partes review under this section shall be final and nonappealable," and holding that this language "may well preclude all review by any route," and "certainly bars an appeal of the non-institution decision here.").  Once a petition is granted, the outcome highly favors the challenger.  In approximately 70% of IPR trials, all instituted claims were canceled, and at least some of the instituted claims were canceled in the remaining 30% of cases.  Out of the 40 final decisions issued so far, only one IPR proceeding has resulted in the PTAB finding all instituted claims patentable.  See ABB Inc. v. Roy-G-Biv Corp., IPR2013-00286, Paper 80 (April 11, 2014).  However, it should be noted that these highly favorable outcomes for petitioners may have resulted in part from particularly strong cases being selected for the first IPR petitions.  The recent uptick in IPR petition filing may indicate that petitioners are now bringing weaker cases, and could result in the PTAB finding a higher percentage of claims to be patentable.

6. The Patentee's Ability to Amend the Claims is Limited:  As IPR does not provide for claim amendments as a matter of right, a patent owner must move to amend its claims.  See 35 U.S.C. § 316(d).  First, the PTAB must grant authorization to file a motion to amend.  Second, the amendments are limited to cancellation of any challenged claim and a "reasonable number" of substitute claims.  Id., 37 C.F.R. § 42.121.  Third, a motion to amend is limited to 15 pages, which significantly limits the ability to amend.  37 C.F.R. § 42.24(a)(1)(v).  Further, the PTAB has set a high bar for the patentee to prove patentability of the amended claims.  Unlike initial patent examination or the old inter partes reexamination procedure, the PTAB does not examine the amended claims in IPR.  Therefore, instead of merely having to overcome the references identified by the petitioner or the examiner, the patent owner in IPR has the burden to prove "general patentability over prior art" in order to amend.  See Idle Free v. Bergstrom, IPR2012-00027 (Paper 26).  A patentee cannot just show support in the specification for the newly proposed claims and argue that the limitations of the proposed claims were not taught or suggested by the petitioner's identified prior art.  Instead, in order to establish patentability of the proposed substitute claims, the PTAB has stated that a patentee must set forth the level of ordinary skill in the art and what was previously known in the art for each feature relied upon to show patentability.  The patent owner must either affirmatively state that it was the first to have invented or developed that feature, or if not, where those features existed in other contexts and how they worked.  See Idle Free v. Bergstrom, IPR2012-00027 (Paper 26).  The burden to prove general patentability greatly limits a patentee's ability to amend its claims.  Nevertheless, Chief Administrative Patent Judge James Donald Smith at a PTAB roundtable discussion on April 15 hinted that an upcoming PTAB decision will provide guidance for patent owners to amend claims successfully.

7. Estoppel is Limited:  Although a petitioner is estopped from rearguing the bases of invalidity argued (or that could have been argued) at the PTAB, estoppel does not reach all invalidity arguments.  Only patents or publication prior art may be raised in IPR proceedings, and therefore a petitioner can only be estopped from arguing invalidity on those bases.  A defendant could still raise other bases for invalidity in district court, such as non-patentable subject matter, statutory bars triggered by public use or sale, or lack of sufficient written description and enablement.  Further, if the parties settle and the IPR trial is terminated with respect to the petitioner, estoppel does not attach to the petitioner.  See 35 U.S.C. § 317(a).  Similarly, if the USPTO decides not to institute the IPR trial, estoppel does not attach to the petitioner.  See 35 U.S.C. § 315(e).

8. Timing is Generally Faster:  Median time to trial in district court is around 2.5 years, with significant variations across jurisdictions.  PricewaterhouseCoopers LLP 2013 Patent Litigation Study.  In comparison, IPR trials are instituted within six months after the petition is filed (37 C.F.R. § 42.107(b); 35 U.S.C. §314(b)), and the PTAB must come to a final determination within one year of institution, with a possible six-month extension for good cause.  35 U.S.C. § 316(a)(11). 

9. It Could Save Money:  Initiating a proceeding at the PTAB costs $9,000 to petition, plus a fee of $200 for each claim over 20.  Once initiated, there is an additional $14,000 fee, plus a fee of $400 for each claim over 15.  From there, the fees to take a PTAB proceeding through completion generally range from $200,000 - $750,000.  In contrast, a patent lawsuit costs an average of $530,000 - $3.6 million through the end of discovery, and $970,000 - $5.9 million through final disposition.  AIPLA Report of the Economic Survey (2013).  In part, this may be because district court litigation typically involves increased discovery costs, hearings and additional issues, including infringement, which is not determined at a PTAB proceeding.  However, if the litigation is not stayed, you may not save that money as IPR and district court litigation may be forced to proceed concurrently.

10. PTAB Has Technical Expertise:  In contrast with most district court judges and juries, the PTAB is staffed with experienced patent attorneys with technical backgrounds.  Familiarity with patent law and greater technical understanding favors petitioners, particularly where the technology or aspects of patent law at issue are complex.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.