"Kroy IP appears to offer patent owners attractive strategic options for timing their patent enforcement investigations and actions."
The U.S. Court of Appeals for the Federal Circuit's precedential decision in Kroy IP Holdings LLC v. Groupon Inc. (Kroy IP) has significant strategic implications for patent litigation and inter partes review (IPR) proceedings. The holding, facts, and procedural aspects of Kroy IP are well covered here. This article focuses on how the decision affects patent litigation and IPR strategies for both patent owners and IPR petitioners.
Kroy IP significantly narrowed the scope of IPR estoppel. In particular, a final written IPR decision that certain claims are unpatentable cannot collaterally estop a patent owner from asserting other, unadjudicated patent claims in district court litigation. This is true even if the unadjudicated claims are "immaterially different." This decision has several important implications:
- IPR petitioners should consider challenging greater numbers of patent claims and whether filing multiple IPR petitions is warranted to guard against later assertions in district court litigation.
- IPR petitioners should comprehensively assess both noninfringement and invalidity defenses for all potentially relevant patent claims at an early point in a dispute to ensure that IPR challenges comprehensively address all relevant patent claims.
- Patent owners should consider presenting additional claim sets in their patent applications to maximize enforcement options and support strategic timing of enforcement activities.
- Patent owners should consider timing their enforcement strategies to strategically leverage enforcement options.
We further explore these points below.
Strategic Implications for IPR Petitioners
Increased Pressure to Challenge More Claims
Under Kroy IP, IPR petitioners cannot rely on invalidating representative claims and arguing collateral estoppel for immaterially different claims in district court. This increases the pressure to challenge every claim that could potentially be asserted in litigation. This change could substantially increase both the complexity and cost of IPR petitions.
Length Constraints
IPR petitions are limited to 14,000 words. Challenging greater numbers of claims within this limit may prove difficult. The cost of filing additional IPR petitions is substantial. At present, the petition fee is $23,750 for up to 20 claims and $470 for each additional claim. The post institution fee is currently $28,125. Multiplying these costs by filing multiple petitions may be unappealing—but the added cost may be justified if necessary to fully address all relevant claims.
Comprehensive Early Case Assessment
IPR petitioners will be well served to carefully consider all claims from an asserted patent at an early point in a patent dispute. While petitioners may find they have higher upfront costs for this assessment (in addition to the increased cost of broader IPR challenges), these costs may be money-well-spent to guard against the risks of subsequent assertion of unchallenged claims. Petitioners may still need to prioritize which claims to challenge based on factors such as the strength of available noninfringement and invalidity defenses and the commercial importance of the technology in question. The increased stakes of this prioritization underscore the need for a comprehensive early case assessment.
Strategic Implications for Patent Owners
Portfolio Strategy
Patent owners should revisit the cost-benefit analysis of how many claims to present in a given patent application. Presently, extra claim fees accrue for each independent claim in excess of 3 and each claim in excess of 20. Thus, presenting six independent claims and 40 total claims would incur excess claim fees of more than $5,000, which is more than double the typical USPTO fee burden of filing a separate application. In light of Kroy IP, this added cost may be justified to support strategic enforcement efforts.
Strategic Timing of Enforcement Activities
Kroy IP appears to offer some attractive enforcement strategies for patent owners. By statute, an inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner is served with a complaint alleging infringement of the patent. 35 U.S.C. § 315(b). In light of this deadline, a patent owner might choose to focus its pre-filing diligence on a relatively focused set of claims to initiate litigation as soon as justified. At the same time, a patent owner could continue its infringement investigation for other patent claims.
If continuing investigation establishes additional infringement, a patent owner may be able to amend its complaint or bring a second infringement action asserting different claims of the same patent at a time close to or even after the one-year IPR deadline effectively precluding a would-be petitioner from mounting an IPR challenge. It should be noted that this approach is so far untested. Patent owners and are well advised to carefully consider the rules for and discretion of courts to permit amendment of complaints when considering such a strategy.
Simply put, Kroy IP appears to offer patent owners attractive strategic options for timing their patent enforcement investigations and actions. To protect against these enforcement strategies, petitioners may need to pursue a significantly more comprehensive approach in their IPR challenges.
Originally Published by IPWatchdog
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.
