INTER PARTES REVIEW: VIEWS FROM THE TRENCHES Jeff Sanok and Katie Clune Crowell & Moring LLP November 4, 2013

Overview

• Inter Partes Review – What is it?

• Data to Date

• IPR Filing Considerations

• “Lessons We’ve Learned” in the Trenches

• Questions / Discussion

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AIA Into Law (Thomas Jefferson High School for Science &

Technology - Sept. 16, 2011)

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What is an IPR?

• “Trial” procedure before the Patent Trial and Appeal Board (PTAB)

• Challenges validity on §§ 102/103 printed publications and patents

• Inter partes review (IPR) replaced inter partes reexamination (IPX )

– Before PTAB, not Examiners

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Who May File / Overall Timing IPX (Old) IPR (New)

Who May File Anyone other than Patent Owner or its privies.

Any person that is not the Patent Owner, except persons (or privies) who: a) Are estopped based on prior

reexamination or litigation

b) Filed a DJ for invalidity (not a counterclaim)

c) Had been served with a complaint more than one year before filing

Overall Timing 36 months or more (through BPAI appeal)

18 months approximately (maximum 12 months from grant, absent good cause or joinder)

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Key Differences Of An IPR IPX (Old) IPR (New)

Discovery None Some (discussed later)

Protective Order Not available Default protective order / can also move for one

Tribunal 3 Central Reexamination Unit (CRU) examiners

3 Administrative Patent Judges (APJs)

Fed. R. Evidence No Yes

Appeal First to BPAI, then to Federal Circuit

Direct appeal to Federal Circuit

Estoppel Arises after all appeals are final Arises upon final written decision by PTAB

Settlement Proceeding usually does not end if third party requestor drops out

•May settle without creating estoppel •Settlement terminates proceeding unless decided

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IPR Process - USPTO Timeline

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Data To Date IPR Petitions Filed (thru Oct. 31, 2013)

(CBM/DER)

FY (October 1 - September 30)

IPR

Total (IPR + CBM + DER)

2012 17 25

2013 514 563

2014 77 (annualized = 924)

96

Cumulative 608 684

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Data To Date IPR Filings By Month

0

10

20

30

40

50

60

70

80

2012 2013

Petitions Filed 10

87%

13%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

Petitions Granted

Petitions Denied

IPR Petition Grants/Denials

Petitions Granted

Petitions Denied

Less than 10% completely granted

73%

27%

Total 102 Grounds

Challenged

Total 103 Grounds

Challenged

0%

10%

20%

30%

40%

50%

60%

70%

80% IPR Bases - 102 and 103

Total 102 Grounds Challenged

Total 103 Grounds Challenged

Data To Date

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Data to Date

14%

86%

IPR Petitions with Declarations

Petitions without Declarations

Petitions with Declarations

12

30

70

0

10

20

30

40

50

60

70

80

Granted Denied

% of Grounds Granted

Data To Date Who Is Filing IPRs?

• Over 82% of IPRs filed to date involve patents in District Court litigation – IPR almost always filed by one or more

defendants

– Many other IPRs based on some “threat”

• Significantly improved chance of a stay versus ex parte reexam

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When to Consider an IPR…

• Existence of back up arguments (non-infringement, § 112, § 101, §§ 102/103 not based on patents / printed publications)

• Early identification of asserted claims (limit IPR attack)

• Technical complexity of patent (PTAB vs. jury) • Unfriendly forum (e.g., E.D. Tex.) • Is Patent Owner a competitor or NPE? • Short life of the patent

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When an IPR Might Not Make Sense…

• No back up invalidity/unenforceability arguments

• If other parties will fight the IPR battle for you

• Large number of asserted patents/claims

• Long life of the patent

• Beefy disclosure (allow PO to amend/fix)

• If better off before jury on all issues – “Good” facts, charismatic witnesses, spillover effect

across issues, etc.

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Lessons Learned (1) –IPRs In Multi-Defendant Litigation

• “Survivor” is not just a TV show – strange alliances may be formed

– Settlement Leverage – before/after 1 yr. service date

• Over Patent Owner

• Over Other Defendants

– The Joinder Problem

– Coordination/Best Prior Art/Page Limits

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Lessons Learned (2) – Beware of Page Limits

• Petition – 60 pages/average almost 5 grounds – Only 12 pages/ground! – 14 point font; no real footnotes

• Patent Owner Prelim. Response – 60 pages • Trial Initiated – average 2 grounds • Patent Owner Response – 60 pages

– for 2 grounds, PO gets 30 pages/ground!

• Petitioner Reply – 15 pages – just 7.5 pages per ground

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Lessons Learned (2) – Beware of Page Limits

• Patent Owner Advantage – On a per ground basis, PO gets 42 pages;

petitioner gets only 19.5 pages

• PTAB Stingy on Extra Page Requests – Denial of almost every motion

• Recommend – Limit initial petitions to <3 grounds

– File multiple petitions

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Lessons Learned (3) – “Joinder” Issues

• IPR Petition: one-year bar from service (not filing)

• Joinder Exceptions to one-year bar (35 USC § 315(c)) – After patent owner’s preliminary response (or lapsing

of deadline)

– Before 30 days after institution of inter partes review

– Institution discretionary if accompanied by joinder motion

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A “Joinder” Case Study (IPR2013-071)

• NPE Litigation – Multiple defendants • At one year bar – “A” files IPR; “B” files IPR

– Both IPRs advance multiple distinct grounds

• PTAB grants “A” IPR; denies “B” IPR • §42.122 – w/in 1 month, “C” copies “A” IPR and

requests joinder – “B” only requests rehearing on limited grounds

(denied)

• “B” then files revised IPR/joinder request

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A “Joinder” Case Study (IPR2013-071)

• Patent Owner and “A” oppose “C’s” joinder – PO argues hinders settlement/causes delay

– “A” argues extra complications/adds nothing

– PO given time to respond to “C’s” copied IPR (another 60 pages directed at same 2 grounds and after learning PTAB’s views!)

• Patent Owner also opposes “B’s” joinder / “A” favors due to different grounds and art

• PTAB denies “B’s” revised IPR – Not similar enough to A’s; PTAB appears concerned

only with delay, not quality of grounds

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A “Joinder” Case Study (IPR2013-071)

• “B” now copies “A’s” IPR; requests joinder and waiver of one month time limit

• Patent Owner and “A” oppose

– PO argues hinders settlement/delay

– “A” argues extra complications

• PTAB Outcome:

– “B’s” IPR granted with restrictions

– “C’s” IPR granted with extra restrictions

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A “Joinder” Case Study (IPR2013-071)

• PTAB Restrictions:

– A to make consolidated filings

– A goes first in all depositions/hearings

– C only allowed 7 page filing on points of difference with A

– C cannot overlap A in depositions/hearings

– B now just along for the estoppel ride

• Protection against A settling (risky)

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Lessons Learned (3) – Claim Construction

• PTAB supposed to apply “the broadest reasonable construction in light of the specification” 37 C.F.R. § 42.100(b)

• “Heavy presumption” for ordinary meaning

• Early PTAB rulings – constructions appear more like district court type

than those Examiners apply

• Unclear how PTAB law will develop

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Lessons Learned (3) – Claim Construction

• Be careful to include claim constructions in petition

– Patent owner has advantage of “selecting” constructions not briefed in petition

– Petitioner has no opportunity to respond

– PTAB has denied grounds based on lack of constructions

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Lessons Learned (4) – Discovery Limitations

• § 42.51 — Three Types of Discovery – Mandatory “Initial Disclosures”

• By agreement; no one agrees

– Limited - “Routine Discovery” • Production of cited exhibits

• Cross examination of declarants

• Production of inconsistent information

– Limited - “Additional Discovery” • By agreement OR

• In the interests of justice

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Lessons Learned (4) – Discovery Limitations

• Garmin v. Cuozzo, Case IPR2012-00001, Paper No. 26, (PTAB March 5, 2013). – Limited discovery is “significantly different from the scope of

[district court] discovery,” and “restricts additional discovery to particular limited situations”

• Five additional discovery factors: 1. “More Than A Possibility And Mere Allegation”

“the requester of the information should already be in possession of a threshold amount of evidence or reasoning tending to show beyond speculation that something useful will be uncovered.”

2. “Litigation Positions and Underlying Basis” 3. “Ability to Generate Equivalent Information by Other Means” 4. “Easily Understandable Instructions” 5. “Requests Not Overly Burdensome To Answer”

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Lessons Learned (4) – Discovery Limitations

• Inconsistent Information – “relevant information that is inconsistent with a

position advanced by the party during the proceeding”

• For Litigated Patents - produce or be warned – Prior expert reports and testimony (both patent

owner and defendants)

– Prior inventor testimony

– Prior licenses

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Lessons Learned (5) - Who Should Handle IPR?

• Lead Counsel – Must Have PTO Registration

• Pro Hac Vice Motions Permitted in IPRs

– Litigation Counsel

• Prior protective order concerns (?)

• Patent prosecution bars (?)

– (“An inter partes review proceeding is not a reexamination proceeding” – PTAB)

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Lessons Learned (5) - Who Should Handle IPR?

• Institution Starts “Trial” – Expert cross examination

– Rules of evidence/objections

• Motions to Amend – Understanding PTO application of broadest

reasonable interpretation (BRI) standard

– Know your PTAB panel (many new Judges) • Old and familiar with Examiner ex parte appeals

• New private practice “litigators”

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Inter Partes Review – Views From The Trenches

• Questions/Discussion?

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INTER PARTES REVIEW: VIEWS FROM THE TRENCHES Jeff Sanok and Katie Clune Crowell & Moring LLP November 4, 2013