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Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

PTAB Trial Proceedings and Parallel Litigation: Impact, Strategy & Consequences

2015 National CLE Conference

Friday, January 9, 2015

Presented byDenise W. DeFranco

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AGENDA

Recent PTAB statistics (Denise) Real parties, joint parties, and defense group

dynamics (Scott) Pitfalls and opportunities (Scott) Amending at the PTAB or elsewhere (Scott) New rules and shifting perspectives (Scott) Choice of forum: PTAB v. District Court (Denise) Stay of litigation (Denise) Appeals from PTAB proceedings (Denise) QUESTIONS

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Claim Disposition

Current as of January 1, 2015Source: Finnegan Research

203071.38%

60821.38%

2067.24%

IPRResultsbyClaim

InstitutedClaimsCancelledbyPTABInstitutedClaimsSurvivedInstitutedClaimsConcededbyOwner

49392.84%

244.52%

142.64%

CBMResultsbyClaim

InstitutedClaimsCancelledbyPTAB

InstitutedClaimsSurvived

InstitutedClaimsConcededbyOwner

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Case Disposition

Current as of January 1, 2015Source: Finnegan Research

12570.22%

5028.09%

31.69%

IPRResultsbyCase

NoInstitutedorSubstituteClaimsSurvivedAtLeastOneInstitutedClaimSurvivedConsideredSubstituteClaimsAllowed

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55

Claim Disposition

Current as of January 1, 2015Source: Finnegan Research

66

Timing

Current as of January 1, 2015

Source: Finnegan Research

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77

Claim Construction

Current as of January 1, 2015

Source: Finnegan Research

88

Claim Construction

Current as of January 1, 2015

Source: Finnegan Research

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99

Claim Construction

Current as of January 1, 2015

Source: Finnegan Research

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Choosing a Forum:District Court vs. PTAB

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1111

Another Day at the Office

Monday morning 9:30 a.m. and a package arrives

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Correspondence from the United States

you have just received a copy of a complaint that was filed in a court last Friday in the United States

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The Complaint

You are the alleged infringer of a U.S. Patent

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Evaluate Options

Stop allegedly infringing behavior Approach patent owner for a license Develop non-infringement defenses Develop invalidity defenses Consider countersuit:

For patent infringement For unfair trade practices

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Choose Forum for Invalidity Defenses

Seek to Invalidate Patent in District Court Where Sued

Challenge Patent at U.S. Patent & Trademark Office

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Overview of Relevant Considerations

Availability of post-grant challenges Procedural advantages and disadvantages Cost comparison using case study Time to resolution Scope of discovery Other practical considerations

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Availability of New Post-Grant Proceedings

IPR PGR CBMWhat? Any patent Any patent issued

from an application filed on or after March 16, 2013

Any covered business method where petitionercharged with infringement

Time Limits?

Within 12 months of being sued for infringement

Within nine months of issuance

Sunset after eight years(Sept. 16, 2020)

Scope? Limited to patents and printed publications

Any invalidity ground under 35 USC 282

Any invalidity ground under 35 USC 282

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Covered Business Method

Covered Business Method

A patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service (not including technology inventions)

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Procedural Advantages of USPTO

ISSUE PGR/CBM/IPR DISTRICT COURTBurden of proof Preponderance of the

evidenceClear and convincing evidence

Claim construction Broadest reasonable construction

Phillips:

- intrinsic record (other claims, specification, prosecution history)

- extrinsic evidence (experts; other prior art)

- DictionariesDecision maker Patent Trial and

Appeal Board (APJs)District court judge or jury

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Procedural Disadvantages of USPTO

ISSUE PGR/IPR/CBM DISTRICT COURT

Estoppel Issues raised or could have been raised

Yes (no post-grant challenge if lose in district court)

Amend claims Yes No

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PTO Fees For Post-Grant Proceedings

Institution Fee Excess Claims FeeIPR $27,200 $600 per claim above 20PGR $35,800 $800 per claim above 20

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Case Study for Three Patents in T-PGR

PTO Initiation Fee PTO Excess Claims Fee Total FeesPatent 1(100 claims)

$35,800 $64,000 $99,800

Patent 2(80 claims)

$35,800 $48,000 $83,800

Patent 3(20 claims)

$35,800 $0 $35,800

Total $107,400 $112,000 $219,400

Exemplary Legal Fees for T-PGR: $300K-700K Compare $3-5MM+ for litigation vs. $500K-$1MM in T-PGR Potential $250-500K reduction in litigation costs based on T-PGR

work that wont be repeated in litigation due to estoppel

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Time to Resolution

PROCEEDING TIME TO RESOLUTIONIPR/PGR/CBM About 18 monthsDistrict Court (very quick) 20 monthsDistrict Court (typical) 2-3 years

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District Court v. PTO

District Court PTO

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Other Patents Considerations

Which defense is stronger, non-infringement or invalidity?

Are you practicing the prior art such than any claim amendment would give rise to new non-infringement defense?

Conversely, would you still infringe even if the patent were amended to overcome the prior art?

Is a litigation stay available in district court?

Would claim construction issues benefit from early appeal to U.S. Court of Appeals for the Federal Circuit?

How many patents are asserted in litigation?

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Stays of Litigation

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IPRStays in Related Litigation

Stays in litigation with IPR Automatic stay if Petitioner files DJ action on or after

filing petition, unless:

Patent owner asks court to lift stay,

Patent owner files civil action or counterclaim for infringement, or

Petitioner asks to dismiss civil action. 35 U.S.C. 315(b).

A counterclaim of invalidity does not trigger an automatic stay. 35 USC 315(a).

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Stays in litigation with CBM/PGR (AIA section 18(b)) Court shall consider:

Whether stay will simplify issues and streamline trial

Whether discovery is complete and trial date is set

Whether stay will unduly prejudice non-moving party

Whether stay will reduce the burden of litigation

Immediate interlocutory appeal

Federal Circuit reviews de novo

Discretion of district court

CBM PGRStays in Related Litigation

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Statistics for Stays of Litigation

Post-AIAMotions to Stay Pending IPR, PGR, SE, or CBM

2012 (from 9/16) 2013 2014 (YTD) Total

Granted 3 107 83 193Denied 2 40 65 107Other 1 24 27 52Total 6 171 175 352

Success rate 50.0% 62.6% 47.4% 54.8%

Source: Docket Navigator (July 8, 2014)

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AIA Post-Grant Proceedings: The Coming Tsunami of Appeals

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Tsunami of PTAB Appeals?

As of Nov. 27, 2014: 2,122 inter partes review (IPR) petitions 262 covered business method review (CBM) petitions 3 post-grant review (PGR) petitions PTAB instituting at high rate and holding claims

unpatentable at high rate

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Tsunami of PTAB Appeals?

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Sources of PTAB Appeals

IPR, CBM and PGR appeals under 35 U.S.C. 141: A party to an inter partes review or a post-grant review

who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318 (a) or 328 (a) (as the case may be) may appeal the Boards decision only to the United States Court of Appeals for the Federal Circuit.

Interlocutory appeals of CBM stay denials under AIA 18

Mandamus?

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Commencing a PTAB Appeal

Must file a timely Notice of Appeal: [n]o later than sixty-three (63) days after the date of the

final Board decision. 37 CFR 90.3(a). [m]ust be filed with the Director, 37 CFR 90.2(a), with

copy of notice to PTAB, 37 CFR 90.2(a), and three copies to Federal Circuit clerk, Fed. Cir. R. 15(a)(1)

Must provide sufficient information to allow the Director to determine whether to intervene. 37 CFR 90.2(a)(3)(ii).

Cross-appeals: Within 14 days of the Notice of Appeal. FRAP 4(a)(3).

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First Rulings: Appeal of Institution Denials

Appeal of institution denials: After PTAB refused institution and party appealed

directly to CAFC, Federal Circuit held that institution decision could not be appealed because of Section 314(d)s broadly worded bar on appeal. St. Jude v. Volcano, 749 F.3d 1373, 1376 (Fed. Cir. 2014).

Court noted that Section 314(d) may well preclude all review [of a noninstitution decision] by any route, but it need not decide that issue here. Id.

See also Zoll v. Phillips, 2014 WL 4179887 (Fed. Cir. Aug 25, 2014).

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First Rulings: Mandamus

Mandamus petition relating to institution: PTAB refused to institute IPR proceedings on five

patents

Federal Circuit found that Petitioner had no clear and indisputable right to challenge a non-institution decision directly in this court, including by way of mandamus. In re Dominion Dealer Solutions, 749 F.3d 1379, 1381 (Fed. Cir. 2014).

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Strategic Tips: Make a Record

Make a record Introduce facts into the record to support theme:

Expert declarations Factual declarations Discussion of prior art references

Preserve legal arguments for appeal Take advantage of opportunities to object to evidence Take advantage of opportunities to comment on

evidence

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Strategic Tips: Preserve Issues for Appeal

Preserve Arguments: Object to evidence as introduced Make substantive objections during depositions (801,

802, 803) Motion to exclude evidence Observations on testimony Request for rehearing

Respond at every opportunity to set forth your positions

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Practitioners Guide to PTAB Trials

The Practitioner's Guide to Trials Before the Patent Trial and Appeal Board is a focused desk reference with checklists, charts, and practice tips. Practice-focused sections include: A quick reference for PTAB statutes and

rules Building patent trials into your litigation

strategy A detailed description of a PTAB trial from

petition preparation to appeals to the U.S. Court of Appeals for the Federal Circuit

Publisher: The ABA Section of Intellectual Property Law

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Finnegans AIA Blog

ABOUT THIS BLOGAIABlog.com is a resource of Finnegan providing news and information about U.S. patent practice under the America Invents Act (AIA).

www.aiablog.com

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Questions?

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Speaker Information

Denise W. DeFranco has been representing companies in patent infringement litigation in both trial and appellate courts for more than two decades. She has successfully litigated cases involving a broad range of technologies, including biotechnology, medical devices, pharmaceuticals, telecommunications, electronics, and software. Denise is currently serving on the Council of the ABA Intellectual Property Law Section and as the President-Elect of AIPLA, on the ladder to become President in October 2015.

Denise W. DeFrancoFinnegan, Henderson, Farabow, Garrett & Dunner, LLPTwo Seaport LaneBoston, MA 02210-2001 +1 617 646 1670+1 617 646 1666 Faxdenise.defranco@finnegan.com

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