PRESENTATION TITLE

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America Invents Act: Creating “Rocket Docket” Patent

Trials in the Patent Office

Agenda

Overview of the old and new toolsNew tools– Timing– Strategic considerations– Costs

Case studies exploring effectiveness of the new tools Status of Rules Governing Procedures

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Pre-9/16/12 PTO Tools

Ex Parte Reexamination Inter Partes Reexamination

Patents/printed publications

Substantial new question

No discovery, no oral hearing

No estoppel

No settlement effect

Patent owner may request

Patents/printed publications

Reasonable likelihood of prevailing

No discovery, no oral hearing

Estoppel (PTO and D/C)

No settlement effect

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Post-9/16/12 PTO Tools

Ex Parte Reexamination Inter Partes Reexamination Post Grant Review

Patents/printed publications

Substantial new question

No discovery, oral hearing

No estoppel

No settlement effect

Patent owner may request

Patents/printed publications

Reasonable likelihood requester prevails

Discovery, oral hearing

Estoppel (PTO, D/C and ITC)

Settlement terminates, no estoppel

Available 9/16/12, if no PGR

Within 12 months of litigation

Any invalidity ground

More likely than not 1+ claim unpatentable; and/or novel/unsettled legal question

Discovery, oral hearing

Estoppel (PTO, D/C and ITC)

Settlement terminates, no estoppel

Patents filed after 3/16/13

Within 9 months of issuance

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Summary of Major Areas of Change

Proceeding Purpose &Timing

Issues &Prior Art

Strategic Considerations

Post-Grant Review

3rd Party challenge of patent within 9 months of issuance

Any ground of invalidity (§§ 101, 102, 103, 112, 251) – not limited to patents or printed publications

Balancing Litigation Defenses with Estoppel Provisions

Inter Partes Review

3rd Party challenge of patent after PGR window or conclusion of PGR*

Limited to novelty, obviousness (§§ 102, 103) – limited to patents and printed publications

Balancing Litigation Defenses with Estoppel Provisions

* PGR only available for patents filed on or after 3/16/2013. Practically, PGR will not be implemented until approximately 2015.

Timing

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PGR

Patent app. filed after 3/16/13

Patent issues (likely 2015

or later)

Patent expires

9 mos.

Request for PGR filed

PGR completed

2 years

Invalidity based on:• Patents• Printed publications• Prior use/sale• Insufficient disclosure• Etc.

Estoppel

“Raised or reasonably could have raised”

Challenger’s prior DJ lawsuit forfeits review entirely

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IPR: Scenario A (no PGR, no lawsuit)

Invalidity based on:

• Patents

• Printed publications

• Double patenting

9 mos.

IPR Filed

2 years

IPR Completed

Patent issues Patent expires

Estoppel

Challenger’s prior DJ lawsuit forfeits review entirely

No PGR filed

“Raised or reasonably could have raised”

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No PGR filed, > 9 mos. elapsed

Patentee lawsuit

1 year

IPR must be filed within 1

year

Patent issues Patent expires

Estoppel

IPR: Scenario B (lawsuit)

Invalidity based on:• Patents• Printed publications• Double patenting

IPR Completed

2 years

“Raised or reasonably could have raised”

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USPTO Proposed Timeline for Conducting PGR and IPR

Proposed Trial Practice Guide: Federal Register 77(27):6868, 09-Feb-2012

Petition Filed

PO Preliminary Response

Decision on

Petition

PO Response &

Motion to Amend Claims

Petitioner Reply to PO

Response & Opposition to Amendment

PO Reply to Opposition to Amendment Oral Hearing

Final Written

Decision

2 months

3 months

4 months

2 months

1 month

Hearing Set on

Request

No more than 12 months

PO Discovery

Period

Petitioner Discovery

Period

PO Discovery

Period

Period for Observations & Motions to

Exclude Evidence

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Procedures – “Rocket Docket” Patent Office Trials

Sample Scheduling Order

• 4 months for PO response to petition and amendment proposal,

• 2 months for Petitioner reply,• 1 month for PO reply to Petitioner’s

opposition, • 2-3 months for motions to exclude evidence

and oral hearing, and • 2 months for final written decision.

Strategic Considerations

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Maximizing Options

Proactive Approach Other Opportunities• Notice letter

from patentee• Stalled pre-

litigation negotiations

• Prior art search reveals new invalidating art

• Litigation filed• License

expiration

Patent Monitoring

Post-GrantChallenge

Freedom toOperateAnalysis

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Benefits to Challenger

Cancellation of claims - - Avoid infringement

- Freedom to operate

Amendment of claims- Intervening rights

Patentee admissions

Prosecution history

estoppelCreateintrinsic

evidence

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Strategic Pros And Cons

Pros Cons

Ex Parte Reexam

• Faster/less expensive than litigation

• No estoppel

• Anonymity

• Multiple reexams

• Lower burden of proof

• Technically sophisticated

• Only patents/printed publications

• No involvement after request

• $17,760 Filing fee

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Strategic Pros And Cons

Pros Cons

Inter Partes Review

• Less expensive than litigation

• Discovery, oral hearing

• Some invalidity grounds remain for litigation

• Lower burden of proof

• Technically sophisticated

• Only patents/printed publications

• Estoppel on patents and printed publications that could have been raised

• Effectively prevents ex parte reexam

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Strategic Pros And Cons

Pros Cons

Post Grant Review

• Less expensive than litigation

• Discovery, oral hearing

• Lower burden of proof

• Technically sophisticated

• Broad invalidity bases

• Estoppel on all invalidity grounds that could have been raised

• Effectively prevents IPR and ex parte reexam

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Estoppel - Inter Partes Review

Parallel LitigationPTO Determines Patent

Valid

Parallel Litigation District Court Holds Patent

Valid

When EstoppelAttaches

InterPartesReexam

Estopped from validity defense (raised or could have raised in Inter Partes Reexam). •District Court Only

Inter Partes Reexam Vacated -Estopped

Final Decision -AppealsExhausted

Inter Partes Review

Estopped from validity defense (raised or reasonably could have raised) •ITC & District Court

No Estoppel*

* Practical Estoppel for Inter Partes Review filed by party more than one year after being sued for patent infringement. §315(b).

(PTAB)WrittenDecision

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Strategic Timing: Inter Partes Reexam v. IPR

Inter Partes Reexam (pre-9/16/12) IPR (post-9/16/12)Standard: reasonable likelihood of prevailing

Standard: reasonable likelihood of prevailing (but effectively may be higher to ease burden on PTAB)

If not converted to IPR procedure, longer time to decision, estoppel

Faster time to decision, estoppel

Can file even if already in DJ litigation or litigation > 1 year

Cannot file if DJ litigation before IPR; cannot file if in litigation > 1 year

Long delay often a factor in denying stay motions

Unknown impact of shorter time to decision – more inclined to stay?

Greater ability of PO to amend More restricted amendments

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Strategic Issues: PTO vs. Litigation

Factors Post-GrantReview

Inter Partes Review Litigation

Burden of Proof Preponderance of Evidence Clear and Convincing Evidence

Presumption of Validity

No Yes

Claim scope Broadest reasonable interpretation (Suitco)

Contextual (narrow) construction (Phillips)

Complexity and nature of attack

Any basis other than best mode

References limited to printed publications, but must pick best

• Any references, but limited to best

• Any basis but best mode

Decision maker PTAB3 Judge Panel

Average Juror

Practical Considerations and the Governing Rules

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Procedures – “Rocket Docket” Patent Office Trials

• Goal to improve timing over Inter Partes Reexaminations.– May increase likelihood of automatic stay

“sticking.”

Projected Timing

Inter Partes Reexam 5+ years to BPAI decision

Inter Partes Review AIA indicates 12 to 18 months to PTAB decision

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Procedures – “Rocket Docket” Patent Office Trials

Litigation/Trial-Like

• Claim Construction• Limited Discovery• Protective Orders• Settlement• Hearing

Prosecution/Reexamination

• Amendments to Claims– 1 as matter of right– 1 by joint motion

• Claim Charts

Appeal by either party to the CAFC

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Procedures – Petition for an Inter Partes Review

Petition = Summary Judgment Motion, Plus:

• Identify all real parties in interest. • Identify all claims challenged and grounds on which the

challenge to each claim is based. • Provide a claim construction and show how the

construed claim is unpatentable. • Include statement of facts, identify the exhibit number of

the supporting evidence relied upon to support the challenge and state the relevance of the evidence.

• Provide copies of evidence relied upon, including any declarations.

• Page limits for IPR (50) and PGR (70).

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Procedures – Petition for an Inter Partes Review

Board will conduct the proceedingso as to reduce the burdens:

• Instituting a trial on a claim-by-claim, ground-by-ground basis.

• Conference calls with a judge handling the case to decide issues quickly and efficiently and to avoid the burdens associated with filing requests for relief.

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Procedures – “Rocket Docket” Patent Office Trials

Post-Grant Review

• “Evidence directly related to factual assertions advanced by either party in the proceeding.”

• Depositions not expressly identified.

Inter Partes Review

• Depositions of witnesses submitting affidavits or declarations.

• What is otherwise necessary in the interest of justice.

U.S. District Court

• Any nonprivileged matter that is relevant to any party’s claim or defense.– Includes any

documents or other tangible things and the identity and location of persons who know of any discoverable matter.

• Depositions of inventors, prosecuting attorneys, experts, employees.

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Procedures – “Rocket Docket” Patent Office Trials

Routine Discovery

• Documents cited.• Cross-

examination for submitted testimony.

• Information inconsistent with positions advanced during the proceeding.

Additional Discovery

• Any discovery beyond routine discovery.

• Can include additional live testimony.

Requestby any party for additional discovery*

* A party seeking additional discovery in IPR and derivation must demonstrate that the additional discovery is in the interests of justice. A party seeking additional discovery in PGR will be subject to the lower good cause standard.

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Proposed Filing Fees (Single Patent)

Post Grant Procedure

PTO Petition Fees (base)

Ex Parte $17,760

IPR $27,200

PGR $47,100

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Comments on the Rules – Legal Organizations

Legal Organizations

• ABA

• AIPLA

• IPO

• Association of Corporate Counsel

• International Federation of IP Attorneys

• Filing of a Petition with option to file “Supplemental Information”

• Preliminary response using testimonial evidence

• Initial evidentiary disclosures• Motions to amend claims - reasonable

number• Pro Hac Vice not freely granted• “Reasonably could have raised”

estoppel• Standard for claim construction -

“Broadest Reasonable Construction”• Fees• Page limits• Timing of PO response

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Comments on the Rules – Companies

Companies

• Intel

• Microsoft

• Verizon

• Google

• Cisco

• Page Limits

• Discovery

• Scope of direct examination

• Preliminary response by PO with testimonial evidence

• Fees

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Potential Pitfalls

Patentee

Petitioner

Short Response Time

• Respond to claim construction

• Analyze prior art• Consider expert &

secondary considerations

Discovery• 4 months• Extensions unlikely• Ramifications of

claim amendments

Drafting Petition• Grounds to raise?• Impact of standard

of review?• Impact of claim

constructions on litigation?

Discovery• 2 months• Extensions unlikely• Responding to

amendments & secondary considerations

Case Studies

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Case Study #1: PGR (“All In”)

FTO analysis identifies patent X, issued 3 months

ago, and multiple invalidity

arguments

PGR (all invalidity bases)

File DJ action

(stayed)

Lose PGR: litigation resumes

Win PGR: freedom to operate, litigation over

Estoppel“Raised /reasonably could have raised”

Effectively infringement

only

Best circumstances for use:• Strong, but complex invalidity

positions• Strong prior use/sale, 101, 112

arguments• Strong 103, no 102, arguments• Decent non-infringement position

Case Study #2: IPR (“The Hedge”)

FTO analysis identifies patent X,

issued 12

months ago,

strong printed art and

prior use/sale

IPR (patents /printed pubs.)

File DJ action

(stayed)

Lose IPR: litigation resumes

Win IPR: freedom to operate, litigation over

Estoppel“Raised /reasonably could have raised”

Infringement, §112, and

prior use/sale invalidity defenses

Best circumstances for use:• PGR not available• Complex invalidity positions• Prior art positions, both printed

and not printed• Strong 103, no 102, arguments• Weak non-infringement position

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Case Study #3: IPR (“The Choice”)

Pre-9/16/12, receive

invitation to license

IPR (patents /printed pubs.)

File DJ action

(stayed)

Lose IPR: litigation resumes

Win IPR: freedom to operate, litigation over

Estoppel“Raised /reasonably could have raised”

Infringement, §112, and prior use/sale invalidity defenses

IP reexam (patents /printed pubs.)

3-6 year proceeding through appeal (potential litigation stay throughout); risk of conversion to IPR process

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Case Study #4: Ex Parte Reexam: Old School

FTO analysis identifies patent X

and multiple invalidity

arguments

Ex parte reexam

Patent Owner files lawsuit

(stayed)

Lose reexam: litigation resumes

Win ex parte reexam: freedom to operate, litigation over

(No “estoppel,” but potentially argument estoppel)

Litigation on all issues

Best circumstances for use:• Need to preserve some prior art based invalidity arguments for litigation

• Weak non-infringement positions• Cost is a factor

Ex parte reexam