Judge Rader announced his plans to retire from the Federal Circuit at the end of this month. Different sources are reporting that he has indicated an interest in teaching intellectual property to students in various countries. This will also allow him to continue to lecture and travel in the next phase of his career. We wish him the best of luck in his new pursuits.
From the U.S. Court of Appeals for the Federal Circuit Web Page:
CHIEF JUDGE RANDALL R. RADER TO STEP DOWN AS CHIEF JUDGE ON MAY 30, 2014
Chief Judge Randall R. Rader today announced his intention to step down as chief judge on May 30, 2014. Judge Rader will continue in active service on the court. He will also undertake additional teaching, lecturing and travel. Consistent with statutory succession provisions, Judge Sharon Prost will succeed Judge Rader as the chief judge.
Lex Machina’s 2013 Patent Litigation Report Shows Disparity Between Litigated Patents and those under PTAB ReviewMay 14th, 2014
Litigation and post-grant proceedings often go hand-in-hand. A new litigation report published by Lex Machina summarizes patent litigation data for 2013 and prior years. It is an interesting report and very easy to digest. Two findings caught my eye. The first one relates to the overall number of patent litigation cases filed in 2013:
Plaintiffs filed 6,092 new patent cases in U.S. District Courts in 2013 . . .
The second finding is the number of U.S. Patents at issue in those filings:
4,917 patents were at issue in all cases filed during 2013.
That second number is surprising, because if understood correctly, the findings indicate that about 5 out of every 6 lawsuits filed in 2013 relate to different patents. That ratio seems high — especially in view of the AIA litigation joinder provisions. However, if we assume these numbers are roughly correct, they show a large difference between the number of patents asserted and the petitions filed in the PTAB.
For example, compare Lex Machina’s reported 4,917 patents at issue in 2013 suits with the 1,312 total IPR and CBM petitions on file in the PTAB from September 16, 2012 to May 8, 2014. These numbers indicate that at most about 1 out of 3 patents in litigation are the subject of a PTAB petition. If true, that means several patents in litigation have not been submitted for review by the PTAB.
Of course, bear in mind that this is just a rough, unscientific approximation because:
- not every petition in the PTAB relates to a new patent,
- not every patent being challenged in the PTAB is in litigation, and
- this crude approach does not attempt to correlate the petitions before the PTAB with a certain year of patent assertion.
Not every patent in suit is eligible for a post-issuance proceeding in the PTAB, so there is no reason to expect that every patent in suit will be the subject of a petition. But, this data seems to indicate that there is still a large number of litigated patents that could be subject to future post-grant challenges. Readers are invited to contact me with better data than this admittedly rough approximation. Please send me that information and I will try to post it to give a more accurate representation of patents in litigation versus those challenged in the PTAB.
I am presenting at the AIPLA Spring Meeting on May 15, 2014 in Philadelphia and hope to see you there. My task is to provide strategies for filing inter partes reviews, covered business method reviews and post-grant reviews. I hope to see you there!
I just got back from the PLI Post-Grant Conference held in San Francisco. The new world of patent litigation has only just begun and we are seeing many interesting ways that the AIA post-grant provisions are changing the way we view and value patents. This year already has brought a lot of patent-related decisions from the PTAB, Federal Circuit, and Supreme Court. There will be a lot to process in the months to come. Stay tuned.
The Federal Circuit issued two orders on April 24, 2014 dismissing appeals by petitioners in proceedings where the Patent Trial and Appeal Board (PTAB) denied institution of inter partes review (IPR). Each appeal is summarized as follows:
St. Jude Medical, Cardiology Div. v. Volcano Corp. & Michelle K. Lee (as Deputy Director) - Appeal of Denial of IPR Petition
St. Jude brought suit against Volcano for patent infringement of five patents in 2010. St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., No. 10-cv- 631 (D. Del. filed July 27, 2010). Volcano counterclaimed alleging patent infringement of its U.S. Pat. 7,134,994 in September of 2010. More than two years later, the district court dismissed all claims relating to the ’994 patent (based on stipulations by the parties).
About a half year after the district court dismissal, St. Jude filed a petition for IPR of the ’994 patent. IPR2013-00109. But that petition was dismissed by the Board (acting as a delegee of the Director) based on the one-year bar for IPR petitions. 35 U.S.C. § 315(b). In a case of first impression, the Board determined that a counterclaim alleging infringement of a patent asserted over a year before the filing of the IPR petition triggered the 315(b) bar. St. Jude appealed the Board’s decision not to institute IPR to the Federal Circuit. Volcano and the PTO Director moved to dismiss St. Jude’s Federal Circuit appeal.
The Federal Circuit dismissed St. Jude’s appeal, holding that it may not hear appeals from the Director’s denial of petition for inter partes review. In making its decision, the Court applied 35 U.S.C. § 314(d) and explained that an appeal to the Federal Circuit of a decision on IPR lacks jurisdiction unless the Board institutes trial:
Chapter 31 authorizes appeals to this court only from “the final written decision of the [Board] under section 318(a).” Id. § 319. Likewise, section 141(c) in relevant part authorizes appeal only by “a party to an inter partes review . . . who is dissatisfied with the final written decision of the [Board] under section 318(a).” Id. § 141(c). What St. Jude now challenges, however, is the Director’s non-institution decision under section 314(a) & (b). That is not a “final written decision” of the Board under section 318(a), and the statutory provisions addressing inter partes review contain no authorization to appeal a noninstitution decision to this court. . . .
The statute thus establishes a two-step procedure for inter partes review: the Director’s decision whether to institute a proceeding, followed (if the proceeding is instituted) by the Board’s conduct of the proceeding and decision with respect to patentability. . . . The statute provides for an appeal to this court only of the Board’s decision at the second step, not the Director’s decision at the first step.
The Federal Circuit’s position on direct appeals from the Director’s decision whether to institute an inter partes review is summarized in the next paragraph:
In fact, the statute goes beyond merely omitting, and underscoring through its structure the omission of, a right to appeal the non-institution decision. It contains a broadly worded bar on appeal. Under the title, “No Appeal,” Section 314(d) declares that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” Id. § 314(d). That declaration may well preclude all review by any route, which we need not decide. It certainly bars an appeal of the non-institution decision here.
The Court’s holding in St. Jude Medical was also used to dismiss the next appeal which requested mandamus relief:
In re Dominion Dealer Solutions, LLC. - Petition for Writ of Mandamus to the USPTO
Dominion Dealer Solutions filed several IPR petitions to challenge the patentability of several patents owned by AutoAlert, Inc. IPR2013-00220, -00222, -00223, -00224 and -00225. The Board denied institution of trial for five of the IPR petitions. Dominion filed requests for rehearing, but they were also denied by the Board. Dominion then filed an action in the Eastern District of Virginia to challenge the Board’s decision under the Administrative Procedures Act (see my earlier post). Dominion also filed a “Petition for Writ of Mandamus to the Director” with the Federal Circuit.
The Federal Circuit denied the petition for mandamus. In denying Dominion’s appeal, the Federal Circuit referenced the St. Jude Medical decision made that same day:
In another Order issued today, we dismiss an appeal by a patent challenger seeking review of the Director’s decision not to institute an inter partes review. See Order Dismissing Appeal, St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., No. 2014-1183 (Fed. Cir. Apr. 24, 2014). We explain that such a challenger may not appeal the non-institution decision to this court. We conclude that such an appeal is precluded by the statutory provisions addressing inter partes review, including section 314(d)’s broad declaration that the Director’s decision “whether to institute an inter partes review under this section shall be final and nonappealable,” and by our jurisdictional statute. See St. Jude, slip op. at 5-6.
Those conclusions require denial of Dominion’s petition for mandamus relief. At a minimum, given our conclusions about the statutory scheme, Dominion has no “clear and indisputable” right to challenge a noninstitution decision directly in this court, including by way of mandamus. That is all we need to decide.
The Court noted Dominion’s appeal in the Eastern District of Virginia, and its dismissal on April 18, 2014, but concluded “[w]e need not decide that issue here.”
These decisions remind petitioners that they should take every reasonable measure to obtain institution of trial, because appeals of Board decisions denying institution of trial will not easily survive a motion for dismissal in light of the holding in St. Jude Medical. It will be interesting to see whether Dominion will decide to appeal the district court’s dismissal of its APA challenge now that the Federal Circuit has rejected mandamus relief under the St. Jude Medical holding.
Eastern District of Texas Denies SAP’s Motion to Vacate the Judgment in the Versata Patent Infringement CaseApril 24th, 2014
SAP recently learned that the Eastern District of Texas denied its motion to set aside or stay a district court judgment in favor of Versata for infringement of its U.S. Pat. 6,553,350 (Versata Software, Inc v. SAP America, Inc., No. 2:07-cv-00153 (E.D. Tex)). On April 20, 2014, Judge Roy S. Payne dismissed SAP’s motion despite its successful patentability challenge of Versata’s ’350 patent last year in the PTAB. Could SAP’s win in the first covered business method patent review be too late to rid itself of the judgment?
History of the Patent Infringement Suit and PTAB CBM Proceeding
The patent infringement suit by Versata started when it sued SAP for alleged infringement of its U.S. Patent Nos. 6,553,350 and 5,878,400 in 2007 (Versata Software, Inc v. SAP America, Inc., No. 2:07-cv-00153 (E.D. Tex)).
A first jury trial was held in 2009, and a second jury trial was held in 2011. In the first trial, the jury found both patents directly infringed and inducement of infringement of one claim of the ’350 patent. Shortly after the first trial, the Court granted JMOL of noninfringement of the ’400 patent. A second trial was held on the ’350 patent and a jury found the ’350 patent infringed, resulting in a $392 million judgment and an injunction dated September 9, 2011 (stayed pending appeal).
SAP filed its petition for covered business method patent review on the first day it was available via the AIA: September 16, 2012. The petition included grounds for challenging the ’350 patent under 35 USC §§ 101, 112, and 102. This was the the first covered business method patent review under the America Invents Act (CBM2012-000001).
About a month later, SAP filed a notice of appeal of the district court decision in the Federal Circuit (filed on October 11, 2011). Briefing was completed some months later, and oral arguments were held on February 4, 2013. About a month before the oral arguments (January 9, 2013), the PTAB instituted trial on the challenges under 35 USC §§ 101 and 102, but declined review on the challenges under 35 USC § 112. So as of January, 2013, the dispute was being pursued both in the Federal Circuit and in the PTAB.
Based on a series of communications between the parties and the PTAB, SAP agreed to drop its challenge under 35 USC § 102 in exchange for an expedited trial on its challenges under 35 USC § 101. The PTAB trial was held on April 17, 2013, where both parties presented their arguments concerning 35 USC § 101.
On May 1, 2013, the Federal Circuit affirmed the lower court jury decision on infringement and damages awards and vacated part of the trial court’s permanent injunction and remanded for further proceedings based on the opinion.
In June of 2013, the Patent Trial and Appeal Board (PTAB) decided that Versata’s U.S. Pat. 6,553,350 was unpatentable under 35 U.S.C. § 101.
After the Patent Office decided that the claims challenged in the related covered business method patent review were unpatentable, SAP motioned for a stay of proceedings in the Federal Circuit. In a simple, one page document, the Federal Circuit denied that motion for stay on July 5, 2013 without providing further comment or opinion. The Supreme Court denied certiorari of SAP’s petition on January 21, 2014.
Current Stay Motion
A “Motion of SAP America, Inc. and SAP AG For Relief From Judgment Under Fed. R. Civ. P. 59(e) or 60(b) Or For A Stay” was filed on January 21, 2014, and renewed on March 27, 2014 in the E.D. Tex. action. Judge Payne’s denial of the stay observed:
The Court finds that all four of these [stay] factors counsel against a stay in this case. There are no remaining issues in this case to simplify. The trial has been held and the appeal is completed. A stay would clearly unduly prejudice the nonmoving party and provide a clear tactical advantage for the moving party. Moreover, a stay would not reduce the burden of litigation on the parties or the Court. Finally, the fact that the Federal Circuit has already denied Defendants’ request for a stay pending completion of the PTAB proceedings weighs heavily against Defendants’ request. Accordingly, the request for a stay is DENIED.
Judge Payne also denied the request to vacate under Rule 60(b):
Defendants have taken advantage of a full and fair opportunity to litigate the validity of the patent before this Court, before the jury, and before the Federal Circuit, even pursuing a writ to the United States Supreme Court. To hold that later proceedings before the PTAB can render nugatory that entire process, and the time and effort of all of the judges and jurors who have evaluated the evidence and arguments would do a great disservice to the Seventh Amendment and the entire procedure put in place under Article III of the Constitution. The proceedings before the PTAB are not even final at this time, but this Court does not believe that later finality will change this calculus. Indeed, it is the finality of the judgments issued by the Federal Courts that is at stake here. Unlike the situation before the Court in Fresenius USA, Inc. v. Baxter Intern., Inc., 721 F.3d 1330 (Fed. Cir. 2013), the judgment in this case is final and there are no further issues to be resolved. That fact also clearly distinguishes this case from that before the Fifth Circuit in Bros. Inc. v. W. E. Grace Mfg. Co., 320 F.2d 594 (5th Cir. 1963).
Thus, Judge Payne distinguished the present matter from the Baxter case at least in part because the Baxter judgment was not final. Apparently, the court is of the opinion that once certiorari was denied by the Supreme Court the district court judgement became final. It will be interesting to see SAP’s response to this decision in the upcoming months.
A patent owner insists that your company infringes a patent and makes a claim of patent infringement. You have settled patent infringement assertions before, but this patent seems invalid over known prior art. You consult with your patent counsel and a decision is made to file a petition for inter partes review (IPR) under the new post-grant challenges afforded by the America Invents Act.
A lot of hard work goes into preparing the IPR petition. You include a declaration by an expert and multiple prior art grounds of invalidity. You file your petition, knowing that in six months you will get a decision on whether the Patent Trial and Appeal Board (PTAB) will institute trial. You get notice that a decision has been made and you read it, only to learn that your petition for IPR has been denied in total. You believe the decision not to institute is a mistake. What do you do?
To know your options you consult the statute:
§ 314. Institution of inter partes review
. . .
(d) NO APPEAL.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
Final and nonappealable? That does not sound good. After all, you recall hearing something about requests for reconsideration. So you consult the CFR:
§ 42.71 Decision on petitions or motions.
. . .
(c) Petition decisions. A decision by the Board on whether to institute a trial is final and nonappealable. A party may request rehearing on a decision by the Board on whether to institute a trial pursuant to paragraph (d) of this section. When rehearing a decision on petition, a panel will review the decision for an abuse of discretion.
(d) Rehearing. A party dissatisfied with a decision may file a request for rehearing, without prior authorization from the Board. The burden of showing a decision should be modified lies with the party challenging the decision. The request must specifically identify all matters the party believes the Board misapprehended or overlooked, and the place where each matter was previously addressed in a motion, an opposition, or a reply. A request for rehearing does not toll times for taking action. Any request must be filed: . . . (2) Within 30 days of the entry of a final decision or a decision not to institute a trial.
You prepare and file a request for rehearing according to the rules, but the PTAB affirms its earlier decision. What can you do now?
Petitioners are starting to explore different avenues to attempt to challenge a decision not to institute trial. Some have filed for relief in the Eastern District of Virginia, some have appealed to the Court of Appeals for the Federal Circuit, and some have made claims in both courts. A recent decision by the Eastern District of Virginia relies on § 314(d) to hold that appeals of PTAB decisions to not institute trial are final and nonappealable.
In Dominion Dealer Solutions, LLC, v. Michele K. Lee, 3:13CV699, ____ (E.D. Va. 2014), Judge Robert E. Payne denied Dominon’s challenge of the PTAB’s decision not to institute trial in five IPR petitions filed by Dominion against patents owned by AutoAlert, Inc. The court instead granted the PTO’s motion to dismiss based on its interpretation that the PTAB’s decision not to institute trial is final an nonappealable under 35 U.S.C. § 314(d).
As it turns out, the Federal Circuit already has a petition for mandamus from Dominion requesting relief from the PTAB decision to not institute IPR. It will be interesting to see how the Federal Circuit decides that petition, because that may be an indicator of the Federal Circuit’s approach to other persons that are also seeking a writ of mandamus — some of which we will be discussing in future posts.
I will be presenting at PLI’s “USPTO Post-Grant Patent Trials 2014″ CLE Program on April 28th with a number of other post-grant practitioners. Please join us there or attend via webinar! — Timothy Bianchi
USPTO Statistics Show Inter Partes Patent Reviews are Frequently Settled Before Final Board DecisionFebruary 17th, 2014
The U.S. Patent Office regularly posts statistics on post-grant proceedings such as inter partes review and covered business method patent review. An excerpt of PTAB statistics for February 13, 2014 is found below. The acronyms “FWD” and “RAJ” stand for “Final Written Decision on the merits” and “Request for Adverse Judgment.” The “Other” category includes terminations due to dismissal.
The number of trials with a final written decision on the merits (FWD) remains relatively small because IPR proceedings take roughly about a year and a half from filing of a petition to conclusion, and the AIA provision allowing IPRs is only about 17 months old.
Interestingly, the data shows a relatively high number of settled IPR proceedings. These settlements can occur any time after the filing of the petition and before a final written decision on the merits. Therefore, these settlements are made within months of the Petition filing rather than years. Of course, all settlements are not equal. Some result in the termination of both the Patent Office proceeding and the concurrent District Court litigation. Others may only terminate the Patent Office proceeding. And, as discussed in earlier posts, some settlements may dismiss the Petitioner from the Patent Office proceeding but maintain the proceeding against the Patent Owner. Regardless, early settlements often favor the Petitioner and provide a “win” for the Petitioner. And even if that is not the case, settlements executed before a final decision on the merits provide another opportunity for early discussion and resolution of patent disputes.
It should be noted that IPRs are responsible for more settlements than can be provided by these statistics, because many disputes are resolved by settlements achieved prior to any filing of IPR petitions (i.e., in cases where the Patent Owner is afforded an opportunity to settle before an IPR petition is filed).
It will be some time before more accurate statistics on IPRs will be available, however these settlement statistics show that parties can achieve some resolution of patent disputes very early in post-grant proceedings, and likely much earlier than in traditional litigation time frames.
A petition for covered business method review, inter partes review, or post-grant review may be filed on behalf of of several different parties and real parties in interest. Typically, such filings involve one, two, or three named persons (e.g., companies) as the petitioner. However, the Board’s rules do not state a limit on the number of persons that may sign a single petition. On October 15, 2013, thirty-five (35) companies were named in a Petition for a Covered Business Method Patent Review of U.S. Patent 8,146,077. Agilysys, Inc. et al v. Ameranth, Inc., CBM2014-00014. The companies named in the Petition include:
The Patent Trial and Appeal Board (PTAB or Board) used this Petition to clarify its position on petitions naming several parties and real parties in interest. Id., Paper 11 (February 11, 2014). The Board clarified that the Petition may name several companies, but that each cannot separately appear and independently participate:
On February 7, 2014, the Board initiated a conference call with the parties, to inform the parties that although thirty-five companies are identified in the petition as “Petitioners” and real parties-in-interest, the thirty-five companies collectively constitute only a single party in this proceeding before the Board. Consequently, the designation in the petition of fifteen pairs of lead and backup counsel, one pair for each of fifteen groupings of the thirty-five companies, is unacceptable. As a single party before the Board, all thirty-five companies must speak with a uniform voice, whether in writing or orally in a conference call, hearing, or deposition.
Counsel for Petitioner proposed that the thirty-five companies would file a single paper, sharing the pages among themselves, and in the event of differences in the positions of the different companies, there would be one or more separate sections in the paper to articulate the differences. Counsel for Patent Owner objected to this approach. The Board agreed with Patent Owner:
The manner of conducting this proceeding, as proposed by [Counsel for Petitioner], is not in accordance with the rules governing trial practice and procedure before the Board. The thirty-five companies collectively filed a single petition, and thus, are recognized as a single party, as Petitioner, before the Board. According to 37 C.F.R. § 42.2, “Petitioner” means “the party filing a petition requesting that a trial be instituted.” In circumstances not involving a motion for joinder or consolidation of separate proceedings, for each “petition” there is but a single party filing the petition, no matter how many companies are listed as petitioner or petitioners and how many companies are identified as real parties-in-interest. Even though the separate companies regard and identify themselves as “Petitioners,” before the Board they constitute and stand in the shoes of a single “Petitioner.”
Because the thirty-five companies constitute, collectively, a single party, they must speak with a single voice, both in writing and oral representation. [Counsel for Petitioner's] proposal transforms the “Petitioner” under 37 C.F.R. § 42.2 from a single party into thirty-five different parties. That is not only contrary to 37 C.F.R. § 42.2, which defines “Petitioner” as a single party by referring to “the party filing a petition,” but also prejudicial to Patent Owner, who potentially would have to respond to thirty-five different, possibly inconsistent, positions on every issue. Nor would the Board’s interests in the speedy and efficient resolution of post-grant proceedings be served by permitting the presentation of inconsistent positions based on the filing of a single petition.
The original Petition named fifteen pairs of lead and backup counsel. Based on the “single petitioner” concept articulated by the Board, the Petitioner was ordered to file a paper to re-designate lead and backup counsel “by regarding itself as a single party” in accordance with 37 C.F.R. § 42.10(a) within a week of the Order entered February 11, 2014.