PRESENTATION TITLE 1 America Invents Act: Creating “Rocket Docket” Patent Trials in the Patent Office

Agenda Overview of the old and new tools New tools –Timing –Strategic considerations –Costs Case studies exploring effectiveness of the new tools Status of Rules Governing Procedures 2

Pre-9/16/12 PTO Tools Ex Parte ReexaminationInter 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 3

Post-9/16/12 PTO Tools Ex Parte ReexaminationInter Partes ReexaminationPost 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 4

5 Summary of Major Areas of Change Proceeding Purpose & Timing Issues & Prior Art Strategic Considerations Post-Grant Review 3 rd 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 3 rd 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 6

7 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. 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

8 IPR: Scenario A (no PGR, no lawsuit) Invalidity based on: Patents Printed publications Double patenting 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”

9 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 Invalidity based on: Patents Printed publications Double patenting IPR Completed 2 years “Raised or reasonably could have raised”

10 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

11 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 12

13 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-Grant Challenge Freedom to Operate Analysis

14 Benefits to Challenger Cancellation of claims - - Avoid infringement - Freedom to operate Amendment of claims - Intervening rights Patentee admissions Prosecution history estoppel Create intrinsic evidence

15 Strategic Pros And Cons ProsCons 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

16 Strategic Pros And Cons ProsCons 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

17 Strategic Pros And Cons ProsCons 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

18 Estoppel - Inter Partes Review Parallel Litigation PTO Determines Patent Valid Parallel Litigation District Court Holds Patent Valid When Estoppel Attaches Inter Partes Reexam Estopped from validity defense (raised or could have raised in Inter Partes Reexam). District Court Only Inter Partes Reexam Vacated -Estopped Final Decision - Appeals Exhausted 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) Written Decision

19 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 amendMore restricted amendments

20 Strategic Issues: PTO vs. Litigation FactorsPost-Grant Review Inter Partes ReviewLitigation Burden of ProofPreponderance of EvidenceClear and Convincing Evidence Presumption of Validity NoYes Claim scopeBroadest 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 makerPTAB 3 Judge Panel Average Juror

Practical Considerations and the Governing Rules 21

22 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 Reexam5+ years to BPAI decision Inter Partes ReviewAIA indicates 12 to 18 months to PTAB decision

23 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

24 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).

25 Procedures – Petition for an Inter Partes Review Board will conduct the proceeding so 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.

26 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.

27 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. Request by 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.

28 Proposed Filing Fees (Single Patent) Post Grant Procedure PTO Petition Fees (base) Ex Parte$17,760 IPR$27,200 PGR$47,100

29 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

30 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

31 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 32

33 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 34

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 35

36 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