1 1 AIPLA Firm Logo American Intellectual Property Law Association Interplay between Litigation and the AIA __________ An Overview John B. Pegram Fish & Richardson P.C. _____ AIPLA IP Practice in Europe Committee March, 2013

Interplay between litigation and AIA Proceedings in Courts and the USPTO, and Almost Everything Else (Other AIA Changes Affecting Litigation) Note: This presentation is based on the author’s personal views at this time, which are not necessarily the same as those of any organization with which he is affiliated. 2

Invalidation Procedures in Traditional U.S. Patent Litigation In infringement Litigation: – Invalidity defenses, and – Invalidity counterclaims Declaratory judgment actions – Only when the DJ Plaintiff is threatened with infringement litigation No European-style – Post grant opposition, or – Nullity actions 3

Reexamination (Pre-AIA) Two types: – Ex Parte, and – Inter Partes Filed at any time—No threat required Similar to application examination By Examiners in the Central Reexamination Unit (CRU) Decision Appealable to USPTO Board – Long pendency until final USPTO Decision 4

Ex Parte Reexamination Filed by either Patentee or Third Party Still available Post-AIA Third party involvement limited to initial stage – Third party cannot argue against Patentee’s or Examiner’s actions and arguments – Third party has no right of appeal Not a satisfactory substitute for litigation 5

Inter Partes Reexamination (IPRx) (Pre-AIA) Filed by a Third Party Third Party had full participation Replaced in the AIA by Inter Partes Review (IPR) 6

NEW USPTO PROCEEDINGS AFTER THE AIA 7

Patent Trial and Appeal Board (PTAB) Board of Administrative Patent Judges (APJs) Adversary proceedings – Not a form of examination – Limited discovery Direct appeal to the Federal Circuit – One less step than reexamination Less chances to cure mistakes Increased need for litigation skills PTAB Reviews can be settled 8

Main Issues with New PTAB Review Procedures Cost of PTAB Review Thresholds for PTAB Review Estoppels based on PTAB Review Stay of Litigation pending PTAB Review Different Standards from Litigation favor Challenger – Claim scope – Burden of proof Page Limits 9

Three New PTAB Review Procedures Under the AIA Inter Partes Review (IPR) Available since September 2012 Post Grant Review (PGR) – To be available: From March 2013, But only for patents issued on AIA applications Covered Business Method (CBM) Review – Available since September

Inter Partes Review By PTAB Invalidity Grounds: Limited to patents & publications Threshold: “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition” Estoppel Effect: “with respect to that claim on any ground that the petitioner raised or reasonably could have raised” 11

Post Grant Review By PTAB Invalidity Grounds: Any Threshold: “if information presented in the petition … is not rebutted, [it] would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable” Estoppel Effect: “with respect to that claim on any ground that the petitioner raised or reasonably could have raised” 12

Covered Business Methods (CBM) A PTAB review of the validity of covered business method patents “Covered business method patent means 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, except that the term does not include patents for technological inventions.” 13

Covered Business Methods (CBM) Invalidity Grounds – Pre-AIA patents – Limited prior art – AIA patents – Any Threshold – Same standards and procedures as PGR, plus – Petitioner must have been sued for infringement of the patent, or charged with infringement under the patent. – Petitioner must show that at least one patent claim is for a CBM 14

Covered Business Methods (CBM) Estoppel Effects Petitioner is estopped – before the Office with respect to any claim on any ground raised or reasonably could have been raised, and – in a subsequent district court or ITC action that a claim is invalid on any ground that the petitioner raised. Patent owner is estopped from taking action inconsistent with any adverse judgment including – obtaining a patent claim that is patentably indistinct from a finally refused or cancelled claim, or – amending its specification or drawing in a way not permitted during the proceeding. 15

Statistics (IPR) -Number of IPRs Filed -124 filed through February 8, filed in January, Application of Threshold: Reasonable Likelihood of Success -IPR has been instituted in 9 of the 9 decisions reviewed -In several cases, IPR was ordered on only some of the petitioned claims 16

Statistics (CBM) -CBMs Filed -15 filed through February 8, None filed in January,

Statistics: Types of Cases? Filings by industry (IPR + CBM) ~60% software or EE ~20% mechanical ~20% bio/chemical Approximately 75% of challenged patents are in pending litigations 18

Construction of Patent Claims Courts use Markman procedure to determine the correct construction of the claims USPTO uses “broadest reasonable construction” of the claims – Used in reexamination – Query use in PTAB Reviews? In Gore, Judge Moore suggested that there is no “broadest reasonable construction” once the Fed Cir has construed the claims – In essense, there is a single reasonable construction. 19

Construction of Patent Claims Aria Diagnostics v Sequenom, argued in January, 2013, questions whether claim construction should receive de novo review. – Parties will keep raising the issue until the Fed Cir decides it 20

Stay of Litigations In typical case of infringement suit followed by an IPR request – District Judge has discretion re whether to stay – Because IPR is faster than IPRx, stay is more likely AIA encourages a stay of District Court case pending a CBM Review: – See Market-Alerts Pty. Ltd. v. Bloomberg Finance LP, Civil Action No. 1:12-cv (D. Del. Feb. 5, 2013) 21

Dealing with Estoppel Open question: How will “reasonably could have raised“ be interpreted? – What about later discovered prior art? How good is the noninfringement defense? – Can PTAB Review help improve that defense? Do you have prior use or sale evidence that cannot be considered in an IPR or a CBM? Is the PTAB the best forum for invalidity issues, in spite of estoppel – Favorable standards – Skilled judges 22

ALMOST EVERYTHING ELSE _____ (OTHER AIA CHANGES AFFECTING LITIGATION) 23

Joinder (35 U.S.C. § 299) There was a growing practice of forcing unrelated defendants to litigate in one case – Less costly for Trolls – More costly for Defendants due to coordination Joinder of unrelated defendants is discouraged by the AIA – Greater likelihood of transfer to a more convenient court – Possible consolidation for discovery 24

False Marking (35 U.S.C. § 292) Before the AIA – Private Parties could sue for a penalty in cases of false patent number marking – A flurry of cases AIA – Only the government can sue for the penalty – A person who has suffered a competitive injury may sue for damages adequate to compensate for the injury – marking of a product relating to a patent that covered that product but has expired is not a violation of this section – Amendments limited pending cases – False marking litigation has dried up 25

Supplemental Examination A form of reexamination by the CRU Patent owners can “cure” failures to disclose prior art, etc. – May avoid charges of inequitable conduct Not used much – Seven requests through February 15, 2013 – One filing accepted by USPTO for reexamination – One rejected – Five remain under review as of February 25, 2013 Not highly recommended 26

Best Mode Failure to disclose the Best Mode no longer is a defense – Harmonization point Somewhat greater emphasis on defenses of – Lack of Enablement, and – Lack of a Written Description of the Claimed Invention 27

Defense to infringement based on prior commercial use (AIA § 5) An expansion of subject from the existing business methods prior use defense Not a traditional prior use defense – Commercial use in the United States – One year before earlier of effective filing date or certain public disclosures – Exception—does not apply to patents based on applications by a University, etc. 28

Advice of Counsel (35 U.S.C. § 298) ‘‘The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.’’ One piece of the trend toward making proof of willful infringement more difficult and less of a threat 29

30 AIPLA Firm Logo Thank you for your attention! Questions? John B. Pegram Fish & Richardson P.C. New York For further information see: