1. Comparison of Federal Court, ITC, and USPTO Proceedings in IP Disputes
TOM ENGELLENNER Pepper Hamilton, LLP
IP in Japan Committee Meeting AIPLA MWI Meeting, Phoenix, AZ
January, 2014

2. Comparing Court , ITC and USPTO Proceedings
Federal District Court proceedings
International Trade Commission (ITC) proceedings
New mechanisms for challenging patents under the AIA
Key features of Inter Partes Review (IPR) proceedings
Some Statistics for the first year of IPR availability
Stays of Federal Court and ITC Cases
Comparisons and Conclusions

3. Patent Infringement
And Invalidity Trials
In the Federal Courts

4. Patent Litigation in the Federal Courts
35 U.S.C. 271 provides:
whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
35 U.S.C. 281:
A patentee shall have remedy by civil action for infringement of his patent.
35 U.S. C. 282:
(a) A patent shall be presumed valid (b) The following shall be defenses :
(1) noninfringement,
(2) invalidity of the patent or any claim in suit

5. Rise of Patent Suits in the Federal Courts
Source: PWC 2013 Patent Litigation Survey

6. Top 5 Patent Forums in Federal Courts (2010)

7. Typical Federal Court Patent Suit Budget

8. Disposition of Patent Suits in the Federal Courts
Source: PWC 2013 Patent Litigation Survey

9. The US International
Trade Commission

10. Patent Litigation at the ITC
19 U.S.C provides:
[T]he following are unlawful, and when found by the Commission to exist shall be dealt with, in addition to any other provision of law, as provided in this section: . .
(B) The importation into the United States, the sale for importation, or the sale within the United States after importation … of articles that—
(i) infringe a valid and enforceable United States patent or a valid and enforceable United States copyright registered under title 17; or
(ii) are made, produced, processed, or mined under, or by means of, a process covered by the claims of a valid and enforceable United States patent.

11. Rise of Patent Suits at the Int’l Trade Comm.
Source: David Hill, Report to WIPO on US Patent Litigation (2012)

12. Comparison of District Court & ITC Proceedings
Fed. District Ct.
ITC
Decision maker
Federal District Judge or Jury
Administrative Law Judge subject to Commission and Presidential Review
Timing
Average time to Initial Determination: 12 months
Average time (to trial):
28 months
Burden of Proof for Invalidity
Patent Presumed Valid Clear and convincing evidence to the contrary is needed
Average Cost
$1-10M: $2,100,000
$10-25M: $3,554,000
>$25M: $5,911,000
$1-10M: $1,967,000
$10-25M: $3,410,000
>$25M: $6,242,000
Source : AIPLA Economic survey (2013)

13. Typical ITC Patent Suit Budget

14. Federal Court and ITC Budget Comparison

15. Alternatives to Litigation
New AIA
Alternatives to Litigation

16. The America Invents Act
The America Invents Act (AIA) established several new mechanisms for challenging issued U.S. Patents:
Inter partes review
Post grant review
Cover business method review
Derivation proceedings
All of these new proceedings are conducted before a new “Patent Trial and Appeal Board.”

17. Comparison of AIA Proceedings
IPR
CBM
PGR
Grounds
102 & 103 but only patents and printed publications
101 (ineligible subject matter)
112 (enablement or written description) &
all102/103 prior art
Timing
Pre-AIA patents:
Anytime
Post-AIA patents:
9 months after issue and after termination of PGR challenges
Anytime if sued or threatened by PO.
9 months after issue and after all PGR challenges are terminated
Available only for Post AIA patents:
Must be filed within 9 months of grant
Standard
Receivable likelihood success
More likely than not that a claim is invalid
More likely than not
that a claim is invalid

18. Key Features of IPR proceedings

19. Key Features of IPR Proceedings
Initiated by a Petition (and fee payment):
Formal recitations
Must identify all challenged claims and recite all grounds for review
60 pages or less, 14pt. font, double spaced
Must be accompanied by all supporting evidence
PTAB expects in most cases the evidence will include one or more expert declarations.
What does a reference disclose? What does the reference mean to a person skilled on the art? Why a feature in inherent in the prior art?

20. Key Features of IPR Proceedings
Patent Owner (PO) Initial Response (optional):
Decision to Initiate Proceedings
PO takes discovery of Petitioner’s Expert(s)
Patent Owner Response (with PO’s Expert Declarations) and Motion to Amend Claims (only one opportunity)
Petitioner takes discovery of PO’s expert(s).
Petitioner’s Reply (w/ rebuttal declarations) and Opposition to Amendments
PO discovery of rebuttal experts
PO’s Reply
Trial (Oral Hearing) ~~~~~> Final Written Decision

21. Typical Inter Partes Review Budget

22. Comparison of Federal Court, ITC & IPR Costs

23. IPR Statistics
9/16/2012 to 9/15/2013
Special thanks to Yasser El-Gamal, Ehab Samuel and Peter Siddoway
who compiled some of the following data for the AIPLA

24. Statistics
483 petitions filed in the first year

25. Statistics
Most IPR petitions have been against NPEs

26. Statistics
About 6% of IPRs involve Japanese companies

27. Statistics
During the first year, about 8% (37) of the IPR petitions resulted in settlements (20 before, and 17 after, institution)

28. Statistics
403 of the 483 petitions (83%) were related to pending patent litigation between the same parties

29. Statistics
The 403 Petitioners involved in related Federal Court litigation has filed for stays 159 times
But Petitioners are very unlikely to get a stay at the ITC

30. Forum Comparison USPTO (IPR) ITC DISTRICT CT Grounds
102 & 103 but only patents and printed publications
101 (ineligible subject matter)
112 (enablement or written description)&
all102/103 prior art
112 (enablement or written description) &
Presumption of validity?
No. Petitioner need only show that it is more likely than not that a claim is invalidity
Yes. Respondent must prove invalidity by clear and convincing evidence
Yes. Defendant must prove invalidity by clear and convincing evidence
Collateral effect of invalidity?
Conclusive on all other proceedings
Not conclusive unless affirmed by the CAFC
Not conclusive on other proceedings unless affirmed

31. Forum Comparison (Continued)
USPTO (IPR)
ITC
DISTRICT CT
Jury Trial? No
Yes
Timing
12 months from Initiation to Decision
12 Months from Initiation to Initial Determination
Average time to trial: 28 months
Damages?
Injunction?
Maybe
Resolve Infringement
Costs
~$300K – 500K
~$2M - $6M

32. Thanks for your attention! Questions?
Tom Engellenner Pepper Hamilton, LLP
High Street Tower, 19th Floor
125 High Street
Boston, MA 02110
Name