5 Distinctions Between IPRs and District Court Patent Litigation | Finnegan | Leading Int...
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`ARTICLES
`
`5 Distinctions Between IPRs
`and District Court Patent
`Litigation
`
`December 16, 2015
`Corporate Counsel
`By Michael J. Flibbert, Maureen D. Queler
`
`Authored by Michael J. Flibbert and Maureen D. Queler
`
`Over 3,600 petitions for inter partes review (IPR) have been filed with the U.S. Patent
`and Trademark Office’s Patent Trial and Appeal Board (PTAB) since this post-grant
`procedure became available in 2012. Those IPRs often have related district court patent
`cases, many of which are being stayed pending adjudication of the IPRs. One practical
`consequence of this fundamental shift in U.S. patent practice is that patent litigators are
`now routinely finding themselves thrown into the unfamiliar world of PTAB practice,
`which bears little resemblance to district court litigation. Indeed, at times the rules and
`procedures are direct opposites. Litigators must appreciate these fundamental
`differences to successfully represent clients before the PTAB.
`
`To assist those who may have extensive litigation experience yet are relative novices to
`PTAB practice, we examine five key areas of practical distinctions between district court
`litigation and IPRs. And perhaps readers who do not practice in this area are wondering
`what all the shouting is about. We invite you to come along, too.
`
`1. Legal Standards
`
`Issued patents receive fundamentally different levels of deference in district court and
`PTAB proceedings. In district court, patents enjoy a statutory presumption of validity
`and challengers must prove each patent claim invalid by clear and convincing
`evidence—the highest burden of proof in U.S. civil litigation. But no such presumption of
`validity applies in PTAB proceedings. Petitioners need only establish unpatentability by
`a preponderance of the evidence—i.e., that the claims are more likely than not
`unpatentable. This is a significantly reduced burden of proof compared to litigation.
`
`Claim construction standards also differ. District courts interpret patent claims based on
`the principles articulated in Phillips v. AWH Corp. (Fed. Cir. 2005). The PTAB, on the
`other hand, applies the PTO’s ‘broadest reasonable construction’ to claims in unexpired
`
`Voip-Pal Ex. 2091
`IPR2016-01198 and IPR2016-01201
`1/12/2018
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`patents. In re Cuozzo Speed Techs. (Fed. Cir. 2015). In many cases those standards may
`yield the same construction if, for example, the specification expressly defines a claim
`term. But in others the PTAB’s construction may be somewhat broader, which may
`sweep in more prior art anticipating or rendering obvious the challenged claims.
`
`A subtle but important distinction also exists in standing requirements. As a
`jurisdictional prerequisite to initiating a civil action in federal district court, a party must
`have sufficient Article III standing. On the other hand, standing is not required for those
`who file IPR petitions with the board. In fact, any member of the public other than the
`patent owner may file a petition with the PTO to initiate an IPR.
`
`The IPR petition, however, must identify the real party in interest, which is not required
`for district court plaintiffs. In addition, though anyone can initiate an IPR, a party must
`have standing to appeal an adverse decision to the U.S. Court of Appeals for the
`Federal Circuit. For public interest groups and others who may have difficulty
`establishing a potential injury from the decision on patentability, they may be able to
`institute an IPR but not appeal any loss.
`
`2. Procedures
`
`District court litigants deal with a set of patent claims that cannot change, as no
`procedure exists to modify claims. Consequently, defendants have a fixed target to
`shoot at. But the situation is quite different at the PTAB, where patent owners can move
`to amend the challenged patent claims. To date, the board has only rarely granted such
`motions, but they are filed quite often and can drastically alter both parties’ strategy.
`For example, patent owners must consider the implications of amending their patent
`claims on an alleged infringer’s intervening rights, especially if involved in concurrent
`litigation. A petitioner must also be prepared to separately analyze and oppose the
`amended claims in addition to the original claims.
`
`Case schedules also vary considerably. It may take two years to get to trial in district
`court and at least several more months (perhaps much longer) to receive the court’s
`decision. The board operates on a much faster schedule: By statute, an IPR must be
`completed within one year of institution (although the time may be extended up to six
`months for good cause). Parties therefore have much longer in district court to develop
`both their positions and evidence than in IPR proceedings.
`
`Summary judgment procedures also exist in district court, which allow a court to resolve
`one or more issues before trial. No such procedure exists in PTAB practice. During an
`IPR, the board will issue only two substantive decisions: an institution decision
`explaining why an IPR has been instituted (or not instituted); and, if an IPR is instituted
`and is not otherwise terminated, a final written decision resolving the patentability of
`the challenged claims.
`
`District court litigation can involve a wide range of substantive issues, including, for
`example, infringement, validity (e.g., anticipation, obviousness, written description,
`enablement, utility), enforceability (e.g., inequitable conduct), other equitable defenses
`(e.g., unclean hands, laches), damages, injunctions and more. IPRs involve a much
`narrower universe of issues: the patentability of claims under 35 U.S.C. §§ 102 and 103
`(anticipation and obviousness) based on prior art printed publications. Post-grant
`review (PGR) involves a broader range of patentability issues, but still does not address
`infringement, equitable defenses, damages or injunctions. Petitioners must therefore
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`1/12/2018
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`carefully consider which forum is the best to raise their unpatentability arguments, and
`patent owners may still have their claims challenged under theories of enablement or
`indefiniteness in district court, despite surviving an IPR based on prior art.
`
`Settlement practices also differ significantly. District court cases can be voluntarily
`settled at any time, and settlement is encouraged and often facilitated through court-
`ordered mediation.
`
`Settlement in district court will lead to dismissal of the action. The PTAB also
`encourages settlement but has no available mediation or other alternative dispute
`resolution procedures. Also, in view of public-interest considerations, the board may
`continue the proceeding to a final written decision even if the parties settle, particularly
`if the case has been fully briefed. Litigators who are accustomed to settling cases on the
`eve of trial may be surprised that last-minute settlements before the board may not
`achieve the desired result of preserving a challenged patent if the board elects to issue
`a final written decision even after a settlement.
`
`3. Discovery
`
`Discovery practices differ vastly in district court compared to the PTAB. In district court,
`discovery is broadly available for any information that is reasonably calculated to lead to
`the discovery of admissible evidence. Document requests, interrogatories, requests for
`admission, depositions (including of an opposing party under Rule 30(b)(6)), and third-
`party discovery are routinely available. Moreover, district court discovery typically
`occurs over many months or even years, allowing the parties to fully develop their
`positions as new facts come to light.
`
`The situation is radically different before the PTAB. Outside the required routine
`discovery, which includes exhibits cited in a paper, information that is inconsistent with
`a position advanced by the party and crossexamination of the declarants, board
`authorization (or party agreement) is required for any additional discovery.
`
`A party seeking additional discovery must show that the requested discovery is in the
`interests of justice for IPRs. To determine whether the requested additional discovery
`qualifies, the board considers several factors: (1) whether more than a possibility and
`mere allegation of finding something useful has been demonstrated; (2) whether the
`request is asking for the other party’s litigation positions; (3) the ability to generate
`equivalent information by other means; (4) whether the request contains easily
`understandable instructions; and (5) whether the requests are overly burdensome to
`answer. Therefore, unlike the expansive discovery common in district court, the high
`burden placed on a party seeking discovery in an IPR has resulted in the Board granting
`discovery in only limited situations. In addition, unlike the lengthy discovery periods in
`district court litigations, any discovery at the PTAB must take place within the strict one-
`year statutory deadline for completing an America Invents Act trial.
`
`4. Trials
`
`District court trials involve live witness testimony in addition to deposition designations.
`The board, on the other hand, will only rarely allow live witness testimony. Instead,
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`direct testimony takes place through written declarations with cross-examination
`testimony occurring during the deposition of the declarant. The board has granted live
`testimony in at least one IPR, but emphasized that this was a unique situation and that
`such testimony would be unnecessary during most oral arguments. In addition, video-
`recording of a deposition must be agreed to between the parties, but may not be
`submitted to the board without authorization. To obtain such authorization, a party must
`demonstrate a specific reason or need for the PTAB to see the video. Practitioners
`should be aware of these differences between district court and PTAB practice and
`adjust their cross-examination strategy accordingly.
`
`District courts conduct bench and jury trials with a single district judge always presiding.
`A typical patent case requires at least several days to try. ‘Trials’ (final hearings) before
`the board, on the other hand, consist of an oral argument before a panel of three
`Administrative Patent judges, and these hearings are typically completed in less than
`three hours.
`
`5. Appellate Standards of Review
`
`Both PTAB decisions and district court judgments may be appealed directly to the U.S.
`Court of Appeals for the Federal Circuit, but the standards of review are somewhat
`different. A district court’s factual findings are reviewed for clear error whereas the
`Federal Circuit reviews the Board’s factual findings for substantial evidence. Legal
`issues are reviewed under the same de novo standard. Litigants should keep in mind
`that, historically, the affirmance rate of Board decisions is quite high (about 80%),
`perhaps owing in part to the more deferential ‘substantial evidence’ standard of review.
`
`As we have seen, district court litigation and PTAB practice differ in major respects.
`Given the high stakes of these proceedings and the potential traps for the unwary,
`counsel should carefully examine these distinctions before becoming involved in a fast-
`moving IPR proceeding.
`
`Tags
`
`Inter Partes Review (IPR), Patent litigation
`
`Related Professionals
`
`Michael J. Flibbert
`Partner
`Washington, D.C.
`+1 202 408 4493
`Email
`
`Maureen D. Queler
`Associate
`Washington, D.C.
`+1 202 408 4294
`Email
`
`https://www.finnegan.com/en/insights/5-distinctions-between-iprs-and-district-court-patent...
`
`1/12/2018
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`Reprinted with permission from Corporate Counsel ©2015 ALM Media Properties, LLC.
`All rights reserved. Further duplication without permission is prohibited. For
`information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.
`This article is for informational purposes, is not intended to constitute legal advice, and
`may be considered advertising under applicable state laws. This article is only the
`opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett
`& Dunner, LLP, or the firm’s clients.
`
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