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.
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 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.
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 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.
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.
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, 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.
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.
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