Post-Grant Review Settlement Strategies Knotty for Patent Owners

Patent owners looking to settle a post-grant proceeding, beware—things just got more complicated. By statute and regulation, Congress preserved the Board’s right to “independently determine any question of jurisdiction, patentability, or Office practice” even after parties settle and attempt to terminate. 37 U.S.C. § 317(a); 37 C.F.R. § 42.74. After AIA implementation, one question remained: How often would the Board continue a proceeding after the parties settled? The Board recently demonstrated their willingness to do so, continuing a case even after the parties jointly moved to terminate. Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, Paper 47 (PTAB Nov. 12, 2013). Thus, patent owners may find themselves limited in what they can accomplish via settlement.

In Interthinx, the Board granted both parties’ joint motion to terminate the IPR, but only as to the petitioner. The Board reasoned that given the “advanced stage of the proceeding,” the Board would still issue a final decision. The Board argued it has this authority because it is not a party to settlement and is not bound by it. In the Order, the Board identified the parties’ ongoing litigation in the Eastern District of Texas before finding the circumstances warranted a final decision.

It appears that patent owners seeking to avoid a Board ruling have limited options. The patent owner may request an adverse judgment, 37 C.F.R. § 42.73(b), but the regulations require the party to disclaim, cancel, abandon, or concede their position. They may petition for leave to withdraw, but the Board may decline. And settlement now may become equally problematic.

Further slanting settlement incentives against patent owners, the estoppel regulations deal only with the petitioner’s estoppel in settlement situations. According to the regulations, estoppel provisions as to the petitioner apply to final written decisions on patentability, except for settlements: “estoppel shall not apply to a petitioner, or to the real party in interest or privy of the petitioner who has settled . . . .” 37 C.F.R. § 42.73(d).

Yet collateral consequences still apply to the patent owner who remains in the proceeding post-settlement. The patent owner would still be “precluded from taking action inconsistent with the adverse judgment” including seeking patentably indistinct claims or any specification or drawing amendment denied during the trial proceedings. § 42.73(3)(i),(ii).

Depending upon when in a proceeding the Board releases the Petitioner, the Patent Owner may benefit from the ex parte nature of the continued proceeding. Indeed, in Interthinx, the patent owner requested an oral hearing three days after receiving the notice continuing the case sans petitioner. See Paper 50. In doing so, the patent owner will continue to fight, alone, against the possibility of an adverse Board ruling, despite having settled with the petitioner.