patent litigation issues and the america invents act

Patent Litigation Issues and

the America Invents Act

Presented to Martin Pringle

November 5, 2014

By: Scott R. Brown

New Tools in Patent Litigation

The America Invents Act (AIA) Creates New Ways to Challenge Patents in the Patent Office

• Inter Partes Review (IPR)

• Covered Business Method Patents (CBM)

• Post Grant Review (PGR)

The Patent Trial and Appeal Board

• The AIA created the PTAB, known by some as the death panel

• Track record shows almost uniform cancellation of challenged claims

• It is news when a claim survives, so far only a few

• It is news when a proceeding is not instituted

IPR replaces Inter Partes Reexam

• Prior procedure allowed challengers to participate

– Could file comments and supporting declarations

– Held before special examining unit

• All aspects entirely based upon paper submissions

• Appeal to BPAI

• Appeal BPAI to the Federal Circuit

The Problems of Reexamination

• “Special dispatch,” but no hard deadlines

• District Courts more reluctant to stay actions, pending a process that could last for five years

• If no stay, increase costs and potential contradictory results

• No discovery/cross examination of declarants

• No termination by agreement

IPR, the new procedures

• Must be based on printed publication prior art

– No prior commercial product based challenges

• Standard to institute: “reasonable likelihood that the petitioner would prevail with respect to at least one of the challenged claims”

• Standard to prevail: Preponderance (51%)

• Estoppel: Bar reliance on prior art “raised or reasonably could have raised”


Inter partes review: quicker, more efficient, and less expensive

• Faster to decide:

– Initial decision to begin in 6 mos.

– Final decision within 12 mos (total 18 mos.)

• Only one appeal:

– Proceedings held by the PTAB

– Direct appeal to the Federal Circuit


• Must bring an IPR petition within 1 year of service

• Pick your forum

– If you first sue for invalidity in Federal Court, no IPR

– Estoppel


• Litigation (lite) process

– Claim Construction

– Depositions of all declarants

– Extremely limited document discovery

– The rules of evidence apply

– Oral final hearing

– Quick access to PTAB to resolve disputes during the process

IPR, better forum for the defense

• Key advantages

– Broader claim construction

– Lower burden of proof for invalidity

– Technical decision makers

– Speedy resolution

– Lower costs

– Higher chance of success

Broader Claim Construction

• PTO: “Broadest reasonable interpretation”

– Most claims easier to invalidate under this standard

– May force patentee to take narrow positions on claims without discovery of defendants product

• Accused infringer may also be forced into unfavorable positions without knowing patentee’s theories

Lower burden of proof of

invalidity• There is no presumption of validity

• The PTO uses a preponderance standard (51%)

• PTAB has proven it will not defer to patent examiner’s decisions

Speedy Resolution

• IPR has statutory time limits

– 6 mos. to institution

– 12 mos. to decision• Rarely 6 additional months for good cause

– Most done in 18 mos.

• Court’s seem much more willing to stay given the speedy structure, vs. the old procedures

Lower Cost

• Cost a fraction of a full blown patent lawsuit

– Limited discovery is the key

• Have proven useful against trolls – the simple threat of a patent lawsuit no longer necessarily means inevitable expensive litigation

• They still can be expensive if many claims or patents are asserted ($23,000 filing fee)

Types of Allowed Discovery

• Depositions of all declarants

– Have not seen whether drafts will be discoverable

• Very particularized showing required to get document discovery

• Prevents Patentee from learning about a “black box” product until positions have been taken in IPR

PTAB Observations

• Technologists, very mechanical in their approach

• There is little story to tell that will persuade them

• Objective considerations, likely to be ignored

• Have proven willing to find combinations obvious

• Very difficult to change the claims

PTAB Observations

• A great forum if you have complex technology and good printed publication prior art

• Especially useful if only a few patents/claims involved

• Useful if the best prior art was already considered by the PTO

RecommendationsIf you have a client threatened with an infringement claim, the time to look for prior art is right away

If you can develop good printed publication prior art because of the lower burden of proof, patent and technical expertise, and relatively sympathetic audience, IPR is a significant new tool for the defense

Recent Important Decisions

• Octane Fitness v. Icon Health & Fitness

• Lighting Ballast Control LLC, v. Philips Electronics

• Limelight Networks, Inc., v. Akamai Technologies, Inc.

Octane Fitness v. Icon Health &

Fitness (Sup.Ct. 2014) The Court in exceptional cases may award

reasonable attorney fees to the prevailing party.35 U.S.C. § 285

OLD STANDARD: Absent litigation misconduct or inequitable conduct before the PTO, fees may be awarded only if the litigation is both (1) brought subjective bad faith; and (2) objectively baseless


Fitness• Sham litigation

– Must be established by clear & convincing evidence

– Presumption that patent litigation brought in good faith


Fitness• The Court’s Unanimous Opinion

– Rejection of Brooks test as unduly rigid, and impermissibly encumbering the flexible statutory grant of discretion to district courts

– Analysis “begins and ends with the text of § 285” –Exceptional means uncommon, rare, not ordinary, unusual

– Brooks test renders § 285 superfluous in light of Court’s inherent power to award fees.


Fitness• NEW STANDARD:

– “[A]n exceptional case is simply one that stands out from others with respect to the substantive strength of the party’s litigation position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District Courts may determine whether a case is ‘exceptional’ in a case-by-case exercise of their discretion, considering the totality of the circumstances.”


Fitness• Standard of Proof:

– Nothing in § 285 justifies a clear and convincing standard of proof

– § 285 is one simple discretionary inquiry governed by a preponderance of the evidence standard

– Court did not directly address the Federal Circuit’s presumption that patent infringement suits are brought in good faith.

Lighting Ballast Control LLC, v.

Philips Electronics • Federal Circuit (en banc)

• Issue: is claim construction, which includes underlying questions of fact, properly subject to de novo review by the Federal Circuit

• 50% reversal rate

• No deference to district court constructions


Philips Electronics • Appellant argued de novo improper, should be

deferential “clearly erroneous” standard

• One group of amici argued factual determinations should be reviewed under the “clearly erroneous” standard, but ultimate conclusion “de novo”

• Apellee argued for no change "the interpretation of a so-called patent claim... is a matter of law”


Philips Electronics • Right now, Court’s can hold early claim

construction hearings

• Can lead to early summary judgment or settlement

• But if it’s a mixed question, does that mean the jury must speak on the factual issues?


Philips Electronics • Stare decisis rules the day:

– After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman II, and that the criteria for departure from stare decisis are not met.

Limelight Networks, Inc., v.

Akamai Technologies, Inc.• Supreme Court 134 S.Ct. 2111 (2014)

• Divided induced infringement

• Issue: if multiple parties carry out claimed steps of the method, can one be held for inducing the other to infringe


Akamai Technologies, Inc.• Direct Infringement Requires Single Actor:

– A defendant that does not itself undertake all of a patent's steps can be liable for direct infringement only "when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps. Muniauction


Akamai Technologies, Inc.• The method claim required a content delivery

network, that would hold voluminous files for customers, and “tagging” customer content that it would hold on its server

• In this way customers did not have to store the voluminous files and web content delivery was faster to end users because servers local to the end user could be used for delivery


Akamai Technologies, Inc.Defendant also operated a CDN and carried out several of the steps claimed in the '703 patent. But instead of tagging those components of its customers' Web sites that it intends to store on its servers (a step included in the '703 patent), requires its customers to do their own tagging.

Defendant also "provides instructions and offers technical assistance" to its customers regarding how to tag for its servers.


Akamai Technologies, Inc.• Liability for inducement must be predicated on

direct infringement. . .inducement liability may arise "if, but only if, [there is] ... direct infringement." Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341, 81 S.Ct. 599, 5 L.Ed.2d 592 (1961)


Akamai Technologies, Inc.– Muniauction (which, again, we assume to be correct)

instructs that a method patent is not directly infringed — and the patentee's interest is thus not violated — unless a single actor can be held responsible for the performance of all steps of the patent. Because Limelight did not undertake all steps of the '703 patent and cannot otherwise be held responsible for all those steps, respondents' rights have not been violated.


Akamai Technologies, Inc.– The Federal Circuit seems to have adopted the view

that Limelight induced infringement on the theory that the steps that Limelight and its customers perform would infringe the '703 patent if all the steps were performed by the same person. But we have already rejected the notion that conduct which would be infringing in altered circumstances can form the basis for contributory infringement, and we see no reason to apply a different rule for inducement.


Akamai Technologies, Inc• The Supreme Court repeatedly pointed out it

was not deciding whether Miniauction was correct, and even suggested at the end that the Federal Circuit revisit the issue

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