Best Corporate Practices in Patent Litigation Defense and Offense

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1 Best Corporate Practices in Patent Litigation Defense and Offense Ending Defensive Litigation Quickly and Cheaply and Maximizing Patent Value Joseph J. Berghammer Binal J. Patel MARCH 2015 Joe Berghammer (312) Binal Patel (312)

2 The Ever Evolving Patent System The AIA SCOTUS PTAB Congress District Courts 3 Campaign Filing Trends Strategies for Early Dismissal/Resolution Strategies Based on Recent Case Law Trends Strategies for Use of Combined Proceedings Successful Defense of Troll Litigation 4 2

3 Litigation Increases and Decreases In 2014: 18% decrease in District Court filings 212% increase in PTAB filings 5 Sharp decline in litigation post Alice 6 3

4 Damages Trending Downward 7 District Court Patent Determinations 8 4

5 9 10 5

6 PTAB Institution Decision Outcomes Patent Office Trial Instituted: 72.6% 11 PTAB Patent Determinations Claims Cancelled: 78% 12 6

7 Patent Office Trials Timeline 13 Patent Office Trials Characteristics PGR IPR CBM Target patents AIA patents only: EFD Mar. 16, 2013 Grounds 101 (*PTO), 102, 103, and 112 (no best mode) When Within 9 months of patent grant Who Any person not the patent owner Any patent including those with EFD before Nov. 29, and 103 based on patents and printed publications only AIA patents: After 9 months (end of PGR), Non-AIA patents: after issuance Both: only within 1 year of civil action Any person not the patent owner Any covered business method patent, including those with EFD before Nov. 29, (*PTO), 102, 103, and 112 (no best mode) AIA patents: After 9 months (end of PGR) Non-AIA patents: after issuance Both: Before Sept. 16, 2020 Any person sued or charged with infringement 14 7

8 Campaign Filing Trends Strategies for Early Dismissal/Resolution Strategies Based on Recent Case Law Trends Strategies for Use of Combined Proceedings Successful Defense of Troll Litigation 15 Early challenges to pleadings Insufficient identification of accused activity Insufficient allegations of indirect infringement Venue challenges Motions to Dismiss 12(b)(6) 16 8

9 Early 12(b)(6) motion practice a reality 17 Model Rules to Limit Discovery ESI Model Rules Model Rules Limiting Claims and Prior Art Case Management Procedures by Patent Judges 18 9

10 Stays of Litigation 19 Early Resolution - PTAB Settlement Preliminary Response 20 10

11 Early Resolution - PTAB Preliminary Response Due 3 months after Petition filing date 21 Early Resolution - PTAB Overall: Petitions denied 27.4% Trend moving toward more denials of Petitions 22 11

12 Patent Owner Preliminary Response Engage or keep your powder dry? 23 Patent Owner Preliminary Response Engage! PTAB is willing to refuse to initiate AIA proceedings: 27.4% Two bites at the apple Focus on particular matters: Particular grounds Don t forget redundancy Particular references Did I mention redundancy? Estoppel and procedural matters 24 12

13 Patent Owner Preliminary Response Engage! Focus on burden of proof Reasonable likelihood that the petitioner would prevail on at least 1 claim (35 USC 314) Petitioner shall have the burden of proving unpatentability by a preponderance of the evidence (35 USC 316) Is response necessary to assist in defeating motion to stay in parallel litigation? Are there weak grounds for some claims that if declined by the PTAB would prevent a stay in a parallel litigation? 25 Patent Owner Preliminary Response Keep your powder dry PTO grants petitions 72.6% No estoppel on dismissal any ground that the petitioner raised or reasonably could have raised during that inter partes review Just bought yourself a stronger Petition Will Petitioner be outside 12 month window Gives Petitioner extra time 7 9 months w/ PR: 3 months w/o PR. Claims need to be amended 26 13

14 Patent Owner Preliminary Response Keep your powder dry Allows opening for Supplemental Information Only allowed within one month of institution of AIA proceeding (37 CFR ) May hurt final argument because argument made weakly the first time (w/o testimony) Limited to attorney argument and documents No new testimony 27 Campaign Filing Trends Strategies for Early Dismissal/Resolution Strategies Based on Recent Case Law Trends Strategies for Use of Combined Proceedings Successful Defense of Troll Litigation 28 14

15 Strategies in view of recent SCOTUS case law Document your case for attorneys fees Octane Fitness v. Icon Health & Fitness (2014): In determining which cases are "exceptional" and deserve fee shifting under 285, district courts should consider totality of the circumstances rather than rigid subjective bad faith / objectively baseless framework (9-0, Sotomayor). Highmark v. Allcare (2014): All aspects of district court's exceptional-case determination for fee-shifting should be reviewed for abuse of discretion (9-0, Sotomayor). 29 Fee Shifting a Reality and a Risk Motions for attorneys fees (35 U.S.C. 285) 30 15

16 Strategies in view of recent SCOTUS case law Prepare a challenge under 101 Alice v. CLS Bank (2014): Adding a generic computer to the abstract idea of intermediated settlement does not make it patentable subject matter (9-0, Thomas, Sotomayor concurs). 31 Post-Alice win rates 32 16

17 Strategies in view of recent SCOTUS case law Consider expert/inventor testimony in Markman Teva v. Sandoz (2015): Review of factual matters in claim construction is for clear error; ultimate inquiry is de novo (7-2, Breyer). Consider indefiniteness Nautilus v. Biosig (2014): Claims are invalid for indefiniteness if, in light of the specification and prosecution history, they fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention (9-0, Ginsburg). 33 Strategies to Utilize Trends in Patent Office Litigation Discovery limited Limits costs Use to advantage during depositions File multiple Petitions (or don t) Allows additional space for arguments For Petitioner and Patent Owner Suggested by regulations PTAB is limiting grounds in Petitions Patent Office litigations front loaded 34 17

18 Strategies to Utilize Trends in Patent Office Litigation Amending claims difficult Three amendments allowed in 2014 PTAB focuses on technical arguments Story less significant than in District Court PTAB considers each claim 35 Strategies to Utilize Trends in Patent Office Litigation Trends in resolution First 104 Patent Office Trials (through April 2014) Adverse outcome in all proceedings 75% settled, dismissed, adverse judgment requested 17% all claims cancelled 8% some claims cancelled Currently pendulum is swinging 36 18

19 Strategies to Utilize Trends in Patent Office Litigation 67% of challenged claims instituted 50% of instituted claims fail to survive 37 Campaign Filing Trends Strategies for Early Dismissal/Resolution Strategies Based on Recent Case Law Trends Strategies for Use of Combined Proceedings Successful Defense of Troll Litigation 38 19

20 Strategies for Combined Proceedings Different Burdens Clear and convincing (D.Ct.) Preponderance (PTAB) Different claim scope Phillips (D.Ct.) Broadest reasonable interpretation (PTAB) Conflicting verdicts District Court: Validity and Infringement PTAB: Invalidity Ultratec v. Sorenson (CaptionCall) $44 million judgment 39 Strategies for Combined Proceedings Stay litigation Use IPRs to put pressure on Plaintiff give Plaintiff something to lose Patent Office attack of patent in dispute Patent Office attack of family of patent in dispute Patent Office attack of unrelated families No standing requirements for IPRs, PGRs Use District Court to put pressure on Petitioner Use IPRs and PGRs pre-litigation to clear path 40 20

21 Campaign Filing Trends Strategies for Early Dismissal/Resolution Strategies Based on Recent Case Law Trends Strategies for Use of Combined Proceedings Successful Defense of Troll Litigation 41 Successful Defense of NPE Litigation Costs of settlement decreased Cost of filing Patent Office Attack can be benchmark Portion of cost of full IPR, PGR, CBM can be benchmark Stays Ancillary attacks on NPE patents Patent in suit Other patents No standing requirement 42 21

22 NPE-Related Costs 43 Congress key elements introduced Crack down on demand letters More detailed pleading requirements Discovery limits Limit willful infringement Eliminate fee diversion from PTO Balanced post-grant proceedings Mandatory or presumptive fee shifting Transparency on ownership and financial interests 44 22

23 Thank You. CHICAGO, IL Ten South Wacker Drive Suite 3000 Chicago, IL 6060 T F WASHINGTON, DC th Street NW Suite 1200 Washington, DC T F BOSTON, MA 28 State Street Suite 1800 Boston, MA T F PORTLAND, OR One World Trade Center 121 Southwest Salmon Street 11th Floor Portland, OR T F