A joint settlement in case of IPR may not prevent revocation of defendant's patent by PTAB
Inter Partes Review (“IPR”) has been popularly adopted and used as a strategy for invalidating patent claims due to its compact and expedited process nature. The Patent Trial and Appeal Board ("PTAB") is required to render an institution decision within 3 months of preliminary briefings on issues of claim patentability and a final decision within 12 months of any instituted proceeding. Such a time frame allows both a petitioner and a patent owner to reach a conclusion on the patentability dispute. Further, the expedited schedule allows each party to understand its relative strength of argument, leading to a settlement within a relatively short period of time as compared to a proceeding before a federal district courts, thereby saving time and expense in the patent dispute.
The legal authority making the above to be possible is a settlement provision, codified at 35 U.S.C. § 317. Section 317 indicates that an instituted IPR shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the office has decided the merits of the proceeding before the request for termination is filed. In addition, this section indicates that by such a termination, no estoppel shall attach to the petitioner, real party in interest or privy of the petitioner on the basis of that petitioner’s institution of that IPR. The section gives reasonable motivation for a petitioner to terminate an IPR proceeding via a settlement.
What if the PTAB refuses to terminate an IPR despite a joint request by both parties based on a settlement and proceeds to a final written decision? As indicated in Section 317, a joint request for termination may not be granted if the Office has decided the merits of the proceeding before the request for termination is filed. Although the section does not specifically list or explain the criteria for determining the merits of the proceeding to a final written decision, there are cases providing us with a number of considerations.
For instance, in Blackberry Corp. v. Mobilemedia Ideas LLC, IPR2013-00016, on March 18, 2013, the Board instituted an IPR upon petition by Blackberry against Mobilemedia’s patent. Instead of filing a patent owner response, the patent owner filed a motion to amend canceling several of the challenged claims and proposing substitute claims for the cancelled claims. The petitioner filed an opposition to the patent owner’s motion to amend claims, and the patent owner filed a reply to the petitioner’s opposition. An oral hearing was scheduled for October 18, 2013, but in response to the parties’ joint request to cancel the oral hearing, the Board cancelled the oral hearing. The petitioner and the patent owner also filed a joint motion to terminate the instant proceeding, and a true copy of their written settlement agreement. With the parties’ briefings on the motion to amend, the Board considered that the trial issues had been briefed fully at the time the parties moved to terminate the proceeding. Thus, the Board indicated that it would proceed to a final written decision in view of the advanced stage of the proceeding, rather than terminate the proceeding. Ultimately, the Board cancelled the claims as requested by patent owner Mobilemedia. Although Multimedia had also moved to substitute claims in place of the cancelled claims, the Board found that Multimedia did not show how the claims were amended to address issues of patentability raised in the petition. Thus, none of the substitute claims were entered in the patent.
In Google Inc. And Yahoo! Inc. v. Createads LLC, IPR2014-00200, Petitioners, Google Inc. and Yahoo! Inc. filed a petition for IPR of the patent at issue, and the Board instituted trial on May 9, 2014. On October 15, 2014, Google, one of the petitioners and patent owner filed a joint motion to terminate as to Google. The motion indicated that the parties agree that termination of the proceeding as to Google is appropriate because Google and the patent owner have resolved their dispute concerning the patent at issue. In particular, the motion indicated that Google and the patent owner had entered into a written agreement that memorialized the understanding between the parties and terminated the underlying district court litigation between them. The Google motion further indicated that its motion to terminate as to Google did not affect Yahoo!, which intended to continue the proceeding as the district court litigation between Yahoo! and the patent Owner remained pending. The patent at issue was also the subject of 28 additional cases, which remained pending. The Board granted Google’s Motion. On February 16, 2015, the remaining Petitioner, Yahoo! and the patent owner filed a joint motion to terminate proceeding indicating that the parties had settled their disputes with respect to the patent at issue, and filed a motion, seeking termination of the proceeding. The Board granted the joint motion as to the request to terminate the proceeding with respect to petitioner, Yahoo! Inc., but still proceeded to final decision on the merits of the patent claims in dispute. The Board reasoned that although the parties to an IPR may agree to settle their issues related to the challenged patent, the Board is not a party to the settlement and may determine independently any question of patentability. 37 C.F.R. § 42.74(a). In addition, the Board explained that the trial issues had been fully briefed and argued at the time the parties moved to terminate this proceeding and there are over 10 other cases asserting the patent at issue against other entities currently stayed in the Delaware District Courts. The Board indicated that in view of the advanced stage of the proceeding and the number of existing district court cases involving the patent at issue, they will proceed to a final written decision. 35 U.S.C. § 317(a). The Board ultimately found many of the dispute claims non-patentable.
Above examples clearly indicate that when the Board terminates an IPR as to a petitioner, it may nevertheless proceed to a final written decision when the trial issues have been fully briefed and argued at the time the parties move to terminate an IPR. The Board may also proceed to a decision on the merits when there is a large number of existing district court cases involving the patent at issue.
Both petitioner and a patent owner should consider the above in deciding a strategy for the patent dispute. A petitioner, seeking to avoid estoppel, would need to discuss settlement with a patent owner at the early stage of IPR proceeding. Similarly, a patent owner runs a risk of unpatentability decisions if the settlement does not occur before significant briefing on central issues, in which case the Board may review patentability issues on the merits.