ChIPs Global Summit Report 3: Congratulations - your patent has been allowed, when is it finally final?

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Article America Invents Act, Article AmeriKat, Article ChIPs Global Summit 2016, Article district courts, Article dual track, Article estoppel, Article inter partes review, Article opposition procedure, Article patent validity, Article stay of proceedings,

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ChIPs Global Summit Report 3: Congratulations - your patent has been allowed, when is it finally final?

Problems, problems everywhere,but
where is the solution for the dual-track system?
The problem of a dual track system was the final session the AmeriKat attended before lunch on the first day of the ChIPs Global Summit 2016, a topic which came up at this year's Fordham IP conference (see post http://liveeconcerts.blogspot.com /2016/03/fordham-2016-outstanding-patent-issues.html">here).  What is the impact of a system where a patent cannot be declared finally valid, only finally invalid?  This problem has been, in part, generated by the America Invents Act with the creation of inter partes review (IPRs), which has resulted in some patentees facing serial IPRs and parallel attacks in the district courts.  In Europe, the dual track problem is between national courts and EPO oppositions where a national court may hold a patent valid and infringed only for the patent, many years later to be held invalid by virtue of an EPO opposition.  So what is the latest thinking in the US on this issue?

Judge Rama Elluru (Administrative Patent Judge, USPTO) - who was not speaking on behalf of the USPTO or Patent Trial and Appeal Board (PTAB) - stated that there was an opportunity for serial petitioners.  However where there is a subsequent challenge to the same patent, the petition is usually assigned to the panel who dealt with the first petition as they are familiar with the history, prior art and arguments.  When the same petitioner challenges the same claims, there is a possibility for estoppel.  There is also discretion not to institute an IPR if the petitioner could have raised the challenge in the post grant review or if the petitioner is accused of harassment.  If the petitioner has already challenged validity and lost in district court and there is some evidence of undue harassment then that may be something that is taken into consideration when instituting an IPR.  However, it depends on the facts of the case.  In answer to a question as to whether the PTAB looks at a successful invalidity win in district court during their proceedings, the answer was that they "will make an independent decision based on the record in front of it."

Chief Judge Barbara Lynn (US District Court for the Northern District of Texas) first declared that nothing she said was, of course, binding on herself.  She then commented that she "loves complex patent cases but I only want to hear them once."  The worst outcome is to be reversed and remanded as its a huge expense of resource for the parties.  The America Invents Act has stymied the ability to achieve finality of a patent's validity.  The lack of finality is a real problem for certainty and especially the patentee whose fight is never over.  Chief Judge Lynn commented that the judges look at what is happening in the PTAB - what they are doing, how fast they are doing it and how the district courts and PTAB are or should be interacting.  Chief Judge Lynn stated that "I have to worry about multiple actions in my own court and actions in other courts construing the same patent that I am considering."  One has to be alert to the potential for contradictory decisions emanating from different fora.   Chief Judge Lynn noted that district court judges do the best they can to reassemble cases.  Indeed, Chief Judge Lynn explained how she and a district judge in another case concerning the same patent met to construe the patent claims together so to avoid contradictory decisions as much as possible.  Judges are therefore finding ways to work around these problems.  

The panel also noted that the presumption of validity under US patent law assists the patentee in showing that they have something of real value and that the burden of proving that the patent is invalid falls on the other side.  However, in reality if we took a poll, many would comment that there are a lot of weak patents out there.  It was suggested that perhaps the focus therefore should be on patent quality so that the presumption of validity and the standard of evidence to rebut that presumption (clear and convincing) is actually appropriate. Just because a patent has survived one patent challenge does not mean that the patent is necessarily stronger.  If the patent has survived a challenge in front of a really good judge, then the panel noted that that may deter opponents.  However, in reality, that decision is not binding on anyone who is not party to that case.  Those parties will try a different tactic before different judges in a different forum.  This is of course correct - it is not fair to an absent party to be faced with the bias of a decision in a case they had no right to participate in.  There cannot be a time bar for bringing a challenge to a patent in district court as potential litigants and controversy may not be in existence at the time of the first action.
  
Chief Judge Lynn explained that most district courts are staying cases pending inter partes reviews.  If a patent is invalidated, then that is the end.  If it is not, then the district court goes forward and may still invalidate the patent.  The district court judges pay attention and review the decisions coming from the PTAB.  There is a lot of intersection between the tracks.  However, the dual tracks create significant tension but she did not have an immediate solution - although the problem greatly demands one.  Chief Judge Lynn did note that there needs to be a way of bringing "everyone in" on the process.  

Melissa Scanlan (Senior Director, IP Litigation and Antitrust, T-Mobile USA) noted that she is usually on the defence side and, therefore, joked that she never thinks about the "poor patent owner" especially those whose patent claims are overly broad, tenuous and are asserted with a hefty multi-million dollar price tag [she didn't say it, but the AmeriKat understood her to mean patent assertion entities, or whatever they are now called].  Melissa stated that she liked "having as many tools in my patent tool chest as I can.  That includes asserting my best arguments in district court on validity and then going to PTAB in parallel and to play one off against the other where there is an opportunity to do it; there are tons of strategic decisions which go into that."  However, she recognized that it can create an inefficient system.  Inefficiency is generally a bad thing, but as a litigator you will use every tool that you can "as aggressively as I can to shift some costs back in the other direction".  Perhaps, the AmeriKat muses, that is the heart of the issue on multiple attacks in a dual track system - costs.  Would blanket wide costs-shifting deter serial attacks?   Melissa also commented that a validity assessment before a jury is almost always daunting.  There is a fear that as soon as jurors see the official stamp on the patent and watch a glittering video in court about the invention, they are then unable to look beyond that to the merits.  "We have been successful in invalidating patents, so we know it is possible.  We have done it, but we sure do not count on it.  We feel better about our chances on infringement."

If the panellists could change one thing about this dual track landscape, what would it be?  There was no consensus, however, two panellists suggested that they would rather all arguments be articulated at the PTAB and the district court case stayed until the PTAB conducts its assessment, rather than to "drag on and on in a slow expensive process in district court."

Closing the session, moderator Rachel Krevans (Morrison & Foerster) explained that the US has one system of patent laws, regardless of technology and regardless of the identity of the patentee.  However, recent history with the rise of non-practising entities has generated a lot of cynicism about the value of patents, i.e. not being worth the paper they are printed on.  However, when companies start the R&D and investment cycle for products, they need to have confidence in strong patent protection and in the patent system to assure investors that their investment will become good.

If the quality of patents being issued is in doubt and the number of times a patent will be subject to attack is almost limitless, then confidence in the strength of patent protection and the system begins to falter.  The value of the bargain struck in obtaining patent protection begins to erode.  The AmeriKat wonders whether if such a state of affairs is permitted to continue, more inventions will be protected by way of trade secrets, not by patents.  Surely, such an outcome will be classed as devastating failure of laws that were established to promote innovation for the good of society.  But who has a solution?  AIPPI has been working on a full scale global survey on this dual-track problem over the past few months to identify potential solutions.  This work will continue over the next few months and the AmeriKat will keep readers updated on this work as practitioners grapple with this problem, not just in the US, but across the world.  


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