As the number of inter partes review (IPR) and covered business method (CBM) petition filings continues to increase, an unresolved but significant issue remains: the extent to which preliminary decisions from the Patent Trial and Appeal Board (PTAB) denying or granting institution of a petition can be used in district court litigation. While many district courts are staying litigation once a petition has been granted, those cases in which a stay has not issued (be it for denied or granted institution decisions) need to address the potential use of institution decisions, and in particular the extent to which institution decisions are admissible in jury trials. By granting institution, the PTAB has found a “reasonable likelihood” that at least one challenged claim would be invalidated,1 but the denial of institution may be merely based upon procedural issues or other reasons that have little to do with the validity of a challenged claim. For example, the PTAB has increasingly been rejecting petitions based upon a failure to address whether a printed publication is in fact prior art or whether a piece of prior art can invalidate claims based upon priority dates issues.2 Given the PTAB’s increasing use of 35 U.S.C. § 325(d) and other mechanisms to deny petitions in an effort to reduce its caseload,3 it is increasingly likely that cases involving the relevance and admissibility of denied IPR decisions will become more frequent.
Currently, very few decisions exist that have addressed the use and admissibility of IPR or CBM institution decisions. At the most basic level, these determinations may be split between the admissibility of PTAB decisions denying institution versus decisions granting institution, although it is not infrequent for a PTAB institution to have a mix of grounds which were instituted and not instituted.
Decisions Denying Institution
To date, district courts have taken different approaches regarding the use and admissibility of the denial of an IPR petition in an underlying litigation involving the same patent. In Procter & Gamble, the Southern District of Ohio considered the existence of a denied IPR petition when addressing summary judgment of validity of the same patent.4 In its summary judgment order, the court noted that the PTAB had already considered the same prior art, same prior arguments, and testimony from the same expert.5 The order emphasized that the defendants could not even meet the reasonable likelihood standard required for instituting IPR, a standard in contrast with the “clear and convincing” burden for invalidating claims in litigation.6
In Universal Electronics v. Universal Remote Control, the Central District of California denied a defendant’s motion to exclude evidence of a denial of institution.7 In theUniversal case, the plaintiff wanted to introduce evidence of the denial of institution to rebut the defendant’s defense that it had a good faith belief in the asserted patent’s invalidity.8 The plaintiff argued that the defendant could not maintain such a defense because the denial occurred over the defendant’s submission to the PTAB of substantially the same prior art.9 The defendant argued that evidence of the PTAB’s denial of institution would be irrelevant and would confuse the jury.10 While the court’s brief order provides very little explanation, the court ruled in favor of the plaintiff, stating that “[a]ny potential confusion can be addressed by appropriate jury instructions on the standard of proof applicable to patent invalidity defenses and counterclaims.”11
In contrast to the Universal decision, in Interdigital v. Nokia, the District of Delaware excluded evidence of the denial of institution of an IPR petition, finding that its “probative value is greatly outweighed by the expenditure of time [and the risk of confusion] that would be required to give the jury the full context necessary to fairly evaluate the evidence.”12 The court in Interdigital noted that even assuming institution decisions are a part of a patent’s prosecution history, they are not to be given the same weight,13 stating that other parts of the prosecution history were scrutinized by the patent examiner under a stricter standard than the reasonable-likelihood standard employed in an institution decision.14 The court further distinguished institution decisions by explaining that unlike patent examiners, IPR decision makers are not “persons of ordinary skill in the art,” suggesting that the PTAB's decisions to deny institution are of little relevance in litigation.15 The court appeared to take the position that IPR institution decisions of any type (whether denials or grants) should not be permitted to be used as evidence in a patent infringement jury trial.
The approach in Interdigital appears to additionally consider that the denial of an IPR or CBM petition can be for a multitude of reasons that do not relate to the actual strength of the prior art and invalidity arguments raised in the petition. Also to be considered by a court addressing admissibility of denials is the IPR and CBM petition process itself, which currently does not provide any mechanism for a Petitioner to respond to arguments raised in a Preliminary Response prior to the PTAB deciding whether to institute trial for a petition.16
Decisions Granting Institutions
To date, there have been very limited situations where a court decided on the admissibility of a pending IPR proceeding in which the PTAB had granted institution. This is most likely the result of cases either being dismissed prior to trial (be it settlement or other reasons), or the imposition of a stay by the district court to avoid concurrent proceedings. In the limited number of cases where a court has been asked to admit evidence of a pending IPR, it has been in the context of a defendant attempting to prove a good faith belief of invalidity. In June of 2013, the Federal Circuit held in Commil v. Cisco that “a good-faith belief of invalidity may negate the requisite intent for induced infringement.”17 Defendants have since raised the existence of an instituted IPR to defend against induced infringement claims as evidence of their good-faith belief that the patent was invalid.
In the Eastern District of Texas case of Personalized Media v. Zynga, the defendant asked the court to allow evidence of the PTAB’s granting of institutions on the patents-in-suit to support their contention that they had a good faith belief of invalidity.18 The court, however, issued a blanket exclusion of all evidence pertaining to the institutions. The court found that “the danger of undue prejudice is too high, and that the danger of unfair prejudice cannot be mitigated simply by the use of a limiting instruction.”19 The Eastern District of Texas again excluded such evidence from being used to support a good faith belief to defend against induced and contributory infringement claims in a recent order in Allure Energy v. Nest Labs, stating that any probative value is outweighed by “the danger of misleading the jury and waste of time involved in explaining [the circumstances] to the jury.”20
Another case involving instituted IPRs is the Western District of Wisconsin case ofUltratec v. Sorenson. The defendants there sought in a summary judgment motion to consider evidence of the PTAB’s granting of institutions on several patents to show their basis for believing the asserted claims to be invalid.21 In response, the court noted that such evidence was not conclusive but did not preclude the possibility that the institution decision may still be considered in some situations.22 In a later ruling, the court stated that the defendants could introduce evidence of the institution outside the presence of the jury to argue against the objective prong of the test for induced infringement and may even introduce such evidence to the jury to argue against the subjective prong (i.e., “as evidence showing their good faith belief in invalidity”).23
The issue of the admissibility and use of institution decisions will continue to be closely watched by both plaintiffs and defendants alike given the limited case law on the subject. To date and without Federal Circuit guidance, it appears that the determination of admissibility may require a case-by-case approach for decisions denying institution, given the varying factors such as different prior art, evidence, and reasons that a petition was denied, although at least one court appears to deny their use in any situation. The potential basis for the admissibility of instituted IPR or CBM petitions will be particularly noteworthy, including the use of such decisions to rebut any intent requirement for indirect infringement or willfulness allegations.