A recent District Court order in XY, LLC v. TransOva Genetics, LC, 1-13-cv-00876 (COD April 8, 2016, Order), illustrates the importance of using AIA trials as an offensive tool against a charge of patent infringement and a defensive tool against a charge of willfulness. Specifically, the court found that a PTAB decision invalidating one out of ten patents-in-suit was persuasive evidence in support of overturning a jury's finding of willful patent infringement.
In April 2013, XY sued TransOva on a variety of causes, including patent infringement of ten patents, arising out of a dispute of a license agreement pursuant to which TransOva could use XY's patented technology directed to sex-selection technology for livestock. While the litigation was ongoing, a third party filed IPR petitions against two of the patents-in-suit (U.S. Patent Nos. 7,195,920; 7,820,425); the PTAB instituted both IPRs and determined certain claims of the '920 patent to be unpatentable. Since the issuance of the order in XY, the PTAB also deemed certain claims of the '425 patent to be unpatentable.
At trial, the jury found TransOva liable for willful patent infringement. TransOva challenged this finding on the basis that it was clearly erroneous. TransOva's defense against willful infringement was based on: (1) a good faith belief that the licensing agreement was still in effect; (2) reliance on advice of counsel as to the invalidity of four patents-in-suit; and (3) evidence presented at trial as to patent invalidity amounted to a substantial question of invalidity. The Court reviewed the record and determined "that TransOva's invalidity defense was objectively reasonable, as it presented a substantial question of invalidity, and therefore TransOva cannot have willfully infringed."
The court felt confident that there was no evidence of willfulness, in part because of favorable PTAB proceedings:
This finding [of no willful infringement] is further supported by the proceedings brought with respect to the '920 and '425 patents before the Patent Trial and Appeal Board, which resulted in a finding of invalidity as to the '920 patent, and a hearing as to the possible invalidity of the '425 patent. While this evidence was not before the jury, it bolsters the Court's present finding that TransOva's invalidity defenses met the minimal standard of objective reasonableness, at least as to some of XY's patents.
Thus, while the jury did not even hear any evidence as to the PTAB's decision, the court was persuaded.
The decision in XY illustrates that a favorable outcome in an IPR (even when filed by another party) may be useful for defeating a charge of willful infringement, even for patents that were not involved in the AIA trial.