Discovery Practice in Post Grant Patent Proceedings

In patent litigation before the federal district courts and the International Trade Commission (ITC), parties are obligated to preserve and prevent the destruction of potentially relevant information. This duty often commences as soon as litigation is reasonably foreseeable. Many courts also extend the duty to counsel for the litigants and require that counsel take affirmative steps to ensure that their clients are aware of, and take steps to comply with, the duty to preserve documents. As a result, counsel typically consult with their clients regarding this duty and provide their clients with a “litigation hold” letter that explains the measures the client should undertake to preserve potentially relevant information.

The new post grant review (PGR) and inter partes review (IPR) procedures created by the America Invents Act are adversarial proceedings in which the parties may take limited discovery from one another. The question arises: are the parties to PGR and IPR proceedings under a duty to preserve potentially relevant information?  

Parties to PGR and IPR proceedings may take limited discovery that falls under the categories of “routine discovery” and “additional discovery.” See Proposed Rule § 42.51. Routine discovery includes “non-cumulative information that is inconsistent with a position advanced by the patent owner or petitioner during the proceeding.” Id. § 42.51(b)(3). Additional discovery is obtainable by any party which can show “good cause” in PGR proceedings and can show that the discovery sought is required “in the interest of justice” in IPR proceedings. Id. §§ 42.51(c), 42.224.

As a practical matter, parties to a PGR/IPR proceeding will naturally try to obtain any information that supports its positions and/or damages the other party’s positions. Presumably, both sides will try to characterize such information, when requested from the other, as information that contradicts the positions of the party from which discovery is sought, so that the discovery falls within the “routine discovery” umbrella and must be voluntarily produced by the party in possession of it. As indicated in a prior post, such information will often relate to secondary considerations of nonobviousness, including evidence of copying and commercial success by the petitioner and evidence of testing and licensing by the patent owner. Additionally, each party will likely request from the other any relevant statements made in prior litigation or administrative proceedings.

But what happens when one of the parties, when PGR/IPR as been ordered or is reasonably foreseeable, does not take any measures to prevent the destruction of documents that potentially contradict positions that it will likely have to take in PGR/IPR? In many instances, this issue may be preempted by the fact that the PGR/IPR proceeding was precipitated by district court or ITC litigation, and thus, the duty to preserve potentially relevant information will have already started prior to the PGR/IPR proceeding. In situations where no concurrent litigation exists, it remains to be seen whether the PTAB will impose a duty to preserve potentially relevant information once PGR/IPR is ordered, requested, or reasonably foreseeable.

If the PTAB imposes a duty to preserve documents similar to the district courts, then the consequences to non-compliant petitioners and patent owners could be severe. The PTO’s proposed rules package authorizes sanctions similar to the “Rambo sanctions” of the Federal Rules of Civil Procedure, e.g., the ability to enter an order holding facts to have been established, an order precluding a party from presenting or contesting an issue, or entry of judgment against a party. The discussion accompanying the proposed rules package explicitly states that sanctionable conduct includes “failure to disclose a prior relevant inconsistent statement.” Proposed Rules of Practice for Trials before the PTAB at 24. Counsel who are wary of Rambo sanctions are advised to provide “hold” letters with instructions to their clients for preserving information that is potentially relevant to a PGR/IPR proceeding. In light of the inherent difficulty in detecting a party’s negligent or deliberate destruction of relevant information, it is quite possible that sanctions would be severe if the PTAB adopts the practice of the district courts and the ITC.