Parties in litigation are generally advised to be as candid as possible in arguing before the court.  Although strategic needs may affect what arguments are presented to a court, withholding arguments in a district court that are presented to the PTAB may lead to unfortunate consequences.  As a recent district court order shows, withholding arguments from a district court proceeding may deny a party the opportunity to benefit from PTAB institution based on the withheld arguments.

In a district court proceeding, Power Survey, LLC accused Premier Utility Services, LLC (d/b/a Narda Safety Test Solutions) (“Narda”) of infringing several patents related to methods and systems for detecting contact or stray voltage in motor vehicles.  (See U.S. Patent Nos. 8,482,274, 8536,856, and 8,598,864)  Parallel to the district court litigation, defendant Narda filed six separate IPRs against the three related Power Survey patents simultaneously on May 30, 2014.  (IPR2014-00832, IPR2014-00834, IPR2014-00835, IPR2014-00836, IPR2014-00838, and IPR2014-00839)  The IPRs were filed in two groups.  A first set of three IPRs (IPR2014-00832, IPR2014-00835, and IPR2014-00838) relied on a central reference (“the Sarnoff Report”).  Due to petitioner Narda’s failure to establish that the Sarnoff report constituted prior art against the patents-in-suit, institution on the first set of IPRs was denied on November 14, 2014.  A second set of three IPRs (IPR2014-00834, IPR2014-00836, and IPR2014-00839) relied on a second group of references.  Central to this second group of references was a manual used with a device called an “EFA-300 sensor” (“EFA Manual”).  Each of the second set of IPRs was instituted on November 26, 2014. Notably, petitioner Narda used over eight references in its IPR filings and used an expert declarant in support of the petitions.

In the district court litigation, plaintiff Power Survey moved for a preliminary injunction to prevent defendant Narda from selling accused infringing products.  On September 4, 2014, the district court held a preliminary injunction hearing.  Although Power Survey provided multiple witnesses in support of its preliminary injunction, Narda provided no witnesses in opposition. 

Despite the fact that the preliminary injunction hearing took place months after the filing of the IPRs, Narda used only one of its eight references in arguing the invalidity of the patents in suit.  Further, Narda disclaimed the use of the EFA Manual and instead argued that the EFA-300 sensor itself was prior art.  Narda also did not use its IPR expert declarant in any capacity.

Applying the four-factor test for analyzing a preliminary injunction, the court found that Power Survey demonstrated a clear showing of need for injunctive relief and granted Power Survey’s motion. 

Two weeks later, after the second set of IPRs were instituted, Narda moved for reconsideration of the preliminary injunction order.  Narda argued that the PTAB institutions qualified as “newly discovered” or “overlooked” evidence.  Reviewing the motion, the district court noted that “reconsideration is not to be used as a means of expanding the record to include matters not originally before the court.”  (citing Bowers v. Nat’l Collegiate Athletics Ass’n., 130 F. Supp. 2d 610, 612 (D.N.J. 2001)  The court continued, “the PTAB’s initiation of proceedings was not known at the time” to the court even though “the factual evidence upon which Defendants’inter partes petition was premised certainly was known and available.”  As a result, the court determined that the alleged “new evidence” was not “new evidence… but rather evidence deemed insufficiently important to present to this Court.” 

Upon this analysis, the court determined that “a strategic decision to present different evidence in federal court than in an administrative court does not entitle a party to reconsideration simply because the administrative court later initiated review based on alleged facts and argument.”   As a result, the court denied Narda’s motion to reconsider the preliminary injunction order.

The issues raised in this case warrant attention.  It is common for parties in patent litigation to use different arguments at district court as compared to those used at the PTAB.  The reasons for such variance are valid – the PTAB has shown itself to be receptive to different arguments than may be used at district court.  Nevertheless, in preliminary injunction contexts, there is no reason to withhold information from a hearing that may inform a judge’s decision.  Lacking statutory authority to force a court to reconsider a preliminary injunction upon institution of proceedings, parties are unwise to withhold arguments like those discussed above from the district court.

The case is Power Survey, LLC. V. Premier Utility Services, LLC, Civil Case No. 13-5670 in the District of New Jersey.  The order described above is available at the attached link.  (Link)