Inter Partes Patent Reexamination Filings Pose Challenge to Lodsys
Late Friday, Google announced that it had filed inter partes patent reexamination requests against two of the now infamous Lodsys patents, 7,222,078, and 7,620,565. Over the past few months, Lodsys has been contacting iOS and Android application developers seeking license fees, and has begun suing others to enforce their patent rights (the patents are purportedly directed to application transactions among providers and users). An infringement suit was filed against 11 defendants in Texas, including EA, Take-Two Interactive, Atari and Rovio (of Angry Birds fame).
As a licensee, Apple has attempted to intervene in the ongoing litigation arguing that app developers are covered under the terms of their license. Google, perhaps unencumbered by the contractual obligations of Apple with respect to challenging validity, has opened up a new battle front for Lodsys at the the USPTO.
As explained this past Saturday at Wired.com, Google announced the filing stating that:
We’ve asked the US Patent Office to reexamine two Lodsys patents that we believe should never have been issued. . …Developers play a critical part in the Android ecosystem and Google will continue to support them. [quote attributed to Google Senior Vice President and General Counsel, Kent Walker]
So, now what?
The USPTO now has 90 days by statute to decide to order or deny patent reexamination. Roughly 95% of such requests are granted. (USPTO stats here) So, one can expect that the reexaminations will very likely be ordered. Typically, an “office action” would be issued at the time of the Order rejecting (some or all) of the claims of the patent, and requiring a response from Lodsys within 2 months time. Thereafter, Google will be able to respond to any Lodsys submission to the USPTO.
Of course, in patent reexamination, the playing field is not nearly as favorable to patentees as a district court. For example, the USPTO applies much more liberal standards relative to that of the district courts with respect to validity and claim construction. Specifically, invalidity in a district court must be shown by “clear and convincing” evidence, whereas in the Office it is sufficient to show non-patentability by a “preponderance” of the evidence. Additionally, patents are presumed valid in court, not so at the USPTO. For these reasons, as well as for litigation strategy purposes, patent reexamination is an attractive option for litigation defendants.
What happens to ongoing litigation while patent reexamination is pending at the USPTO?
In some cases, ongoing litigation may be “stayed” pending the outcome of patent reexamination in the interests of judicial economy. However the decision to stay a case is highly dependent on the facts, and perhaps more importantly on the judge involved. In the Lodysys case (Texas case), Judge Ward of the Eastern District of Texas is presiding. Historically, Judge Ward has stayed cases 40% of the time (2008-2011) (see full stats in my prior post on this topic). So, the Google filing has the potential to completely shut down the present case. I would expect that the Texas defendants will seek a stay at some point, likely shortly after an Order (60-90 days from now).
However, even if a motion to stay is denied by Judge Ward, an advancing reexamination that includes adverse patentability findings makes later law suits more difficult to pursue. This is because one of the factors considered by a judge in staying a case is the stage of the USPTO proceeding…the closer to the end, the more attractive the stay option. So, later law suits become increasingly more difficult to pursue as a reexamination advances that includes adverse validity findings.
Needless to say, all of this assumes Google is sucessful at the USPTO. While there is no guarantee, historically, inter partes patent reexaminations have led to complete cancellations of all claims in roughly 44% of cases, and most proceedings include some claim amendments (which could potentially eliminate past damages for infringement).
Unfortunately, the reexamination proceeding will take some time. As I have discussed previously, the length of an inter partes patent reexamination, through appeal, is significant. Likewise, Lodsys has additional patents in their portfolio, and others pending. Clearly, the Lodsys threat is not going to be defeated overnight. Nevertheless, with Google funding the battle at the USPTO, a second front has opened on a much more favorable battlefield.