Introduced by the America Invents Act (AIA), Inter Partes Review (IPR) first became available on September 16, 2012. “IPRs have really taken off and filings have increased over time as more and more people consider how useful they can be,” explains Latham & Watkins partner Jonathan Link. “The first IPR decision came down in September 2013 and it knocked out the claims of the patent. More people began to consider IPRs as part of their litigation strategy, and more and more people are filing them — to the point now that we’re seeing more than 100 filings a month.”
At Latham, Link focuses on International Trade Commission (ITC) and patent litigation, as well as AIA proceedings before the United States Patent and Trademark Office (USPTO). He represents large clients, including several Fortune 100 companies and numerous small businesses in federal and state court, the ITC and the USPTO.
In this lw.com interview, he looks at the many of the perceived benefits associated with the IPR process, and explores lessons learned and emerging trends.
What are some of the benefits associated with the IPR process?
Link: It’s a very fast proceeding — after a petition is filed, the Patent Trial and Appeal Board (PTAB) has six months to decide whether to institute the proceeding or not. Once instituted, the PTAB has to provide a final written decision within 12 months. So it’s only 18 months from start to finish. So far, the PTAB has been very petitioner friendly — the PTAB has invalidated a lot of patent claims.
In 2012, there was a fairly small number of IPRs and covered business method (CBM) filings. That number increased quite dramatically in 2013 — over 500 for IPRs. In 2014, the same number of IPRs were filed in April, 2014 as were filed in all of 2013. Filings for 2014 have passed 1,200. The exponential increase can’t continue forever, but it is an indication that IPRs have become a big business.
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What industry sectors are seeing the most IPRs?
Link: More than 70 percent of filings are in the electrical and computer area, with the next big category being mechanical patents. These two categories together account for about 85 percent of the filings. It’s not surprising, as these are areas where non-practicing entities (NPEs) are most active.
There are a couple of reasons why defendants believe it is useful to file an IPR against the patent owner, such as an NPE, in those situations. One reason is due to a motion to stay the underlying, parallel litigation. In the case of an NPE, courts seem more willing to stay the litigation if it perceives there is little or no harm to the patent owner. Because NPEs often have difficulty obtaining an injunction, their remedy is very likely going to be monetary damages. A court may feel that with interest, it can make the patent holder whole and a stay of the litigation will cause little harm.
It also puts some pressure back on the patent owner. The patent owner now has additional legal fees that they may not have anticipated but have to take on in order to defend the patent. So IPRs and CBMs allow a defendant to put some pressure back on the plaintiff.
In what ways are IPRs a critical part of litigation?
Link: One of the things we’ve found is that in litigation, about 80 percent of the IPRs were filed by defendants in the district court and about 60 percent of those IPRs were filed against NPEs. This is now a very common strategy for defendants. If you are sued in district court, you should be looking at IPRs because there are benefits to knocking out the claims, to staying the litigation, and to applying additional pressure on the patent holder. If you are planning to assert patents, you need to plan for an IPR to be filed against you.
During district court litigation, a patent is presumed valid under 35 U.S.C. § 282. So an accused infringer had to show by clear and convincing evidence that the patent was invalid. This is a higher burden than the preponderance of the evidence requirement that the patent owner needs to meet to show infringement. With IPRs, the higher burden is not at issue. Rather, the PTAB interprets the claims using the broadest reasonable interpretation and then applies the prior art to those claims. Further, the relevant statute specifically states that the petitioner has the burden of showing a patent is invalid by a preponderance of the evidence. So many consider an IPR as an easier way to invalidate a patent than in a litigation.
In fact, patent litigation suits are down in September 2014 from last year. Current statistics favor a defendant filing an IPR as well as obtaining a stay of the litigation. It may be that plaintiffs are looking harder at patent validity and reconsidering whether to bring suit in light of this new landscape.
Why have IPRs been described as death squads?
Link: As of April 2014, about 85 percent of the claims that were at issue in IPR-written decisions were found invalid, and 100 percent of the CBMs were knocked out. So when a patent was involved in an IPR, any final written decision was likely going to be in favor of the petitioner. Since then, the success rates of petitions have fallen. However, a patent owner still faces an uphill battle.
What unique combination of skills does Latham bring to the table?
Link: The IPR process has been styled as an administrative proceeding in front of the USPTO but it’s not — it’s essentially litigation. An IPR proceeding is very similar to a summary judgment proceeding with briefing and a hearing, all of which are best handled by litigators. I think when companies see that the USPTO is involved, they all too often think of patent prosecution and matters before the old Board of Patent Appeals and Interferences (BPAI) with a patent prosecutor. Today, the PTAB is staffed by 177 Administrative Patent Judges (APJ) who have technical and advanced degrees and a lot of practical patent legal and engineering experience. These APJs must apply rules and regulations akin to those used in federal court litigation. The parties can take depositions of experts, and some discovery is exchanged. It’s not a board of former examiners but rather one that requires you have to have litigation experience and strategy.