Stay Calculus to Encourage Multi-Defendant
As the new patentability trials of the America Invents
Act (AIA) have only been available for 7 months, their impact is only now
beginning to be felt in the district courts. The new USPTO Patent Trial &
Appeal Board (PTAB) proceedings permit suspect patents of any vintage to be
reconsidered in a far more speedier, cost effective, and challenger friendly
manner relative to that of the federal district courts. Not surprisingly, there
has been a robust demand for these proceedings with
over 200 such petitions filed since September 16th-many of which target the
patents of non-practicing entities (NPEs).
The impact of these new PTAB proceedings are beginning to
be felt in the district courts as motions to stay the costlier court
proceedings pending PTAB review are being considered almost daily. And, many
courts are staying the parallel litigation in favor of the speedier USPTO
proceedings. Interestingly with the argument of multi-year
USPTO reexamination delays now eliminated by the faster PTAB proceedings,
Patentees (NPEs in particular) are now emphasizing to the courts that estoppel
only applies to the petitioner or real party in interest-not necessarily every
defendant in a multi-defendant suit. As such, NPEs argue that a concluded PTAB
proceeding will not simplify issues for trial because defendants that did not
join in the petition filing would be free to raise the very same issues decided
in the PTAB proceeding upon lifting of the stay.
The solution for non-petitioning defendants facing such
an argument is really quite simple.....just pile on.
Joinder practice at the Patent Trial & Appeal Board
strategic opportunities for multi-defendant lawsuits. Joint Defense Groups
(JDGs) are especially common in lawsuits that target an industry, such as those
typically lodged by non-practicing entities. Petitions from co-defendants of a
JDG for joinder of an ongoing post grant patentability trial (i.e., IPR, PGR or
CBM) that are filed within one month of trial institution at the PTAB, which do
not raise substantial issues beyond those presented in the previously granted
petition, or those that simply file a copy of the previously granted petition,
are likely to be liberally granted. (Rules 42.122, 42.222)
Joinder practice enables co-defendants to actively
participate in the ongoing post grant proceeding before the PTAB. As can be
appreciated, through joinder, individual defendants can secure the opportunity
to participate in a proceeding they would otherwise have no control over, or no
recourse should the original
petitioner decide to settle.
Perhaps more importantly, those co-defendants that
are faced with the court ultimatum of agreeing to sign onto estoppel or be
forced to move forward with the costlier litigation proceeding have nothing at
all to lose by agreeing to be bound by estoppel - assuming they seek
First, by definition, joinder occurs once trial is
instituted and a preliminary claim interpretation issued. Joinder filers in
many cases will have the benefit of the wait-and-see-approach.
Second, practically speaking, should the petition effort
fail at the PTAB it is very unlikely
that the co-defendant would want to go to trial on the same evidence anyway.
Third, as to the "reasonably could have raised" aspect of
excluded), the co-defendant is free to add-on any such grounds desired in
their joinder filing. To be sure, additional grounds advanced in a joinder
petition may be deemed as raising substantial issues leading to a denial as to
those issues. But, such a denial would arguably insulate the co-defendant from
the "reasonably could have raised" estoppel. In other words, demonstrably, such
issues could not have been raised, and the co-defendant had no control
over the first filing (which the record shows they did not support at the time
of filing). This creates a situation in which the original petitioner may be
bound by the "reasonably could have raised" estoppel but the co-defendants, at
least in some respects, are not. So, in essence, co-defendants are agreeing to
sign onto a proceeding in which the art raised, if unsuccessful, could not be
reused in court....which, as noted above, would be the practical result in any
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