Court Cites Improved Speed of PTAB as Eliminating Potential Prejudice
The primary business distinctions between the USPTO Patent Trial & Appeal Board (PTAB) proceedings and traditional court based patent invalidity proceedings are the vast improvements in cost, predictability, effectiveness, and speed of PTAB proceedings— but it is the speed and effectiveness that is changing the perspective of the judiciary on staying litigation pending USPTO proceedings.
As most are aware, the old patent reexamination system, at least on the inter partes side, has been replaced by IPR. IPR must be concluded by statute within 12-18 months, a marked improvement over the (roughly speaking) previous 6+year path through the Central Reexamination Unit (CRU), Board of Patent Appeals & Interferences (BPAI) and Court of Appeals for the Federal Circuit (CAFC). These changes are being quickly recognized by courts, several of which have agreed to halt litigation proceedings upon the mere filing of an IPR (months in advance of an Order to grant the IPR petitions).
Previously, when an inter partes or ex parte patent reexamination was the basis for the motion to stay the court proceeding, the strongest plaintiff arguments in opposition were that the significant USPTO delay would prove prejudicial to the plaintiff…not any more.
In SoftView LLC v. Apple Inc., et. al., 1-10-cv-00389 (DED September 4, 2013, Order), Judge Stark (order here) found several aspects of the IPR process militated in favor of a stay, whereas months earlier a motion to stay on patent reexamination grounds was denied [an enhanced version of this opinion is available to lexis.com subscribers]. Specifically, the Court found:
A stay is likely to simplify the issues for trial. Unlike in connection with the earlier requested stay- when only some of the asserted claims stood rejected – the PTAB has granted inter partes review with respect to all of the asserted claims of the patents-in-suit. . . Should all of the asserted claims be found invalid, this litigation would be “simplified” because it would be concluded. Alternatively, should even some of the asserted claims be found invalid, that finding would reduce the number of issues left to be litigated. Another possibility is that some or all of the claims are found not invalid, yet even in that scenario, litigation should be somewhat simplified due to the estoppel effect on [defendants]- and Moving Defendants’ agreements to be bound certain prior art. Thus, while it remains true that in this litigation Defendants are pursuing invalidity and equitable defenses beyond the scope of what will be considered during the inter partes review, and Softview has reiterated its pledge not to seek to amend claims, the simplification factor favors a stay.
As to the last point on amending, presumably the Patentee agreed to this concession in the hopes of undercuting the argument that a change in claims would frustrate the litigation process and favor a stay. This concession is now a no-win proposition for plaintiffs.
As to the speed of PTAB proceedings compared to earlier stay denial (based on a patent reexamination filing) the Court found:
In the Court’s July 2012 decision denying a stay, the Court noted that the early stage of litigation and lengthy process of reexamination weighed against a stay. . this comparison [is] different now: while the case has substantially progressed, the inter partes review promises to be a more expeditious process than reexamination and appears to be relatively close to completion. . . .by the time case-dispositive motions are filed, the inter partes review is likely to be over. Pursuant to 35 U.S.C. § 316(a)(11 ), the PTAB must issue a final determination within one year of the notice of a review – here by March 29, 2014- unless that period is extended for six months for good cause shown. Hence, while the parties and the Court have dedicated substantial time and resources to this case – and only this case can resolve all of the patent-related disputes among the parties- the Court believes, under the circumstances, it is appropriate to allow the inter partes review a reasonable period to conclude before launching the parties into the expense of expert discovery.
As I predicted when the AIA was first passed, the patent troll game has changed. At least for those wise enough to avail themselves of the new PTAB options.
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