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By: Ethan Horwitz, Carlton Fields.
TODAY, BOTH PATENT OWNERS AND ACCUSED INFRINGERS have multiple choices of venues in which to litigate the validity of a patent. There is the historic option of a patent infringement case in the federal courts. Increasingly, the International Trade Commission (ITC) is being chosen as a venue. And while historically there were some post-grant procedures in the United States Patent and Trademark Office (USPTO) to litigate validity, the options for such procedures have expanded considerably under the America Invents Act (AIA), which established the new post-grant proceedings of inter partes review (IPR),1 post-grant review (PGR),2 and a transitional program for covered business method patents (CBM).3
With these options, a patent owner must decide where to file and an accused infringer may decide where to defend itself. Each option has different advantages and disadvantages, making the venue decision in a specific case a complex one with different competing issues.
There are many characteristics of a district court patent litigation, but only some of them are relevant to the decision of whether to pursue action there or in the USPTO or ITC. The main factors relevant to the decision of venue are juries, damages, speed/slowness, counterclaims, burden of proof, eBay considerations for an injunction, and multidistrict consolidation:
There are numerous factors to consider in litigating Section 337 cases at the ITC.10 However, a number of these factors significantly affect the decision of where to file, including domestic industry, importation, ALJ, OUII, speed, stays, lack of effective counterclaims, in rem jurisdiction, and joinder. Each is described below:
There are a number of post-grant procedures in the USPTO and they vary. Some may be brought by the patent owner (reissue,18 supplemental examination,19 and ex parte reexamination20) and some by others (ex parte reexamination, post-grant review,21 inter partes review,22 and covered business method proceedings23).24 Some are ex parte, some inter parte. Some have trials, some do not.
These various proceedings have characteristics that need to be taken into account when determining whether to use them as opposed to a district court or ITC proceeding. Specifically, factors to consider relate to amending or clarifying claims, burden of proof, estoppel effect, the lack of live testimony (usually), strengthening the patent, speed (sometimes), limited discovery (if any), limited basis for invalidity (for some), and expense.
After looking at the characteristics of the venues, the next consideration is determining where to file. The patent owner can bring an ex parte proceeding to strengthen the patent in the USPTO, a district court action, or an ITC action; all three jurisdictions are available. The accused infringer—or even a party who has not yet been accused—can bring an action in the USPTO, and in some cases an accused infringer can bring a declaratory judgment in the district court, but not in the ITC. The accused infringer can even file in the USPTO after a case is brought in the district court or even after the ITC case has been filed. The problem with a post-grant proceeding after the filing in the ITC is that there will not be a stay in the ITC, which is going to proceed very quickly. But very often, if a post-grant proceeding is filed, a stay of a district court litigation will be available if done correctly and quickly; namely, an accused infringer cannot wait until trial is about to take place to file in the USPTO and expect a stay. But the odds are, if done correctly, a stay will issue.
With this in mind, the issues to consider in choosing a venue are:
So, the earlier the better. If you file the post-grant proceeding before the district court action is brought, a stay is likely. If it is filed just after the district court action is filed, a stay is still likely. If filed much later, there is a question about whether a stay will issue. Also, the type of AIA proceedings matter; courts are more likely to issue a stay when there is a specific deadline in the USPTO by which a decision must be issued.
Many of the issues used to determine the jurisdiction in which to litigate are party neutral, meaning that they can apply equally to either a patent owner or an accused infringer:
There are a number of factors that a patent owner should consider in choosing a venue:
The decision regarding where to file a patent claim is a complicated one. The easy way out is to opt for the cheaper PTAB proceeding; however, there are many other factors to consider. If the PTAB route is the wrong way to go, the later district court or ITC proceedings will be just as expensive, but with less of a chance to win.
Ethan Horwitz is a partner at Carlton Fields with over 25 years of experience in intellectual property. Mr. Horwitz is listed as one of the top 50 trial lawyers in the United States in Law360’s “Trial Aces.” He has advised clients and has litigated patent, trademark, trade dress, copyright, and false advertising cases in the United States and internationally. He is the author of the treatise Horwitz on Patent Litigation, the treatise Patent Office Rules and Practice, and the treatise World Trademark Law & Practice, all published by LexisNexis.
For more information on remedies for patent infringement, see
> PATENT FUNDAMENTALS
For a detailed discussion of the post-issuance challenge procedures in the America Invents Act, see
> THE FUNDAMENTALS OF POST-ISSUANCECHALLENGE PROCEDURES: IPR, PGR & CBM
RESEARCH PATH: Intellectual Property & Technology > PTAB Proceedings > Post-Issuance > Practice Notes> Post-Issuance Challenge Procedures
For additional information on choosing a favorable venue for patent litigation, see
> PATENT LITIGATION FUNDAMENTALS
RESEARCH PATH: Intellectual Property & Technology> IP Litigation & Enforcement > Patent > Practice Notes > Litigation
For an overview of the factors to be considered in litigating Section 337 patent cases at the International Trade Commission, see
> THE FUNDAMENTALS OF ITC SECTION 337INVESTIGATIONS (PATENT INFRINGEMENT)
RESEARCH PATH: Intellectual Property & Technology> IP Litigation & Enforcement > Patent > Practice Notes > International Trade Commission (ITC) Section 337Actions
1. Inter partes review (IPR) is a new post-grant proceeding (replacing inter partes reexamination) created by the AIA in which the Patent Trial and Appeal Board (PTAB) reviews the patentability of one or more claims in an issued patent based only on grounds that could be raised under 35 U.S.C. §§ 102 or 103 and only on prior art patents or printed publications. For a full explanation, see the Lexis Practice Advisor IP Glossary. 2. Post grant review (PGR) is a new post-grant trial proceeding established by the AIA for patents with an effective filing date on or after March 16, 2013. A petitioner (any person other than the patent owner) may challenge the validity of such patents on any grounds under 35 U.S.C. § 282(b)(2) or (3), including anticipation, obviousness, lack of utility, lack of eligible subject matter, or inadequate disclosure (except for failure to disclose the best mode). The petition must be filed no later than nine months after the patent or reissue patent was granted. For a full explanation, see the Lexis Practice Advisor IP Glossary. 3. For purposes of the Transitional Program for Covered Business Method Patents established by the AIA, a “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions. See 37 C.F.R. § 42.301(a). For a full explanation, see the Lexis Practice Advisor IP Glossary. 4. Polaroid Corp. v. Eastman Kodak Co., 789 F. 2d 1556, 1557 (Fed. Cir. 1986). 5. Osram Sylvania v. Am. Induction Tech., 701 F. 3d 698, 699 (Fed. Cir. 2012). 6. eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006). 7. Compare this to the ITC where you need not show a balancing of these hardships. See Spansion, Inc. v. Int’l Trade Com’n, 629 F. 3d 1331, 1336 (Fed. Cir. 2010). 8. 35 U.S.C.A. § 299. 9. A Markman hearing, also known as a claim construction hearing, is a pretrial hearing where he court determines the meaning of words from patent claims that are in dispute in a patent infringement lawsuit. The findings in a Markman hearing affect many issues in a patent case, such as infringement, invalidity, etc. The name stems from a Supreme Court decision, Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), which held that courts and not juries must construe the claims. 10. Section 337 of the Tariff Act of 1930 authorizes investigation of alleged infringement of U.S. patent rights and provides for the enforcement of other intellectual property rights. For a full discussion of issues in ITC litigation, see Ethan Horwitz & Lester Horwitz, Horwitz on Patent Litigation, Ch. 15 (Matthew Bender 2015). 11. 19 U.S.C.S. § 1337. 12. Id. 13. 19 C.F.R. § 210.42. 14. 19 U.S.C. § 1337(c). 15. Sealed Air Corp. v. Int’l Trade Com’n, 645 F. 2d 976, 986 (1981). 16. See supra note 4. 17. However, when there are a large number of respondents named, the ITC may request that they be reduced. 18. Reissue applications may be used to correct accidental errors in patents that cause the patent to be wholly or partly inoperative or invalid. For a full definition, see the Lexis Practice Advisor IP Glossary, https://advance.lexis.com/api/permalink/c720afd3-5326-4b22-9e44-e32950860813/?context=1000522. 19. Under the AIA, a patent owner may request a supplemental examination of a patent in the USPTO to consider, reconsider, or correct information believed to be relevant to the patent. After the request is filed, the USPTO conducts the supplemental examination and decides whether a substantial new question of patentability exists. If it does, ex parte eexamination will be ordered (see footnote 20, below, for a definition of ex parte reexamination). For a full explanation, see the Lexis Practice Advisor IP Glossary, https://advance.lexis.com/api/permalink/49793b20-b828-4efd-9b6c-3f57a44d5fe2/?context=1000522. 20. An ex parte reexamination is a procedure in which the USPTO reviews the validity of a patent. It can be instituted by any person at any time. Only the patent owner may participate in an ex parte reexamination proceeding, and only prior art patents or printed publications may be considered. For more details, see the Lexis Practice Advisor IP Glossary, https://advance.lexis.com/api/permalink/0b577373-eecb-46ad-8c16-adfa6affc64f/?context=1000522. 21. See supra note 2. 22. See supra note 1. 23. See supra note 3. 24. Derivation proceedings will not be dealt with in this article. 25. There are courts that have actually stayed a patent litigation saying there is no way to complete a patent litigation because it cannot do a Markman hearing until it sees what additional statements are being made in the USPTO proceeding that is taking place. See Roblor Marketing Grp., Inc. v. GPS Indus., 63 F. Supp. 2d 1341 (S.D. Fla. 2008). 26. See dissent in In re Cuozzo Speed Tech., LLC, 793 F.3d 1268, 1271 (Fed. Cir. 2015). 27. Marine Polymer Tech., Inc. v. Hemcon, Inc., 672 F. 3d 1350, 1351 (Fed. Cir. 2012). 28. 37 C.F.R. § 42.51 (2015). 29. Every proceeding, ex parte or not, has estoppel effect for the patent owner. But there is also an effect on third parties not even involved; prior art in the proceeding has a higher burden of proof in later litigation: clear and convincing evidence. 30. 35 U.S.C. §§ 315, 325. 31. Coho Licensing LLC v. Glam Media, 2014 U.S. Dist. LEXIS 131284 (N.D. Cal. Sept. 17, 2014). 32. See e.g., K-40 electronics, LLC v. Escort, Inc, No. IPR2013-00203 (P.T.A.B. Aug. 29, 2013). 33. 35 U.S.C. § 257. 34. In re Cuozzo Speed Tech, LLC, 793 F.3d 1268 (Fed. Cir. 2015). However, certiorari has been granted in that case and this issue has been argued before the Supreme Court. Also, there are exceptions when the patent is about to expire. 35. 37 C.F.R. § 1.510(b)(2). 36. Motorola Mobility, LLC v. Int’l. Trade Comm’n, 737 F. 3d 1345, 1348 (Fed. Cir. 2013). 37. Ethicon v. Quigg, 849 F. 2d 1422, 1428 (Fed. Cir. 1998). 38. See In re Swanson, 540 F.3d 1368, 1369 (Fed. Cir. 2008). 39. See Premier Int’l Assoc. LLC v. Hewlett-Packard, 554 F. Supp. 2d 717, 718 (E.D. Tex. 2008). 40. eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006). 41. Evolutionary Intelligence, LLC v. Millenial Media, Inc., 2014 U.S. Dist. LEXIS 81090 (N.D. Cal. June 11, 2014). 42. A patent file wrapper is an electronic or paper folder that contains all of the documents pertaining to a particular patent application. The file wrapper contains a complete record of proceedings in the PTO, from the filing of the initial patent application to the issued patent, as well as all the communications between the inventor and the PTO.