NPEs Unwittingly Invite Lopsided Battles at PTAB

NPEs Unwittingly Invite Lopsided Battles at PTAB

Stay Calculus to Encourage Multi-Defendant Attacks

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 (PTAB) provides 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 joinder.

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 estoppel (CBM 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 case.

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