Strategies and Opportunities in an America Invents Act World – Choices of Venue

Posted on 09-13-2016

 

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.

Relevant Characteristcs of the Venues

District Court

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:

  • Juries. Both sides can request a jury in district court patent litigation, and there are many factors to consider when determining whether requesting a jury is appropriate, such as whether you have a good story and whether you have a simple story. With a very complicated technical explanation of how a patent is invalid, a jury may not be the best audience. Similarly, if there are legal issues to explain, such as why priority should not be awarded based on a prior application because of the differences in the specifications, a jury may not be a good audience. On the other hand, a simple, strong story may work well in front of the jury. Another consideration is the commonly held belief that plaintiffs generally do better with juries and that damages are higher with juries than with judges.
  • Damages. The district court is the only place to recover damages. Damages are not available in the ITC, and certainly not available in the USPTO.
  • Speed/slowness (depending upon where). For speed, a case may be filed in the Eastern District of Virginia and be on a rocket docket. From that speedy venue, the venues range up to the very slow districts—in one case in the U.S. District of Massachusetts, for example, it took the parties over five years to get to trial and an additional three plus for the district court to issue its decision.4 Even in jurisdictions that run relatively quickly, however, it is unclear how long the case is going to take; civil cases may be pushed aside for criminal cases and a judge’s timing varies within a jurisdiction.
  • Counterclaims. The only place for effective counterclaims is the district court. Thus, a plaintiff who knows the accused infringer has good patents to assert may not want to be in the district court. The jury is going to hear why both the plaintiff and the defendant infringe, and it may get very complicated.
  • Burden of proof. In the district court or the ITC, invalidity must generally be proved by clear and convincing evidence.5 In addition, when invalidity is based on prior use, there are strict proof requirements; infringement must be proven by the preponderance of the evidence.
  • eBay considerations for injunctions. District courts do not automatically issue injunctions for patent owners. In eBay,6 the Supreme Court held that the traditional four-factor test for injunctive relief applies equally in patent cases. Thus, district courts must consider (1) whether there is irreparable injury, (2) what other remedies are available, (3) a balancing of the hardships between plaintiff and defendant,7 and (4) the public interest.
  • Multidistrict consolidation. Since the AIA, a plaintiff can no longer include multiple unrelated defendants in the same action.8 But if there are different defendants across different jurisdictions, the litigation could end up in a multidistrict consolidation where all those cases are consolidated for pretrial procedures. Consolidation is not just for discovery, but for all pretrial procedures. So, a Markman hearing is conducted in the multidistrict consolidation, and summary judgments may also be determined there.9

ITC

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:

  • Domestic industry. The ITC was created to defend U.S. business, and therefore, the ITC looks to whether there is a domestic business to defend; that domestic industry must obviously be in the United States and must be related to the patent.11 The ITC’s requirement that a case involve a domestic industry relating to the patent can be as simple as an investment in plant and equipment in the United States relating to the patent or an investment in exploiting the patent, such as research and development, licensing, and engineering.
  • Importation. The ITC only deals with imports; domestic products are not under its purview.12 The ITC will not stop products from being manufactured and sold in the United States; it will only stop products from being imported into the United States. For example, if a chip is made in the United States and then shipped overseas to be packaged, when the package with the chip comes back into the United States, that return trip back into the United States is an importation the ITC can stop.
    Also, there must be a relationship between the infringement of the patent and the product and its features. Unlike in district court, where an infringement is an infringement regardless of how extensive it is, the ITC will look to the extent the patented feature fits into the overall product and determine whether it is worthy of stopping importation. For example, if the patent is for the chip itself, the ITC will likely stop the chip from being imported. If a phone is being imported that contains that chip, ideally a complainant will want to show how the patented aspect of the chip allows the phone to do certain things and that those are the very things that make the phone sellable. There is a difference as to whether the patented chip merely does what can be done by any chip or whether there is something unique about the patented aspect of this chip that allows the phone to have the feature being advertised, such that the chip is an integral part of the marketing of the product.
    A last example is a refrigerator with a time display that uses a chip; that time display chip is so remote to the basic function of the refrigerator that the ITC is unlikely to issue an injunction for that refrigerator based on infringement by the chip.
  • ALJ. The ALJ (Administrative Law Judge), not a jury, decides an ITC case. The ALJ gives an opinion and then the commission actually issues a decision. The senior ALJs are very well-versed in patent issues as much of what they do is deciding patent cases. ALJs know patent law very well; they also have experience picking up technology and often have technical clerks to help.
  • OUII: The Office of Unfair Import Investigations. There are three different parties to an ITC litigation: (1) the complainant (the patent owner); (2) the respondent (the party accused of infringing); and (3) the public, represented by the OUII. OUII attorneys very often have technical degrees and patent backgrounds and know the issues very well. And, not always, but very often, the ALJs look to the OUII attorneys for advice because they have been very steeped in the case throughout discovery and are impartial.
  • Speed. The ITC must issue a decision within 12–16 months from initiation of the action, and in complicated cases that period could be extended up to 18 months.13 So, usually, the trial is 9 to 13 months from initiation of the case. If you are a respondent, you find out about the case on day one. Often, on day 30, the case is initiated, and then nine months later, you start trial. And very often, if discovery has not been completed, it really doesn’t matter because an extension is unlikely.
  • Stays. There are no stays of ITC actions for post-grant procedures in the USPTO.
  • No effective counterclaims. There are counterclaims in ITC actions. However, the counterclaims are separated out and sent to the district court as an independent case so that there is effectively a one-sided case in the ITC.14 The only issues are whether the respondent is infringing the patent and whether the patent is valid and enforceable. So, from the patent owner’s point of view, the only risk in an ITC case is that the patent may be held invalid, and even that may not be binding. The ITC decision has no res judicata effect but can have a persuasive effect in a later case in the district court.
  • In rem jurisdiction. The ITC has jurisdiction over the products being imported, not personal jurisdiction over the parties in the case.15 This means that service is easy. The ITC serves other parties by mail; there are no Hague Convention issues involved and no delays because of the Hague Convention. Another consequence of the ITC being an in rem proceeding is that there is no balancing of the equities to be considered in issuing an injunction. There is a balancing for the public interest, but the damage to defendant is technically not a factor in the case.16
  • Joinder. Before the AIA, you could historically sue 100 different parties in the district court who were independently infringing; under the AIA, you can now only sue related defendants. For example, the manufacturer, the seller, and the user of a specific product can be sued in one action; different manufacturers cannot be sued in the same case. By contrast, even after the AIA, the ITC has no limitations as to the number of different unrelated parties that can be included in the action.17

Post-Grant Procedures in the USPTO

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.

  • Amending or clarifying the claims. There are different post-grant procedures, and in some you can amend the claims and in some you cannot. In some you can theoretically amend the claims, but as a practical matter, permission to amend is rarely granted. But even if the claims cannot be amended, they can be clarified. The statements made in the post-grant procedure are considered in interpreting the claims.25 There is a significant advantage for a patent owner to look at the defendant’s product, file a post-grant procedure, and say things to make the claims read on defendant’s product.
    Some ex parte procedures allow amendments to the claims. In fact, in a reissue, a patent owner can actually expand the claims within the first two years after grant. A patent owner can amend the claims in ex parte reexamination and inter partes review to limit the claims. But it is difficult; although technically possible and having actually occurred in some cases, the USPTO’s Patent Trial and Appeal Board (PTAB) has made it very difficult to amend the claims.26
    The Federal Circuit has held that intervening rights only apply to amendments of claims, not to clarifying claims.27 So, if the claim language has not changed, but through statements in the USPTO the meaning of the claims has changed, there are no intervening rights.
  • Speed (sometimes). Inter partes review, post-grant review, the transitional program for covered business method patents, and derivation proceedings are supposed to be completed within one year from institution, with a six- month extension possible. In reissues, there are no time limits. For ex parte reexaminations, the law says they are to be done with “special dispatch.”
  • Burden of proof. In the district court and in the ITC, invalidity must be proven with clear and convincing evidence. In the USPTO, there are two different standards. One is the preponderance of evidence applicable to inter partes review, post-grant review, covered business methods, and derivation proceedings. In a reissue and in ex parte reexamination, there is the usual application standard.
  • Limited discovery. There are different standards for discovery in the inter partes procedures in the USPTO. Obviously, in ex parte proceedings, there is no discovery. In post-grant reviews, there is limited discovery directly related to the issues. In inter partes review, discovery is limited to the discovery necessary in the interest of justice.
    In general, if a declaration is filed in an inter partes proceeding, the other side can depose the declarant and look at the documents related to that declaration. Getting discovery beyond that is difficult. In order for a party to get further discovery, the PTAB generally requires the party to show exactly what it wants, show that the information exists, and show how it will be relevant.28 There is no general discovery; a party must identify a specific witness who knows specific information or identify a specific document with specific information. What this effectively means is, unless a party knows about relevant information in advance and can identify it, it is not going to get discovery on that information.
    Thus, for example, where prior art (i.e., evidence that the subject or invention is already known) is based on a prior use by a third party who is cooperative with an accused infringer, the accused infringer can file an inter partes procedure and set forth only the issues that are favorable (within the limit of the duty of candor), and it will be difficult for the patent owner to get full discovery.
  • Limited to validity. In post-grant procedures, there are no issues of infringement, no counterclaims, and no damages involved; the proceeding is limited to the issue of validity.
  • Estoppel effect.29 Parties to a post-grant review are prevented from raising anything that was or reasonably could have been raised.30 Parties to an inter partes review are prevented from raising in litigation anything that was raised or could have been raised. The difference between “could” have been raised or “reasonably could” have been raised is not clear. Thus, in these proceedings, any prior art before the PTAB is off limits in a later litigation, though it may be combined with other new art under 35 U.S.C. § 103. But even in situations where there is no estoppel effect, when a stay is requested in the district court, the court may require an accused infringer to agree that it is estopped from raising any prior art filed in the USPTO proceeding.31
  • Limited basis. Some post-grant reviews have very limited bases, while others are wide open. For example, a reissue can be based on any relevant information. Supplemental examinations and post-grant review may be based on any relevant information. Ex parte reexamination and an inter partes review can be based upon patents, published applications, print publications, and the like; they cannot be based on prior use.
  • No live testimony (usually). Some post-grant proceedings have what is called a “trial.” But, the PTAB trial is very different than a trial in the district courts. The PTAB trial consists of the filing of declarations and depositions of the declarants, and basically after all those depositions, the PTAB receives final briefs and can hear final arguments. It is rare that there is an actual witness giving testimony before the PTAB. In fact, the patent community was surprised when the PTAB finally allowed some live testimony, but you can generally count upon the fact that live testimony will likely not be permitted.32 There are “trials” in inter partes review, post-grant reviews, covered business methods, and derivation proceedings as well. These trials are the way just described and are not real trials.
  • Less expensive. The PTAB is not cheap but is dramatically less expensive than district court or the ITC. The filing fees are sometimes expensive, but usually, the two greatest costs of litigation are trial and discovery and, as explained above, neither exists before the PTAB to any real extent.
  • Cleansing of the patent. A patent owner can cleanse the patent if there is a defect such as in inventorship and inequitable conduct, even if the inequitable conduct is intentional, but not if the accused infringer has raised it first.33 If the accused infringer has not raised it or if it is an ex parte proceeding and the accused infringer has not yet raised it in court, the post-grant procedure can eliminate it as an issue.

Issues in Choosing a Venue

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:

  • The Markman hearing. The first consideration is who is going to do the Markman hearing. In the ITC, the ALJ does it. In the district court, the court does it. In the USPTO, the Patent Office does it.
    The second consideration for Markman hearings is that in the district court and the ITC, the standard for the Markman interpretation is the proper meaning of the claims. In the USPTO, there are different standards. In reissue, post- grant review, and inter partes review, the claims are given their broadest reasonable interpretation.34 The USPTO has established that standard for initial applications and has also applied it to these proceedings. In an ex parte reexamination, the standard is the proper meaning, as in the district court and the ITC.35
    One of the issues a patent owner is faced with is whether he or she can live with the broadest possible interpretation when prior art is evaluated. An accused infringer may want the broadest possible interpretation because it pulls in more of the prior art with a better chance of invalidating the patent.
  • Burden of proof. In the district court and the ITC, invalidity must be proven by clear and convincing evidence.36 In the USPTO, the standard is a preponderance of the evidence.37 In reissue and ex parte reexamination, the standard is the same as an original application. There are cases where this burden of proof makes a difference; there have been cases where the district court held the patent valid and infringed, a later USPTO proceeding invalidated on the same art, and the Federal Circuit did not see a problem with that.38 It stated that the two rulings were not contradictory because the USPTO has a different job than the district court and a different standard than the district court.
    But there is also the practical issue of going before a jury. A jury is used to a preponderance of evidence standard and a beyond a reasonable doubt standard, like you see on TV trials. But a clear and convincing standard may mean to a jury that they have to find something dramatic in order to invalidate the patent. A jury may not understand a clear and convincing standard even if the judge explains it properly.
  • Cost. The USPTO is much cheaper. For a lot of companies, this is the most important factor in deciding where to file.
  • Speed. In the ITC, the trial is usually held in 9–13 months, with a decision issued from 12–16 months. The district court can range from a very short time in the rocket docket to who knows how long. And, in the USPTO, many proceedings are completed within one year.
  • Stays. One of the advantages of bringing a post-grant proceeding, especially against non-practicing entities, is a stay in the district court. The cost is reduced because discovery and motion practice are not proceeding. Also, with a post-grant proceeding, the patent owner is on the defensive because the only issue is one that the patent owner cannot win; it can only not lose.
    The factors used to determine whether a district court will issue a stay are:39
    • Would the stay unduly prejudice the other side? Very often for a non-practicing entity, this is difficult because only the question of damages remains. Following the Supreme Court’s eBay decision,40 it is less likely that an injunction will issue. If only damages are in issue (e.g., as in most cases filed by non-practicing entities), it will be difficult to show that a stay will unduly prejudice the plaintiff.
    • Will the stay simplify trial? In the USPTO, the patent owner, if it loses, is clearly bound by the result and the case disappears. If the patent owner wins, then very often the accused infringer cannot raise those same issues in the district court, so the post-grant proceeding will simplify trial. And even in cases where the accused infringer will not be bound, a court may only issue a stay if the defendant agrees to be bound by the post-grant proceeding result.41
    • Progress of the case. If an inter partes proceeding is filed the day after service of the complaint, a stay is much more likely than if it is filed the day before trial is about to start. Where along that line of continuums is the switch from more likely to less likely is not clear, but obviously the faster a post-grant proceeding is filed, the more likely the stay.
    • Other factors. The court will entertain other considerations, not specifically included in the first three, in deciding whether a stay is appropriate.

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.

  • Counterclaims. Counterclaims may only be effectively brought in district court. So, this can be a key issue when there are cases in the ITC, in the district court, and in the USPTO. Whoever wins the first decision has a major advantage; odds are that settlement is going to be very favorable to whoever wins the first round.
  • Jury. Whether there is a jury is a key factor. In the district court, there are juries and live witnesses. In the ITC, there is no jury; some ALJs allow live witnesses for direct and cross- examination, while some ALJs have declarations for direct testimony and only live cross-examination. Further, in the ITC, there can be a very limited cross-examination; cross and direct do not go back and forth and back and forth until everybody is finished. There is only one round of redirect, and then recross, with no ability for re-redirect if something new comes up in recross, unless the ALJ decides to allow it.
    In the USPTO, there is obviously no jury and a very technical audience. So, it is important to consider who has a good story, who has a sympathetic witness, and who may have facts that look bad on first blush but with detailed explanation can be overcome. All of these things go into the decision of whether to demand a jury. And even on validity, once a party has a jury in its favor, many other things become a lot easier. So, a jury is a significant factor in whether to choose the district court, the ITC, or the USPTO.
  • Damages. Only the district court can award damages. In the ITC, you may be granted an injunction, which can disrupt the other side’s business and may be a way of damaging them enough that they agree to settle by paying, but there are no formal damages. And obviously in the USPTO, there are no damages whatsoever; only validity is an issue.
  • The effect of USPTO decisions on trials. A significant consideration when determining venue is that after a decision in a post-grant proceeding, there may be no second bite at the apple in the district court or in the ITC. If invalidity involves a good story, you may not want to take a risk in the USPTO, because that good story may disappear and never go in front of a jury. After a post-grant proceeding, what could have been raised or what reasonably could have been raised is no longer available in court.
    But there is also the effect of validity being out of the picture at a later trial on infringement. Very often, the patent owner must balance a fine line between why the patent is valid (why it is limited in certain ways and therefore overcomes the prior art) and why it infringes (why it is broad in certain ways and therefore encompasses what defendant is doing). Now, technically, the Markman hearing produces the same meaning of the claims for both invalidity and infringement. But as a practical matter, there is more leeway to argue infringement if a patent owner does not have to worry about validity; the patent owner does not have to worry about balancing a limited claim for validity purposes and a broad claim for infringement purposes.
  • Discovery. Especially with prior art of a prior sale, in the USPTO a party will have very little discovery for the other side to attack the basis of the prior sale. A party will be able to put its best witness up. There is a very limited ability to go behind that witness and get the testimony of other witnesses and documents other than what was produced. And so, with limited discovery, a party may not want to be prevented from getting full discovery and being bound so that it cannot raise the same issue later at trial.

Balancing the Issues

Neutral Factors

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:

  • Expense. Both sides will benefit from the lower cost of a PTAB proceeding. However, when one party can bear the cost better, that party may not want to litigate in a venue that evens the playing field by not requiring the other, less wealthy party to spend significant sums.
  • Discovery. The lack of full discovery in the PTAB proceeding will hinder the side that needs the discovery the most. When the PTAB proceeding is based on paper prior art (patents and publications) the need for discovery is reduced but may still exist. For example, expert declarations may often contain testing done by others. While an expert should supervise the tests, the supervision may be satisfied by the expert testifying that this lab has been used for years and is trusted. The ability to depose the lab is limited.
    In cases where the prior art is use-based, the lack of discovery at the PTAB proceeding is even more critical. If the claim is that the patent owner offered the invention for sale, then the patent owner—within limits of candor—can put up its best witness and characterize the offer its own way. There is little, if any, ability in the PTAB proceeding to go beyond the witness and depose others. The patent owner may wish to choose a PTAB proceeding for this reason. On the other hand, if the prior offer for sale was done by a third party, the patent owner will have difficulty getting additional discovery of that third party who may have an interest in invalidating the patent.
  • Jury. Either side may have a very complex issue or state of facts that makes the PTAB proceeding the better way to go. In addition, either side may have an appealing story that may work better before a jury.

Patent Owner Factors

There are a number of factors that a patent owner should consider in choosing a venue:

  • Cleansing the patent. Except when the issue has already been raised in litigation, a patent owner can cure things like inventorship issues and inequitable conduct in a post-grant proceeding.
  • Ex parte post-grant proceedings. Obviously, it is easier to win ex-parte. The ex-parte post-grant procedures give the patent owner that advantage and allow it to put prior art before the USPTO and gain the clear and convincing standard for validity in a later court or ITC action.
  • Counterclaims. The district court permits counterclaims whereas the post-grant proceedings do not and the ITC effectively does not. There are a number of factors to consider on this issue, including whether there is an effective counterclaim, whether the patent owner’s claim will be stayed for a post-grant proceeding, or whether the counterclaim will be allowed to proceed if the patent owner’s claim is stayed.
  • Speed. It is usually the patent owner that wants to rush through the litigation, but not always. Often, a PTAB proceeding with strict deadlines will be faster, but some district courts are even faster, and the ITC is always fast.
  • Damages. While a declaration of validity or an injunction against imports may be important, and the cases in the PTAB or the ITC may lead to a later damages judgment, the prospect of immediate damages in district court does have an effect on the ability to settle favorably.
  • Whipsaw validity and infringements. Technically, a claim’s meaning does not change when considering validity and infringement. However, the reality of a trial is that there is a distinct advantage of merely arguing infringement and not having to worry about contradicting a position on validity.
  • Fresh Markman hearing. While there are sometimes disputes over what a defendant is doing, most litigation revolves around how to describe what defendant is doing and how to fit it into the claim language. Imagine being able to write the file wrapper knowing what issues will arise with defendant’s product.42 The statements made in a post- grant proceeding are part of the file wrapper. After seeing defendant’s product, a post-grant proceeding may be filed where statements can be made to later use in a Markman hearing; there are no intervening rights where the claim is not changed, even if its meaning has been changed to expand the scope of the claim.

Accused Infringer Factors

  • Stays. A post-grant proceeding, if brought quickly enough, will often stay a district court proceeding but not an ITC proceeding. The post-grant proceeding is not very cheap but much cheaper than the other two alternatives.
  • Burden of proof. To invalidate in the district court or the ITC, the burden is for the most part clear and convincing evidence, and prior use must be proven with strong evidence. In the USPTO, the standard is the same as for applications and much easier to show. In addition, statistics are starting to show that patents have serious problems in PTAB proceedings.
  • Markman hearing. The standard in the district court and ITC is the proper meaning of the claims whereas in PTAB proceedings it is the broadest reasonable meaning. The use of a broader meaning pulls in a broader range of prior art, and the choice of a PTAB proceeding provides the additional benefit of having an audience with a lot of experience evaluating prior art.
  • No two shots at validity. For the most part, after a PTAB proceeding, an accused infringer will have lost the ability to present an invalidity case in district court or the ITC. If the invalidity story is a good one, such as how the accused infringer had the invention prior to the patentee, this may resonate better with a jury than with the PTAB.

Conclusion

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.


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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.