Even if they’ve never faced a patent infringement lawsuit filed in federal district court, virtually every inside counsel has had to deal with a letter containing notice of alleged patent infringement. Whether it’s the technology your company sells or the commonplace functionality of your company’s website, a variety of activities serve to create exposure to allegations of patent infringement. Although strong doubts may exist about the validity of the claimed patent, the costs and the uncertainty that go into proving that invalidity before a jury remain daunting.
The America Invents Act (AIA) has delivered a powerful tool to challenge patent validity in these situations and others like them. Through the creation of a new breed of trial-like proceeding in the U.S. Patent and Trademark Office (PTO), companies now have a relatively quick way to challenge questionable patents before a technically savvy decision maker and at a much lower cost than district court litigation. These new PTO trial proceedings include discovery, protective orders, expert depositions, motions and the application of the Federal Rules of Evidence at oral hearings before three-judge panels. It is a brave new world in the PTO, and if you are looking down the barrel of a “bad” patent—or if you are asserting patents that may be challenged—you need to know how things have changed.
Now, PTO trials or IPR have replaced IPRex. The advantages are clear. The first is speed. When a petition for IPR is filed, the PTO will decide whether to institute a “trial” within six months and then will make a final decision within 12 months after that. The near certainty of those 18 months to a final decision (appealable to the Federal Circuit) is a major advantage compared with endless litigation and/or the old IPRex.
The speed of the process also contributes to the second advantage: a greater ability to obtain a stay of concurrent litigation about the same patent. Stays provide a critical avenue for controlling or delaying litigation costs. Once seen as nearly automatic, courts had been granting stays with growing reluctance in recent years, especially in some districts such as the popular Eastern District of Texas. The interminable pendency of re-exams often served as the justification as judges face increased pressure to keep matters from languishing on their dockets. The promised speed of the new PTO trials has already resulted in an uptick in the number of stays being granted.