Choosing wisely: Practical considerations for choosing venues for IP disputes

Choosing wisely: Practical considerations for choosing venues for IP disputes

In the first two installments of this series we discussed the pros and cons of filing your intellectual property action in the United States district courts and at the United States International Trade Commission (ITC).  Here we discuss inter partes reviews (IPRs), an option that is rapidly gaining popularity due to its speed and reduced costs. 

An IPR offers parties who have been sued for patent infringement or fear imminent suit several distinct advantages: 1) speed; 2) relatively low cost; 3) knowledgeable judges; 4) legal standards making it easier to prove invalidity; and 5) the ability to stay the district court litigation until the review is completed.

The inter partes review proceeding came to life in September 2012, with the passage of the America Invents Act (AIA), and allows parties to challenge the validity of a patent based on patents and printed publications. To initiate the process, the party accused of infringement files a petition with the U.S. Patent and Trademark Office (PTO). 

If the PTO determines that the petitioner has demonstrated established a reasonable likelihood that they will succeed in invalidating at least one claim, an IPR is instituted. Limited discovery is allowed, as is a hearing with oral argument. However the scope of discovery, and of the proceeding itself, are far narrower than in either ITC or district court proceedings. From institution to the final written decision, it should take no longer than 12 months, and the initial determination of specific grounds will issue within six months of institution. 

To date this procedure has been mostly used by those in the electrical, computer, or mechanical fields. According to the USPTO only about 6 percent of petitions have involved pharmaceuticals, and what many are saying is the first inter partes review of pharmaceutical related patents occurred this June.

Because there is relatively limited discovery in an IPR, the costs of the proceeding are substantially less than litigation. Knowledgeable judges are guaranteed, because the proceeding is before the PTO itself. In addition, once an IPR has been instituted, a petitioner can move to stay co-pending district court litigations, and if the motion is granted the petitioner can pursue their invalidity claim without litigation expenses mounting.

If a party has done a thorough prior art search, it is significantly easier (and cheaper) to invalidate a patent via an IPR than in an ITC or district court proceeding. This is due to two things—standard of proof and claim construction. Before the ITC and the district courts, a party trying to invalidate a patent must present “clear and convincing” evidence of invalidity, which is a heightened standard. In contrast, in an IPR, a party seeking to invalidate a patent only has to demonstrate invalidity using the lower “preponderance of evidence” standard.  Parties trying to invalidate a patent receive another advantage in IPRs—in both the ITC and the district courts, the judge interprets the patent claims as she thinks a person in the art would, and then determines if the prior art invalidates the patent. However, in an IPR the PTO uses the “broadest reasonable interpretation” of the claims of the challenged patent, making it more likely that prior art will invalidate the claims. Thus, it is easier legally for a party to invalidate a patent in an IPR than it is in either an ITC proceeding or the district court. The most recent statistics support this, indicating that roughly 70 percent of IPRs end in at least one claim of the challenged patents being invalidated.

Though an IPR will not stay an ITC case, if an IPR is filed at roughly the same time as an ITC investigation begins, the initial decision in the IPR is likely to issue before the Commission makes its final decision. Even though the decision is not binding, it will be influential.

However, filing an IPR has some risks—the patentee has the ability to revise the claims during reexamination, and the defendant may then be faced with patent claims that are stronger than they were previously.  The issue that will affect more losing petitioners is estoppel—under the rules, the accused infringer essentially has “one bite” to argue invalidity based on patents and written documents. 

A party who files an inter partes review and allows the proceeding to go through to its conclusion, and fails to invalidate the patent or relevant claims, cannot challenge the validity of the patent or those claims at the district court or ITC using patents or printed publications, even if those publications were not raised during the IPR. However, they may still challenge validity based on prior art devices and products. Even the denial of the petition may cause some harm, as the patentee is likely to use the fact that the patent office declined to institute the proceeding as evidence that the prior art cited is not that strong.

The inter partes review is best used by parties accused of patent infringement in the district courts who have a strong invalidity defense, ideally based on both written publications and devices, and who have the resources and time to ensure that they did a thorough search of the prior art.  It is particularly attractive for those who have been sued in districts which are less likely to invalidate patents.

However, IPRs are not a cure-all for all accused infringers. IPRs only offer relief to those accused of patent infringement—those accused of violating trademarks, trade secrets, copyright, or other causes of actions cannot utilize this procedure.  In addition, for parties lacking defenses other invalidity based on patents and publications, the risks of estoppel can be significant.

Though an inter partes review is generally not useful to those trying to protect their intellectual property, or those accused of violating intellectual property rights other than patents, it offers those accused of infringing patents an opportunity for relatively speedy, inexpensive resolution of patent disputes, with knowledgeable judges and legal standards that are more favorable to invalidating patents than those in other forums.

 

 

District Court

USITC

IPR

Injunctive relief available?

Yes, but less common

Yes

No

Monetary damages available?

Yes

No

No

May invalidate patents?

Yes

Yes

Yes

General exclusion order available?

No

Yes

No

Will determine whether rights are infringed?

Yes

Yes

No

Judges experienced with patent cases?

Varies

Yes

Yes

Speed

At least 2-3 years (except for EDVa)

16 months, 12 months until initial decision

12-18 months

Cost

Along with the USITC, the most expensive option

Along with district court, the most expensive option

Least expensive option

Offensive use

Yes

Yes

No

Defensive use

Yes

No (except for counter-suits)

Yes

Patents

Yes

Yes

Yes

Trademark

Yes

Yes

No

Copyright

Yes

Yes

No

Trade Secret

Yes

Yes

No

Overseas discovery

Yes

Yes (but limited)

Only allowed with authorization

Third party discovery

Yes

Yes (but limited)

Only allowed with authorization

Contributing Author

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Aarti Shah

Aarti Shah is a member in Mintz Levin’s Washington, D.C. office and former senior investigative attorney at the U.S. International Trade Commission. She specializes in...

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