INTER PARTES REVIEWINTER PARTES REVIEWINTER PARTES REVIEW INTER PARTES REVIEW

DEAN OLSONDEAN OLSONDEAN OLSONDEAN OLSON

THE VIEWS EXPRESSED HEREIN ARE THOSE OF THE VIEWS EXPRESSED HEREIN ARE THOSE OF THE AUTHOR AND THEY DO NOT NECESSARILY THE AUTHOR AND THEY DO NOT NECESSARILY REFLECT THOSE OF THE AUTHOR’S EMPLOYERREFLECT THOSE OF THE AUTHOR’S EMPLOYERREFLECT THOSE OF THE AUTHOR S EMPLOYER, REFLECT THOSE OF THE AUTHOR S EMPLOYER, PFIZER INC.PFIZER INC.

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SUMMARYSUMMARYSUMMARYSUMMARY•• InterInter PartesPartes ReviewReview IntroductionIntroduction•• Inter Inter PartesPartes ReviewReview--IntroductionIntroduction•• Risk or OpportunityRisk or Opportunity--By the numbersBy the numbers

Ti iTi i•• TimingTiming•• Comparison to District CourtComparison to District Court•• Initial ImpressionsInitial Impressions•• Developing Significant IssuesDeveloping Significant Issuesp g gp g g•• Post Grant ReviewPost Grant Review

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INTRODUCTIONINTRODUCTION

•• America Invents Act (AIA) created new America Invents Act (AIA) created new Patent Office Patent Office trials to allow trials to allow challenges to issued patents, including interchallenges to issued patents, including inter partespartes review (IPR) andreview (IPR) andchallenges to issued patents, including inter challenges to issued patents, including inter partespartes review (IPR) and review (IPR) and postpost--grant review (PGR)grant review (PGR)

Conducted by AIAConducted by AIA--created Patent Trial and Appeals Board (PTAB) created Patent Trial and Appeals Board (PTAB) between challenger and patent ownerbetween challenger and patent ownerbetween challenger and patent ownerbetween challenger and patent owner

IPR grounds of challenge limited to novelty and obviousness and IPR grounds of challenge limited to novelty and obviousness and patents and publicationspatents and publications

•• NoNo written description/enablement (112) grounds of invalidationwritten description/enablement (112) grounds of invalidationNo No written description/enablement (112) grounds of invalidationwritten description/enablement (112) grounds of invalidation•• No sale/use No sale/use grounds of invalidationgrounds of invalidation

Very fast pace; Very fast pace; opportunities for very limited discoveryopportunities for very limited discovery

OOpportunity for an oral hearing before a decision on the meritspportunity for an oral hearing before a decision on the meritsOOpportunity for an oral hearing before a decision on the meritspportunity for an oral hearing before a decision on the merits

AAvailability of termination by settlement of individual issuesvailability of termination by settlement of individual issues

PTAB decision triggers PTAB decision triggers estoppelestoppel to proceedings before PTO or civil to proceedings before PTO or civil liti ti f d i d bl ld h b i dliti ti f d i d bl ld h b i dlitigation for grounds raised or reasonably could have been raisedlitigation for grounds raised or reasonably could have been raised

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POST GRANT PROCEEDINGS BY THE NUMBERS POST GRANT PROCEEDINGS BY THE NUMBERS ––RAPID ADOPTION HAS EXCEEDED EARLY RAPID ADOPTION HAS EXCEEDED EARLY

PREDICTIONSPREDICTIONS

•• 1500 IPR P titi b J l 20141500 IPR P titi b J l 2014 i t 5/d i i t 6i t 5/d i i t 6•• 1500 IPR Petitions by July 2014 1500 IPR Petitions by July 2014 ––ongoing rate 5/day increasing to 6+ ongoing rate 5/day increasing to 6+ per day per day

•• PTAB more than 75% of petitions lead to initiation of trialPTAB more than 75% of petitions lead to initiation of trial•• PTAB is 3PTAB is 3rdrd most active “litigation venue”most active “litigation venue”--August 2014 85 JudgesAugust 2014 85 Judges•• 89 final decisions now available 89 final decisions now available •• High patent invalidation rateHigh patent invalidation rateg pg p

Many on obviousness groundsMany on obviousness groundsLack of meaningful ability to amend claims is a challengeLack of meaningful ability to amend claims is a challenge

•• As of July 2014As of July 2014 Termination of proceedings for 450 pTermination of proceedings for 450 patents petitionedatents petitionedAs of July 2014As of July 2014--Termination of proceedings for 450 pTermination of proceedings for 450 patents petitioned atents petitioned 285 trials instituted285 trials instituted196 settled/adverse judgment 196 settled/adverse judgment 89 final Decisions89 final Decisions75 patents75 patents--at least some claims at least some claims unpatentableunpatentable

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THE NUMBERSTHE NUMBERSN bN b ff P i iP i i Petition TechnologyNumber Number of of PetitionsPetitions

FYI IPR T i l P t

Petition Technology Breakdown

Technology No of %FYI IPR Trials Instituted

Percent Instituted

2012 17

Technology No. of Petitions

%

Electrical/computer

1230 71.7

2013 514 167 87%2014 985 419 76%Total 1516

co pu eMechanical 263 15.3Chemical 123 7.2Bi /Ph 92 5 4Bio/Pharma 92 5.4Design 8 0.4

Final Dispositions

Technology Settlements Adverse Judgments

Final Written Decisions

2013 38 2 02014 125 31 89

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Procedural Schedule for IPR and PGRProcedural Schedule for IPR and PGRProcedural Schedule for IPR and PGRProcedural Schedule for IPR and PGR

Patent owner response includes request for claim amendments and any declarations

PTAB order/decision to initiate “trial” begins “discovery” period 

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IPRIPR District Court ComparisonDistrict Court ComparisonIPRIPR‐‐District Court ComparisonDistrict Court Comparison

IPR District CourtLess costly: 500 k Litigation: 5 million

Quicker resolutions: Decision within 18 months of petition but with potential pitfalls analogous to interference practice

Litigation- 25-36 months

interference practice

Lower standard: Preponderance of evidence-No presumption of validity that must be overcome

Clear & convincing standard/Presumption of Validity

Broader claim construction: broadest reasonable interpretation in light of the specification- so more art applies

Ordinary and customary meaning to the skilled artisan

IPR limited to novelty and obviousness Not limited to novelty/obviousnessyarguments: Patents and printed publications; retains 112 arguments for future challenge

y

Claim amendment very unlikely No claim amendment allowed

Limited Discovery Extensive Discovery allowed

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IPR PROCEEDINGS IPR PROCEEDINGS ––INITIAL IMPRESSIONSINITIAL IMPRESSIONS

•• System appears to favor the challengerSystem appears to favor the challenger•• Similar to Interference practiceSimilar to Interference practice--Mind the rules!Mind the rules!•• Limited discovery is quite limitedLimited discovery is quite limited--Some discovery is Some discovery is

d t d ith t t f i td t d ith t t f i tmandated even without request of opposing party mandated even without request of opposing party Cited exhibitsCited exhibitsCrossCross--examination of declarantsexamination of declarantsCrossCross--examination of declarantsexamination of declarantsInformation that is inconsistent with a position Information that is inconsistent with a position advanced during proceedingadvanced during proceeding

•• Motions for additional discovery “i.e., in the interests of Motions for additional discovery “i.e., in the interests of justice” justice” Garmin v. Garmin v. CuozzoCuozzo IPR2012IPR2012--00001 (Paper 19) 00001 (Paper 19) typically rejectedtypically rejectedtypically rejectedtypically rejected

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IPR PROCEEDINGSIPR PROCEEDINGS ––

•• PTAB sets up frequent phone conferences re: questions/issues andPTAB sets up frequent phone conferences re: questions/issues and

IPR PROCEEDINGS IPR PROCEEDINGS INITIAL IMPRESSIONSINITIAL IMPRESSIONS

PTAB sets up frequent phone conferences re: questions/issues and PTAB sets up frequent phone conferences re: questions/issues and parties must be ready to argue and answer all questions parties must be ready to argue and answer all questions ––also must also must contact PTAB prior to filing any motioncontact PTAB prior to filing any motion

•• Oral hearings similar to appellate hearing and include a veryOral hearings similar to appellate hearing and include a veryOral hearings similar to appellate hearing and include a very Oral hearings similar to appellate hearing and include a very technically adept hot benchtechnically adept hot bench-- but the time limit is shortbut the time limit is short--1 hour per 1 hour per sideside

•• Consider not filingConsider not filing substantivesubstantive (vs. procedural) Patent Owner(vs. procedural) Patent OwnerConsider not filing Consider not filing substantivesubstantive (vs. procedural) Patent Owner (vs. procedural) Patent Owner Preliminary Response Preliminary Response --has not been effective in stopping trial has not been effective in stopping trial initiationinitiation

Gives advance notice of strategyGives advance notice of strategyG es ad a ce ot ce o st ategyG es ad a ce ot ce o st ategyExpert declaration generally not available so reliance is on Expert declaration generally not available so reliance is on attorney argumentattorney argumentBut may help rebut petitioner’s initial claim constructionBut may help rebut petitioner’s initial claim constructionBut may help rebut petitioner s initial claim construction But may help rebut petitioner s initial claim construction

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DEVELOPING SIGNIFICANT ISSUESDEVELOPING SIGNIFICANT ISSUESDEVELOPING SIGNIFICANT ISSUESDEVELOPING SIGNIFICANT ISSUES

•• WhichWhich “Court” controls the validity of a patent“Court” controls the validity of a patent-- DistrictDistrictWhich Which Court controls the validity of a patentCourt controls the validity of a patent District District Court or the Patent Trial and Appeal Board?Court or the Patent Trial and Appeal Board?

•• Is a claim amendment in an IPR a fiction?Is a claim amendment in an IPR a fiction?

•••• Differing grounds of invalidation can be redundantDiffering grounds of invalidation can be redundant--estoppel impact?estoppel impact?

•• Simultaneous PTO proceduresSimultaneous PTO procedures--are they stayed?are they stayed?

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PTAB Decision vs. District Court DecisionPTAB Decision vs. District Court Decision--Which one rules?Which one rules?

•• 2011: District Court held patent valid and infringed2011: District Court held patent valid and infringed--SAP v. SAP v. VersataVersataMay 2013: CAFC affirmed court decision May 2013: CAFC affirmed court decision June 2013: PTAB cancelled all claimsJune 2013: PTAB cancelled all claims

•• Reasons for different outcomeReasons for different outcome“Broadest reasonable interpretation in light of the specification” (BRI) claim “Broadest reasonable interpretation in light of the specification” (BRI) claim interpretation made a difference interpretation made a difference –– PTAB not bound by District Court claim PTAB not bound by District Court claim constructionconstructionconstructionconstructionLower standardLower standard-- preponderance of the evidence instead of clear and preponderance of the evidence instead of clear and convincing evidenceconvincing evidence

•• Very complexVery complex--multiple proceedingsmultiple proceedings--timing of PTAB decision may be importanttiming of PTAB decision may be importantVery complexVery complex--multiple proceedingsmultiple proceedings--timing of PTAB decision may be important timing of PTAB decision may be important as to as to whether PTAB or District Court decision followed whether PTAB or District Court decision followed

•• District Court refused to overturn original jury verdict in light of subsequent District Court refused to overturn original jury verdict in light of subsequent PTAB decision and District Court decision upheld by CAFCPTAB decision and District Court decision upheld by CAFCp yp y

•• Compare to FreseniusCompare to Fresenius-- may mean that timing of PTAB decision (whether prior may mean that timing of PTAB decision (whether prior or postor post--District Court decision) determines which decision is followed District Court decision) determines which decision is followed

•• Two different SAP cases currently before CAFC Two different SAP cases currently before CAFC ––likely have to wait for elikely have to wait for en n bancbanc decisiondecision

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CLAIM AMENDMENTSCLAIM AMENDMENTS

•• Requirements for claim amendments Requirements for claim amendments --Idle Free Systems v. Idle Free Systems v. Bergstrom IPR2012Bergstrom IPR2012--00027 00027 gg

•• Facts/reasoning to persuade Board that substitute claims Facts/reasoning to persuade Board that substitute claims are patentableare patentable

Representation about the closest prior artRepresentation about the closest prior artRepresentation about the closest prior artRepresentation about the closest prior artSubstitute claims means one for one substitutionSubstitute claims means one for one substitution

•• First claim amendments in 2000 cases finally allowed May First claim amendments in 2000 cases finally allowed May 20 201420 201420, 2014 20, 2014

Int. Flavors & Fragrances Inc. v. U.S. Dept. of Agriculture Int. Flavors & Fragrances Inc. v. U.S. Dept. of Agriculture (IPR2013(IPR2013--00124; pat. No. 7,579,016) 00124; pat. No. 7,579,016) (( ; p , , ); p , , )But both parties agreed to amendment and patentee But both parties agreed to amendment and patentee was “Uncle Sam”was “Uncle Sam”

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Redundancy Redundancy -- Is your Patent Is your Patent S f ?S f ?Ever Really Safe?Ever Really Safe?

•• PTAB commonly initiates trial on only one or twoPTAB commonly initiates trial on only one or two•• PTAB commonly initiates trial on only one or two PTAB commonly initiates trial on only one or two grounds of challenge deeming other grounds as grounds of challenge deeming other grounds as redundant redundant

•• Redundancy is PTAB workload management procedure Redundancy is PTAB workload management procedure for complying with 1 year trial time framefor complying with 1 year trial time frame

•• H i t l d dH i t l d d “ i il ” i t f“ i il ” i t f•• Horizontal redundancyHorizontal redundancy-- “similar” prior art references “similar” prior art references used as alternative invalidation groundsused as alternative invalidation grounds

•• Vertical redundancyVertical redundancy--sets of prior art references that sets of prior art references that yy ppinclude additional references used as alternative include additional references used as alternative invalidation grounds invalidation grounds

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Redundancy Redundancy -- Is your Patent Is your Patent S f ?S f ?Ever Really Safe?Ever Really Safe?

•• Will redundant grounds be estopped from use in furtherWill redundant grounds be estopped from use in furtherWill redundant grounds be estopped from use in further Will redundant grounds be estopped from use in further challenge, or will PTAB’s decision that other grounds are challenge, or will PTAB’s decision that other grounds are redundant be overturned by CAFC as denying redundant be overturned by CAFC as denying P titi ’ d ?P titi ’ d ?Petitioner’s due process?Petitioner’s due process?

•• If PTAB’s redundancy rulings are overturned, does that If PTAB’s redundancy rulings are overturned, does that set up patentee for sequential challenges by opponentset up patentee for sequential challenges by opponentset up patentee for sequential challenges by opponent set up patentee for sequential challenges by opponent on the other grounds?on the other grounds?

•• Is there a solution to this problem that satisfies the one Is there a solution to this problem that satisfies the one PTAB t i l ti li ?PTAB t i l ti li ?year PTAB trial timeline?year PTAB trial timeline?

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SIMULTANEOUS PTO PROCEDURESSIMULTANEOUS PTO PROCEDURES

•• Simultaneous PTO procedures e.g., continuation Simultaneous PTO procedures e.g., continuation applications reexaminations reissuesapplications reexaminations reissuesapplications, reexaminations, reissuesapplications, reexaminations, reissues

•• End run around the IPR that allows an amendment?End run around the IPR that allows an amendment?•• Should these procedures be stayed in light of an IPR?Should these procedures be stayed in light of an IPR?p y gp y g•• Should the IPR be stayed in light of these PTO Should the IPR be stayed in light of these PTO

procedures?procedures?•• C ti ti li ti t b t dC ti ti li ti t b t d 3535•• Continuation applications may not be stayedContinuation applications may not be stayed--see 35 see 35

USC 315(d) “stay” limited to matters involving “patent”USC 315(d) “stay” limited to matters involving “patent”•• Reexamination may not be stayedReexamination may not be stayed--Ethicon Inc vEthicon Inc v QuiggQuiggReexamination may not be stayedReexamination may not be stayed Ethicon Inc., v. Ethicon Inc., v. QuiggQuigg

849 F.2d 1422 (Fed. Cir. 1988)849 F.2d 1422 (Fed. Cir. 1988)•• PTO request for comments due Sept. 15PTO request for comments due Sept. 15

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POST GRANT REVIEWPOST GRANT REVIEW--(PGR)(PGR)

•• Effective patent application filing Effective patent application filing date must be on or date must be on or ffafter March 16, after March 16, 2013; accordingly, limited actual 2013; accordingly, limited actual

experience so farexperience so far•• First PGR filed early August 2014First PGR filed early August 2014--(PGR2014(PGR2014--00008)00008)y gy g (( ))

Pat. No. 8,684,420Pat. No. 8,684,420--written description challengewritten description challenge•• TimingTiming--PGR limited to 9 month period following grant; PGR limited to 9 month period following grant;

IPR limited to post PGR periodIPR limited to post PGR periodIPR limited to post PGR periodIPR limited to post PGR period•• PGRPGR--Broad grounds for challengeBroad grounds for challenge

PGR PGR grounds of challengegrounds of challenge--novelty, obviousness, written novelty, obviousness, written description enablement indefiniteness 101description enablement indefiniteness 101??description, enablement, indefiniteness, 101description, enablement, indefiniteness, 101??

•• Potentially Potentially differing preliminary standarddiffering preliminary standard--”reasonably ”reasonably likelihood” vs. “more likely than not”likelihood” vs. “more likely than not”

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SUMMARYSUMMARYSUMMARYSUMMARY•• New IPR patent challenge mechanism; more than 75% of IPR New IPR patent challenge mechanism; more than 75% of IPR

petitions have had PTAB trial initiated and most trials result inpetitions have had PTAB trial initiated and most trials result inpetitions have had PTAB trial initiated and most trials result in petitions have had PTAB trial initiated and most trials result in invalidation or settlementinvalidation or settlement

•• Cost reduction Cost reduction -- IPR is 500k vs. 5 million for litigation IPR is 500k vs. 5 million for litigation and IPR is and IPR is fasterfaster (18 months v. 25(18 months v. 25--36 months for district court)36 months for district court)faster faster (18 months v. 25(18 months v. 25 36 months for district court)36 months for district court)

•• Procedural advantages of IPR over litigationProcedural advantages of IPR over litigationClaim constructionClaim construction--broadest reasonable construction broadest reasonable construction

Preponderance of evidence vs. clear and convincing standardPreponderance of evidence vs. clear and convincing standard

No presumption of validityNo presumption of validity

•• IPR still in its infancy; many evolving questions remain (e gIPR still in its infancy; many evolving questions remain (e gIPR still in its infancy; many evolving questions remain (e.g., IPR still in its infancy; many evolving questions remain (e.g., redundancy; extent of estoppel; do simultaneous PTO redundancy; extent of estoppel; do simultaneous PTO proceedings continue; are claim amendments possible; even proceedings continue; are claim amendments possible; even challenges to USPTO IPR system itself)challenges to USPTO IPR system itself)challenges to USPTO IPR system itself)challenges to USPTO IPR system itself)

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