This covers new patent litigation tools pertinent to the America Invents Act, including IPR, CBM and PGR

1. Patent Litigation Issues and
the America Invents Act
Presented to Martin Pringle
November 5, 2014
By: Scott R. Brown

2. New Tools in Patent Litigation
The America Invents Act (AIA) Creates New Ways to Challenge Patents
in the Patent Office
• Inter Partes Review (IPR)
• Covered Business Method Patents (CBM)
• Post Grant Review (PGR)

3. The Patent Trial and Appeal Board
• The AIA created the PTAB, known by some as the death
panel
• Track record shows almost uniform cancellation of
challenged claims
• It is news when a claim survives, so far only a few
• It is news when a proceeding is not instituted

4. IPR replaces Inter Partes Reexam
• Prior procedure allowed challengers to participate
– Could file comments and supporting declarations
– Held before special examining unit
• All aspects entirely based upon paper
submissions
• Appeal to BPAI
• Appeal BPAI to the Federal Circuit

5. The Problems of Reexamination
• “Special dispatch,” but no hard deadlines
• District Courts more reluctant to stay actions,
pending a process that could last for five years
• If no stay, increase costs and potential
contradictory results
• No discovery/cross examination of declarants
• No termination by agreement

6. IPR, the new procedures
• Must be based on printed publication prior art
– No prior commercial product based challenges
• Standard to institute: “reasonable likelihood
that the petitioner would prevail with respect to
at least one of the challenged claims”
• Standard to prevail: Preponderance (51%)
• Estoppel: Bar reliance on prior art “raised or
reasonably could have raised”

7. IPR, the new procedures
Inter partes review: quicker, more efficient, and
less expensive
• Faster to decide:
– Initial decision to begin in 6 mos.
– Final decision within 12 mos (total 18 mos.)
• Only one appeal:
– Proceedings held by the PTAB
– Direct appeal to the Federal Circuit

8. IPR, the new procedures
• Must bring an IPR petition within 1 year of
service
• Pick your forum
– If you first sue for invalidity in Federal Court, no IPR
– Estoppel

9. IPR, the new procedures
• Litigation (lite) process
– Claim Construction
– Depositions of all declarants
– Extremely limited document discovery
– The rules of evidence apply
– Oral final hearing
– Quick access to PTAB to resolve disputes during the
process

10. IPR, better forum for the defense
• Key advantages
– Broader claim construction
– Lower burden of proof for invalidity
– Technical decision makers
– Speedy resolution
– Lower costs
– Higher chance of success

11. Broader Claim Construction
• PTO: “Broadest reasonable interpretation”
– Most claims easier to invalidate under this standard
– May force patentee to take narrow positions on
claims without discovery of defendants product
• Accused infringer may also be forced into
unfavorable positions without knowing
patentee’s theories

12. Lower burden of proof of
invalidity
• There is no presumption of validity
• The PTO uses a preponderance standard (51%)
• PTAB has proven it will not defer to patent
examiner’s decisions

13. Speedy Resolution
• IPR has statutory time limits
– 6 mos. to institution
– 12 mos. to decision
• Rarely 6 additional months for good cause
– Most done in 18 mos.
• Court’s seem much more willing to stay given
the speedy structure, vs. the old procedures

14. Lower Cost
• Cost a fraction of a full blown patent lawsuit
– Limited discovery is the key
• Have proven useful against trolls – the simple
threat of a patent lawsuit no longer necessarily
means inevitable expensive litigation
• They still can be expensive if many claims or
patents are asserted ($23,000 filing fee)

15. Types of Allowed Discovery
• Depositions of all declarants
– Have not seen whether drafts will be discoverable
• Very particularized showing required to get
document discovery
• Prevents Patentee from learning about a “black
box” product until positions have been taken in
IPR

16. PTAB Observations
• Technologists, very mechanical in their
approach
• There is little story to tell that will persuade
them
• Objective considerations, likely to be ignored
• Have proven willing to find combinations
obvious
• Very difficult to change the claims

17. PTAB Observations
• A great forum if you have complex technology
and good printed publication prior art
• Especially useful if only a few patents/claims
involved
• Useful if the best prior art was already
considered by the PTO

18. Recommendations
If you have a client threatened with an infringement
claim, the time to look for prior art is right away
If you can develop good printed publication prior art
because of the lower burden of proof, patent and
technical expertise, and relatively sympathetic
audience, IPR is a significant new tool for the defense

19. Recent Important Decisions
• Octane Fitness v. Icon Health & Fitness
• Lighting Ballast Control LLC, v. Philips Electronics
• Limelight Networks, Inc., v. Akamai Technologies,
Inc.

20. Octane Fitness v. Icon Health &
Fitness (Sup.Ct. 2014)
 The Court in exceptional cases may award
reasonable attorney fees to the prevailing party.
35 U.S.C. § 285
 OLD STANDARD: Absent litigation
misconduct or inequitable conduct before the
PTO, fees may be awarded only if the litigation
is both (1) brought subjective bad faith; and (2)
objectively baseless

21. Octane Fitness v. Icon Health &
Fitness
• Sham litigation
– Must be established by clear & convincing evidence
– Presumption that patent litigation brought in good
faith

22. Octane Fitness v. Icon Health &
Fitness
• The Court’s Unanimous Opinion
– Rejection of Brooks test as unduly rigid, and
impermissibly encumbering the flexible statutory
grant of discretion to district courts
– Analysis “begins and ends with the text of § 285” –
Exceptional means uncommon, rare, not ordinary,
unusual
– Brooks test renders § 285 superfluous in light of
Court’s inherent power to award fees.

23. Octane Fitness v. Icon Health &
Fitness
• NEW STANDARD:
– “[A]n exceptional case is simply one that stands out
from others with respect to the substantive strength
of the party’s litigation position (considering both the
governing law and the facts of the case) or the
unreasonable manner in which the case was litigated.
District Courts may determine whether a case is
‘exceptional’ in a case-by-case exercise of their
discretion, considering the totality of the
circumstances.”

24. Octane Fitness v. Icon Health &
Fitness
• Standard of Proof:
– Nothing in § 285 justifies a clear and convincing
standard of proof
– § 285 is one simple discretionary inquiry governed by
a preponderance of the evidence standard
– Court did not directly address the Federal Circuit’s
presumption that patent infringement suits are
brought in good faith.

25. Lighting Ballast Control LLC, v.
Philips Electronics
• Federal Circuit (en banc)
• Issue: is claim construction, which includes
underlying questions of fact, properly subject to
de novo review by the Federal Circuit
• 50% reversal rate
• No deference to district court constructions

26. Lighting Ballast Control LLC, v.
Philips Electronics
• Appellant argued de novo improper, should be
deferential “clearly erroneous” standard
• One group of amici argued factual
determinations should be reviewed under the
“clearly erroneous” standard, but ultimate
conclusion “de novo”
• Apellee argued for no change "the interpretation
of a so-called patent claim... is a matter of law”

27. Lighting Ballast Control LLC, v.
Philips Electronics
• Right now, Court’s can hold early claim
construction hearings
• Can lead to early summary judgment or
settlement
• But if it’s a mixed question, does that mean the
jury must speak on the factual issues?

28. Lighting Ballast Control LLC, v.
Philips Electronics
• Stare decisis rules the day:
– After fifteen years of experience with Cybor, we
conclude that the court should retain plenary review
of claim construction, thereby providing national
uniformity, consistency, and finality to the meaning
and scope of patent claims. The totality of experience
has confirmed that Cybor is an effective
implementation of Markman II, and that the criteria
for departure from stare decisis are not met.

29. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
• Supreme Court 134 S.Ct. 2111 (2014)
• Divided induced infringement
• Issue: if multiple parties carry out claimed steps
of the method, can one be held for inducing the
other to infringe

30. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
• Direct Infringement Requires Single Actor:
– A defendant that does not itself undertake all of a
patent's steps can be liable for direct infringement
only "when there is an agency relationship between
the parties who perform the method steps or when
one party is contractually obligated to the other to
perform the steps. Muniauction

31. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
• The method claim required a content delivery
network, that would hold voluminous files for
customers, and “tagging” customer content that
it would hold on its server
• In this way customers did not have to store the
voluminous files and web content delivery was
faster to end users because servers local to the
end user could be used for delivery

32. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
Defendant also operated a CDN and carried out several
of the steps claimed in the '703 patent. But instead of
tagging those components of its customers' Web sites
that it intends to store on its servers (a step included in
the '703 patent), requires its customers to do their own
tagging.
Defendant also "provides instructions and offers
technical assistance" to its customers regarding how to
tag for its servers.

33. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
• Liability for inducement must be predicated on
direct infringement. . .inducement liability may
arise "if, but only if, [there is] ... direct
infringement." Aro Mfg. Co. v. Convertible Top
Replacement Co., 365 U.S. 336, 341, 81 S.Ct. 599, 5
L.Ed.2d 592 (1961)

34. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
– Muniauction (which, again, we assume to be correct)
instructs that a method patent is not directly
infringed — and the patentee's interest is thus not
violated — unless a single actor can be held
responsible for the performance of all steps of the
patent. Because Limelight did not undertake all steps
of the '703 patent and cannot otherwise be held
responsible for all those steps, respondents' rights
have not been violated.

35. Limelight Networks, Inc., v.
Akamai Technologies, Inc.
– The Federal Circuit seems to have adopted the view
that Limelight induced infringement on the theory
that the steps that Limelight and its customers
perform would infringe the '703 patent if all the steps
were performed by the same person. But we have
already rejected the notion that conduct which would
be infringing in altered circumstances can form the
basis for contributory infringement, and we see no
reason to apply a different rule for inducement.

36. Limelight Networks, Inc., v.
Akamai Technologies, Inc
• The Supreme Court repeatedly pointed out it
was not deciding whether Miniauction was
correct, and even suggested at the end that the
Federal Circuit revisit the issue