Interim IPR Results & Litigation – What Happens At The Board May Not Stay At The Board
The America Invents Acts ("AIA") gives alleged infringers facing an infringement claim a choice—challenge validity in court or in an inter partes review (IPR). Like any choice, consequences have to be considered. The consequences of successfully prevailing are known—the claims are invalidated. For the most part, the consequences of losing the IPR proceeding are also known—the challenger is estopped from challenging the claims "on any ground that the petitioner raised or reasonably could have raised during that inter partes review."1
In Interdigital Communications, Inc. v. Nokia Corp., the district court similarly excluded the Board's decision denying an IPR petition with respect to the asserted patent, despite overlap in the references and arguments presented in the petition and in litigation.11 The district court was of the opinion that the denial was not a "decision on the merits,"12 but rather more "akin to a ruling on a preliminary injunction, where the merits are assessed with less than a full record and with less than a full adversarial proceeding."13 Similar to the court in WARF, the district court distinguished the Board's decision, and IPR proceedings as a whole, from initial patent prosecution. First, the district court noted that "a patent examiner cannot allow a patent to issue saying there is a reasonable likelihood that it is not obvious."14 Second, the court noted that "the patent examiner is a person of ordinary skill in the art, whereas the IPR decisions are made by lawyers who are not persons of ordinary skill in the art."15 Furthermore, the district court found little relevance in the denial given that the defendants were not a party to the petition.16 In light of this "marginal relevance," the court found that the probative value of the evidence was "greatly outweighed" by "the expenditure of time that would be required to give the jury the full context necessary to fairly evaluate the evidence" (and related "significant risk of confusion of the issues").17
The Admissions : On the other hand, in Universal Electronics., Inc. v. Universal Remote Control, Inc., the district court admitted the Board's denial of defendant's petition, finding that any potential confusion caused by the different standards "can be addressed by appropriate jury instructions."18 Like in WARF and Interdigital, there was significant overlap in the prior art references and arguments presented in both proceedings.19 Although the district court's decision on this issue is short, it apparently agreed with the plaintiff that the decision's probative value on the merits of the defendant's invalidity defenses outweighed any prejudice.20
Likewise, in StoneEagle Services., Inc. v. Pay-Plus Solutions., Inc., the district court similarly admitted the Board's denial of defendants' petition with appropriate jury instructions addressing the different standards applicable to IPR proceedings.21 The court did not comment on the overlap, if any, between the prior art references and arguments presented in the denied petition and in litigation.
A Framework for Resolving Future Admissibility Disputes : Decisions to date have been relatively brief, as expected in resolving pre-trial motions in limine. None, for example, have even cited to Microsoft Corp. v. i4i Ltd. P'ship.22 There, the Supreme Court explained that a "challenger's burden to persuade the jury of its invalidity defense by clear and convincing evidence may be easier to sustain" where the PTO did not consider newly-introduced prior art.23 Moreover, the Supreme Court suggested that "[w]hen it is disputed whether the evidence presented to the jury differs from that evaluated by the PTO, the jury may be instructed to consider that question."24
Microsoft itself thus recognizes the highly probative value of the fact that the PTO has considered the art the challenger relies upon. The probative value of a Board's decision denying an IPR petition peaks where the references and arguments in the denied petition overlap with the trial arguments, as occurred in Universal.25 In these situations, on further reflection on Microsoft's teachings, future district courts may not give as much weight to the reasons the WARF court first articulated in favor of exclusion. For example, WARF's and Interdigital's rationale that Board proceedings are conducted by lawyers seems thin factually given that the PTO seeks to hire technically-trained jurists for the Board.26 More critically, the Supreme Court suggested considering appropriate jury instructions in part because "if the PTO did not have all material facts before it, its considered judgment may lose significant force."27 This rationale does not turn on the particular agency official making the "considered judgment," but rather on the PTO's overall agency expertise.
Microsoft's suggestion of crafting appropriate jury instructions also addresses at least some aspects of the additional concerns raised by the WARF and Interdigital courts concerning the differences in standards. But those concerns may eventually continue to carry the day with some courts given Federal Circuit decisions in the context of reexamination. Callaway Golf Co. v. Acushnet Co.,28 for example, affirmed exclusion of "non-final re-examination determinations [that] were of little relevance to the jury's independent deliberations," but raised risk of jury confusion. By contrast, K-TEC, Inc. v. Vita-Mix Corp.29 found the district court did not abuse its "broad" discretion by allowing parties to discuss the extent to which the PTO considered a prior art reference in still pending reexamination proceedings.
In exercising that discretion, it is apparent that there are some limits on probative value of certain institution denials. Petitions denied on procedural grounds, like failure to file within the required one year from service of a complaint, or discretionary grounds, such as because the references previously were considered by the PTO, likely have very little probative value. Likewise, probative value is reduced where the grounds presented in the petition are completely separate and distinct from the references and arguments presented at trial. There is simply no reason to delve into PTAB procedures or explanations in such cases, and exclusion would almost certainly be warranted.
The middle ground between these extremes presents tougher questions. For example, consider a situation in which a (denied) petition presented an obviousness ground based on Reference A in view of Reference B, and at trial the defendant present an invalidity defense including the combination of Reference A and Reference C, or perhaps Reference D and Reference B. While these combinations are different on their face, and may well be materially different for many reasons, a patentee may nonetheless also argue that the combinations are merely cumulative of the ground denied in the petition, or even other art considered in prosecution. In that case, sorting through whether to admit, even with a jury instruction as suggested by Microsoft, will be difficult and no guiding principle seems certain to carry the day. Indeed, this very scenario is one which defense counsel will likely craft in part to avoid admission of an unfavorable institution decision or to minimize its impact if admitted. Meanwhile, patentee's counsel may seek to develop the record on "cumulativeness" to support admission of the Board's institution denial.
Finally, even apart from the possible probative value of a failed petition on validity, the decision might also arguably be relevant to willfulness.30 Once again, however, this rationale may be undercut once other courts weigh in or the Supreme Court has addressed the willfulness standard of review in currently pending cases.
Conclusion : As we await additional decisions/guidance on the issue, parties should remain mindful that denials of IPR petitions may impact trial. Ideally, an accused infringer should ensure that the grounds presented in an IPR petition are separate and distinct from trial arguments,31 thereby minimizing any probative value of a decision from the Board denying the petition. A prudent patent owner, however, may nonetheless attempt to frustrate that objective by introducing evidence regarding the potential cumulative nature of the accused infringer's invalidity defenses at trial as compared to information considered by the PTO. But how district courts will address these moves and counter-moves under the FRE 403 balancing test will likely remain uncertain for some time.
1. 35 U.S.C. § 315(e).
1. 35 U.S.C. § 315(e).
Mitchell G. Stockwell
Joshua H. Lee