Presenting a live 90-minute webinar with interactive Q&A Leveraging Inter Partes Review Petition Denials Lessons From PTAB Full or Partial Denials to Avoid Institution of an IPR or Avoid a Denial TUESDAY, MARCH 24, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Thomas L. Irving, Partner, Finnegan Henderson Farabow Garrett & Dunner , Washington, D.C. Jill K. MacAlpine, Ph.D., Partner, Finnegan Henderson Farabow Garrett & Dunner , Washington, D.C. Joshua L. Goldberg, Esq, Finnegan Henderson Farabow Garrett & Dunner , Washington, D.C. Cory C. Bell, Esq., Finnegan Henderson Farabow Garrett & Dunner , Boston The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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DISCLAIMER • These materials have been prepared solely for educational and entertainment purposes to contribute to the understanding of U.S. intellectual property law. These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case is fact specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (including Finnegan Europe LLP, and Fei Han Foreign Legal Affairs Law Firm), cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with these authors. While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed. 4
Leveraging IPR Petition Denials Lessons From PTAB Full or Partial Denials to Avoid Institution of an IPR or Avoid a Denial 5
The Revolution: Inter Partes Review (IPR) Petition Filings Continue To Rise Oct. 2014 Over 2500 IPR Petitions filed Filings approximately doubled from Oct. 2013 to Oct. 2014 Oct. 2013 Oct. 2012 As of March 6, 2015. Source: http://www.uspto.gov/sites/default/files/documents/030515_aia_stat_graph.pdf 4 PGRs filed so far; 2 settled prior to institution decision, 2 institution decision pending. 6
District Litigation Filings Dropping as IPR Petition Filings Rising • Source: Courtlink. First time since 2008 that first-instance patent litigation filings dropped. 5355 cases in 2014 represents a 17% decrease in the number of district court patent infringement cases from 2013. 7
And Petition Grant Rate is High! Granted + joinder = 76% As of March 6, 2015. Source: http://www.uspto.gov/sites/default/files/documents/030515_aia_stat_graph.pdf 4 PGRs filed so far; 2 settled prior to institution decision, 2 institution decision pending. 8
And if the Petition is Granted, Cancellation Rate in IPRs is High! IPR Results by Claim IPR Results by Case 79% of claims not 26 surviving! 13.27% 260 No Instituted or 8.46% Substitute Claims Survived Instituted Claims 32 Cancelled by PTAB Mixed Outcome 644 16.33% 20.96% Instituted Claims Survived 138 All Instituted Claims 70.41% Instituted Claims Survived 2168 Conceded by Owner 70.57% “mixed outcome” means some instituted claims survived, some did not. As of Feb. 1, 2015. Source: Finnegan research, with thanks to Dan Klodowski, Kai Rajan, Elliot Cook, and Joe Schaffner. Analysis: 3072 claims at issue; 196 cases. 9
Don’t Rely on Being Able to Amend Claims: Only 3 Cases Have Granted a Motion to Amend Substituting Claims On a per case basis, substitute claims have been considered in 56 IPRs, and have only been allowed 3 times (5%). Against the entire population of Final Written Decisions (196 as of Feb. 1, 2015), the percentage is even lower, 1.5% (3/196). Source: Finnegan research, as of Feb. 1, 2015. 10
Per Claim, 7% of Proposed Substitute Claims Allowed Note: on a per claim basis, 312 substitute claims have been proposed, only 22 allowed (7%). Source: Finnegan research, as of Feb. 1, 2015. 11
Thus far … Hundreds of claims, entire patents cancelled (in 70% (138/196) of Final Written Decisions, no instituted claims survived)* 26 patents have survived IPR entirely (13%, 26/196) * *As of Feb. 1, 2015. Source: Finnegan research; 196 Final Written Decisions. These statistics do not include settlements, requests for adverse judgment, motions to terminate, still-pending cases, requests for rehearing, and appellate outcomes. 12
No Field of Technology is Immune* *Statistics by case. Source: Finnegan research of IPR Final Written Decisions. As of Feb. 1, 2015. TC1600 and 1700: 37 FWDs; TC2100: 30 FWDs; TC2400: 7 FWDs; TC2600: 22 FWDs; TC2700: 13 FWDs; TC2800: 41 FWDs; TC3600: 26 FWDs; TC3700: 18 FWDs. 13
Reminder of Burdens Unfavorable to Patent Owner PGR/CBM PGR/IPR DISTRICT COURT ISSUE Preponderance of the Clear and convincing Burden of proof evidence evidence Presumption of No Yes Validity? Phillips/Markman framework: analyze claims, specification, Broadest reasonable and prosecution history to Claim construction Interpretation (BRI)* determine how claims would be understood by one of ordinary skill in the art Patent Trial and Decision maker District court judge or jury Appeal Board (APJs) * and no attempt to preserve patentability; also not bound to follow district court’s construction, if it exists. 14
Tactical Advantages Favoring the Challenger • Challenger generally has time to plan attack, secure experts, and prepare detailed and compelling expert written reports. – IPRs can generally be filed at any time up until the patent expires. • Unlimited time if patent not in litigation; • 12 months from service of infringement complaint if patent in litigation. – PGR petitioners have from publication of patent application until 9 months post- issuance. – Patent Owner has only three months to file POPR and cannot "present new testimony evidence beyond that already of record[.]” – Once instituted, Patent Owner can bring in evidence but is already behind the eight-ball. • Strict limits on discovery. • Petitioner estoppel not discouraging filings; Patent Owner estoppel is harsh. 15
Patent Owners May Want To Do This: • But avoiding the IPR trial by getting the petition denied may be possible! 16
24% of the Institution Decisions Have Been Denials Patent Owner’s best outcome is a denial 17
What Are Some Examples Of The Bases Of These Denials? • Failure to name real-party-in-interest as required by 35 U.S.C. §312(a)(2) and 37 C.F.R. §42.8(b)(1). – Very fact-dependent • Time-barred under 35 U.S.C. §315(b) • Same or substantially the same prior art/arguments under 35 U.S.C. §325(d) – “Same or substantially the same prior art or arguments” during prosecution – “Same or substantially the same prior art or arguments” in another IPR petition • Claim construction • Insufficient evidence to meet threshold for institution – 35 U.S.C. § 314(a): “shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” • Objective evidence of nonobviousness • Reference is not prior art 18
Failure to Name Real-Party-in-Interest 35 U.S.C. §312(a)(2) • Zerto, Inc. v. EMC Corp. , IPR2014-01329 – Petitioner: Zerto Inc. – POPR: Zerto, Inc.'s failure to identify its parent entity, Zerto, Ltd., as a real party-in-interest fatal to the Petition. – PTAB: Denied petition. • Zerto, Ltd. should have been identified as a real party-in-interest. • Zerto, Ltd. established in Israel in 2009, 2011, Zerto, Inc. established in the U.S. as a wholly-owned subsidiary of Zerto, Ltd. in 2011; boards of directors of the two companies are the same, and the CEO of Zerto, Ltd. is the President/CEO of Zerto, Inc. • In the totality of the circumstances, it was “unclear whether Zerto, Ltd. and Zerto, Inc. operate as separate and distinct entities, or effectively operate as a single entity.” 19
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