Best Strategies for ITC Respondents When Considering a PTAB Action

When faced with allegations of patent infringement at the International Trade Commission (ITC), a respondent must quickly evaluate whether or not to request an AIA review (hereinafter, inter partes review for convenience) at the Patent Trial and Appeal Board (PTAB) for the patent or patents at issue. The cost/benefit analysis entails: the different caliber of judges, the inability for a stay at the ITC, the ITC’s procedural schedule, the § 315(b) one year statutory bar (when there is a parallel district court action), § 315(e) estoppels, the different standard of proof between the tribunals, and the ability to negatively affect the patent owner’s remedy at the ITC.

Judges

As compared to district court judges, PTAB judges are seen as patent specialists and adept in assessing the highly technical nature of patents and prior art. And like the PTAB, ITC judges are seen as patent specialists and able to properly evaluate the technical nature of patents and prior art. So there may be no real gain for this factor.

Costs and No Stay

Inter Partes review was touted as a lower cost alternative to district court litigation to assess patent validity. While litigating a patent case can cost millions, an IPR can be an order of magnitude less. One way to reduce costs is to request a stay of litigation.

District court judges regularly grant a stay of the district court action, especially after the inter partes review is instituted. The stay pauses costs and fees for the district court case while the parties focus on the inter partes review.

But at the ITC, the administrative law judges will usually not grant a stay of an ITC action in favor of an IPR proceeding even after an IPR is instituted. This is because the ITC, unlike district court, must complete its investigations “at the earliest practicable time.” Furthermore, the accelerated procedural schedule at the ITC almost assures that the ITC will reach a conclusion before the PTAB. Thus, when considering an IPR, respondents must consider those costs to be additional to what is already being spent at the ITC.

Case Workload and Timing

Due to the ITC’s tight deadline in the procedural schedule, an ITC action alone can quickly become overwhelming. A respondent should therefore consider the size, capacity and ability of their attorney team when contemplating an IPR proceeding. That said, note that what increases the workload for a respondent also increases the workload for the complainant. A savvy respondent can estimate the PTAB timelines and file their IPR petition to stack deadlines and squeeze the other side during a major procedural deadline at the ITC, e.g., Markman or contentions.

Statutory bar

According to statute, a petition for inter partes review must be filed within one year of service of a complaint. 35 U.S.C. § 315(b). But no case has currently held that filing at the ITC triggers the one year statutory bar. Rather, thus far cases have held that the § 315(b) deadline is only triggered by a complaint filed in District Court. So if the ITC action is the only case at issue, a respondent should not lose the opportunity to later challenge the patent(s) after one year. Of note, many well trained ITC complainants now know to file a corresponding district court action to cut off this § 315(b) loop hole.

Estoppels

The resulting estoppels from a completed inter partes review are also worth considering. IPR petitioners are prevented from asserting a later invalidity attack that relies on anything the petitioner “raised or reasonably could have raised” during the IPR. 35 U.S.C. § 315(e). While the actual scope of the § 315(e) estoppels are uncertain and vary judge to judge, a worst case scenario suggests that a respondent at the ITC could be prevented from presenting invalidity arguments relying on patents and printed publications associated with an IPR proceeding. A respondent will not, however, be precluded at the ITC from relying on prior art products or other validity challenges such as § 112 (enablement, written description, or clarity) and § 101 (patentable subject matter), because those challenges cannot be raised in the IPR. Note, these additional invalidity positions might not be available if respondent files a post grant review or covered business method review where § 112 and § 101 challenges are permitted. The ITC has not yet interpreted the § 315(e) estoppel provisions, likely due to its fast pace and likelihood of finishing the ITC proceedings before the inter partes review. It remains to be seen how the ITC will treat § 315(e) estoppels for prior and/or co-pending IPR proceedings.

Different Standard of Proof

While the ITC considers patent validity under the clear and convincing evidence standard, inter partes review utilizes the lower evidentiary standard of a preponderance of the evidence. Thus, with the same prior art, a respondent theoretically has a better chance of invalidating a patent at the PTAB.

Potential to affect the Exclusion Remedy

The remedy for complainants at the ITC is an exclusion order which prevents a respondent from importing infringing products. The peril of an exclusion order is an extremely powerful tool for complainants and is the genesis of why many patent owners seek relief at the ITC. But a positive result for a petitioner in inter partes review could reduce the impact of this remedy. For example, the ITC could withhold or suspend the exclusion of imported products based on claims deemed invalid in inter partes review. See 337-TA-939, 60, Comm’n Op. (U.S.I.T.C. Aug. 23. 2016). That said, more recently the ITC declined to overturn an exclusion order when the patents at issue were deemed invalid at the PTAB months after the remedy decision. See 337-TA-945, 11, Comm’n Op. (U.S.I.T.C. Aug. 16, 2017).

Conclusion

In the end, it appears filing an AIA review is the best practice for a respondent. Especially in light of the recent Federal Circuit decision that affirmed the PTAB’s unpatentability determination over claims previously upheld at the ITC and affirmed in a previous Federal Circuit decision. See Nobel Biocare Services AG v. Instradent USA, Inc., No. 17-2256, slip op. (Fed. Cir. Sept. 13, 2018). Naturally, the specific circumstances (patents, infringement position, etc.) associated with an individual case will dictate the best strategy vis-à-vis the use of PTAB validity challenges in an ITC case.

This article appeared in the September 2018 issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.