Sunny: Hello everyone. My name is Sunny McCall and I’m Momentum’s Vice President of Content and Experience and Program Director of Momentum’s upcoming 2nd IP Counsel Exchange on Post-Grant Patent Challenges. It is my great pleasure to be here today with Eleanor Yost, a partner in Goodwin Procter’s Intellectual Property Litigation Group. Eleanor – welcome.
Eleanor: Good morning, Sunny – thanks for having me.
Sunny: So nice to be here with you Eleanor. Eleanor will be leading a session at the event with Cynthia Bright, Vice President and Associate General Counsel of IP Litigation and Public Policy at Hewlett Packard, on “What the Past 12 Months of CBM Challenges and IPR and PGR Proceedings Reveal about Party Successes and Failures across Industries.” By way of background, Eleanor focusses on protecting and enforcing intellectual property rights in state and federal courts, the US International Trade Commission and the US Patent and Trademark Office. A thought leader on the subject of USPTO Pat Trial and appeal board post-grant patent proceedings, Eleanor has been featured in several prestigious legal and IP publications, including IP Law360, AmLaw Daily, Corporate Counsel and Intellectual Property Magazine. Eleanor is also the lead author of “PTAB Post-Grant Proceedings – A Technical Guide for Practitioners”, and represents patent owners and petitioners in re-examination, IPR and CBM proceedings and related appeals to the federal circuit. Thank you again for your time today, Eleanor, I’m so excited to speak with you so I’m just going to go right ahead and jump right in here. Reading your bio, it looks like you have been practicing patent law for quite some time now, how would you say you’ve seen the practice of IP law shift over the past year or so particularly in light of the “new” post-grant patent proceedings at the PTAB?
Eleanor: Well, it’s really been a sea-change for the practice – for folks who have been used to litigating in the district court, maybe before the ITC – in the past there was only one way, really, to get a patent invalidated if you were a defendant or an accused infringer – it took a long time and there were opportunities to go to the Patent Office to try and get a claim cancelled, but it was essentially a multi-year process that never really got anyone very far over a usable period of time. So now, with these post-grant proceedings, we’ve found that they’re working – at least for folks who are looking to challenge patents. They’re faster, cheaper and effective. Challengers are successful close to 80% of the time at invalidating claims that they are accused of infringing, so there’s a really strong impetus for accused infringers to file these petitions; and we’re seeing in the practice folks pick a two-prong strategy when they’re dealing with patent litigation now – certainly there’s still the district court practice – but every single one of those district court cases now has to consider pretty strongly whether they’re going to start a parallel proceeding before the PTAB.
Sunny: That’s really interesting, Eleanor. So, it’s been reported that more than 1500 petitions have been filed for FY 2014 thus far at the PTAB – which is, I believe, almost three times the number of estimated yearly fillings. Having quickly gained a reputation as being one of top three patent litigation venues in the country, the PTAB seems to offer an efficiency and reduction in costs that thus far remained unattainable in federal district court which you just mentioned, Eleanor. Could you speak to me a bit about why you feel there’s been such a well spring of interest in these actions at the PTAB of late?
Eleanor: So, I think you’re absolutely right. The proceedings have been shown to be legitimately faster, cheaper and certainly have better options for patent challengers as compared to district court. If you imagine that, in typical litigation, a patent is invalidated maybe 30% – 40% of the time in court; at the PTAB over the last few years, we’ve seen 80% (maybe 85%) of claims that are challenged, are invalidated. And as a result, there’s an incredibly strong impetus for accused infringers to now file these post-grant petitions. And I really think the trend is because this district court practice, that takes so long to come up with a result, is now looking pretty slow. The USPTO, in these post-grant proceedings, are churning out decisions typically within a year of filing one of these petitions, so folks who are challenging patents can really effectively handle their litigation and get a patent thrown out within an incredibly short amount of time as compared to a typical district court litigation. Also, I think it has to be said that these proceedings are certainly much cheaper by an order of magnitude than a typical district court litigation. We’re talking millions of dollars to defend a patent action in district court; and at the PTAB we’re seeing certainly maybe a few hundred thousand dollars to achieve essentially the same result in a much faster timeframe. So, for patent challengers, there really is no comparison – the decision is clear – if you want to save money and get a result faster, you’re going to start with the PTAB every time.
Sunny: Well, that’s fascinating. So, building off of that, Eleanor, what clear advantages (and I know you’ve talked about a few here already) do you see the PTAB offering to clients as opposed to pursuing a claim more traditionally in federal district court? And then, I guess, secondly: are there certain circumstances under which you feel federal district courts may still actually be the better option?
Eleanor: Absolutely. Well, there’s certainly a stacked deck for challengers at the PTAB; and what I mean by that is that there are some legitimate differences between PTAB practice and district court practice. There’s different claim construction standards, for example; different discovery rules; different trial formats – all of these tend to favour a challenger as compared to the patent owner. And of course they also feed into why those proceedings are so much cheaper. One of the driving forces, though, is the ability for someone accused of infringement in district court to start one of these PTAB proceedings and then go back to the district court and try to seek a stay of that litigation. In other words, if you’re sued for infringement, you can go file a petition at the PTAB trying to get the claims that you’ve been accused of infringing thrown out, and in the meantime you ask the judge in the litigation to please stop the litigation and wait for the PTAB to finish its work. It’s really, really common for petitioners and defendants in co-pending litigation to take this strategy – and they do it probably more than half the time. The reason is, of course, that litigating is very expensive and, if you can put all that on hold waiting for the PTAB, then you’re certainly going to save money. The really interesting thing that we’ve seen in our practice are questions about – what are the odds in actually getting that stay of your litigation? And we’ve seen that the answer really varies from district court to district court, and maybe sometimes even judge to judge. It really is still early and we don’t have a huge amount of statistics to draw on, but there are some districts in particular that are much more likely than others to stay a case pending one of these post-grant proceedings. I’ll give you an example: northern district of California is probably the most “stay-friendly” court, while the eastern district of Texas is the least. So what we’ve done in our practice is, when our clients are trying to consider: should we go file one of these petitions; can we get our case stayed – we have a lot of experience to draw from to advise them, on whether this judge is certainly a lot more likely to grant a stay than that judge or this district really likes staying cases and waiting for the PTAB as compared to that one. It informs the strategy and helps our clients lean one way or the other.
Sunny: That’s very interesting – the breakdown between the different courts – which takes me into my next question, Eleanor. What are the differences between challenging or defending a patent before the Patent Office versus before a court? Do you have to apply different litigation skills for these different venues?
Eleanor: Absolutely. So, primarily, the true difference is that, although we call them post-grant trials, they’re really not trials in a traditional sense. In other words, there’s no witnesses on the stand; there’s no juries in the box; none of the typical theatrics you would imagine in a usual courtroom proceeding. In essence, a post-grant proceeding is a lot of work on the papers – there’s a lot of briefing – and it’s basically if you imagine a hearing on claim construction, summary judgement and maybe throw in something like an appellate argument all rolled into one – if you put them all in a blender, that’s basically what these proceedings are like. Each side in a hearing, for example, is given maybe half an hour to an hour to present its case –it’s only attorneys who are presenting an argument – there’s no witnesses typically up on the stand. During the presentation at the PTAB there’s three very technically savvy judges who throw questions at the attorneys to flush out all the arguments; typically most district court judges don’t necessarily have that technical background. And of course at the PTAB it’s certainly very, very hard work; these judges know the record inside out; it’s certainly something to keep folks on their toes; and it’s a different feeling when you’re talking very technically – when you’re talking to a jury, a lot of the finessing of the material is: how do you take something hugely technical and discuss it in a way that your average Joe can understand it and understand the issues in the case. Here, because the judges all have technical backgrounds themselves, you’re getting into a much more nitty-gritty of what’s going on. It’s a much different mid-set. So I think, to be successful, PTAB counsel in particular have to be much more than talented litigators – they really have to be intimately familiar with PTAB practice and then ready to face a panel that really knows the record just as well as they do.
Sunny: So, I know, Eleanor, we’ve touched on quite a few points today, the speed and efficiency of PTAB actions, circumstances under which a PTAB action may/may not be the best fit for a client, all of which will be discussed in more detail at our upcoming 2nd IP Counsel Exchange on Post-Grant Patent Challenges, which excitingly enough, will be taking place at San Jose City Hall, the future home of the United States USPTO’s Silicon Valley office. In closing, any final thoughts for our listeners today, Eleanor?
Eleanor: Sure. I think there’s some very interesting issues that are going to come to a head in the year to come. We’re expecting, for example, that the federal circuit will finally be receiving a hefty volume of appeals out of the PTAB, and that will really shape the practice going forward. The federal circuit decisions impact various panels at the PTAB and maybe they will change how proceedings are managed. We’re really looking forward to that, as well as expecting some new rule-making from the USPTO as well, to finesse some of the rules and hopefully make things a little bit easier for participants. So, it’s going to be an exciting time, I think. The practice is really growing at an incredible clip and we’ll see it keeping going in the future.
Sunny: Well, Eleanor, thank you again for your time here today. It’s really been a pleasure.
Eleanor: Thank you.