JONES DAY TALKS®: Patent Litigation, PTAB, Iancu's Legacy, and Institution Discretion
Partners Matt Johnson and Sarah Geers talk about former USPTO Director Andrei Iancu's impact on the PTAB, and what we might expect from a new director under the Biden Administration. They also comment on why patent litigation filings remained active during COVID-19, and explain the factors the PTAB considers when exercising its discretion to deny an inter partes review, including parallel district court litigation involving the legitimacy of the same patent.
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Read the full transcript below:
Dave Dalton:
If you're a regular listener, you know that here at Jones Day Talks we record quarterly updates on insights and actions related to the U.S. Patent and Trademark Office's Patent Trial and Appeal Board, or PTAB. This our first entry for 2021, and there's a lot to catch you up on. Matt Johnson and Sarah Geers are here to talk about trends in PTAB filing activities and about discretionary denials, which is likely the hottest issue at PTAB today. They'll also discuss the legacy of former PTAB Director, Andrei Iancu. I'm Dave Dalton. You're listening to Jones Day Talks. Based in Jones Day's Pittsburgh office, Matt Johnson is one of Jones Day's primary contacts on practice before U.S. PTO's Patent Trial and Appeal Board, where patentability of issued patents can be challenged. A registered patent attorney, Matt is the administrator of Jones Day's PTAB Litigation Blog, which you can find at ptablitigationblog.com.
Dave Dalton:
Sarah Geers represents pharmaceutical clients in intellectual property litigation in a variety of venues, including a district court, arbitration, and the PTAB. Her practice spans Hatch-Waxman and other patent infringement actions, inter partes review proceedings, trade secret, and misappropriation actions. Her litigation experience spans discovery, trial, and appeal. Sarah works out of Jones Day's office in New York. Matt, Sarah, thanks for being here today.
Matt Johnson:
Hey, Dave. Good to be here. Thanks.
Sarah Geers:
Hey, Dave. Yeah, thanks for having me.
Dave Dalton:
I think this is going to be a good program. This is an interesting time right now. So let's dive right in. Let's go to Matt first. Okay, Matt, 2021, a new administration comes on board in January. So Director Andrei Iancu has moved on, but he was running the PTAB during a very busy time. What will you remember as his impact or legacy at the PTAB looking back, with what he did?
Matt Johnson:
Yeah, Director Iancu's time at the patent office took the helm in February 2018, and I think he really set out to make the patent office a more patent owner, more patent friendly forum. And I think he'll be known for succeeding in that front in a lot of areas. For the examining core, he helped to develop guidelines and help to untangle the web of patent eligibility case law, helping the examiners to have a more structured framework for doing that 101 Analysis and helping the patent applicants have a more predictable framework for making their arguments there. So he definitely helped make things more patent friendly on the examination side of the patent office. Then at the PTAB, I think pretty consistently, the tweaks that he made to the PTAB system, the IPRs and the post-grant reviews, were pretty consistently seeking to make the PTAB more patent owner friendly, or at least more predictable for patent owners.
Matt Johnson:
Things like the change of the claim construction standard, from broadest reasonable interpretation to Phillips, to align with district court standards. The motion to amend Pilot Program makes it easier for patent owners to try to amend their claims in an IPR. And then, through the development and identification of cases as being precedential, he put the Precedential Opinion Panel in place for nominating cases to be precedential and for having further briefing and argument before being deemed precedential opinions. And then the cases that they ultimately put out as precedential, things like NHK Spring and Fintiv, regarding discretionary institution denials, have really been geared towards helping patent owners out in a form that early on was seen as pretty difficult for patent owners in a tough spot to be stuck in. Now 2021, the patent office and the PTAB is a more patent friendly place.
Dave Dalton:
This isn't supposed to be an overtly political discussion. I don't think this is an overtly political position that he held, but when you say things like "more patent owner friendly", "more predictable", these are positive things, right? I mean, in the big picture, this is what people want to know. They know they're going to get a reasonable hearing. They know basically what to expect. I got to believe for a guy who, what you said, 2018? That's a pretty good legacy to have, isn't it, Matt?
Matt Johnson:
Yeah, it's definitely on the predictability front. That's good for all sides of the issue, no matter patent owner or petitioner sides, to know what arguments the board is looking to make, what they're going to base their decisions on. That's good for everyone and definitely a positive for the system. That's going to be a really positive part of Director Iancu's legacy.
Dave Dalton:
This is a little off script, or off outline, but what does a guy like that do next with his career? He's obviously a brilliant man with some great experience. Where does he land, do you think? Or do we know?
Matt Johnson:
There's going to be all kinds of opportunities for him, be that going in-house to work for a company or a law firm. Having those types of contacts and knowledge of the system is going to be potentially valuable for a lot of organizations that would be looking to have him on board.
Sarah Geers:
Sorry to interrupt. Yeah, he was quite in demand even before becoming the Director of the PTO. So I can only imagine he's going to be a very popular person after this.
Dave Dalton:
Right, right, I'm certain. And Sarah, welcome to Jones Day Talks. This is your first time with us. But Matt and Dave Cochran had always talked very favorably about Director Iancu. So I'm sure he's onto great things and we'll watch where he goes. So, Sarah, since we're back to you, let's talk about filing activity. Filings haven't gone down recently. The new administration, and with the changes in directorship and so forth... Why is that? Why are filings holding steady?
Sarah Geers:
I think there's a couple of reasons to explain that. And if you go back to a year ago, we were stepping into this new uncharted territory with COVID, and there were a lot of questions about what was going to happen with patent litigation and with the PTAB. And despite all of the uncertainty, the patent litigation has remained high pretty much across the board. So at the PTAB and at the district court level, we just haven't seen the kinds of reductions that I think folks were initially concerned about. And it's remained quite strong, even despite the transition to remote hearings and remote positions and some of the trial issues with juries and that type of thing. It's remained strong. So I think that's great, and it's also happening at the PTAB. And then in terms of the other changes that Matt touched on, once the trial gets started at the PTAB, if it passes the institution stage, it's still a very petitioner friendly place.
Sarah Geers:
So if you can make it pass these discretionary decision issues, you still have a really good chance of getting a patent knocked out if it's in your way. So I think people still want to come to the PTAB to have that opportunity, if they can get past institution. And then the third thing, which litigators love to think about, is just there's a lot of strategic opportunities between the various forums that you can challenge patents and start patents. So there's always going to be this interest in how you can take advantage of the procedures that are available in the PTAB versus in the district court. So there's always going to be an interest in doing that as well.
Dave Dalton:
There's probably a program for us to do about that, at some point, Matt, Sarah, because Matt, you and Dave touched on that before, different options available to the party's interest in these matters. And without giving away the store, that's something that I think would be interesting to the audience. So we ought to do that later on this year, but I digress. Well, let's talk about the new administration. Matt, installation of a new director, new administration. Are we seeing seismic changes with the Biden administration, or will we be holding serve? You see what I did there? All right, audience, Matt was a stud high school tennis player. We were talking before we started recording, but go ahead. Anyway, what are we expecting for the Biden administration, Matt?
Matt Johnson:
You're too kind on that, for certain, but...
Sarah Geers:
Matt, I'd be up for some mixed doubles, sometime down the road.
Matt Johnson:
Yeah. We've been playing paddle tennis this winter and it's been great. It's a great way to get out and play some form of tennis in the winter.
Dave Dalton:
I have friends who played, I've never done it. I've heard it's a great workout, but go ahead.
Matt Johnson:
No, it's the best. As for the new administration, we're waiting to see still who's ultimately going to be named as the new director, but I think there's the potential for some shifts in PTO policy, particularly around the PTAB. I don't think seismic shifts. Director Iancu was very ambitious in a lot of ways. The changing of the claim construction standard was a big change. And then the development of this discretionary institutional denial case law, and the naming of precedential decisions on that, those were pretty big changes. And I think we could see some shift back in the other direction, maybe toward petitioner side of the... Nothing major, seismic, but you could see some of the decisions that have been named precedential by Director Iancu being de-designated by a new director, particularly if the new director has more ties to the tech community, who typically are more towards the petitioner, the patent challenger side of the V. A new director, more sympathetic to the tech side of things, might think about de-designating decisions such as Fintiv-NHK Spring, and moving away from the large number of discretionary denials that we've seen over the last year.
Matt Johnson:
So I think there's definitely a potential for change, likely will be some change, but nothing crazy, at least from what we've been able to see in the tea leaves so far.
Dave Dalton:
Okay. Now I cannot think of a better time to insert a sort of discreet plug for the PTA Ligation Blog that you guys do. Obviously you'll have your ear to the ground and you'll be watching these things. And this is a good place to go for information as the situation develops. Right, Matt?
Matt Johnson:
Yeah, I appreciate the plug for ptablitigationblog.com. Yeah, we're writing two to three articles a week, over a hundred a year, covering all kinds of PTAB topics, things that are in the news, decisions, or today, talking about the Supreme Court hearing arguments in the Arthrex case yesterday, where there's a slim chance that the Supreme Court could strike down the whole PTAB system. Don't think that's likely, I think they're much more likely to take a more measured approach in dealing with the constitutional law issues that came up in the Arthrex case. But yeah, the PTAB Litigation Blog is the spot to read all about it.
Dave Dalton:
Very popular, that's for sure. I know these things because I watch. You guys do a great job with that. So Sarah, Matt mentioned institutional discretion. In fact, we've been reading about that in the PTAB blog. What is it? And what do I need to know is as an interested or affected party? What is this concept that we're talking about here?
Sarah Geers:
Yeah, this is a very hot topic right now, as we've sort of been discussing already. So Matt mentioned the Fintiv of precedential decision that came down a couple of months ago, and that's sort of been the culmination of a trend over a couple of years, where the PTAB has increased its reliance on its discretion to deny institution of petitions based on other litigation that's going on, related to those patents. So, as I think every PTA practitioner knows, the PTAB has a lot of discretion in a number of areas. And so we're seeing increasingly that they're relying on that to put a hold on PTAB litigation, where litigation and other venues has been going on. And so the Fintiv case solidified the thinking around that and identified certain factors that the panels should look at when evaluating whether to deny institution based on these parallel proceedings.
Dave Dalton:
Okay. That's a great explanation. Matt, I also had a note here, and you and I've talked about these things, off and on, for going on two years... But the PTAB statutes already identify time periods where petitions challenging a patent can be filed. Does this change anything?
Sarah Geers:
Yeah, it's interesting how this case law has developed because you're exactly right. 35 U.S.C. 315 B sets a one-year time limit where petitioners can file their petitions. Once you're served with a complaint for infringement, you have one year to file your PTAB petition. So one would think that your window for filing these is one year, but as this case law has developed, the patent office and the PTAB have layered another extra layer of analysis regarding whether they, in their discretion, where the Supreme Court has said from the close, "Okay, so the PTAB has wide discretion on issues of institution," whether the PTABs should take up a case or not, based on what's happening in other forums.
Sarah Geers:
And it was developed early on based on that fairness, the patent owners theme, where early in the PTAB days there was definitely some piling on by petitioners who, while they may be acting within the one-year window, you would have eight, 10, 12 petitioners filing challenges against a single patent. And the poor patent owner would just be buried in paper. And so this extra layer of analysis through General Plastic decision, NHK Spring, and then Fintiv, and the Fintiv factors, has developed in large part to try to make sure that we're being fair to patent owners, not dog piling, that they're getting a fair shake and only having to defend cases where the PTAB thinks that the challenge is just.
Dave Dalton:
It makes sense to me. Is this part of Director Iancu's legacy?
Matt Johnson:
Yeah, it's right in line with his stated goals of making the patent office a patent and patent owner friendly face. Let's make sure we're being fair to patent owners and not having them being overwhelmed unfairly.
Dave Dalton:
Sure. All right, so Sarah, back to you for a second. So that's most of the rationale, right? Behind the PTAB imposing these additional timing requirements, making sure that the patent owners get fair treatment, correct?
Sarah Geers:
That's a big part of it. The other aspect is there's a lot, for example, the district court is doing to address these issues in the parallel cases. There's a lot of work and effort going into it by the parties involved, by the court. And then there's also the PTAB's resources and expenses. And so it doesn't make sense in some of these instances to be driving to the same decision on the same issues at the same time, when really one forum can handle it as easily as the other. And so this is intended to encourage litigants to pick the place you want to handle this and do it there, and to avoid any sort of opportunity for gamesmanship in terms of the timing, or one forum getting ahead of the other.
Dave Dalton:
Sure, but Matt, aren't there certain jurisdictions, whether it's ITC or certain fast district courts, where this could really put accused infringers in a sort of PTAB bind?
Matt Johnson:
You're exactly right there, Dave. As Sarah said, the PTAB is not inclined to allow you to have two opportunities to make these validity arguments. So if it looks like the district court or the ITC is going to decide these validity issues before the PTAB would get to them, that's one of the big indicators that they might use their discretion to deny institution because the district court or the ITC is going to get those issues first and certain forums like the ITC have really fast dockets. The ITC is going to get to make a validity determination within 18 months of filing of the ITC case. That's about the same timeline as the PTAB case. So most of the time, if the ITC cases filed first, they're going to make these determinations first, and the PTAB is going to be disinclined to institute a case.
Matt Johnson:
Now, is it fair that by filing in the ITC or a rocket docket venue that the patent owner has effectively taken the PTAB off the menu of available options for the accused infringer? Some might feel that that's not quite fair to the accused infringer, and as you said, puts them in a bit of a bind, not being able to select where they want to have these validity challenges heard. So yeah, unbalanced, this is something that's up for hot debate in the PTAB world these days.
Dave Dalton:
Okay. Well, let's pick up on that. Sarah, having heard what Matt just said, what can defendants do to get the PTAB to look at their case under these circumstances?
Sarah Geers:
Yeah. I don't think it'll surprise you based on what Matt just said to hear that petitioners should get their petitions on file with the PTAB as quickly as possible if they want to try to win the race, so to speak. The Fintiv case looks at a number of factors that take into account how far along the parallel proceeding is. And so the more substantive activity that's taken place in the parallel case, the closer you are to any sort of resolution of the issues, the less likely the PTAB is to take it up. So you really want to get there as quickly as possible and do all of this before the parallel litigation has gotten very far along. You could also, as a petitioner, try to get an indication from the parallel proceeding that they would be willing to stay the case while the PTAB is considering it. So put the case on hold, if you can, or at least get an indication from the court that that's a possibility.
Dave Dalton:
And Matt, given this dynamic, how can patent owners capitalize on what's going on?
Matt Johnson:
First one is somewhat obvious, the file in a jurisdiction that has a fast docket, and if you can get into a venue that's likely going to be as fast or faster than the PTAB, then you have a good shot of being able to tell the PTAB, "Hey, District Court, ITC, is going to deal with this issue first. It's not worth your time." And then if the accused infringer does end up filing a petition at the PTAB, you want to make some arguments in your preliminary response on why the PTAB should exercise their discretion to deny institution, make some arguments. If the panel is inclined, potentially deny institution. Give them a path to do that in your preliminary response. And even if the PTAB doesn't decide to deny institution, a lot of times what you will entice the petitioner to do, by making these arguments in your preliminary response, the petitioner may affirmatively make some statements to the district court, the trial court, or to the patent office that they're going to trim their trial court case so that these validity arguments aren't heard in both forums.
Matt Johnson:
Where a recent precedential case from the PTAB, the Sotera case, said that if a petitioner says that they agree not to make validity arguments in both forums, that they affirmatively choose to proceed at the PTAB, rather than in the trial court, the PTA will take that into consideration in making their institution decision. So that's a petitioner's strategy for keeping your PTAB case alive, making one of those Sotera stipulations. On the patent owner side, making the preliminary response arguments to try to get affinitive institution discretion denial. Even if you're not successful there, you might have success in convincing the petitioner to trim their case, see one of these Sotera stipulations. So there's really no downside in making that argument in your preliminary response.
Dave Dalton:
Sure, sure. I got to say Matt, it sounds like you're as busy as ever, because I remember when you and Dave Cochran and I were talking almost a year ago, we did one of these programs and COVID was just becoming a real issue. And you guys like, "Well, we're not seeing anything yet, but it could slow down. We don't know. No one knows anything." Doesn't sound like anything's missed a beat really. I mean, I know the format and the procedures and some things... But sounds like it's been another busy year and it's going to get more busy. Am I wrong?
Matt Johnson:
It's largely based on what Sarah talked about earlier, that once you get in through the door, get that institution decision, the PTAB remains a very petitioner, patent challenger, friendly forum. And so it remains something that everyone accused of infringement of a patent is looking at as a potential way to gain leverage in the case. So we have almost 1500 total filings of the PTAB in fiscal year 2020, definitely not the highs of 2016, 2017, where we were up at 1800 cases, but still above the average and going strong. So still in 2021, looks like the PTAB is here to stay as a big consideration in every patent litigation.
Dave Dalton:
Yeah, it certainly seems so. This has been great, by the way. Sarah, Matt, thanks. But let's close on a pragmatic or practical note. What are clients asking you about right now? What's... I don't want to say keeping them up at night, because that sounds a little inflammatory, but given the current environment and a new administration, are there certain questions or issues or concerns that clients are bringing to your attention? And this is for either one of you, Sarah or Matt. If something pops to mind, is there anything that we ought to know?
Sarah Geers:
I'll jump first. The Arthrex case that Matt alluded to earlier that was just heard yesterday at the Supreme Court is very hot topic as well in this area. And so a lot of clients are anxiously awaiting what happens there, and what changes that might trigger in the PTAB. And in addition to that, patent owners especially are still thinking about, "Well, once things are instituted, are there other things that we would like, to have a fair shake at that point in the process?" So I think generally the changes that Matt talked about have been well received, but from a patent owner perspective, they feel that there's still room for certain improvements down the line in the procedure.
Dave Dalton:
Yeah. Good enough. Good enough, Matt, anything you'd add?
Matt Johnson:
Yeah. The biggest thing over the last year, and beyond whether the PTAB is going to survive Arthrex, and whether we're here for another podcast in a few months... But more practically the Fintiv line of cases, the discretionary denials, really call for coordination of strategy across all forums. You want to be posturing your case so it makes sense and gives you the best opportunities at the PTAB across all your forums. So decisions you make at the district court, at the ITC where you file your infringement lawsuits, they all have downstream effects on what's going to happen at the PTAB and how effective it is for the patent owner or petitioner. So really early strategic thinking across the entire matter is really critical these days, and that's where I see a lot of discussion early planning on both sides of the V, to try to put yourself in the best position to do well at the patent office, through strategizing in the broader matter.
Dave Dalton:
Well said, well said, thank you. All right. And one more time, it's ptablitigationblog.com.
Matt Johnson:
That's it. Check in every day for PTAB news and analysis.
Dave Dalton:
There are a lot of blogs out there, professional services and law firms, but you all do an astounding job, just keeping that so current and so... It's just a real effort, and you and Dave and Sarah and everybody else involved over there are just outstanding. You keep it fresh, you keep it interesting. It's been very well received. I hear a lot of things anecdotally that you guys were a hit, so keep it up. It's all great. So thanks so much.
Matt Johnson:
Thanks Dave.
Dave Dalton:
Hey, great time. We'll do this again, probably in two or three months. All right?
Matt Johnson:
I look forward to it. We'll have lots more to talk about then, I'm sure.
Dave Dalton:
Absolutely. Absolutely. Matt, Sarah, thanks so much.
Sarah Geers:
Thanks Dave.
Matt Johnson:
Thanks Dave.
Dave Dalton:
Take care. Bye.
Dave Dalton:
To find complete biographies and contact information for Matt and Sarah, please visit jonesday.com and while you're there, check out our insights page. You'll find more podcasts, publications, white papers, newsletters, videos, and other important content. And don't forget the PTAB Litigation Blog at ptablitigationblog.com. That's one word, ptablitigationblog.com. Subscribe to Jones Day Talks at Apple Podcasts or wherever else really good podcasts are found. As always, we thank you for listening. I'm Dave Dalton. We'll talk to you next time.
Dave Dalton:
Thank you for listening to Jones Day Talks. Comments heard on Jones day should not be construed as legal advice regarding any specific facts or circumstances. The opinions expressed on Jones Day Talks are those of lawyers appearing on the program and do not necessarily reflect those of the firm. For more information, please visit jonesday.com.
