Tom Engellenner - IP Dispute Cost Comparison

8/10/2019 Tom Engellenner - IP Dispute Cost Comparison

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American Intellectual Property Law Association

Comparison of Federal Court, ITC, and

USPTO Proceedings in IP Disputes

TOM ENGELLENNER

Pepper Hamilton, LLPIP in Japan Committee Meeting

AIPLA MWI Meeting, Phoenix, AZ

January, 2014


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Federal District Court proceedings

International Trade Commission (ITC) proceedings

New mechanisms for challenging patents under the AIA

Key features of Inter Partes Review (IPR) proceedings Some Statistics for the first year of IPR availability

Stays of Federal Court and ITC Cases

Comparisons and Conclusions

Comparing Court , ITC and USPTO Proceedings


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Patent Infringement

And Invalidity TrialsIn the Federal Courts


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Patent Litigation in the Federal Courts

35 U.S.C. 271 provides:

whoever without authority makes, uses, offers to sell, orsells any patented invention, within the United States orimports into the United States any patented inventionduring the term of the patent therefor, infringes the patent.

35 U.S.C. 281: A patentee shall have remedy by civil action forinfringement of his patent.

35 U.S. C. 282: (a)A patent shall be presumed valid. . .

(b) The following shall be defenses . . . : (1) noninfringement, (2) invalidity of the patent or any claim in suit


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Rise of Patent Suits in the Federal Courts

Source: PWC 2013 Patent Litigation Survey


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Top 5 Patent Forums in Federal Courts (2010)


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Typical Federal Court Patent Suit Budget

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


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Disposition of Patent Suits in the Federal Courts

Source: PWC 2013 Patent Litigation Survey


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The US International

Trade Commission


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Patent Litigation at the ITC

19 U.S.C. 1337 provides:

[T]he following are unlawful, and when found by theCommission to exist shall be dealt with, in addition to anyother provision of law, as provided in this section: . .

(B) The importation into the United States, the sale for

importation, or the sale within the United States afterimportation of articles that

(i) infringe a valid and enforceable United States patentor a valid and enforceable United States copyrightregistered under title 17; or

(ii) are made, produced, processed, or mined under, or bymeans of, a process covered by the claims of a valid andenforceable United States patent.


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Rise of Patent Suits at the Intl Trade Comm.

0

10

20

30

40

50

60

99 0 1 2 3 4 5 6 7 8 9 2010

Source: David Hill, Report to WIPO on US Patent Litigation (2012)


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Comparison of District Court & ITC Proceedings

Fed. District Ct. ITC

Decisionmaker

Federal District Judge orJury

Administrative Law Judgesubject to Commission and

Presidential Review

Timing Average time to Initial

Determination: 12 months

Average time (to trial):

28 months

Burden ofProof forInvalidity

Patent Presumed Valid Clearand convincing evidence to

the contrary is needed

Patent Presumed Valid Clearand convincing evidence to

the contrary is needed

Average Cost $1-10M: $2,100,000$10-25M: $3,554,000

>$25M: $5,911,000

$1-10M: $1,967,000$10-25M: $3,410,000

>$25M: $6,242,000

Source : AIPLA Economic survey (2013)


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Typical ITC Patent Suit Budget

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000


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Federal Court and ITC Budget Comparison

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10


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New AIA

Alternativesto Litigation


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The America Invents Act

The America Invents Act (AIA) establishedseveral new mechanisms for challengingissued U.S. Patents:

Inter partes review

Post grant review Cover business method review

Derivation proceedings

All of these new proceedings are conductedbefore a new Patent Trial and Appeal Board.


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Comparison of AIA Proceedings

IPR CBM PGR

Grounds 102 & 103 but onlypatents andprintedpublications

101 (ineligiblesubject matter)112 (enablement orwritten description) &all102/103 prior art


Timing Pre-AIA patents:AnytimePost-AIA patents:9 months afterissue and aftertermination of PGR

challenges

Pre-AIA patents:Anytime if sued orthreatened by PO.Post-AIA patents:9 months after issueand after all PGR

challenges areterminated

Available only forPost AIA patents:Must be filed within9 months of grant

Standard Receivablelikelihood success

More likely than notthat a claim is invalid

More likely than notthat a claim is invalid


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Key Features of

IPR proceedings


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Key Features of IPR Proceedings

Initiated by a Petition (and fee payment):

Formal recitations

Must identify all challenged claims and recite allgrounds for review

60 pages or less, 14pt. font, double spaced Must be accompanied by all supporting evidence

PTAB expects in most cases the evidence willinclude one or more expert declarations.

What does a reference disclose? What does thereference mean to a person skilled on the art?Why a feature in inherent in the prior art?


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Key Features of IPR Proceedings

Patent Owner (PO) Initial Response (optional):

Decision to Initiate Proceedings

PO takes discovery of Petitioners Expert(s)

Patent Owner Response (with POs Expert Declarations)

and Motion to Amend Claims (only one opportunity)

Petitioner takes discovery of POs expert(s).

Petitioners Reply (w/ rebuttal declarations) and

Opposition to Amendments

PO discovery of rebuttal experts POs Reply

Trial (Oral Hearing) ~~~~~> Final Written Decision


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Typical Inter Partes Review Budget

$0

$10,000

$20,000$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Q1- Petition Q2 - P.O. Discovery& Response

Q3 - PetitionerDiscovery and Reply

Q4 - Motions Q5 - Hearing


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Comparison of Federal Court, ITC& IPRCosts

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10


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IPR STATISTICS9/16/2012 to 9/15/2013

Special thanks to Yasser El-Gamal, Ehab Samuel and Peter Siddowaywho compiled some of the following data for the AIPLA

http://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspx
http://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspxhttp://www.aipla.org/learningcenter/live_webinars/Pages/Wednesday,-October-9,-2013-Webinar.aspx


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Statistics

483 petitions filed in the first year


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Statistics

Most IPR petitions have been against NPEs


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Statistics

About 6% of IPRs involve Japanese companies


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Statistics

During the first year, about 8% (37) of the IPR

petitions resulted in settlements (20 before, and17 after, institution)


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Statistics

403 of the 483 petitions (83%) were related to

pending patent litigation between the same parties


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Statistics

The 403 Petitioners involved in related Federal

Court litigation has filed for stays 159 times

But Petitioners are very unlikely to get a stay at the ITC


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Forum Comparison

USPTO (IPR) ITC DISTRICT CT

Grounds 102 & 103 butonly patentsand printedpublications

101 (ineligiblesubject matter)112 (enablement orwritten description)&all102/103 prior art


Presumptionof validity? No. Petitionerneed only showthat it is morelikely than notthat a claim isinvalidity

Yes. Respondentmust prove invalidityby clear andconvincing evidence

Yes. Defendant mustprove invalidity byclear and convincingevidence

Collateraleffect ofinvalidity?

Conclusive onall otherproceedings

Not conclusiveunless affirmed bythe CAFC

Not conclusive onother proceedingsunless affirmed


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Forum Comparison (Continued)

USPTO (IPR) ITC DISTRICT CT

Jury Trial? No No Yes

Timing12 months from

Initiation toDecision

12 Months fromInitiation to Initial

Determination

Average time to trial:28 months

Damages? No No Yes

Injunction? No Yes Maybe

ResolveInfringement No Yes Yes

Costs ~$300K500K ~$2M - $6M ~$2M - $6M


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Thanks for your attention! Questions?

TOM ENGELLENNERPepper Hamilton, LLP

High Street Tower, 19thFloor125 High Street

Boston, MA 02110

+1-617-204-5189engellennert@pepperlaw.comwww.postgrant-counsel.com

Name
mailto:[email protected]://www.postgrant-counsel.com/http://www.postgrant-counsel.com/http://www.postgrant-counsel.com/http://www.postgrant-counsel.com/mailto:[email protected]

Tom Engellenner - IP Dispute Cost Comparison

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