Judge Uses Institution of IPR to “Bolster” Decision to Overturn Jury’s Finding of Willfulness

40639429_sA Colorado district court has provided an example of how the decisions of the PTAB in an IPR proceeding can impact district court litigation. In XY, LLC v. Trans Ova Genetics, LLC, Case No. 1:13-cv-00876 (D. Colo.), Judge Martinez used the PTAB’s decision to institute IPR proceedings to “bolster” his decision to overturn the jury’s finding of willful infringement.

Plaintiff XY had asserted ten patents against Defendant Trans Ova Genetics.  The patents were directed to systems and methods for selecting the sex of cattle and other livestock. Trans Ova challenged XY’s infringement assertion on the basis that the asserted claims were anticipated and/or obvious. The jury ultimately found that all of the asserted claims were valid and infringed. The jury also found that the infringement was willful.

Trans Ova filed a post-trial motion to overturn the jury’s finding of willfulness on the basis that Trans Ova’s evidence of invalidity as to all ten of the patents-in-suit presented a substantial question of invalidity. Noting that a district court reviews a jury’s finding of “objective recklessness” de novo, Judge Martinez agreed that Trans Ova’s evidence of invalidity presented a substantial question of invalidity and overturned the jury’s finding of willfulness.

The Court primarily relied upon the evidence of invalidity that Trans Ova had presented at trial to support its decision.  However, the Court also noted that its opinion was “further supported” by the fact that the PTAB had instituted IPR proceedings with respect to two (out of ten) of the asserted patents and had found the claims of one of those patents unpatentable:

This finding is further supported by the proceedings brought with respect to the ‘920 and ‘425 patents before the Patent Trial and Appeal Board, which resulted in a finding of invalidity as to the ‘920 patent, and a hearing as to the possible invalidity of the ‘425 patent.  While this evidence was not before the jury, it bolsters the Court’s present finding that Trans Ova’s invalidity defenses met the minimal standard of objective reasonableness, at least as to some of XY’s patents.

It is apparent that the Court was influenced to some degree – and at least felt more comfortable with his decision – by the fact that the PTAB had instituted IPRs on two of the patents, at least enough such that the Court mentioned it in its Opinion. It is logical that other courts, whether they explicitly say so or not, to be influenced by decisions of the PTAB to institute IPRs when it comes to assessing the objective recklessness of a defendant’s actions in connection with a willfulness evaluation.

Don’t Let Protective Orders Trip Up Your IPR Strategy

GavelThe PTAB recently addressed what is a common – but unnecessary – problem created by a protective order issued in a parallel Federal District Court litigation.  In B/E Aerospace Industries, LLC v. MAG Aerospace Industries, LLC,[1] the Patent Owner introduced evidence of commercial success in the Patent Owner’s Response Brief.  In reply, the Petitioner wanted to introduce what it contended was contradictory evidence, namely that any commercial success was based upon features of the commercial product that were not part of the claimed invention.  The problem was that the evidence was embodied in documents produced by the Patent Owner during the parallel Federal District Court litigation, and the Patent Owner marked the documents “Confidential” under the court-entered protective order.  The terms of the protective order prevented use of “confidential” information in matters outside of the case.

The Petitioner twice sought an order from the Board for the Patent Owner to produce the subject documents in the IPR, so as to avoid the preclusion effect of the protective order.  The first time, the Board told the parties to “attempt in good faith to agree to submittal of portions of the documents in question.”  Not surprisingly, the Patent Owner would not agree.  Ultimately, the Board denied the Petitioner’s request.  At first questioning whether the request was a proper “discovery” request at all (since the Petitioner was already in possession of the documents),  the Board found that (i) the documents would not be considered “routine discovery,” (ii) the Petitioner had not sought authorization to file a motion for “additional discovery,” and (iii) the Board was not convinced that the requested order “would promote the just and speedy resolution of this case,” citing the fact that the Petitioner’s reply brief was due in about a week and the oral argument was less than six weeks away.

The foundation for the Board’s decision is shaky at best.  It is unclear how the issuance of an order for the Patent Owner to produce a limited and defined set of documents that had already been produced in the parallel Federal Court litigation would affect the “speedy” resolution of the IPR.  It is even more unclear how precluding the introduction of available, material rebuttal evidence promotes the “just” resolution of a case.

In any event, this case demonstrates the tight spot that a party in an IPR can be put in as a result of a protective order in a parallel federal court litigation.  But it is entirely avoidable.  At last count, over 80% of IPRs were filed in response to parallel Federal Court litigation.  In effect, IPRs have become, at least for the time being, an integral part of most patent litigation.  Defendants, when negotiating protective orders in Federal Court litigation, should routinely include provisions permitting use of “confidential” information in related IPR proceedings directed to the patents-in-suit.  This is entirely reasonable and would avoid the headaches evident in the B/E Aerospace case.

[1] IPR2014-01510; IPR2014-01511; IPR2014-01513; Paper 64 (October 13, 2015)