“Mandatory” Initial Disclosures

One aspect of the new “litigation” at the US Patent Office (or PTO) that will be interesting to watch is the culture shock that is sure to occur when concepts that are very familiar to patent litigation in Federal court are introduced for the first time to Inter Partes Review (IPR) and Post Grant Review (PGR) proceedings.  Discovery is one such key litigation task that will soon be making its debut at the PTO.  While some of the facets of discovery in IPR and PGR proceedings will be familiar to patent litigators, the Patent Office clearly sought to fashion its own style of discovery and it is worth digging further into this important and new aspect of patent practice.

From a philosophical perspective, the comments to the new Rules of Practice (that guide IPR and PGR proceedings) make clear that the PTO struggled with the concept of ensuring discovery did not become a slog that led to increased cost and burden on the parties, as is common in district court litigation.  It is also clear that the Patent Office viewed flexibility as a key priority; the Patent Office believing that a more flexible discovery process will lead to a more efficient, less expensive process.  Only time will tell if they were successful, but the PTO should be applauded for the apparent consideration it gave to the very important issue of allowing some discovery to improve contested Patent Office proceedings, but not at such a level as to let costs run rampant.

At the most general level, the PTO chose to implement three types of discovery: (1) “Mandatory Initial Disclosures”; (2) “Routine” Discovery; and (3) “Additional” Discovery.  37 C.F.R. §42.51. This article will focus on the Mandatory Initial Disclosures, with a detailed discussion of the other two discovery types to follow in subsequent posts.

What are Mandatory Initial Disclosures?  The Mandatory Initial Disclosures can take one of two forms.  “Option 1” is modeled on Rule 26(a)(1) of the Federal Rules of Civil Procedure and generally seek to have the parties exchange basic information early in the trial.  For example, the name and contact information for individuals likely to have discoverable information, as well as a copy or description of documents and other information that may be used to support a party’s claims or defenses.   “Option 2” comprises the information from “Option 1,” plus two additional categories of information.  First, if the petition seeks cancellation of any claim based on the existence of an alleged prior non-published public disclosure, further information about the individuals with such information must be provided.  Second, if the petition seeks cancellation of any claim based upon the alleged obviousness of the claim(s), further information about any objective secondary considerations is exchanged.

But just how “mandatory” are these Mandatory Initial Disclosures?  The rule that promulgates these disclosures states that the initial disclosures can be done by agreement or by motion to the Board.  If a motion is required, are the rules really “mandatory”?  The short answer seems to be no.  In the comments section of the Rules of Practice, the Patent Office states that “…providing for mandatory initial disclosures in all cases, including those where the parties do not consent to such disclosures, is not consistent with the statute, or with the legislative intent in enacting the AIA as a less expensive and more efficient alternative to infringement litigation in Federal court.” (Response to Comment 112) (emphasis added).  Thus, the parties can either agree to make initial disclosures or, in the absence of such an agreement, the onus is on the party seeking mandatory initial disclosures to make a motion requesting such disclosure.  In such an instance, the moving party must meet the “motion” standard for each proceeding – “in the interest of justice” for IPR and “for good cause” for PGR.

When are Mandatory Initial Disclosures served?  If the parties agree to submit initial disclosures, such agreement must be filed with the Patent Trial and Appeal Board (PTAB) no later than the filing of the patent owner’s preliminary response, or the expiration of the time period for filing such a response.  The initial disclosures should be filed as exhibits to that agreement.  That sets up an interesting dynamic in that the parties are exchanging information (at least witness names and contact information and categories of relevant documents, if not the documents themselves) before the PTAB even decides whether to institute an IPR/PGR.  Upon institution of a trial, “parties may automatically take discovery of the information identified in the initial disclosures.”  This would include taking the deposition(s) of the listed witnesses and marking as exhibits and producing any documents identified.  One issue that is somewhat vague is whether the patent challenger can begin depositions immediately, as the plain language of this rule seems to indicate, or whether the patent challenger must wait until after the patent owner response is filed and the 3-month patent challenger discovery period begins.  Efficiency seems to dictate that the patent challenger must wait, or else multiple depositions of the same witness may be required.  Further, other commentary from the Patent Office suggests that discovery has been intentionally sequenced to render a more efficient proceeding.

What is the most efficient way to make a motion to the PTAB to require a party to provide Initial Disclosures?  Consistent with the Patent Office’s stated desire to make the discovery process flexible, efficient, and cost-effective, the best way to have this issue brought before the PTAB is to arrange for a conference call with the PTAB.  On such a call, the moving party should be prepared to identify the sought-after discovery and explain the need for the disclosures.  In a PGR, the party will be required to meet a “good cause” standard.  In an IPR, the party will be required to meet the slightly higher “in the interests of justice” standard.  In making its decision, the PTAB will take into account the nature of the information requested, the moving party’s access to that information, and the burden on the disclosing party.

So there you have (somewhat) Mandatory Initial Disclosures…the first “litigation” step of our new IPR and PGR proceedings.

Week 2 of Inter Partes Review Status Update

As the second week in the life of Inter Partes Review draws to a close, it’s interesting to consider the entities that have initially made use of the new Patent Office trial and the subject matter of the patents that are being challenged.

The technology centers with the most activity are 2800 (Semiconductors, Electrical and Optical Systems, and Components) – 6 filings; 2100 (Computer Architecture, Software, and Information Security) – 3 filings; and 1600 (Biotechnology and Organic Chemistry) – 3 filings.  So, semiconductors and computer/software are an early focus – not surprising given these are popular spaces for non-practicing entities (NPEs).

The leading IPR petition filers to date are Intellectual Ventures Management, LLC (4 filings all against patents owned by Xilinx), Nissan North America, Inc. (2 filings), Synopsys, Inc. (2 filings), and Illumina, Inc. (2 filings).  As one would expect, the filings made by all petitioners are comprehensive and detailed.  Thus, it is fair to conclude that these early IPR filers all targeted the new IPR proceeding for one reason or another.  This is in stark contrast to the days leading up to the changeover from Inter Partes Reexamination to Inter Partes Review, when hundreds of reexaminations were filed; presumably those entities saw value in the older system.

It is interesting that the entity that filed the most IPR petitions is Intellectual Ventures Management, LLC, a company known for buying patents to seek licensing revenue and, on occasion, brings lawsuits for patent infringement.  IV typically finds itself on the plaintiff side of patent litigation, so it may seem odd  that IV is the leading IPR filer out of the gates.  Digging deeper into the four IPR petitions IV filed, however, tells a more interesting tale.

Part of IV’s business model is to create funds that purchase patent assets and then IV seeks investors for that fund.  Many technology giants are counted as investors in IV, including Apple, Cisco, Google, and many others.  Among the other investors is Xilinx, a manufacturer of programmable memory chips.  According to allegations made by Xilinx in a complaint filed against IV in 2011, Xilinx became an investor in two or more of IV’s funds and then, after IV acquired additional patents in those funds, IV asked Xilinx to increase its investment to cover licenses to those new patents.  In essence, IV used Xilinx’s (and other investors’) money to purchase more patents and then sought to leverage additional money from Xilinx for those patents.

So, as that battle rages on in the Northern District of California, IV has seemingly opened a new front in the larger war – seeking to take down four of Xilinx’s patents.  While it is difficult to gauge IV’s intent from afar, it is interesting to remember that if parties to an IPR achieve a settlement before the Patent Trial and Appeal Board (PTAB) reaches a final written decision, the IPR is ceased.  If these patents are important to Xilinx, it may increase the pressure on Xilinx to settle its war with IV.  We will keep a watch on further developments.

What is Harness Dickey?

Just about 90 years ago, our founder, J. King Harness, set forth a simple but powerful philosophy: Our client is our trusted business partner. This philosophy has been passed down through generations of Harness Dickey attorneys. We never compromise on thoroughness or responsiveness to client needs.  That philosophy is invaluable in times such as this, with the implementation of the most sweeping overhaul of the Patent Act in over 60 years – the America Invents Act.  Harness, Dickey is particularly well-suited to assist with the AIA’s implementation of new “trials” before the Patent Trial and Appeal Board (PTAB) – Inter Partes Review and Post Grant Review.  Harness Dickey’s lawyers, who have made us a world leader in patent prosecution and world beaters in patent litigation, sit right at the appropriate intersection of litigation and patent office practice that is the cornerstone of the new Patent Office trials.

We look forward to you joining the thousands of clients we have guided in all sectors of business and technology, and of all sizes, in advancing your intellectual property interests in Inter Partes Reviews and/or Post Grant Reviews.

Welcome to Litigation Practice at the USPTO

We welcome the arrival of Inter Partes Review (IPR), as of September 16, 2012, and Post Grant Review (PGR) as of March 16, 2012.  It is open for debate as to whether the America Invents Act (AIA) is true patent reform, but what is absolutely clear is that the AIA has changed patent practice forever.  Check back often for updates and blog entries, including a close watch on IPR filings and orders.  In the meantime, enjoy the presentation found HERE of a timeline of events to occur in an inter partes review and post grant review.  There are many, many details that simply cannot be displayed in such a format, as well as precedent to be watched at the Patent Office as the Patent Trial and Appeals Board (PTAB) begins to handle its first cases.  But, this overview provides a fairly in-depth perspective on what patent owners and patent challengers can expect with these new proceedings.  Happy Litigating at the Patent Office!