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A Sea Change for Trade Secret Protection? The Potential Noncompete Ban, Employee Departures, and Digital Forensics

Performing effective prior-art searches to avoid multimillion dollar patent litigations

By Biva Kumari, Sr. Associate, Patent Search & Analytics

Not even Covid-19 could stop the swelling numbers of patent litigation. In the year 2020, there were approximately 400 more new patent litigation proceedings in district courts than 2019. The spike was driven in part by an 10% uptick in litigation intitiated by non-praticing entities. Based on past statistics, it is anticipated that the trend of filing litigation lawsuits will continue in 2022.

Patent litigation is lengthy and costly. Lawsuits can last for years and cost millions of dollars. And, the damages awarded in patent litigation are generous. In 2020, $4.67 billion in patent damages was awarded by the U.S. courts. The median damages awarded during patent litigation cases in 2017 alone were $10.2 million. In fact, in 2021, Intel vs. VLSI Technology US Patent Infringement Case had the largest settlement with USD 2.18 billion worth of patent damages.

So, what steps should be taken to defend or avoid a patent litigation lawsuit? Some of the patent litigation defences include:

  • challenging the validity of the asserted patent(s) through invalidity searches
  • prohibiting the manufacture and sale of the disputed/infringed product
  • using the non-infringement defence to avoid the infringement claim
  • proving compliance by data that shows you are not infringing
  • negotiating licensing

Most of these practices require time, money, and significant resources. However, among these practices, challenging the validity through an invalidity search requires relatively less money, time, and resources. Therefore, to expedite patent litigation lawsuits, performing an invalidity search on the opponent’s patent is a worthy practice.

An accused party can challenge the claim and make an argument that the original patent is invalid. Infringement and nullity shall be handled in the same proceeding. A defendant in a patent dispute should decide expeditiously to challenge the validity of the patent in the district court or in the United States Patent and Trademark Office (USPTO).

The USPTO offers a host of administrative proceedings by which validity of a patent can be challenged. These procedures include Inter Partes Review (IPR), Post-Grant Review (PGR), and Ex Parte Re-examination.

In IPR and PGR, the challenger, and the patent holder both participate, and the proceedings are handled by the Patent Trial and Appeal Board (PTAB). In an Ex Parte Re-examination, the complainant is not involved after the request for reconsideration has been filed, and the matter is dealt with by the PTO examiners. In IPRs and PGRs, anyone except the patent owner can file a petition to challenge the patent. IPR offers a limited procedure for patent invalidation. The USPTO filing fees for IPR, and PGR are high – $41,500 for an IPR and $47,500 for a PGR.

Although an IPR is the most common method of challenging a patent at the PTO, it does have some disadvantages. An estoppel effect is one of the major problems with the IPR. Another problem is that a petition for the IPR cannot be filed until nine months after the patent is issued. The only reasons that can be invoked within the framework of an IPR are anticipation (35 USC §102) and obviousness (35 U.S.C. §103). For IPR, only patents and printed materials can be cited as prior art. Therefore, an IPR cannot be used to invalidate a patent based on the written description, patentable subject matter, best mode, enablement, indefiniteness, or ownership.

Unlike in IPR, the challenger can assert more grounds of invalidity in PGR. A patent can be challenged in the PGR based on patentable subject matter (101), as well as a written description, enablement, and definiteness (112). Another advantage of the PGR is that the prior art is not limited to patents and printed materials. Only patents filed after March 16, 2013 can be the subject of a PGR. The PGR must be filed within nine months of the date on that the patent was granted. PGR proceedings are at the same disadvantage as IPR in terms of estoppel.

An Ex Parte re-examination proceeding is different from the IPR and the PGR. For PGR, any person can challenge an issued patent, including the patent owner. An Ex Parte re-examination must be based on patents and printed publications. A disadvantage of Ex Parte re-examinations is that, compared to IPRs, they are much less likely to be successful. An advantage of an Ex Parte re-examination, however, is that there is no estoppel effect. Another advantage is that an Ex Parte re-examination is less costly than IPRs and PGRs.

At the opposite extremity of the spectrum, when a case is brought before the district court, many challenges can be made against a patent, ranging from invalidity on the grounds of any number of other Section 102 statutory bars to Patentability or Section 112 failings, to unenforceability due to something like inequitable conduct. Apart from that, chances of finding a prior art are high, as General Counsels also believe that only 5% of their portfolio is valuable and the rest covers incremental technology where the likelihood of prior art is quite high.

If a patent is invalidated, any pending infringement proceedings based on that patent will be dismissed. The results of an invalidity search are extremely important in patent infringement suits to avoid being accused of infringement. Patent litigation is usually expensive. Patent litigation proceedings cost millions of dollars. In many countries, attorney fees make up most of the patent litigation costs and include expert witness fees, travel expenses, and document management and production costs.

Success Story: Millions in savings for U.S. technology leader

An American computer & technology solutions company was facing multiple litigation conflicts from several third-parties in diverse technology areas, such as: Consumer Electronics (i.e., power converters, batteries etc.), Computer Graphics, Wireless Communication (i.e., multi-carrier communication, orthogonal frequency division multiple access (OFDMA), Wideband CDMA etc.), Image Sensor and Image Processing. The client engaged UnitedLex to perform invalidity searches.

UnitedLex created a dedicated team to cater to incoming conflicts or patent lawsuits, conducting 200+ invalidity searches every year with a hit rate of 80% (50% – anticipatory art and 30% – obviousness art). As a result, the customer eliminated the lawsuits and saved millions of dollars.

UnitedLex specializes in all aspects related to patent litigation all over the world

UnitedLex’s expertise in prior art searches (or invalidity searches) can save millions in damages caused by litigation lawsuits, lawsuit proceedings, attorney fees and more. Through detailed reports with File Wrapper Analysis, our clients can invalidate the patents for which they are sued, staving off ongoing litigation in many cases. These expert analyses enable customers to reverse allegations of patent infringement and take a stronger, better-informed stance in patent litigations or negotiations. In some cases, they even help clients file IPRs, while others get negotiated based on strong prior art without any need of IPR or litigation.

Tags: Invalidity, Prior art search, Patent Litigation, Non-practicing entity (NPE), Inter partes review (IPR), Post-grant review (PGR), and ex parte re-examination

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