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Breakout Session No. 2a: Litigation – Uncertain Future: Implications of Supreme Court Jurisprudence on Inter Partes Review


SPEAKER 1: All right, we'll go into the next session. And there's Brent. Brent's partner at the DLA Piper in Silicon Valley office. Brent is both a litigator and a prosecutor, so kind of a [? ringer ?] when it comes to PTAB litigation issues. He was handed a thankless task this week by the Supreme Court.

We had asked that they time their decisions a little bit better for our programs so that are speakers might have time to prepare. But they didn't pay attention to our request. So, Brent, I appreciate your efforts to recalibrate the slides and the presentation to address the new decisions. We look forward to hearing what you have to tell us because you're one of the first we're going to hear from in terms of our lives are changing.

BRENT YAMASHITA: Yeah, my pleasure. And, yeah, that was very inconsiderate of the Supreme Court to not take our wishes into account. Good afternoon, everyone. As Doug mentioned, there were a couple of Supreme Court Decision Cases that came out two days ago.

Professor Ernst talked about them this morning. And so I don't want to repeat a lot of what he said. But I'll try to get at it from more of a guy-in-the-trenches point of view and hopefully not cover the same ground that he did exactly.

So let's see, before I get to sort of the substance, I thought it would be useful to just kind of get our bearings, because I know the experience level of folks in this room and who are watching the webinar may differ in terms of IPR experience. So let me just start the basic framework of what an IPR looks like and what happens during an IPR. And then when we get to the case law, some of this will fit into place, and you'll see where the relevance is of some of these decisions.

So I put up here a timeline that kind of describes the main events in an IPR proceeding. It starts with a petition being filed. It usually is filed by someone who has just been sued for patent infringement in the district courts or sometimes in the ITC. But it doesn't have to be. Anyone can file an IPR on any patent that you want.

The petition-- this is kind of interesting. But when the rules were first promulgated, the petitions had a page limit of 60 pages. Today, instead of page limits, they've transferred to words. So you have 14,000 words, which works out to about 60 pages.

But I think what they had found is clever attorneys were instead of submitting a 60-page brief, that you would expect to receive, were submitting dense claim charts, cramming a lot of information into these charts. And the charts were very dense and hard to read. So in a later revision, they changed it to words to kind of get around that so that people weren't just trying to cram a lot more into each page.

So you file your petition. Typically you challenge certain claims in the patent. It can be all of them, or it could just be one or anything in between. Usually you present arguments-- well, you always present arguments based on prior art, saying, here's the prior art that I think invalidates these claims.

Then three months later, the patent owner can file a preliminary response if they want to. They don't have to, but they can. And with both of these petitions, you can submit expert declarations. And the petitioner always does. The patent owner sometimes does and sometimes does not.

About three months later, so that's six months after the petition was filed, you get your institution decision. And this will have particular significance in just a few minutes, you'll see, when we talk about the SAS case. This point of the IPR is directly affected by the SAS case, as we'll see.

So that petition, it could deny institution altogether, in which case the IPR's done and there will be no further IPR. Or prior to SAS, the PTAB could grant institution as to all challenged claims or just some of them and would give reasons as to why. Assuming that they institute on something, you then go into the discovery period, where first the patent owner can take a deposition of the petitioner's expert. That's usually all the scurvy that occurs.

Then the patent owner can file a response, a substantive response, to the petitioner's grounds. And if it wants to, it can file a motion to amend the claims. And we'll be talking about that a little later as well in regards to the Aqua Products case. You don't need to amend your claims, but you can.

Then [INAUDIBLE] at that point, they've submitted their expert declaration disagreeing with the petitioner's expert. And the petitioner can then depose that expert and then file a reply. If there's a motion to amend, there's a reply filed to that. And then about a year after the petition was filed, you have your hearing. And the hearing is live. It's before a panel of three PTAB judges.

The ones I've done have all been in Alexandria, Virginia at the patent office, the main patent office there. Although, you can technically have them in San Jose or Denver or Detroit where they have satellite patent offices. But I haven't had personal chance to have a PTAB hearing in those places.

You can also have some of the judges participating by video from one of those offices to your panel. So one of the ones I did, it was a little weird. I had two live judges, and a third one was just a camera and a TV, where I supposed to be able to see the judge. But I actually couldn't.

There was nothing there. So the judge could see me, but I couldn't see the judge. And so it was a little weird. And so this is your hearing setting. And then a few months after that hearing, you get your final written decision. And that typically is a pretty lengthy document that looks like a mega office action that kind of goes through all the claims, the arguments that are presented, and talks about, OK, what's valid and what's not valid.

So that's kind of the framework of an IPR. When it was introduced as a structure as part of that [? EIA ?] during the Obama administration, the idea was that it would streamline litigation. It would make things faster and cheaper for clients. I think they were partly inspired by other court systems, such as in Europe, where you often will have infringement decided by a court but invalidity by the patent office. And you could have two separate concurrent streams going on. I think that was part of the inspiration.

Query-- and I think everyone would have their own experience whether it actually has saved money, I think. I was part of a panel discussion yesterday at a different conference, and Judge Rader, former Judge Rader, who used to be the Chief Judge of the Federal Circuit, his view was that IPRs were intended to save money but that he doesn't think they have because people, the defendant typically files a lot of them. And IPRs are not cheap. And so as a result, you have a lot of IPRs.

The litigation's stayed. You often end up litigating later anyway. And so his view, maybe a little cynical, is that it hasn't really saved money. But I think it remains to be seen. I think-- my personal view is that overall it has been a good thing. It's been a good thing for clients. People do save money in my view.

OK, so that's the basic framework of IPRs. And so here are the other things that I'll cover today. This first point was going to be more interesting. I was going to talk about the Oil States case had it not been issued. I was going to have a lot of fun talking with you about, OK, what's going to happen, what are the possibilities.

I was going to read the tea leaves based on the oral argument as to which way each justice was going to go. But then two days ago, they came out with a decision. And the decision actually keeps the status quo. So it's not that interesting, in a way. But there are some nuggets in there that we'll get to, that I want to just flag for you because it might be an omen for things the court will get to later.

I think we'll see that Justice Thomas was kind of giving a wink to litigants as to future arguments they could make if they want to. And we'll get to those in just a minute. And then we'll talk about the SAS case. And this regards does the PTAB have to decide, issue a written final decision on every claim that the petitioner challenged, or can they pick and choose?

Can they say, here are the claims we're going to look at. These are the ones of interest to me. Petitioner hasn't met their preliminary burden [INAUDIBLE] [? others. ?] And that's all I'm going to do. That's what they had been doing. And SAS has shut that down. And so we'll talk about how that's changed things and how that's likely to affect the behavior of the litigants and the PTAB.

Then we'll talk about amending patent claims. And this goes a little bit beyond the domain of my stated topic, because this will involve an en banc Federal Circuit case called Aqua Products, as opposed to a Supreme Court case. But I want to talk about that and how claims are being amended today and whether the PTAB is being more favorable to claim amendments than before. And then finally, we'll just end with essentially some best practices, some observations I've had on IPRs, and also just some rhetorical musings on its role and what service it provides to us.

So as Professor Ernst discussed this morning, there were constitutional issues involved with Oil States. And it's nice when the Constitution becomes relevant to patent practice. In law school, I loved constitutional law. But unfortunately, we don't get to think about it too often.

But here is one instance where we could as a patent lawyer. And the issue was by moving these validity decisions from the Article III courts, the district courts, and juries and pushing that over to the executive branch, are you violating the Constitution? Because you do have Article III judges who are supposed to resolve civil disputes. And so are we violating Article III by having this forum?

In addition, you have a constitutional right to a jury trial in civil cases. So what if you want your invalidity case heard by a jury? You can't get that in an IPR proceeding at the patent office. So you violating that part of the Constitution?

So the answer is it is constitutional. So in a sense, not too interesting. Let me get a little bit into the reasoning just so you can see what the key points were.

So the crux of the issue was you have this patent. Is it a private right, or is it a public right? Private rights usually are litigated in court. Public rights have been treated differently. Like for instance, a government contract is different than just the contract between two citizens. And so those have certain-- the government has certain rights in that because it's a public right granted by the government to this party, and so it's a different kind of animal. And so the key issue was is a patent a private right or a public right? And the court, without much fanfare, concluded that it is a public right.

That before the patent was granted, there was nothing. Like, there was no thing to point to. And so the panel only exists because the government gave it to the inventors. And so that's kind of the starting point, and that was actually not contested. And so the issue is well, OK, once it's issued, does it cease being a public right? Because, as we know, patents are like any other property. You can sell it to people. You can license it to people. You can sign it from one person to another.

We like to think of it as real estate or any other asset. So once it's issued, does it suddenly become a private right? And if so, do you need to litigate its validity in court? And the court said, no, it's a public right. So accordingly, because public rights are treated differently, you're not guaranteed to have an Article III judge resolve your case. You're not guaranteed to have a jury decide the invalidity issue. And so the government has the right to basically take a second look at the patent that it gave you and decide did we make a mistake? Should we take it back.

So there's a couple of interesting things to point out for the future from Oil States. But first of all, I mentioned that my original plan was to kind of read the tea leaves as to which way each judge was going to lean. And I think I was going to correctly decide or guess that Justice Gorsuch and the Chief Justice were going to find that the process is not constitutional, which is what they did in the dissent.

As is often the case or usually the case, Justice Thomas didn't ask any questions during the oral argument. So who knows which way he was going to go? I had assumed he would go with his conservative brethren and find that it was not constitutional. But he surprised me anyway and went with the majority and found that it was constitutional.

So it kind of made me wonder if Justice Scalia was still here, the two of them often voted together in many decisions, and I've often wondered was it Scalia convincing Thomas or was it just happenstance? I kind of think Scalia would have been with the dissent in this situation. And I wonder if Thomas would have gone with him and if we'll see Justice Thomas kind of veering more towards the center in cases.

But anyway, so a couple of things from the majority opinion from Justice Thomas that are worth mentioning. For no apparent reason, the opinion ends with Justice Thomas pointing out things that they're not addressing. He wanted to emphasize the narrowness of our holding. And he lists a couple of things that he wanted to make sure the public understood was not being addressed by this decision.

So the first thing is he said we do not address whether other patent matters, such as infringement actions, can be heard in a non-Article III forum. So this, to me, stands out like a sore thumb because the IPRs clearly don't involve infringement actions. And no one had tried to analogize these proceedings to infringement actions.

So it is kind of interesting that he even brought it up. It's kind of like far [? out dicta, ?] in my mind. But it immediately made me think of the ITC, the International Trade Commission, which is an administrative agency, part of the Department of Commerce, which has the ability to issue an injunction to stop the importation into the United States of infringing goods. And these ALJs make infringement findings, as well as invalidity findings. So it, kind of, raises in my mind whether-- I don't know if Justice Thomas is inviting a challenge or just kind of inadvertently making this happen. But it seems to me that someone may choose to challenge the ITC's jurisdiction after following maybe this guidance from Justice Thomas.

Another thing he said was Oil States does not challenge the retroactive applications of IPR review, even though that procedure was not in place when its patent issued. So as we said, IPRs came about in the AIA under the Obama administration. They're only 6 years old.

I remember that because last year Doug and I did a panel on the five-year birthday of IPRs. So this is year six. So it's six years old. And so most of the patents that have been resolved through IPR were filed at a time when there was no IPR. And so Justice Thomas is kind of [INAUDIBLE] raising this issue of is there a separate constitutional challenge to be made? Because at the time you got your patent and filed for your patent, this rule and this ability for the government to take it from you didn't even exist. So does that raise a separate challenge? And it seems to me that maybe we'll see that resolved in a future case.

He also notes nor has Oil States raised a due process challenge. So again, kind of teeing up the issue perhaps for people to take that flag and run with it. And we'll see what happens. But he's kind of nicely laid out a path for people to present other challenges to IPR proceedings.

So I mentioned I was at a different conference yesterday. And I heard Judge Robart speak. He's the district court judge in Washington who presided over one of the FRAND decisions that the prior panel before me discussed. It was the Microsoft versus Motorola FRAND decision, where he was looking at the intersection of FRAND obligations from the standards process and how does that affect damages.

He also happens to be one of the judges who ruled upon the Trump travel ban, or one of the versions of the Trump travel ban. So interestingly, he spoke about both topics and, at the end, tied them together. And the way he tied them together is in the patent context, he talked about this Oil States case. And he talked about the dissenting opinion, which I mentioned, by Justice Gorsuch and Chief Justice Roberts, where they expressed alarm that the executive branch was encroaching onto the judicial branch's territory and that the director of the PTO could pick these PTAB judges.

The PTAB judges were now making resolutions that previously were being made by Article III judges and the jury. And so they said it's an unconstitutional device. And so interestingly, yesterday they heard oral argument on the travel ban cases. And one of the arguments the government is making there is that when the Trump administration issued the executive order, that was an unreviewable decision. That it's not even proper for it to be attacked in court. And so it'll be interesting to see if Justice Gorsuch and Roberts are consistent in the travel ban case as they were with the Oil States dissenting opinion and whether they protect Article III the way they were here, because it may turn out that President Trump regrets appointing Justice Gorsuch, but we'll see. We'll see.

So that was an interesting note from Justice Robart. And I wanted to raise that for you. So we have this polling software that PLI has provided with your iPads. And so if you're logged in, we have the ability to just, kind of, for fun and just out of interest to take poles of the audience.

So if you're logged in, originally it was going to be a more interesting question. It was going to be, is Oil States going to find that IPRs are constitutional, yes or no? Here, it's already decided. So I very quickly modified the question to instead say, was Oil States correctly decided, yes or no?

I'd be curious to see how people feel about this. So let's see. I think your iPad should-- oh, there we go. OK. So 3/4 say yes. 25% say no. Thank you. That's interesting.

My personal view is that I believe it was correctly decided. But I thought it was going to be a lot closer. I thought it was going to be five to four. And I thought Justice Kennedy was going to be the swing vote. And so it ended up being not as close as I had thought it would be.

So that's Oil States. Now we're on to SAS. Before these cases were decided, Oil States seemed like it was going to be the much more important case, because it could have knocked out IPRs altogether. But since it's kind of keeping the status quo, SAS ends up being the more influential of the two.

So this was issued on the same day. Justice Gorsuch authored the opinion. As you'll recall, he did the dissent in Oil States. So it's kind of weird to me. Because here he thinks the thing should be abolished altogether, yet he has to write the opinion about how PTAB proceedings are going to be from now on.

But in any event, here's the issue. So I mentioned at the beginning that when IPRs are instituted, before SAS, the PTAB had taken the view that the petitioner could challenge whatever claims he or she wanted to challenge. And the PTAB had taken the view that you could institute on all of the challenged claims or you could institute on none of them or you could institute only on some of them. So it was fairly common, like, if you imagine-- suppose a petitioner challenged claims 1 through 20.

It was fairly common for the PTAB in an institution decision to say, you've convinced us as to claims 1 through 10 that there's a reasonable likelihood that you're going to prevail. So we institute as to those claims. But we're not convinced as to claims 11 through 20. So we're not instituting as to those. And what would happen then is the IPR would proceed as to claims 1 through 10. And 11 through 20 would just not be part of the proceeding going forward.

So here the Supreme Court considered is that proper, or is the PTAB required to resolve, in its final decision, every claim that is challenged? And the court ruled that yes, it is required to do so. And it made that finding on the basis of statutory construction.

So the America Invents Act, the relevant portions says, the PTAB shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner. So on its face, and I think this is the reason you have the majority, on its face, it does seem to say clearly that the PTAB shall-- it's mandatory-- issue a final written decision and that's contrasted with just the institution decision. It's the final decision that comes at the end with respect to any claim challenged by the petitioner.

The dissent, as well as the Federal Circuit below the Supreme Court, had found that implied in this is that it's claims challenged by the petitioner upon which the PTAB decides to institute. So in other words, it's implied that if the PTAB thinks it should institute on claims 1 through 10, that it only must issue a written decision as to claims 1 through 10, the claims challenged by the petitioner upon which institution was granted. So it occurred to me that if Congress doesn't like this decision, it could easily remedy it by simply amending this section to add in any claim challenged by the petitioner upon which the PTAB believes it should institute or something like that.

The PTO [? complements ?] off one of the parties and the reasoning of the Federal Circuit below the Supreme Court. The arguments that were convincing to them was that number one that the statute, if you read it as a whole, contemplates that you're not going to need to review everything. And that at best, it was ambiguous. And that under the Chevron line of cases, when a statute's ambiguous, the courts should allow the executive branch to interpret the statute based on its rule-making capability and expertise in the area.

So as I said before, five-to-four decision. The four dissenters were sort of the liberal wing of the Supreme Court. And we'll get to one of those dissenting opinions in a moment. But they decided that you need to institute an issue, a final written decision, as to all challenged claims. So every claim that is challenged in that petition must be considered during the IPR and must make its way into the written decision at the end.

So what does this mean? So it's kind of interesting to think about how this decision will impact the behavior of the parties, as well as the behavior of the PTAB. So let's start with the PTAB.

So before SAS, the PTAB would read the petition. It would read the preliminary response, if there is one-- was one. And it would decide whether to institute. And it had the ability and followed the practice of instituting only on the claims that it thought were reasonable, like likely to be found invalid, and would not institute as to the others. And so as a result, these institution decisions were actually kind of lengthy. And the PTAB actually went through quite a bit of work because they would parse through all the claims. And sometimes there's like 70 claims. And they would go through each one and talk about the art and the arguments that have been presented, and it would give a pretty good reasoned responses as to, OK, here's why we're instituting these claims and here's why we're not as to these other ones. And so I can tell that the PTAB puts in quite a bit of work for this.

So now it knows if the petitioner's challenged all 20 claims, either we're going to not institute on the whole thing, or we're going to institute and look at all 20. So one possibility, and I don't think we'll ever really know if this is happening, but let's think about an example where there's 20 claims total, 20 claims are challenged, and the PTAB objectively thinks there's a good case for invalidity of one claim but a really bad case for 19. So in other words, the petition's very convincing for one claim and not 19 of them.

So the PTAB knows now if it institutes, it has to rule on all 20 in the final decision. And it's going to have to hear arguments as to all 20. And you have to wonder, as human beings, are they going to be more inclined to now just say, nah, let's forget about that one. If you consider the whole thing, I think all 20 or not, the petition's not very strong, so we're just not going to institute at all on anything.

It seems to me that that's a possibility. That just as human beings-- and it's kind of, I think, the process that judges go through. Like, if you're a judge and you get one good argument and five bad ones, I think you're likely to forget about that one argument and just think, huh, this litigant's not so good, because look at all this s bogus stuff they gave me. A question?

AUDIENCE: Yes. On the point you just made, I'm wondering if that they say that the 19 there's not likely to be a successful [INAUDIBLE]. Since there's nothing that the petitioner can provide [INAUDIBLE], is there really that much work for the PTAB to do? Do they institute on one and they figure that the other 19 they're going to write their opinion. It's going to be very similar to what they did in the decision institute.

SPEAKER 1: [? So repeat ?] the question before you answer it.

BRENT YAMASHITA: Oh, sure. Yeah, so the question is, will this necessarily be the case? Couldn't they just look at the 20 claims, understand, OK, yeah, the case is good for one of them and not for 19. And couldn't they just institute on the whole thing, knowing all along that, oh, we're probably going to deny or find 19 claims to be valid and only the one claim to be invalid, and just, kind of, does it really create more work? And I think that's certainly a possibility, that they could just kind of let it ride. And that they could even make a note of it in the institution decision, that we're instituting.

We're convinced has to one. But please be aware that we did not find that 19 of them by themselves would have-- you would have met the burden as to those 19. And we're going to take the Supreme Court's guidance to heart. We're going to give you your day before the PTAB. And we're going to address this again in a final written decision, but here's where we stand. And, yeah, they could very well just keep that view throughout and just put that into their final written decision.

It seems to be another possibility. And I think my view is this is probably the most likely as to what will happen is that they'll still consider each claim individually. But as soon as they find one claim that they think is likely invalid, they'll just stop their analysis. And so usually we claim one as the broadest claim.

So for instance, if they go through claim one, look at the arguments, and say, yeah, there's a reasonable likelihood the petitioner will prove this claim to be invalid, they'll just stop. And they'll issue a much shorter decision than they used to and just say, we're instituting on all challenged claims, 1 through 20. And as to claim one, you showed us x, y, and z, And so we're off to the races. And so in the short term, this could be less work for them. And the majority opinion kind of hints at this.

It says-- it actually kind of spells it out that, oh, by the way, even though we're saying you have to have all 20 in the final decision, that doesn't mean you just need one in your institution decision. You just need one claim to serve as the basis for institution. So, yeah, it remains to be seen how's the PTAB going to react.

The first option I mentioned, where they end up just denying the whole thing, I think the way in which that would happen is they would just kind of summarily say, we've looked at everything. We don't find that you've met your burden as to any claim. So institution denied. And you'll never know that that one claim had a chance and that they were just persuaded by the wealth of 19 other claims that they didn't have as good a case.

So, then, now what about the petitioner? Does this affect the behavior of petitioners? So one important consequence of this decision is estoppel. Because if you get a final written decision, and as the petitioner, if you lose, then there's an estoppel effect. And you can't present the arguments you made or could have made in the district court proceeding. And it had been clear, or it is clear that if the PTAB does not institute on something, then you're not estopped from raising that argument or that claim in district court.

So for instance, if they did an institute on claims 11 through 20, then you could go to district court or you could do another IPR proceeding and challenge those claims based on the same [? art ?] that you had put into your petition, because it's not something you could have raised. Because you tried to raise it, and the PTAB didn't accept it. So the blessing in disguise for petitioners who didn't get every claim instituted was that, at least for the claims that were instituted, you weren't happy about it not being instituted, but at least you knew, well, I can fight this in district court, the way I would have without this IPR. So in a way, I'm no worse off.

Well, now everything's going to be part of the institution. And so if you think about that instance where there's one, you have a strong [? invalidity ?] case for one and not so strong for 19. It'd be much better if under the old approach, to get the institution as just to the one and not on to the 19, because then you could fight those 19 with no estoppel effect in district court. Now all of them will be instituted.

If the PTAB kind of stays consistent to the analysis, they will issue a final written determination, finding that one claim to be invalid and finding 19 other claims to be valid. And then suddenly, the petitioner's estopped. So perhaps that'll-- I think there's two possible incentives this creates for the petitioner is one, it might force petitioners to be more discerning in what it puts into a petition.

So I think the typical response is to file on every claim because you want to validate the whole thing. Typically, a district court complaint will identify certain claims, but they can add to it. They can add to it in their infringement contentions later in the case. So to be safe, the defendant usually wants to challenge every claim in an IPR.

Well, maybe we won't do that anymore because we need to be mindful of this, of, well, do we really want to be estopped as to everything? Because I think like with anything, when you're preparing these petitions, I think the team knows which ones are good arguments and which ones are not as great. You can tell just through an objective assessment.

I think another possibility is you could file separate petitions. So you could attack the broadest claims in one petition and the narrower claims, which would be the harder ones to invalidate, in second petition, knowing that, well, maybe that second petition will just be denied it in its entirety, and that might be OK. That might be better than having all of them instituted and then getting that final written decision that you don't like and being estopped.

So it'll be interesting to see how that plays out. I think as a whole, it does, I think, make stays more likely. Because typically what happens is you get sued in the district court. You file your IPR petition. And I think it's clear that most courts will stay the district court litigation once the IPR institutes.

But there's always some ambiguity about, well, what if some of the claims-- and some of the asserted claims in the district court are not instituted upon. Does the plaintiff have a good argument that, your honor, yes, they're challenging me in this IPR proceeding, but not every claim was instituted upon, only some of them. So I should have my day in court, and let's proceed. And let's at least proceed on the claims that weren't instituted and on. And I know some claims [? will ?] actually dismiss the claims that were instituted on so that the case won't be stayed.

So in other words, if claims 1 through 10 are instituted and 11 through 20 are not, in the past, people had the option of just dismissing claims 1 through 10 from the litigation and saying, well, 11 through 20 are not part of that IPR, your honor, so we shouldn't be stayed at all. And I think the argument had a lot of merit. But now everything will be instituted.

So I think that wiggle room that plaintiff's previously had in these [? corner ?] cases, where you could argue that there shouldn't be a stay, that disappears. So I think we'll see more stays. Oh, I forgot one other possibility which Justice Ginsburg points out in her dissent.

She said that one way the PTAB could react to this-- and I think the dissenters really didn't like the inefficiency of this all. They don't like the idea of forcing the PTAB to conduct the entire proceeding on all of the claims, even the ones it knows from the outset has no chance of being invalid. And so I think Justice Ginsburg was trying to give some practical advice to the PTAB. And what she said was, perhaps the PTAB, in the future, could simply, if you have 20 claims challenged and the threshold hasn't been met for all of them, the PTAB could simply deny institution but explain why and say, we're denying institution. You didn't convince us as to claims declaims 11 through 20. Although you did for claims 1 through 10 and just leave it at that, giving the clear signal to the petitioner to come back the next day and file only as to 1 through 10.

So that was her way, I think, of giving a practical solution to the tabs. PTAB. And I suppose they could just take her up on it, and they could just do that. In other words, if you can't convince me on every claim, we're going to deny institution but give you a signal as to how you could fix it. This might be a very practical work around that ends up being very efficient for all involved.

The one thing that would throw a monkey wrench into that is the one-year bar. So the statute requires that you file an IPR proceeding within one year after being sued on that patent. And for whatever reason, people often wait till the end of that one-year period, whether it's to do a completely good diligent search for art or it takes time. You want to present the best product possible.

If the PTAB starts doing this, then you can't wait till the very end. Because then, if you get that decision and you extend it past that one year, then suddenly you may not have time. You may not have that one day to come back and file a petition. So until we know exactly how the PTAB's going to play out and how they're going to react to this, I think it is prudent to not wait until the end of that one-year period to file the IPR petition. There's a question in the back.

AUDIENCE: [INAUDIBLE] dissent was bringing this as a criticism of the majority holding, saying, wouldn't this be a bad result? And I'd be curious to hear your thoughts. Isn't the PTAB already tried to stamp out these serial filings, where a petitioner will file once, see where they fell short, and then file a second one? Seems to me that's where the PTAB's currently using their discretion to deny serial filings. Wouldn't this be another case of the same thing?

BRENT YAMASHITA: Yeah, that would be-- it would be in this case literally inviting a serial filing. So true, yes, I think they probably-- in that line of thought, they wouldn't want to take her up on it. They would just want to not give that signal. And so I suppose what you could do is, and I'm not sure the majority intended for this consequence, but the PTAB could just do an all-or-nothing approach and decide, OK, if there's one claim that you haven't convinced us on, we're just going to deny institution for all of it. And maybe they don't give their reasons. And then suddenly, yeah, then it doesn't invite the serial filing. And yeah, then it leaves the petitioners sort of up the creek a bit.

But then again, if that's the way it goes, then maybe it, again, [? incents ?] the petitioners to be more discerning in what they challenge and what they don't challenge. Another question?

AUDIENCE: [INAUDIBLE] but does the PTAB have the discretion to deny institution when they find at least one claim reasonably likely to be invalid?

BRENT YAMASHITA: No. They they're supposed to institute. But I should double check.

SPEAKER 1: [INAUDIBLE] could you repeat what that question was?

BRENT YAMASHITA: Oh, yeah. The question was posed whether under the statute, whether the PTAB can deny institution when it finds one claim, that the burden has been met as to one claim. And actually I should read the statute to double check. But--

AUDIENCE: [INAUDIBLE] dissent raising that point. Like, there is no obligation to institute, even if you have a reasonable basis to do so, which is part of the reason why they might just to minimize the burden on PTAB, they might just start denying these things all together and giving one line institution decisions to say, sorry, try again next time, with no guidance whatsoever, which is part of the inefficiency that they were raising.

BRENT YAMASHITA: Yeah, that's what I was thinking, too, earlier that they would just kind of summarily deny institution and not give the reasons. So, yeah, and I don't think that's the-- I think that would be an unintended consequence of the majority decision. But I think it's a possibility, which I think that would probably backfire in the PTAB as well because then, I think, people would just start filing multiple IPRs with small chunks of claims. Because then that way the ones that are strong will get through, and you're not going to get everything denied.

OK, so my second polling question, was SAS correctly decided, yes or no? So for those who want to participate, just use the iPad to input your answer. 40% yes, 60% no. And personally I am in the no camp, so I'm with that 60%.

OK, we're going to move on to our next topic. This concerns motions to amend claims. So as I mentioned at the beginning, the patent owner, after institution, has the ability to file a motion to amend claims. And initially, when IPRs were first promulgated, the PTAB interpreted-- and I think the confusion arose because you make your claim amendments through a motion. And the statute indicated that, well, of course, if you're filing a motion, you should have the burden of convincing the panel to grant you relief under that motion.

So initially the protest said, well, that means since the patent owner's filing a motion, it has the burden of convincing us that we should enter these claims. And what that means is it has the burden of convincing us that these claims are valid. And when I first read that rule, the words make sense. You can understand what they're trying to get at. And then when you try to do it, you realize this is kind of an impossible task, which is something we did try to do.

I was in a position of trying to move to amend for a patent owner. And it was hard to make a convincing argument because it's sort of an abstract one. Because you weren't required just to argue or to show that it's valid in light of the record before the PTAB, you were required to show that it was valid, period. And so people, I think, practitioners, we were really scratching our head.

We were like, well, does that mean I should do a prior art search? Should I explain the search I did? Should I explain what the best art was that I found? And should I explain why it's still valid? And do I have to search in foreign countries? Do I have to search academic journals or just patents?

I mean, as you know with any validity search, it's really kind of open-ended, and there's no real end to it. So it very difficult for the patent owner to make, and in a 25-page limit, to convince the PTAB that the claims you were proposing were valid, in light of all art, period. And so before this case, the board did a study on how many motions to amend were actually granted. And of the ones where a motion to amend was filed and actually ruled upon, before this decision, they had found the motion to amend was granted, or granted in part, only 14 times out of 170 which is 8%.

So these motions to amend were successful only 8% of the time. And that's actually higher than I had thought it would be. But it was very difficult. So then Aqua Products came out. And for those who were here this morning, Professor Ernst did talk about this case. And this case, I think, put things back where they were meant to be and should have been, which is that the ultimate burden is still on the petitioner to show that the claims are invalid.

That's true for the claims in the patent. That's also true for the amended claims the patent owner wants to add to the patent or change in the patent. And that's the more familiar ballpark that we all know. So after this case, the process is patent owner can move to amend claims. And then in the response, the petitioner has to show why those claims are invalid. And maybe you will use the art you used in your petition for the original claims, but you don't have to. You can use other art. And so that puts the burden, just like in district court, back on the petitioner, who usually is the accused infringer in district court, to show why these claims are invalid.

For those who are interested, in November of last year, the chief PTAB judge issued a memo to all PTAB judges explaining this Aqua Products case and making sure that everybody understood that the burden had now shifted from what it had been before. It remains to be seen, OK, is this going to have an impact on motions to amend? I think for the parties, at least for the patent owner, it's a little easier to present now, because now you just have to rebut the argument that it's invalid based on such and such art that the petitioner raises, as opposed to showing in the abstract that it's valid over all, known art out there.

I've only been able to-- and I haven't done a completely thorough search. But in the time I had, I've only found one decision following Aqua Products, which hasn't been out very long. Aqua Products was issued in October 2017. So we're looking at like six months.

In those six months, I have found one PTAB decision where the patent owner moved to amend and where the PTAB applied to Aqua Products framework and allowed the motion, granted the motion, and allowed the claims. And that's called Polygroup Limited versus Willis Electric case IPR 2016, batch 1613. So let's see, I have about three minutes left.

So since I wrote this, I actually disagree with that third bullet point now. The first two are still good. I think it is clear that patent litigation in America is decreasing. It's gone down. In terms of number of district court suits filed, it's gone down by 25% over the past five years. And I think most experts say this is a result of IPRs and Alice. And that both of those have been sort of weapons that accused infringers can use against NPE, Non-Practicing Entities. And that as a result, NPEs are filing fewer cases or being more discerning in what they file, resulting in less litigation. And that anecdotally, and just from my own observations, I think that's true. And I think IPRs have become a big deterrent against NPEs.

I think it affects who they sue and which patents they sue on. And I think the overall result is fewer frivolous lawsuits and, I think, even fewer defendants sued as a result of this. IPRs have been out for six years now. And I think initially it was very difficult to predict what is this going to cost for a client? I think now most firms, boutiques, as well as big firms, have been through the drill several times, many dozens of times perhaps. And so I think pricing has become a known quantity, and I think competition has been fierce. And I think that's good for clients.

I think clients are getting good value. And I think that, as a result, I think this has, in my view, helped IPRs achieve its goal of at least reducing the total litigation budget for clients who are sued of patent infringement. Regarding this last bullet point, I don't think Oil States will change things significantly. It won't change it at all, unless someone raises the arguments that Justice Thomas suggested and actually prevails on those.

I think SAS will change things. And I would even say it is significant. And I think initially we have to see, well, how does the PTAB react? And we've, kind of, today talked about possible ways they could react. But we can at least-- and we have talked about and seen there at least some scenarios that are possible that would result in a drastically different IPR world for all of us. And maybe that'll be a topic next year on if this impacted things at all. So unfortunately, I'm out of time. I'll be around if anyone wants to talk further or has questions.

SPEAKER 1: Thank you so much, Brent.


All right, back in 15 minutes for litigation ethics. Good way to finish the day


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