Voluntarily terminating a post-grant proceeding before the Patent Trial and Appeal Board (PTAB) prior to a final written decision may be appropriate in situations where the parties have agreed to settle the proceeding. Termination due to settlement is a common occurrence in post-grant proceedings. Through October 2016, approximately 17% inter partes review (IPR) proceedings were terminated through settlement before institution, and approximately 13.5% were terminated after institution. Similarly, approximately 14.5% were terminated through settlement before institution, and approximately 13% were terminated through settlement after institution. See October 2016 AIA Trial Statistics.
35 U.S.C. § 317 governs the parties’ ability to voluntarily and jointly terminate an IPR proceeding. 35 U.S.C. § 317(a) provides, in part:
An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed (with added emphasis).
35 U.S.C. § 327 contains similar provisions for post-grant review (PGR) petitions, which also applies to covered business method (CBM) petitions. Sections 317 and 327 along with 37 C.F.R. § 42.74 specify several threshold requirements for joint termination through settlement, including both parties requesting authorization to file the request, providing a true copy of the settlement agreement, and a statement regarding certification of related collateral agreements and understandings. See 35 U.S.C. § 317(b), 37 C.F.R. § 42.74(b). Adhering to these requirements, however, does not guarantee that the PTAB will grant the termination request. The PTAB has discretion to grant or dismiss the request based on whether “the Office has decided the merits of the proceeding before the request for termination is filed.” 35 U.S.C. § 317(a). When a panel issues a final written decision, the panel has “decided the merits” of the proceeding.
In reviewing the legislative history of the statute, the language of Sections 317 and 327 can be contrasted with the settlement provision of the Patent Reform Act of 2007 (S. 1145, 110th Cong. (2007)), which was the predecessor to the Smith-Leahy America Invents Act, and which was amended by the Senate Judiciary Committee to include Section 332, which stated, in part:
A PGR proceeding shall be terminated with respect to any petitioner upon the joint request of the petition and the patent owner, unless the Office has decided the matter before the request for termination is filed (with added emphasis). Senate Report No. 110-259 (2008).
The “decided the matter” language differs from the corresponding settlement provision of the House version of the Patent Reform Act of 2007 (H.R. 1908, 110th Cong. (2007)), which was amended by the House Judiciary Committee to provide settlement of a post-grant proceeding “unless the Patent Trial and Appeal Board has issued a written decision before the request for termination is filed” (with added emphasis). House Report No. 110-314 (2007). In the Patent Reform Act of 2011, which reintroduced patent reform legislation to Congress, the “decided the matter” language of the settlement provision for post-grant proceedings was changed to “decided the merits.” Patent Reform Act of 2011, S. 23, 157 Cong. Rec. S936, S941 (2011). There is no legislative history explaining the reasons for this change.
During the comment period on proposed rulemaking for PTAB trials under 37 C.F.R. § 42.74, comments were submitted regarding the PTAB’s discretion to terminate a proceeding upon settlement by the parties. In response, the U.S. Patent and Trademark Office (USPTO) stated that termination may be conditioned on the filing of a related paper, such as when the challenged claims are clearly unpatentable or the patent owner acknowledges they are unpatentable. See Rules of Practice for Trials Before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decisions, 77 Fed. Reg. 48611, 48649. For example, “termination appropriately may be conditioned on the submission of a disclaimer of the claims in dispute.” Id.
PTAB panels have determined that a joint termination request must be filed before the oral hearing to be considered for grant. In Blackberry Corp., et al. v. MobileMedia Ideas, LLC, the parties field a joint motion to terminate the proceeding nearly two months after oral argument. Blackberry Corp., et al. v. MobileMedia Ideas, LLC, IPR2013-00036, Paper 64 (PTAB Jan. 21, 2014) at 2. The panel granted the motion only with respect to the Petitioner (Blackberry). Regarding the Patent Owner, the panel determined that issuing a final written decision was appropriate because the issues for trial had been briefed fully at the time the parties moved to terminate the proceeding. Id. at 3. Similarly, In Kinetic Technologies, Inc. v. Skyworks Solutions, Inc., the panel denied the joint motion to terminate the proceeding because it was filed after the oral hearing. Kinetic Technologies, Inc. v. Skyworks Solutions, Inc., IPR2014-00690, Paper 43 (PTAB Oct. 19, 2015) at 20. The Kinetic panel found that settlement was concluded after the oral hearing and a point at which the panel had “substantially decided the merits of the proceeding.” Id. at 20-21. In Apple, Inc. v. OpenTV, Inc., the panel denied the requests for termination, finding they were filed at an “extremely late date in each proceeding”— after all briefing was complete and after the oral hearings were held. Apple, Inc. v. OpenTV, Inc., IPR2015-00969, IPR2015-00980, IPR2015-01031, Paper 29 (PTAB Sep. 10, 2016) at 4. The Apple panel had not yet issued a final written decision, but had “deliberated and decided the merits of each proceeding” before the requests were filed. Id.
Some PTAB panels have also denied termination requests filed prior to oral hearing as being belated. In Interthinx, Inc. v. Corelogic Solutions, LLC, the panel granted-in-part a termination request filed on the eve of oral hearing because it was submitted too late in the proceeding. Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, Paper 47 (PTAB Nov. 12, 2013). The panel granted the request, but only with respect to the Petitioner (Interthinx) because the matter in question was “briefed fully and ready for oral hearing at the time the parties moved to terminate.” Id. Further, the panel found that the proceeding was in an “advanced stage”, and rather than terminate the proceeding, a final written decision would be issued. Id.
Settlement in a post-grant proceeding should be agreed upon and joint requests for termination submitted to the PTAB as early as possible in the proceeding to avoid denial due to the late stage in the proceeding. The PTAB bases its discretionary authority to issue a final written decision on the amount of evidence that has been presented in the case at the time the joint termination request is filed and likely the amount of its resources used up to the filing of the request. Using its discretion in this manner is fairly consistent with how courts generally issue decisions “on the merits.” While there have been instances of a panel granting termination of a proceeding just before and after the oral hearing, the majority of decisions show that the likelihood of denial of a joint request to terminate increases as proceedings progress closer to the due date for a final written decision. See e.g., Clio USA, Inc. v. The Procter & Gamble Co., IPR2013-00438, Paper 57 (PTAB Oct. 31, 2014)(request granted after oral hearing); Sony Corp. v. Tessera, Inc., IPR2012-00033, Paper 46 (PTAB Dec. 20, 2013)(request granted just before oral hearing held). For example, panels have determined that the filing of a request for termination is late once the issues have been “briefed fully” and an oral hearing has been held or is ready to be held. According to the rules of practice before the PTAB, no new arguments can be presented at oral hearing. Thus, all evidence on which the decision will be made is of record prior to the oral hearing. Therefore, seeking settlement and moving for termination prior to institution or at an early stage of trial improves the chances of getting the proceeding terminated.