IPR Update – Prosecution Bars

By Andrew Williams --

Are proceedings before the Patent Trial and Appeals Board ("PTAB") more like prosecution or more like litigation?  This might appear to be a purely academic question, except for one significant issue -- litigation prosecution bars.  Prosecution bars are often included in Protective Orders or Discovery Confidentiality Orders to prevent litigation counsel from using the confidential information produced in a lawsuit during subsequent prosecution before the Patent Office.  Of course, with the advent of the PTAB's post-issuance proceedings, the issue of whether practice before the Board should be subject to such bars needed to be resolved.

The PTAB – IPRs are Litigation

Earlier this year, the PTAB addressed the issue, concluding that its proceedings were more like litigation.  In Google Inc. v. Jongerious Panoramic Techs., LLC (Case IPR2013-00191), the Board concluded that "[a]n inter partes review is neither a patent examination nor a patent reexamination."  See id. Paper No. 50, at 4 (P.T.A.B. Feb. 13, 2014).  The issue being decided was whether petitioner's litigation counsel could be admitted pro hac vice.  The requirement for the Board to recognize counsel pro hac vice is good cause, provided lead counsel is a registered practitioner.  See 37 C.F.R. § 42.10(c).  In this case, Mr. James R. Batchelder submitted a declaration in which he indicated that he had extensive experience litigating patent cases, and that he had familiarity with the relevant subject matter because of his representation of Apple in district court litigation involving the same patents (Apple was co-petitioner with Google).  Not surprisingly, the Patent Owner argued that the prosecution bar in the underlying litigation should prevent Mr. Batchelder from participating in the IPR.  That protective order precluded attorneys receiving access to confidential information from engaging in "prosecution activities," and therefore the Patent Owner believed that it would be a violation if Mr. Batchelder were admitted in the case.  See Google Inc., Paper No. 50, at 4.

In that case, the PTAB was unpersuaded by the Patent Owner's arguments.  The Board observed that an IPR is "a trial, adjudicatory in nature and constitutes litigation."  Id.  The Board also noted that, even though it prohibited "prosecution activities, the protective order was silent regarding trials before the PTAB.  Also, all of the substantive briefings had been filed in the case already.  Most importantly, however, the PTAB appeared to shift the focus back to the district court.  Mr. Batchelder was still subject to sanctions if he violated the order.  The Patent Owner did not suggest that Mr. Batchelder was in violation of the protective order, even though he had already been assisting the Petitioner's counsel.  If the Patent Owner believed that Mr. Batchelder was violating the protective order, it could seek relief at the district court.  Of course, this left open the question of how a district court would handle such prosecution bars.

District Court – Counsel May Participate in IPR Proceeding Regardless of Prosecution Bar

The United States District Court for the Southern District of New York recently answered that question in a similar manner, but took it an additional step.  The litigation entailed 11 separate lawsuits against several different ANDA filers that were attempting to market generic versions of OPANA® ER, an opiod painkiller.  The relevant case for these purposes was Endo Pharmaceuticals Inc. v. Amneal Pharmaceuticals, LLC, 12 Civ. 8115 (TPG).  Endo was represented in the litigation by the law firm of Dechert LLP.  Amneal filed an IPR before the PTAB related to the validity of three of the patents involved in the lawsuit -- U.S. Patents 8,309,122, 8,329,216, and 7,851,482.  Endo retained the law firm of Mayer Brown LLP to serve as its primary counsel in that proceeding, but desired to have the two firms collaborate about claims and defenses at issue in both proceedings.  The problem was that a protective order had been filed in the litigation preventing the Dechert attorneys from engaging in patent prosecution or claim amendment before the PTO.

In its decision of August 13, 2014, the District Court noted that the protective order did not specifically bar participation in IPR proceedings, citing the Board's Google decision approvingly.  The Court also noted that both Dechert and Endo had assured the court that the attorneys involved will not participate in claim amendment proceedings.  These, in and of themselves, would have been sufficient to allow Dechert's participation in the IPR.  Nevertheless, the Court went on to conclude that even if the protective order did bar the attorneys from IPR participation, it would have made an exception on the facts of this case.

The Court cited the Federal Circuit's In re Deutsche Bank Trust Co. Americas case, which provided factors to evaluate a party's request for an exemption from a prosecution bar.  First, it must be shown that "representation of the client in matters before the PTO does not and is not likely to implicate competitive decisionmaking related to the subject matter of the litigation so as to give rise to a risk of inadvertent use of confidential information learned in litigation . . . ."  Deutsche Bank, 605 F.3d 1373, 1381 (Fed. Cir. 2010).  The District Court noted that the questions at issue in this case, obviousness and the relevant prior art, would not implicate competitive decisionmaking or claim amendments.  The second factor entails a weighing of the potential injuries: whether "the potential injury to the moving party . . . outweighs the potential injury to the opposing party . . . ."  In this case, the District Court noted that there was minimal risk of inadvertent disclosure, because Dechert's attorneys are explicitly prohibited from participating in claim amendment discussions.  In contrast, the injury to Endo would be significant because the prior art references are the same in both proceedings.  Mayer Brown simply did not have Dechert's considerable expertise and extensive knowledge regarding those references.  Finally, the Court noted the policy concerns of allowing a petitioner/alleged infringer to prevent trial counsel from participating in PTAB proceedings.  The result would be that a patent holder would be required to defend a patent in two separate venues with two sets of attorneys, resulting in a waste of time and resources.  Moreover, the decision at the PTAB would have direct consequences on the district court proceedings, and therefore patent holders have a legitimate interest in formulating consistent strategies.

Even though this was a positive result for patent holders embroiled in both litigation and IPR proceedings, it is only one case.  Therefore, it will be interesting to see how other jurisdictions handle similar questions regarding prosecution bars.  We will continue to monitor and report on any significant updates.

Comments

[Skeptical]

A trial then it is.

Albeit an Article I trial - let's watch out for some unintended consequences of private personal property rights in Article I trial courts....

[Dan Feigelson]

Andrew, thanks for the summary.

I love it when courts create doctrines in one context and then lawyers try to misapply those doctrines elsewhere. If I'm enforcing a patent against a competitor, and I have related application(s) pending (whether related by subject matter or formally by continuation status or both), it makes sense to say that confidential information I get from the competitor during the litigation can't be used to enhance my position vis-a-vis that competitor during prosecution of the related application(s). This includes barring my lawyers in the litigation from participating in patent prosecution.

But IPRs and PGRs are a different kettle of fish: in all instances I'm defending my patent. I'm therefore not surprised by the PTAB's decision nor by the decision of the district court in the Endo cases. I'm disappointed that the lawyers on the other sides even tried to assert a bar, because the situations are obviously not analogous. Indeed, it was the accused infringers who dragged the patentees before the PTAB; seeking to assert a prosecution bar in such a case is a fine example of chutzpa.

What I'd really like to know is when the PTAB is going to acknowledge the corolloary to its determination that IPRs and PGRs aren't prosecution: if that's the case, then claim construction standard should be akin to that of the court, and not BRI applied during patent prosecution. (I know, in principle the patentee can amend but in practice it can't and even the permitted amendments are narrowing amendments.)

[Skeptical]

Dan,

Would it be fair to say that chutzpa is not limited to the parties in the matter, but to the Article I Court itself for its seeming double standard treatment?

How about the chutzpa of even taking a case into consideration and removing one of the property rights from the bundle of property rights? Here, I am talking about the taking of the presumption of validity. That taking - regardless of any final decision - happens immediately and not appealable to a true Article III Court. Thus we have a taking without any compensation by an executive agency Article I Court (in - as you suggest - a litigation status). Do you think that in such a status that due process is implicated for that taking of the stick? I know that to many, such a stick carries tremendous value.

[Skeptical]

More (unintended - or not - consequences) stemming from a closer look at the Article I/ Article III nature tied to a litigation/examination question can be raised if one receives the emailed updated from Greg Aharonian.

Mr. Aharonian raises several legitimacy issues for the PTAB based on whether or not the patent right is a private right (which is where the law indicates, labeling a patent as private property) or a public right.

This is not an idle distinction - especially given the context of this post.

[I Can't Believe It's Not Butter]

I apologize if this is a stupid question, but doesn't this bar only apply to the attorneys? So there wouldn't be anything barring the *client* from using information learned in a litigation setting (from one group of attorneys) to redirect patent prosecution (by another group of attorneys), right?? And possibly a client that has in-house patent counsel and so might be particularly expected to notice what was said in each situation? If so, I do understand the need for an ethics rule, but it's really just window dressing here.

[Andrew Williams]

Dear Not Butter,

Confidential documents are often produced in litigation subject to a Protective Order entered by the Court. Only certain individuals have access to such documents, and the Court Order prohibits them from disclosing the confidential information contained. Therefore, the client does not have access to the information. In addition, even though one or more in-house attorneys are often designated under the order, they are usually subject to similar prosecution bar provisions. Sorry if I did not make this clear in the post, and thanks for the question.

Andrew