Tuesday, November 1, 2022

Just before Ericsson v. Apple ITC trial, PTAB institutes IPR of patent-in-suit, and Apple walked back on promise not to rely on same prior art in ITC case

Sooner or later Ericsson and Apple will have to settle their patent dispute, but as long as they are litigating, they will keep playing hardball. This includes they they avail themselves of certain procedural options in different jurisdictions. Apple is unhappy about Ericsson's enforcement of a 5G standard-essential patent injunction in Colombia as well as about the parallel assertion of patents from the same family in Mannheim and Munich (a basis on which the Munich court declined to dismiss an Ericsson case at an early stage). The key difference between the two litigants' conduct is, however, that Apple isn't merely exercising its procedural rights (as Ericsson also did in Colombia, where you simply can request an ex parte preliminary injunction): occasionally Apple comes across as a bit underhanded or, at minimum, disingenuous by opportunistically contradicting itself. Two judges have already reproached Apple for its "puzzling" litigation tactics--including Administrative Law Judge (ALJ) Cameron Elliot, who will preside over the Ericsson-Apple ITC trial that will commence on Friday (November 4).

A new issue has arisen from Apple's shifting-sands positions, and it involves USPTO Director Kathi Vidal's new policy regarding IPR petitions, which makes it a procedurally interesting matter especially for the many patent practitioners among my esteemed readers.

Apple is the #2 PTAB user (in recent years, second only to Samsung), and some criticize that heavy use of the inter partes review process by a single Big Tech company, but that's actually not my concern here. It's only about what happened with respect to one of Apple's IPR petitions:

  • The relevant patent is U.S. Patent No. 8,792,454 on "secure and seamless WAN-LAN [wide area network, local area network] roaming." It's one of three patents Ericsson originally asserted in the smallest of its three January 2022 ITC complaints against Apple. What makes it particularly relevant is that, in the aftermath of claim construction, Ericsson dropped one of the other patents in its entirety and several of the asserted claims of the other, while the '454 patent fared really well in claim construction. Against that backdrop, validity is likely going to be the key battlefield.

  • On April 1, Apple brought an IPR petition against the '454 patent that relies on the following prior art reference briefly referred to as Luo (the first-named author): Integrating wireless LAN and cellular data for the enterprise, a nine-page article published in a March/April 2003 edition of IEEE Internet Computing.

  • At the time, the USPTO's Fintiv rule that Mrs. Vidal's predecessor in office, then-Director Andrei Iancu, had promulgated was still intact. Apple's IPR petition faced a high risk of a discretionary denial because the ITC trial was on the horizon and there was clearly an overlap between issues raised in the petition and in the parallel proceeding. In order to resolve that conflict, Apple stipulated that it wouldn't leverage the same invalidity contentions based on the Luo prior art reference at the ITC hearing if the petition is granted. That's what Apple told the PTAB early on, and Ericsson relied on it.

  • The timeline of the PTAB pre-institution proceedings made it clear that a decision on whether or not to institute an IPR would be made no later than by the start of the ITC trial.

  • In the meantime, discovery in connection with the ITC case took place (fact discovery cutoff was in late June). Ericsson viewed Luo as a prior art reference that was either going to be irrelevant in the ITC trial (in the event of an IPR being instituted, as Apple promised not to rely--in that scenario--on Luo before the ITC) or not very likely to succeed as a denial of Apple's petition by the PTAB would have shown the USPTO's disbelief in the strength of Apple's Luo-based invalidity contentions.

  • On June 21, Director Vidal threw out key parts of her predecessor's Fintiv rule, and particularly made it clear that an impending ITC hearing should not counsel against the institution of an IPR proceeding. If the same had happened only about four months earlier, Apple would never have had a reason to stipulate not to proffer Luo in the ITC case should the PTAB institute an IPR.

  • If Apple had decided at that point--June 21--to go back on its earlier stipulation in light of a new USPTO rule, one could have criticized it for doing so only after its petition originally benefited from the stipulation, and that Ericsson would have had only three more days to adjust until fact discovery closed. But at least Apple could not have been accused of letting more time pass in a way that was prejudicial to Ericsson.

  • Ericsson highlights in a motion in limine (which now seeks to preclude Apple from relying on Luo in the ITC) that on August 24, Ericsson brought up the Luo stipulation in a deposition of Apple's '454 patent expert Mr. Geier, and four minutes later Apple's counsel emailed the PTAB to rescind the stipulation.

  • Last Friday--October 28--the PTAB granted the petition to institute an inter partes review. I've uploaded the decision (PDF) to DocumentCloud.

  • Had Apple stuck to the stipulation, Luo would now be a non-issue before ALJ Elliot. There would be a potential "injunction gap" as an ITC import ban might be ordered and enforced before a potential PTAB decision invalidating the patent, but only because of Apple's own decision to bet on other prior art in the ITC case while pursuing a Luo-centric PTAB strategy in parallel.

Ericsson's related motion in limine accuses Apple of gamesmanship:

ITC inv. no. 337-TA-1301: Ericsson's Motion in Limine No. 6 to Preclude Evidence, Testimony, and Argument about Luo If Apple's Petition for Inter Partes Review is Granted

The motion in limine had to be filed on the 21st--a week before the PTAB actually decided and two weeks before a hard deadline. When Ericsson brought the motion, it assumed that--should the motion be granted--Luo would be a total non-issue or Ericsson could focus its trial depositions on the reasons for which the PTAB would have deemed Apple's Luo-based theories unconvincing.

Ericsson's position that Apple tactically delayed the rescission of the stipulation--and that this constitutes gamesmanship that no court or, as in this case, quasi-judicial body should reward--is understandable. At the same time, Apple's position will presumably be that the USPTO's new rules are better than the old ones, and that Apple should not face the risk of a U.S. import ban over a patent that in the PTAB's preliminary opinion may very well be invalidated at the end of the IPR proceeding. The institution decision doesn't prejudge the outcome and the ITC might or might not deem the '454 patent invalid over Luo, but Apple's chances would be well over 50% if it could rely on Luo. At the abstract level, Ericsson has a procedural good-faith argument, and Apple a substantive one.

So far, ALJ Elliot has been extremely strict and detail-minded in procedural terms--so much so that if he now deemed Apple's about-face acceptable, he would arguably no longer be consistent with how he has been conducting this investigation so far. And he would set a precedent that would impair the ITC's ability to conduct fair proceedings on famously tight schedules. It would look like Apple can get away with inequitable conduct that would normally not succeed. From an institutional point of view, it would be desirable to tell Apple that it made its bed (without anyone forcing it to do so) and has to lie in it, especially since the chronology of events shows that Apple was indeed playing a tactical game instead of putting all the cards on the table at the appropriate juncture.