Ericsson strikes down patent underlying KPN's $32 million jury verdict from August 2022: PTAB invalidates all challenged claims

The patent infringement dispute between Dutch telecommunications carrier KPN and Swedish telecommunications equipment maker Ericsson is unusual because infrastructure makers typically sell products to telcos rather than getting sued by them over patents. What is not that unusual, though, is the fact that Ericsson is on the receiving end of that case. Ericsson and Nokia, while being net licensors, typically have multiple disputes pending at any given time in which someone else wants to collect patent royalties somewhere, most frequently in the United States. That's why those two companies don't take extreme positions when they are on the enforcing side: they know what it's like when the shoe is on the other food, and they know that whatever they say as a defendant may be held against them as a plaintiff (though inconsistencies could only undermine their credibility but in the end all that should matter is the law).

Last August, a jury in the Eastern District of Texas handed down a verdict in KPN's favor and relating to a package of three patents. The verdict form did not distinguish by patent or claim, but merely indicated whether "any" of the claims had been infringed and whether any of the patents were invalid (juries rarely ever invalidated patents, and here they also thought all patents-in-suit were valid):

Koninklijke KPN N.V. v. Telefonaktiebolaget LM Ericsson & Ericsson Inc. (case no. 2:21-cv-113-JRG, E.D. Tex.): Jury Verdict of August 26, 2022

KPN is apparently never going to get the $32 million payout.

One of the three patents-in-suit, U.S. Patent No. RE48,089 on a "method and system for automatic coverage assessment for cooperating wireless access networks", has now been invalidated by the PTAB. Ericsson--represented by the Baker Botts firm--challenged most claims, also including the ones asserted in the Texas infringement action, and prevailed across the board. The PTAB judgment came down yesterday:

Ericsson Inc. v. Koninklijke KPN N.V. (PTAB IPR2022-00079, Patent RE48,089): Judgment (of May 23, 2023) Determining All Challenged Claims Unpatentable

Maybe this decision will pave the way for a settlement between the parties. They should be commercial partners, not adversaries in patent litigation.

Earlier today I commented on USPTO Director Kathi Vidal's proposed PTAB IPR rulemaking reform. Then I saw this interesting PTAB decision.

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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.

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Lessons from rejection of Apple's cert petition against Qualcomm: PTAB IPR can backfire depending on specific terms of patent license

The Supreme Court denies petitions for writ of certiorari without stating the reasons. It has more important things to do. In the Apple v. Qualcomm case--where the Federal Circuit held that Apple lacked standing to appeal decisions by the Patent Trial and Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO) due to a portfolio license it had taken from Qualcomm in 2019--we at least know what the Department of Justice (DOJ) thought. The Supreme Court had asked for the views (PDF) of the Solicitor General of the United States, Elizabeth Prelogar.

Central to that remnant from what could have become one of the biggest and longest-running patent spats ever is an inconsistency between standing requirements for PTAB Inter Partes Review (IPR) petitions and any appeals thereof to the Federal Circuit. Once you're past the PTAB, the appellant needs to satisfy Article III standing requirements (but not before). On appeal, the same standing questions as with respect to a declaratory judgment action in district court will be asked.

Article III standing involves the questions of injury, causation, and redressability. If you want to appeal a PTAB decision just to stick a decision invalidating the patent on a wall as a hunter's trophy, that doesn't count. Nor do you satisfy standing requirements if there's just a hypothetical possibility of being sued over the same patent(s) somewhere down the road, subject to circumstances that you may consider foreseeable but which can't be predicted with (near-)certainty.

What we know is that Apple's current license agreement with Qualcomm will expire either in 2025 or in 2027 (if a renewal option is exercised), while the two (non-standard-essential, by the way) patents at issue will expire only in August 2029 (U.S. Patent No. 7,844,037 on a "method and device for enabling message responses to incoming phone calls"; originally obtained by Palm) and, respectively, 2030 (U.S. Patent 8,683,362 on a "card metaphor for activities in a computing device"). So even if Apple didn't just breach its obligations under the existing agreement--though, if you ask Qualcomm, that's what it did with respect to the previous agreement, it might face infringement lawsuits over those patents simply as a result of the parties not being able to agree on the terms of a new license.

It's a very significant win for BakerBotts on Qualcomm's behalf, but Apple's arguments for standing (and for why the Supreme Court should have considered the matter worthy of review) weren't all that weak. In fact, compared to what I've recently seen from Apple in the 5G patent dispute with Ericsson or various antitrust contexts, Apple's arguments were pretty strong.

I even consider it quite possible that this--I mean the part on standing without taking a position on patent (in)validity--might have gone differently if Apple had bluntly stated the situation the way it is, but it probably had business as well as litigation-tactical reasons not to tell the whole story.

The peace that Apple and Qualcomm made a little over three years ago was attributable to one--and only one--factor: Apple considered Qualcomm the only reliable vendor from whom to source its 5G chips. Apple didn't see Intel on the right track. A few months prior to that agreement, Tim Cook had categorically ruled out a settlement. In a television interview earlier that year, he said Qualcomm's business model was unlawful, and Apple was going to fight it all the way.

Apple gets away with being a bit behind hardware innnovation. It was still doing extremely well with relatively small screens when comparable Android devices were much larger. It still doesn't have a foldable iPhone, though it's finally getting there. Apple is all about luxury brand image and lock-in. Two L's are the key enablers of a market cap of a couple trillion dollars. But even Apple couldn't have risked falling behind too much with 5G phones. I don't want to get into the question of whether smartphone users really have a major benefit from 5G, or whether those making most of the money from 5G should have to pay more to those making the largest investment (Politico reported on a potential EU initiative). The answer of whether smartphone users really need 5G isn't as clear as it is with respect to connected vehicles (where lower latency plays a role, as was recently discussed in an OPPO v. Nokia case). Regardless, Apple had to fear a loss of market share, and settled.

Cravath had done an incredible job defending Qualcomm against Apple and the FTC. Practically, Apple and the FTC constituted a public-private partnership. It became know that they had a common interest agreement in place. Qualcomm defeated the FTC all the way. Now, if Apple had not settled, it would have continued to support the FTC's case in different ways, and things might have turned out differently. But if the FTC case had ended identically, Apple would have lost its Qualcomm case big-time and might have owed tens of billions in enhanced damages.

The Qualcomm v. Apple infringement cases (for which Qualcomm relied on Quinn Emanuel in the U.S. and Germany) were only a sideshow at that stage and of totally negligible relevance compared to Apple's need for 5G chips, though over time pressure from that front might have piled up on Apple.

The fallout from the Apple-Qualcomm settlement was Intel's exit from the cellular baseband chipset business, with Apple first buying Intel's mobile chip division and then most of Intel's cellular SEPs (a transaction with respect to which Ericsson would now like to conduct discovery, but Apple opposes it). Apple is getting closer to using its own baseband chips. Whether it would at that point make sense for Apple to breach the existing agreement with Qualcomm and stop making royalty payments depends on the undisclosed terms of the contract(s) between them. I doubt it. I'd have doubted it anyway, but even more so now that the two Qualcomm patents at issue here are more formidable than before. What might happen, however, is that the agreement ends regularly in 2025 or 2027, and the parties might then be far apart on patent valuation questions.

Qualcomm's "No License, No Chips" policy has been cleared by the Ninth Circuit, and the FTC didn't even try to appeal it to the Supreme Court. So I'm not implying anything unlawful here. It's just a commercial reality that Qualcomm is in a privileged position among SEP licensors. It rarely ever has to sue to get paid. It has about three times as many licensees as Ericsson or Nokia, as there is a "long tail" of small implementers that wouldn't be worth suing. And from the big ones like Apple, Qualcomm can collect a lot more. The Ninth Circuit basically said that it's up to Qualcomm whether it labels a part of its chip price as a patent royalty.

Once Apple doesn't depend on Qualcomm's chips anymore, that's it for "No License, No Chips" with respect to the most important implementer. And then Qualcomm may have to enforce its patents--SEPs (which it avoided last time) as well as non-SEPs (like in 2017-2019).

In a hypothetical 2025 or 2027 Qualcomm v. Apple infringement litigation, the two above-mentioned patents would most likely be asserted again. Frankly, I'd be surprised if they weren't. The PTAB rejected Apple's validity challenge, and Apple's appeal went nowhere due to a lack of standing. Unless Apple can dig up some previously undiscovered prior art of enormous strength, those patents are going to be hard to challenge. If Qualcomm got to enforce them, especially through injunctive relief (which could also take the form an ITC import ban; indeed, Qualcomm was asserting some other patents against Apple in the ITC), that might put some pressure on Apple. The '037 patent broadly covers a well-known feature: instead of taking a voice call, you can send a (typically predefined) message to the caller to explain your unavailability. The '362 patent may--I'd have to look at it more closely to be sure--read on how one switches between apps on the iPhone.

With the ITC, the effect would be more psychological: it would be quite hard to persuade an Administrative Law Judge--or the Commission, i.e., the five people who make the agency's final decision--to deem those patents invalid. In district court, the problem is that juries rarely consider patents invalid, so you depend on a stay pending a parallel PTAB IPR proceeding.

But how would Apple get a PTAB IPR instituted? First, the most fundamental question has not been--and could not reasonably have been--addressed in the case that was just tossed: estoppel. Apple may simply be estopped from challenging those patents with essentially the same arguments again because it tried and lost. Apple would argue that the previous challenge was somewhat incomplete: Apple lacked standing to appeal. Qualcomm's positions on this are a bit inconsistent: in a parallel case, Qualcomm's counsel argued that Apple was estopped; in this one, Qualcomm said that this was a question of first impression that the Federal Circuit hasn't addressed, and given that the Supreme Court is a court of final appeal, one can't ask the Supreme Court to resolve that question as a prerequisite to addressing the question of whether Apple had standing. The DOJ agreed with Qualcomm that the Supreme Court shouldn't have to take a matter of first impression.

Second, even if Apple wasn't estopped, the PTAB would be fairly likely to decline to institute an IPR, simply because it would doubt the petitioner's chances to prevail.

What could or should Apple have done differently? And what should other licensees and litigants learn from this?

What Apple could have done--but presumably elected not to do--would have been to declare and potentially proffer evidence with respect to the risks it expects to face from those patents in the future. Apple essentially contented itself with saying that Qualcomm had already picked those patents from a portfolio of tens of thousands of patents, and would likely pick them again. Even if Apple believes (as it very well may) that those patents are commercially essential, that they're still going to be relevant a few years down the road, and that it won't be possible then to worked around them without a temporary quality degradation of its products, it can't say so because it would weaken its position too much. Apple at least wants to have a chance to dispute infringement in the future, possibly after making some technical changes ahead of any renewed litigation with Qualcomm.

Apple also couldn't say now that it was certain the parties wouldn't agree on a new license agreement in 2025 or 2027. Apple's and Qualcomm's positions on what patent royalties are reasonable have historically been far apart. They're not going to close the gap in the coming three or five years. But how could Apple have made those points then without saying here and now that it would simply be infringing those patents in a few years?

So, Apple faced a dilemma, and probably made the right choice. At least Apple has achieved one thing: Qualcomm--in this litigation, though not in another--and the DOJ stated that Apple wasn't necessarily estopped from renewing its validity challenges later. That's better than nothing.

At least with the benefit of 20/20 hindsight, it's clear, however, that it was a bad idea for Apple to pursue those PTAB IPRs post-settlement.

It seems Apple was overreliant on the MedImmune precedent in which a party licensed two patents, and royalties were patent-specific, with the net effect of the invalidation of even a single patent being that obligations to pay royalties were reduced or eliminated. By contrast, it can be inferred from the Apple v. Qualcomm documents that Apple wouldn't have saved a cent if the two patents at issue had been invalidated. That distinction also persuaded the DOJ.

What would make most sense to do then?

• If a party has enough leverage in litigation, and enough of a desire to keep challenging certain patents, it should insist on a clause according to which the outcome of--at least pending--validity challenges will entitle it to an adjustment of the royalty rate. How material that adjustment would have to be to establish standing is then another question that would have to be considered. But even a minor injury is better than none at all.

  While we're talking about non-SEPs here, this situation reminds me of something Presiding Judge Dr. Matthias Zigann (Munich I Regional Court, Seventh Civil Chamber) was contemplating in connection with SEP license deals resulting from a Huawei v. ZTE negotation. He had potential adjustments in mind. In Huawei v. ZTE, the European Court of Justice did place some importance on an implementer's ability to challenge patents.

• Otherwise, one should withdraw all challenges. That's also what Qualcomm and the DOJ told the Supreme Court Apple should have done. If Apple had withdrawn its petitions prior to a PTAB IPR decision, there would have been nothing to appeal.

From a policy point of view, one may indeed question the wisdom of not allowing a PTAB petitioner to appeal an adverse decision. In that regard, I understand Apple's course of action.

It's interesting to look at what the Federal Circuit decided (PDF) in parallel Intel v. Qualcomm case:

"This is not the first time this court has addressed this standing issue between these parties. In two prior cases, we found Intel had standing on appeal based on the fact that Qualcomm sued Apple Inc. for infringement of the patent at issue, and that a main component of the accused products identified in Qualcomm’s infringement contentions was manufactured by Intel.[...] We see no reason to find otherwise in this appeal. As such, Intel has demonstrated a non-speculative risk of being sued by Qualcomm for infringement and therefore has standing to bring this appeal."

Let that sink in:

Apple was indeed sued by Qualcomm. Intel was only indirectly affected (customer suit). Apple is still in the same business as before (and expanding into more and more businesses), while Intel has exited the business in question.

Still, Intel "has demonstrated a non-speculative risk of being sued by Qualcomm for infringement" but Apple does not--because Apple has a license at this stage, though it will for sure expire before those patents do. One doesn't have to find the combination of these two outcomes perfectly logical.

In the end, what might have played a role here is that Apple v. Qualcomm was simply--as Qualcomm said--a poor vehicle for asking the Supreme Court to address on how to apply MedImmune to portfolio licenses. This here had a lot to do with legal technicalities, and psychologically Apple's primary problem may have been that the Federal Circuit, the DOJ, and ultimately the Supreme Court just couldn't see a pressing and legitimate reason for which Apple kept challenging those patents after the 2019 settlement instead of leaving Qualcomm and its patents alone.

This has been a counterproductive exercise for Apple, and Qualcomm is going to feel even stronger when the parties discuss their next patent license agreement.

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Apple wants ITC to admit prior art reference out of time based on demonstrably false claim about Ericsson's position on priority date of patent-in-suit

In the Eastern District of Texas, Apple already has a federal judge "puzzled by [its] hot-then-cold positions." And its lobbyists advocating the devaluation of SEPs and opposing the demonopolization of app distribution claim to represent 5,000 small app developers but on their website just list about three dozen companies, roughly half of which are service providers and only a very few of which have actually published apps.

No reasonable person would claim that Apple doesn't have the right to advocate its positions. But it should maintain a certain minimum quality standard for the points it makes--be it in policy debates or in litigation.

On Thursday (June 23), Ericsson filed its opposition to an Apple motion in the investigation of Ericsson's third ITC complaint (one of two non-SEP cases; interestingly, the SEP case was just reassigned to ALJ Moore).

Rarely have I seen an opposition brief that exposed the shortcomings of the related motion as clearly as this one. The ITC is known for its speedy adjudication of complaints, and that's why the parties to an investigation have to respect deadlines. Sometimes respondents are allowed to add prior art references belatedly, but the standard is "good cause." The way Apple's June 14 motion tries to meet that standard with respect to 13 pages from an IEEE document titled Handoff in Hybrid Mobile Data Networks (a prior art reference named "Pahlavan" after its author) is remarkable:

• Apple says its army of lawyers "inadvertently did note cite Pahlavan" in Apple's May 13 notice of prior art.

• Apple can't deny that it knew the Pahlavan document long before May 13: its PTAB IPR petition targeting the same patent (U.S. Patent 8,792,454 on "secure and seamless WAN-LAN roaming") was filed six weeks earlier--on April 1--and listed it as Exhibit 1011:

  

• There is a dispute--and it may be legitimate per se--between Ericsson and Apple over the priority date. As Apple notes, "the ’454 patent claims priority to a non-provisional application filed on July 21, 2004, and a provisional application filed on July 22, 2003." Apple is within its rights to take the position that "the provisional application does not describe the purported invention of the ’454 patent." According to Apple, "the provisional application from 2003 does not mention a mobile device connected to an internal network monitoring signal strength, let alone one that detects when such signal strength is below a threshold and then transitions to the external network based on that signal strength." If that was both true and relevant (I have no opinion on that for now), the priority date would indeed be the July 2004--not 2003--one.

  With a 2004 priority date, the Pahlaven prior art reference might not be first choice: some younger material might then work better. In the case of the earlier (2003) date, Pahlaven now appears to be relevant to Apple's invalidity defense.

• But it's crazy to argue that Ericsson took the position that 2003 is the correct prioriy date "for the first time in its May 12, 2022 supplemental interrogatory responses." That's because Ericsson's relevant ITC complaint, which was filed in January, states the following in its paragraph 17:

  "The ’454 patent issued from Application No. 13/554,711, filed on July 20, 2012, and claiming priority to non-provisional Application No. 10/895,411, filed on July 21, 2004, and provisional Application No. 60/488,809, filed on July 22, 2003." (emphases added)

  So what Apple describes as a new position taken by Ericsson for the first time on May 12 was in reality merely consistent with what Ericsson wrote almost four months earlier in its complaint.

If under that set of circumstances the ITC concluded that Apple has shown "good cause" for an amended notice of prior art, other parties would also have to be granted leave to amend their prior art notices, in which case the deadline for presenting prior art would be much less meaningful.

Ericsson's lawyers believe "Apple’s omission of Pahlavan from its NOPA and from its invalidity contentions until now appears to be gamesmanship, rather than a clerical mistake." The reason they believe Apple did so is that under the Fintiv rule governing discretionary denials, the PTAB can reject a petition just based on an overlap between the petition and the invalidity contentions in the parallel infringement litigation. Ericsson doesn't believe in coincidence here because Apple's notice of prior art to the ITC contained--with respect to just this one patent--70 prior art references, only six (less than 10%) of which are underlying Apple's IPR petition. "By presenting Pahlavan to the PTAB and not including Pahlavan in its NOPA or invalidity contentions, Apple created a scenario in which the six prior art references being considered by the PTAB, if it decided to institute an IPR, would not be identical and therefore not completely 'overlap' within with the list of prior art being considered at the ITC," Ericsson says.

Given that Apple had to be particularly selective about the prior art references used in its PTAB petition, it's a safe assumption that Pahlaven always seemed important to Apple, which makes a clerical error unlikely.

The opposition brief argues that granting Apple's motion would be prejudicial to Ericsson:

"The injection of newly disclosed prior art and previously undisclosed invalidity contentions now, almost a month after the [Notice of Prior Art] deadline and long after the Markman proceedings, unfairly disadvantages Ericsson and would encourage avalanche and ambush, i.e., providing the patentee with a list of 70 references in the NOPA while holding back the primary reference that the patent challenger actually intends to rely on for invalidity."

In the Eastern District of Texas, Judge Gilstrap took issue with "Apple's hot-then-cold positions" (note the plural). The Pahlaven prior art reference is now a case of "cold-then-hot positions." I just don't understand why Apple makes that demonstrably false claim about Ericsson's position on the priority date. Ericsson's ITC complaint left no doubt about that one.

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Apple has started to file PTAB IPR petitions against Ericsson's actual U.S. patents-in-suit (as opposed to just patents Samsung challenged before)

The most important question surrounding the Ericsson v. Apple patent dispute is how the parties are going to get guidance from courts on a fair, reasonable, and non-discriminatory (FRAND) royalty rate for each other's standard-essential patents (SEPs). Ericsson has been consistent that it considers $5 per iPhone the correct amount, and aims to have the reasonableness of that position confirmed by the United States District Court for the Eastern District of Texas.

At the same time, the parties are asserting non-SEPs against each other. Apple inexplicably claims that Ericsson is tying SEP licenses to non-SEP licenses, without explaining why Ericsson's non-SEPs-in-suit bestow market power on Ericsson beyond what merely constitutes intellectual property enforcement. While there might be a concern if a SEP holder offered only a portfolio license that also covers non-SEPs, Ericsson doesn't do that: its SEP licensing offer doesn't require Apple to take a license to any non-SEPs.

Apple is a mass filer of petitions for inter parties review (IPR) by the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO). Shortly after Ericsson filed its U.S. patent infringement lawsuits and ITC complaints in January, Apple filed its first PTAB IPR petitions aimed at some Ericsson patents. However, Apple was effectively recycling petitions Samsung had brought the previous year (during a dispute with Ericsson that settled after only a few months), regardless of whether Ericsson was actually asserting those patents against Apple. It's just about driving up litigation costs, and with respect to SEPs, Apple may hope that it can point to favorable PTAB outcomes in the valuation discussion in different fora.

Apple piggybacked on many more Samsung petitions during the first calendar quarter. It may not even be done with that effort: on April 4, Apple challenged U.S. Patent No. 6,879,849 on an "in-built antenna for mobile communication device."

Now Apple is also challenging actual patents-in-suit. I expect many more IPR petitions to be filed. It obviously took Apple some time after the mid-January complaints to search for prior art and develop its invalidity contentions.

On April 1, Apple challenged U.S. Patent No. 8,792,454 on "secure and seamless WAN-LAN [wide area network, local area network] roaming," one of the three non-SEPs Ericsson is asserting in ITC investigation no. 337-TA-1301 (this post continues below the document):

22-04-01 PTAB Apple IPR2022... by Florian Mueller

Five days later, on April 6, April also filed a PTAB IPR petition against Ericsson's U.S. Patent No. 9,705,400 on "reconfigurable output stage," one of the five non-SEPs Ericsson is asserting in ITC investigation no. 337-TA-1300 (this post continues below the document):

22-04-06 PTAB Apple IPR2022... by Florian Mueller

While this was expected, it shows that the patent infringement dispute between those parties has entered a new phase. It won't be long before the first challenges to European patents become known as well. Apple and Ericsson are going to make a number of filings with the Federal Patent Court of Germany, for instance.

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Ericsson seeking preliminary injunction against Apple distributor in Brazil, filed second case in Belgium; Apple wants December trial in Texas, now challenging 10 Ericsson patents

Ericsson keeps up the pressure on Apple. A filing made by Apple in the Eastern District of Texas on Monday (January 31) mentions that "[i]n Brazil [...], in addition to targeting Apple in a previous injunction request, Ericsson [...] filed for a second preliminary injunction on January 17 against Allied Tecnologia S.A., based on Ericsson’s claimed 4G cellular SEPs and merely because Allied resells Apple cellular products." Apple is now intervening to protect its wholesaler.

When I previously wrote about the preliminary injunction Ericsson is seeking against Apple itself in Brazil, I used the plural form "injunctions" though it appears to be a single motion for preliminary injunction involving three SEPs. And now there's another such motion, also over three SEPs, targeting Allied Tecnologia because of its distribution of accused Apple products.

Apple can't complain about the litigation tactic of targeting someone's resellers: Apple wrote threat letters to U.S. carriers and retailers in 2012 because of their distribution of Samsung products.

In another jurisdiction, Belgium, Ericsson was already known to have brought one case against Apple, and now Apple says there's been a second filing:

"In Belgium, Ericsson filed another case against Apple on January 24, asserting another claimed cellular SEP and seeking an injunction of that FRAND-encumbered patent."

It is clear what Apple means by "injunction of that [...] patent." Obviously Ericsson won't ask the court to enjoin (ban) its own patent.

Apple also keeps escalating the dispute, though I haven't been able to learn about countersuits since a Mannheim complaint became known. By now I've found ten petitions by Apple to invalidate U.S. patents held by Ericsson. I'll provide some detail on that further below, but let me first show you--and comment on--Apple's latest Texas filing:

22-01-31 Apple Riso Early Cmc by Florian Mueller on Scribd

That reply brief in support of Apple's request for an early case management conference in the Eastern District of Texas relates to where and how to resolve the parties' claims. A recent Ericsson filing exposed Apple's preference for the Eastern District of Texas as not going so far as to actually commit to keeping Ericsson's infringement cases there if Ericsson agreed to withdraw them in the Western District and refile in the Eastern District. That's because where Apple would really like to go is the Northern District--of California, not Texas. Its home court.

In a follow-up I explained that Apple is already looking beyond the district court and trying to subject the FRAND-compliance dispute to the appellate jurisdiction of the Federal Circuit, while Ericsson would prefer to return to the Fifth Circuit, in which it defeated HTC last year over partly the same legal questions.

Apple's reply brief doesn't change the picture. It mentions those additional filings in Brazil and Belgium, which are not going to shock Judge Gilstrap--I guess he'd more likely be shocked if Ericsson wasn't asserting its foreign patents in other jurisdictions at the same time. Apple keeps arguing that Ericsson might gain leverage from injunctions in other jurisdictions before the Texas court has set a FRAND rate. In standard-essential patent disputes of this scope, that's not unusual. Different jurisdictions have their distinct strengths/weaknesses profiles from a patent holder's point of view: some are more injunction-oriented (particularly the ITC, which has no other remedy, and Germany, where it takes one year to get an injunction and can easily take ten to get a damages award). Article III courts like the one in Texas and its Western counterpart are mostly about monetary relief.

To its reply brief, Apple attached a proposed case schedule (PDF on Scribd), which envisions a trial to begin in early December (of this year), which would probably be an unprecedented pace for a FRAND trial in the U.S., and wants Ericsson to make such a proposal as well, which it has no intention to do unless and until Judge Gilstrap himself deems it the appropriate next step.

Apple is still conflating SEP and non-SEP assertions. For SEPs, a global FRAND determination by a court is a possibility, though Apple is not entitled to it in the United States. Non-SEPs, however, can be enforced through injunctive relief, and that is actually how their commercial value is established if the parties can't agree. Ericsson is asserting a mix.

The patent assertions by Apple against Ericsson that are known at this stage include an ITC complaint over three mmWave patents that are not in IPlytics' database of standard-essential patent declarations, so it's a safe assumption they're non-SEPs, as is Apple's Mannheim patent-in-suit. Unless there's an Apple SEP case that's already pending but hasn't surfaced yet, it seems that Apple still has not asserted a FRAND-pledged SEP in its corporate history.

Additional PTAB IPR petitions discovered

On Wednesday I listed Apple's first seven petitions with the Patent Trial and Appeal Board for inter partes review of patents granted to Ericsson by the United States Patent and Trademark Office, and noted that Apple was piggybacking on Samsung's related efforts of about a year ago.

One week ago, on January 25, Apple filed five PTAB petitions against Ericsson patents, of which I saw only two when I wrote the post I just linked to. So let me add the remaining three:

8. IPR2022-00339

   U.S. Patent No. 10,492,179 on "resource signaling for PUCCH"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

9. IPR2022-00342

   U.S. Patent No. 9,584,204 on a "transmitter for transmitting discovery signals, a receiver and methods therein"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

10. IPR2022-00346

    U.S. Patent No. 10,587,386 on "multiplexing of periodic channel state information on physical uplink shared channel together with hybrid automatic repeat request acknowledgement"

    (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

On another note, the United States International Trade Commission (USITC, or just ITC) will soon receive comments on public-interest issues relating to the parties' requests for import bans. While there are stronger public-interest arguments against a hypothetical import ban on Ericsson's mobile base stations than on phones and similar devices (for which there are countless alternatives), the ITC is almost certainly going to institute investigations of Ericsson's three complaints as well as the sole Apple complaint in a couple of weeks.

The most important public-interest concerns involving Apple have nothing to do with patents, but with its App Store practices. Apple is now--with respect to its App Store monopoly abuse--the "Enemy of the States" as

• the Biden Administration made a filing that formally supports neither party (because it stops about one step short of what is needed to find Apple in violation of the antitrust laws) but backs Epic Games in numerous ways (the conclusion that the Ninth Circuit should not allow the Sherman Act to be unduly narrowed is a MAKE ANTITRUST GREAT AGAIN message), and

• 35 U.S. state attorneys-general declared themselves in support of Epic, with California likely to complete the third dozen soon (California was granted an extension because of its particular interest in California Unfair Competition Law and according to Tech Xplore will support Epic Games even with respect to the Sherman Act claims).

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Apple piggybacking on Samsung's 2021 campaign to get Ericsson patents invalidated, drive up litigation costs: seven PTAB IPR petitions discovered

After the expiration of the Ericsson-Samsung patent cross-license agreement, Ericsson went to court about a year ago, and Samsung's response included 30 petitions with the Patent Trial & Appeal Board of the United States Patent & Trademark Office, each taking aim at an Ericsson patent. We're now seeing a similar development, though on a smaller scale so far, between Ericsson and Apple, and once again it looks like a net licensee is using some of its vast resources to drive up litigation costs.

Over the course of the last seven days, Apple brought seven IPR petitions against Ericsson patents, and will likely file more in the days or weeks ahead. None of those seven U.S. patents has been asserted by Ericsson against Apple (or is the subject of a declaratory-judgment action by Apple), but each was challenged by Samsung last year. It's somewhat ironic that Apple, which for many years denounced Samsung as a copycat, is actually building on Samsung's 2021 inter parties review (IPR) campaign against Ericsson, even rehashing invalidity contentions previously advanced by Samsung.

I'm a longstanding supporter of robust post-grant review of issued patents, but there's no denying that the process sometimes does get abused by deep-pocketed players to the detriment of innovators challenging patents because they can afford it, not because there's a need. Ericsson has so many patents that it will always find some others to assert regardless of how many Apple challenges. The problem is that such petitions clog the PTAB system and slow down the resolution of objectively urgent cases.

These are the seven Apple v. Ericsson IPR petitions I've found so far:

1. IPR2022-00455 (of January 19, 2022)

   Petition (Scribd)

   U.S. Patent No. 10,165,601 on "methods and apparatuses for performing preamble assignment for random access in a telecommunications system"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

2. IPR2022-00459 (of January 19, 2022)

   Petition (Scribd)

   U.S. Patent No. 8,798,658 on "minimizing drive test logged data reporting"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

3. IPR2022-00464 (of January 19, 2022)

   Petition (Scribd)

   U.S. Patent No. 10,193,600 on "codebook subset restriction signaling"

   (not yet asserted by Ericsson against Apple; asserted against Samsung--and challenged by Samsung--in 2021)

4. IPR2022-00465 (of January 19, 2022)

   Petition (Scribd)

   U.S. Patent No. 8,731,124 on "signaling of sequence generator initialization parameters for uplink reference signal generation"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

5. IPR 2022-00340 of Januar 21, 2022

   Petition (Scribd)

   U.S. Patent No. 10,470,203 on "scheduling request resource configuration"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

6. IPR2022-0458 (of January 25, 2022)

   Petition (Scribd)

   U.S. Patent No. 9,888,486 on a "method and arrangement in a telecommunication system"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

7. IPR2022-00468 (of January 25, 2022)

   Petition (Scribd)

   U.S. Patent No. 10512027 on "on-demand request for system information"

   (not yet asserted by Ericsson against Apple; challenged by Samsung in 2021)

According to an Ericsson reference to those filings, at least the first five of those petitions target patents declared essential to an ETSI standard. Apple may hope to use any PTAB decisions (even if only to institute an investigation) as an argument against Ericsson in the FRAND context, claiming that large parts of the portfolio are invalid. But how much merit would that argument have? Ericsson can always argue that Apple did not attack a representative sample, but cherrypicked certain patents for this purpose.

Again, there'll be more of this, and presumably in short order. And one couldn't blame Ericsson for doing somthing similar now, except that they can't recycle arguments previously made by Samsung or some other party: Apple has no track record of SEP assertions.

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Restoring the America Invents Act: legislative measure to defend post-grant review of U.S. patents welcomed by tech industry, patent experts

About a year ago I described a complaint by Apple, Google, Intel, and Cisco over then-USPTO Director Iancu's PTAB rulemaking as "litigation to the rescue of legislation" because the case was brought in defense of the ideas underlying the Leahy-Smith America Invents Act (AIA). Essentially, Mr. Iancu had gutted the PTAB IPR (inter partes review) part of the AIA by establishing a discretionary-denial regime.

By now there is also hope for the PTAB IPR process because of developments on other fronts. The next USPTO Director may undo some of Mr. Iancu's rulemaking, and now there's a proposal in the United Senate that amounts to "legislation to the rescue of (earlier) legislation": the Leahy-Cornyn Restore AIA bill ("RAIA"). Sen. Patrick Leahy (D-Vt.), one of the sponsors of the original AIA, is now the President pro tempore of the Senate. Sen. John Cornyn (R-Tex.) has also taken an interest in patent policy for some time. Both have a reputation for balanced positions on patent enforcement: neither are they in the "Coons camp" (which favors ever stronger enforcement even of weak patents) nor could they be reasonably accused of seeking to weaken patent protection.

Litigation, executive action, legislation--three ways to reverse Mr. Iancu's PTAB rules, any single one of which could do the job. Executive action would potentially be quickest (as it won't take that much longer until the new USPTO Director has been named). Durability is the most important quality of new legislation: the Restore AIA would not only solve the problem at hand but would also prevent it from reoccurring, unless and until Congress would decide otherwise.

None of these options are mutually exclusive, so in the ideal scenario for the U.S. technology industry the USPTO would alter course (the sooner, the better) and Congress would pass legislation with a view to future administrations. App stores are an entirely unrelated subject (except that Apple and Google, which frequently defend against patent infringement complaints, are involved again, though as reform opponents), but it's another example of parallel efforts on multiple fronts (legislation such as the Open App Markets Act (U.S.) and Digital Markets Act (EU), antitrust enforcement, and private litigation such as Epic Games v. Apple), some of which may even serve to reinforce each other.

A few days ago, Law360 published an opinion piece that makes a very compelling case for the RAIA. The author, Haynes Boone's Joseph Matal, was personally involved with the creation of the original AIA, and served as Acting Director as well as Acting Solicitor of the USPTO. Not only does this background make him an interesting voice to chime in but he makes an argument that policy makers can't brush aside in these times of chip shortage: "[T]he bill would protect American manufacturers against the depredations of hedge funds and other unscrupulous actors that have been exploiting recent opportunities to leverage invalid patents against America's industrial base."

Mr. Matal's op-ed points to estimates according to which "American automobile manufacturers are expected to lose almost $300 billion in revenue because of a lack of access to the semiconductors that control so many of the functions on a modern car." That is an example of the disruptive impact of problems at or near the top of a multi-tiered supply chain. It is in the national economic (and also the national security) interest of the United States to encourage manufacturing companies to invest. And industrial policy also involves IP policy.

The opinion pece points to the record $2.175 billion verdict in VLSI v. Intel. According to Mr. Matal's article, one VLSI patent "claimed simple insights into the voltage needs of integrated circuits" and faced a PTAB challenge by Intel that allegedly "showed that these things had been understood by electrical engineers years before the patent was filed." But irrespectively of the merits of that PTAB petition, the USPTO declined to conduct a post-grant review. It was one of many discretionary denials of its kind.

Mr. Matal notes that the amount of that staggering verdict "is a substantial portion of the cost of building a new microchip fabrication plant" and goes on to ask a (rhetorical) question: "Before we transfer that amount from the nation's premier chip manufacturer to a hedge fund, shouldn't we at least want an accurate and technically reliable assessment of whether the patent is valid?"

Due to that VLSI verdict and the chip shortage crisis, Intel may be the perfect poster child in the U.S. when it comes to being a victim of patent overleveraging.

I wish to clarify that I also take criticism of "patent holdout" and "intelligent infringement" very seriously. Others have argued that the PTAB had too much of a motivation to grant IPR petitions, and I'm philosophically against giving government officials the wrong incentives. If there are issues to be addressed with respect to abuse of the PTAB process by defendants, let's have a debate--and come up with solutions. But the RAIA goes in the right direction, and discretionary denials are not the answer. It should be all about the merits, and that's the way I interpret Mr. Matal's Law360 contribution.

He draws an interesting comparison between two cases in which Huawei asserted U.S. patents. Samsung had some success at the PTAB, but later, when Huawei sued Verizon, the U.S. telecommunications carrier "received a total of six discretionary denials from the USPTO -- the agency refused to consider Verizon's challenges on their merits." The end of the story was that Verizon felt forced to settle with Huawei, and to pay up.

Mr. Matal's opinion piece notes that the country of origin of a patent lawsuit is irrelevant: "Regardless of who is asserting a patent, the public interest demands that we only award infringement damages for valid patents — those that claim a technological advance. Allowing invalid patents to be monetized does not reward innovation — it simply corrupts the system and encourages more investment in this type of litigation." In the alternative, we will see more lawsuits over patents of dubious quality, more damages awards and settlements, and as a result, ever more litigation. A vicious circle.

There are other benefits of the RAIA that Mr. Matal touts, such as that it "would also safeguard patent judges' independence by prohibiting political interference in pending PTAB cases — abuses that are currently the subject of a bipartisan Government Accountability Office investigation."

Here's the most optimistic paragraph from the article:

"Americans are a highly inventive people. There is no shortage of strong patents that are being issued and enforced in the U.S. Providing access to accurate and technically proficient validity review ensures that the patent system's rewards flow to the true innovators rather than to legal opportunists and ultimately preserves the integrity and credibility of the U.S. patent system."

As a litigation watcher with a long-standing interest in patent policy, I couldn't agree more. Reward the innovators, not the mere opportunists--and an assessment of patent quality by the agency that is best-placed to do (and infinitely better placed than a layperson jury) is the way to make that critical distinction.

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In response to Samsung's Federal Circuit appeal, Ericsson points to Munich anti-antisuit case law

On February 22, Samsung filed the opening brief in its Federal Circuit appeal of Ericsson's anti-antisuit injunction from the Eastern District of Texas. Yesterday, Ericsson responded (this post continues below the document):

21-04-02 Ericsson Response ... by Florian Mueller

Those 80 pages from Ericsson are probably just the tip of the iceberg. Come Friday, the Federal Circuit may very well be inundated with amicus curiae briefs in support of Ericsson's position, as there will be no shortage of U.S. companies and academics with an interest in maximizing the number of patent lawsuits brought in the U.S., including in the Eastern District of Texas, which has lately been eclipsed by the Western District.

I believe it makes more sense to go into detail when not only Ericsson's brief but also the anticipated slew of amicus briefs are on the table. But I wanted to be of service and make the document available immediately.

Just a couple of observations:

• Ericsson definitely likes the Munich case law on anti-antisuit injunctions:

  "Courts worldwide recognize the legitimacy of defensive injunctions against foreign efforts to restrict domestic relief. Appx1116; see, e.g., Nokia v. Continental, Oberlandesgericht München [Munich Higher Regional Court], Dec. 12, 2019, 6 U 5042/19 (Ger.), translation at 8 (Appx1858-1867) (granting anti-interference injunction 'as a defense against' interference with enforcement of German 'patent rights in Germany').

  "See also InterDigital Tech. Corp. v. Xiaomi Commc’ns Co., Landgericht München [Munich Regional Court I], Feb. 25, 2021, 7 O 14276/20 (Ger.), translation at 39 (Appx1868-1922) (confirming anti-interference injunction to ensure patentee is not 'deprived of his right[s]' to 'enforcement'); [...]"

  Unlike the U.S. framework for antisuit injunctions, however, German courts afford literally zero deference to courts outside the EU.

• Ericsson argues that Judge Gilstrap's misconception (believing that Samsung was seeking an ITC import ban against Ericsson over its own SEPs, when in reality those ITC complaints involved only non-SEPs on both sides) doesn't matter because Samsung could still do so and, in any event, "Samsung has attacked Ericsson 4G and 5G SEPs through IPRs in the U.S., see Samsung Elecs. Co. v. Telefonaktiebolaget LM Ericsson, IPR Nos. 2021-487, -447, -446, -486 (Jan. 29, 2021), -730 (Mar. 26, 2021)."

  Challenging the validity of another party's patents couldn't be much further from seeking an import ban over one's own patents...

  Less than 24 hours before Ericsson filed its response brief with the Federal Circuit, IAM (Intellectual Asset Management) wrote about "the extent of the assault Samsung has launched at the PTAB against Ericsson as the Korean company pursues a strategy that few can afford." Interestingly, the Unified Patents report IAM cites to notes that Samsung "is the most prolific PTAB filer (49 filings) and at the same time are the most targeted defendant in patent litigation (19 cases as first-named defendant)," while "Ericsson was the most attacked patent owner at the PTAB with 30 petitions filed against them." The passage I just quoted from Ericsson's response brief merely lists a handful of Samsung v. Ericsson IPR petitions targeting SEPs. This means that only about 10% of Samsung's IPR petitions in the first quarter relate to Ericsson SEPs, and only one in six IPR petitions against Ericsson was brought by Samsung over a SEP. All in all, Unified Patents lists 30 Samsung v. Ericsson IPR petitions, most of them relating to non-SEPs. This just a consequence of Ericsson, a notoriously aggressive enforcer, having elected to sue Samsung over a large number of patents.

  The "strategy that few can afford" (bringing many IPR petitions) presupposes a patent holder asserting many patents, which is also a "strategy that few can afford." It's also an indication of how far apart the parties' positions on a reasonable license fee must be: otherwise Ericsson wouldn't be suing so aggressively, and Samsung would consider it cheaper to accept Ericsson's terms than to litigate in multiple jurisdictions in parallel.

There would be a lot more to say about Ericsson's filing, but for the reason stated above (I predict an avalanche of amicus briefs on Friday), I'd like to leave it at that for now.

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Apple, Google, Intel, Cisco sue USPTO Director Iancu over gutting the America Invents Act: litigation to the rescue of legislation

Andrei Iancu, an IP litigator and former chairman of a firm that primarily represents patent trolls, has been persistent and creative in his efforts to prove that it's bad idea to put the fox in charge of the henhouse. The Director of the United States Patent & Trademark Office is one of the three most dangerous men in the U.S. from a patent policy perspective. The other two are Senator Chris Coons (D-Del.) and Antitrust Assistant Attorney General Makan Delrahim, with whom Mr. Iancu teamed up to abandon a very balanced U.S. policy position on the enforcement of standard-essential patents (SEPs).

The Patent Trial and Appeal Board (PTAB) has been in Mr. Iancu's crosshairs for years. After all, it's a troll patent graveyard--and that's just not conducive to the business of Mr. Iancu's former (and presumably future) firm. Last year's revision of the PTAB Trial Practice Guide raised a number of issues that made it harder to challenge weak patents. While those guidelines contain a set of roadblocks that have practical consequences, they did far less damage to the post-grant review process than Mr. Iancu's decisions to designate as "precedential" (and, therefore, binding on the PTAB) two PTAB decisions relating to discretionary denials of the institution of inter-partes reviews (IPR): NHK and Fintiv.

Taken together as the NHK-Fintiv rule, those decisions run counter to what was arguably the single most important idea behind the IPR part of the America Invents Act (AIA): patents that shouldn't have been granted in the first place (because the claimed inventions weren't new, or íf new, then not inventive) shouldn't give their owners leverage in litigation. Otherwise the owners of weak patents are overcompensated, which is a misallocation of economic resource that impedes actual innovation.

In order to strike a reasonable balance between the interests of plaintiffs and defendants, Congress decided--when the AIA was enacted in 2011--to require an IPR petition to be filed within one year of being sued over the relevant patent. Without that requirement, defendants to infringement complaints could file a petition at a late stage of litigation and then move for a stay. The twelve-month window means there is normally enough time to identify relevant prior art--but delaying tactics won't work.

The net effect of Mr. Iancu's NHK-Fintiv rule is that discretionary denials by the PTAB to institute IPR proceedings have become far more frequent than previously, especially in cases in which product-making and service-providing companies have to defend themselves against patent troll lawsuits in the Western and Eastern Districts of Texas. That's because the NHK-Fintiv "factors" make a discretionary denial of an IPR petition particularly probable if the parallel infringement litigation is pending in a district that schedules a near-term trial date (though even so-called rocket dockets often have to push their trial dates back later) and are statistically unwilling to stay their cases. Simply put, the troll-friendlier the district, the harder it is to redress balance through an IPR petition.

Actually, when the one-year deadline set by Congress has been met, it should be all about the likelihood of success of a petition. But only the last one of the six NHK-Fintiv "factors" involves that aspect, and it does so in a way that minimizes the weight of the merits:

"6. other circumstances that impact the Board’s exercise of discretion, including the merits"

As a result, ever more discretionary denials don't even address the merits.

A discretionary denial is fatal to a petition in two ways: even if the circumstances (such as a district court's trial date) change, you can't request reconsideration after 30 days; and when the PTAB has definitively denied your petition, you practically can't appeal that decision to the Federal Circuit.

The net effect is really absurd. Congress wanted IPR petitions under the AIA to bring some balance to patent litigation, considering that juries rarely hold patents invalid. While there is no formal distinction between patent assertion entities and other litigants, the problem of patent trolls was already rampant in 2011, and it was certainly part of the plan to make trolling less lucrative. But now, with NHK-Fintiv, the IPR part of the AIA ever more often fails to come to the aid of defendants when they need it the most, which is precisely when they have to defend themselves in the aforementioned troll-friendly districts.

Four Silicon Valley icons--Apple, Google, Intel, and Cisco--jointly brought a complaint in the Northern District of California (where all four are based) against Mr. Iancu (in his capacity as USPTO Director) in order to overturn NHK-Fintiv (this post continues below the document):

20-08-31 Apple Google Intel... by Florian Mueller

The second paragraph of the complaint raises a key policy question: what makes a patent system strong? Misguided policy-makers believe that a patent system is strong if it favors those enforcing patents. But the leverage a patent owner gets in litigation must be proportionate to the quality of the patent. Patents that were granted only because the very limited amount of time patent examiners (not only, but also at the USPTO) have to find prior art should be invalidated swiftly and reliably once they are asserted in litigation. Bad patents weaken a patent system.

The four co-plaintiffs explain how much they invest in innovation, how many jobs they've created, and how many U.S. patents they hold. No one will seriously believe that those companies--who, by the way, don't always agree--didn't want innovators to be fairly compensated. When they get sued, they obviously defend themselves, and they'll do what any well-advised defendant would do in their place. But all they want is a balanced, functioning system.

The relief they are seeking is declaratory ("[d]eclare that the NHK-Fintiv rule is unlawful"; "[s]et aside the NK-Fintiv rule") and injunctive ("[p]ermanently enjoin Defendant, and his officers, agents, employees, assigns, and all persons acting in concert or participating with him, from relying on the NHK-Fintiv rule or the non-statutory factors it incorporates to deny institution of IPR").

The statutory basis for this is a mix of two laws whose acronyms are distinguishable only by the middle letter: the Administrative Procedure Art (APA), which allows parties to bring challenges to certain actions by government agencies, and the 2011 AIA.

The complaint challenges Mr. Iancu's decision to designate the NHK-Fintiv pair of decisions as "precedential" in three ways:

• Ideally, the four tech giants would like the court to hold that NHK-Fintiv exceeds the USPTO Director's authority and violates the AIA. This is an argument about the limits of the USPTO Director's discretion in how his agency implements the AIA.

• Plan B would be for the court to deem the NHK-Fintiv rule arbitrary and capricious.

• As a last resort (Plan C), the complaint claims that the USPTO Director failed to fulfill the requirement of "notice-and comment rulemaking." If the complaint succeeded only on this basis, the USPTO might ultimately adopt the same rule again, but at least there would have to be some consultation of stakeholders.

The complaint doesn't mention Chevron, a Supreme Court doctrine according to which a government agency is entitled to deference when applying an ambiguous statute. Justice Gorsuch is a known critic of that doctrine and apparently waiting for the best opportunity to have it overruled. The USPTO will likely make a Chevron argument. The complaint suggests that plaintiffs anticipate that line of defense, as it stresses how clearly Congress doesn't want to limit parallel PTAB and district court proeedings other than by way of the one-year deadline. If the courts agree with the four tech giants, Chevron doesn't apply anyway.

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New USPTO trial practice guidelines overshoot as they seek to restrict parallel PTAB IPR petitions challenging the same patent

Since taking office, Undersecretary and United States Patent & Trademark Office (USPTO) Director Andrei Iancu, who previously managed a major patent litigation firm, has been on a crusade against inter partes reviews of issued patents by the Patent Trial and Appeal Board (PTAB). It will take more than one blog post to explain and comment on Director Iancu's various anti-IPR initiatives, all of which share a common goal: to keep as many weak patent claims alive as possible, contrary to the political goal of the economically most important part of the America Invents Act (AIA). Giving leverage to patent holders even though the asserted patents were obtained without an actual contribution to the state of the art is a total misallocation of resources and incentivizes legal gamesmanship while discouraging true innovation.

This month, the USPTO published the latest update to its PTAB Trial Practice Guide (PDF). The section on "Parallel Petitions Challenging the Same Patent" starts on page 26, and its first paragraph is already very telling:

"Based on the Board's prior experience, one petition should be sufficient to challenge the claims of a patent in most situtations [sic]. Two or more petitions filed against the same patent at or about the same time (e.g., before the first preliminary response by the patent owner) may place a substantial and unnecessary burden on the Board and the patent owner and could raise fairness, timing, and efficiency concerns. See 35 U.S.C. § 316(b). In addition, multiple petitions by a petitioner are not necessary in the vast majority of cases. To date, a substantial majority of patents have been challenged with a single petition."

I don't mean to attach too much importance to the typo ("situtation") in the first sentence. I usually have typos in my posts. But in an official document of this kind, typos are unusual, and most often found in sections that underwent edits until shortly prior to publication. That said, the issue here is one of substance.

The "substance" of that paragraph just amounts to vague terms expressing frequencies of occurrence ("most", "vast", "substantial", "rare", "unlikely"). Not even numbers. Just words.

As a matter of policy, that's not the way to provide workable and meaningful instructions to judges. Judges have to make decisions, and they need criteria, possibly examples, that help them do their job. Words like "most" and "unlikely" don't constitute or properly describe criteria, much less a standard, for anything.

What should the PTAB judges do then? Should they keep statistics of the cases before them and strive for a particular distribution of decisions, based on whatever range of percentages a given judge believes to be consistent with guidelines like "unlikely" and "substantial majority?" So after someone grants two petitions challenging the same patent, they'll have to reject at least the next ten?

When outsiders like bloggers or financial investors (especially risk arbitrageurs) try to predict an outcome, it's an inherently probabilistic exercise. But applying the law is different from placing bets on one outcome or the other. It should be all about the merits, not a numbers game.

The section on parallel petitions has many more paragraphs, and some do talk about criteria for whether a petition should be granted, with a particular emphasis on reasons weighing in favor of rejection. But before the reader reaches that point, the new Trial Practice Guide takes the position that two parallel petitions challenging a given patent should be "rare," and three or more should be "unlikely" to be justified--"unlikely" regardless of how many claims a patent has, how complex the relevant technology is, or how many prior art references are presented.

The good news here is that the PTAB judges can still grant parallel petitions if they deem them justified. But Director Iancu will achieve his objective of dissuading many petitioners from even trying to bring parallel petitions now.

I can think of at least four reasons why parallel petitions are sometimes not only justified, but even necessary:

1. There are maximum word counts for PTAB petitions and related filings. However, some patents have so many claims that parallel petitions are necessary. Qualcomm's envelope tracker patent is a good example: it was challenged by four petitions, each of which targeted different claims. And all four petitions were granted based on a likelihood of having merit.

2. Petitions are typically brought in response to infringement lawsuits, and such petitions must be filed within a year of the complaint. However, plaintiffs often have more time to decide which claims to ultimately take to trial, so defendants should be able to challenge all claims of an asserted patent.

3. In light of the Supreme Court's SAS ruling, the USPTO should actually welcome a partitioning of IPR petitions. Under SAS, all challenged claims must be reviewed even if a likelihood of success has been identified with respect to only one of them. Multiple petitions per patent, however, are a means of still giving the PTAB some flexibility.

4. Sometimes defendants identify additional prior art references after an initial petition.

The PTAB's enemies such as former Federal Circuit Chief Judge Randall Rader have used the highly pejorative term "death squad" because of a high invalidation rate (80%). Here again it should be about the merits, not about the numbers. The proper conclusion from a high invalidation rate would be to reject more applications in the first place. Instead of greater legal certainty through higher patent quality, Director Iancu's vision is to have ever more patents (including junk patents), ever more litigation, and ever more leverage for patent holders because defendants will face many roadblocks such as page limits, maximum word counts, the next best thing to a prohibition of parallel petitions, unfavorable claim construction standards, and so forth. While some (such as the firm Mr. Iancu used to run) stand to gain from such policies, it's bad news for legitimate innovators, for the economy at large, and for the general public.

It's very, very hard to convince a jury that a patent should be deemed invalid. Jurors have too much respect for "the Government" in a context like this. PTAB IPRs, however, can solve the problem, unless the process is sabotaged by means of a Trial Practice (Mis)Guide.

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