In Trulia, Inc. v. Zillow, Inc., Trulia filed a petition seeking covered business method review of U.S. Patent No. 7,970,674 relating to automatically determining a current value for a real estate property. CBM2013-00056. On March 10, the Board instituted a trial on the ‘674 patent and set a hearing date of November 19, 2014. On July 28, 2014, the Parties publicly announced a merger, which is expected to close sometime in 2015. However, the merger is currently pending review by the FTC, whose review is dictated by the Hart-Scott-Rodino Antitrust Improvements Act under 15 U.S.C. § 18(a). Under this section the initial waiting period expired on September 3, 2014.
In light of the merger, on August 18, the parties filed a joint motion to request to extend the dates by one year, but no less than six months in view of the FTC’s review and expected approval of the merger. The PTAB asked the parties to supplement their motion after the expiration of the initial waiting period. On September 3, the FTC extended the waiting period in a second request for information regarding the merger. On September 12, the parties filed a supplemental notice to provide additional information requested by the Board, including whether the extent to which the parties are bound by the merger agreement and an explanation regarding why the parties are unable to settle this proceeding in an agreement that takes into account the likelihood of FTC approval. Following the Parties’ submission, the Board denied both a 1-year extension and an extension of six months.
The Board first noted that based on the information provided by the parties, the FTC could file a lawsuit if it does not approve the merger to keep it from closing. If that were to occur, the merger could be delayed for multiple years. In response to the Board’s question about how likely it was for the FTC to approve the merger, the parties responded only that they were “optimistic,” but did not provide any “objective facts” to support their opinion. The parties further stated that they “expected” their shareholders to approve the merger, but the Board noted that this indicated that they had not yet approved the merger.
Faced with this information, the Board concluded that “[a]lmost everything is uncertain” and that the parties desire to delay the proceeding “simply to wait and see” what happens with the approval of the merger. The Board further noted that the parties do not desire to settle now, but look to settle in the future assuming that “all pertinent conditions develop to align in favor of settlement.” The Board held that this basis did not constitute good cause under 37 C.F.R. § 42.5(c)(2) and that “extensions should not be granted on the basis of speculation and conjecture.”
Finally, the Board was not convinced that this proceeding could be settled, taking into account all of the existing uncertainties:
We asked the parties why they are unable to negotiate a settlement agreement that takes into account the uncertainty of FTC approval of the merger agreement. Paper 33. The parties imply that such a settlement could be reached if termination of the proceeding can be arranged without prejudice to the filing of another petition, by stating that it is beyond their control whether the Board would accept the filing of a new petition if the FTC disapproves the merger agreement, citing 35 U.S.C. § 325(e)(1). Paper 35. The response is not sufficiently meaningful. The parties do not explain why, if they can account for uncertainty of FTC disapproval, they cannot account similarly for uncertainty of Board acceptance of a new petition. It is unclear why the settlement terms cannot include two options which address, respectively, the Board’s acceptance or non-acceptance of a new petition filed after FTC disapproval of the merger agreement.
The Board’s decision continues its practice of denying extensions of time that would jeopardize or prevent it from completing trial on the proceeding within the 12 month statutory mandate, absent compelling reasons satisfying the good cause requirement under section 42.5. Instead, it appears that the Board prefers that the parties settle this proceeding and address any uncertainties in the settlement agreement rather than simply seek an extension of time to “wait and see” how the merger plays out.
Trulia, Inc. v. Zillow, Inc., Case CBM2013-00056 (PTAB Sept. 24, 2014) (Paper 38) (Lee, J.).
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. The authors represent inventors, patent owners and technology companies in patent licensing and litigation in U.S. District Courts and in the United States Patent and Trademark Office, including numerous IPRs currently pending before the PTAB. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Greg Cordrey at 949.623.7236 or GCordrey@jmbm.com.