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The America Invents Act (the “AIA”) includes a new inter partes review (“IPR”) procedure that takes the place of the old inter partes reexamination. The new IPR procedure, called a “trial” once the petition for review is granted by the Patent Office, permits declarations, limited discovery, including depositions, and potentially live testimony before the Patent Trial and Appeal Board at the hearing on the petition. This new litigation component is likely to drastically alter the strategy and potential outcomes from the old reexamination process.

Indeed, the litigation component of challenging the validity of a patent at the Patent Office is unlike anything in the old reexamination process. As a result of this shift from a patent prosecution-like proceeding to one incorporating adversarial elements of litigation, it will be important for companies contemplating filing IPRs to review the IPR process and the petitions themselves, including expert declarations, with a litigation mind set and with the help of seasoned litigators in combination with savvy patent prosecutors.

This is the first in a series of articles that focus on the new IPR process and the key provisions that bring litigation to the PTO.
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Complainant FlashPoint Technology, Inc. (“FlashPoint”) initiated an ITC proceeding against HTC Corporation, among others. FlashPoint filed a motion for a protective order seeking to limit the discovery of electronically stored information. FlashPoint proposed a limit of 15 custodians collectively for respondents to select, which included an option to negotiate for additional custodians if there was a good faith basis to add additional custodians from FlashPoint.

HTC asserted that a limit on email discovery would severely prejudice its ability to prove its on sale bar and implied license defenses. As explained by the Administrative Law Judge, “HTC is pursuing an on-sale bar because it believes there is a relationship between the asserted patents and FlashPoint’s invalidated U.S. Patent No. 6,163,816 (“the ‘816 patent”). The ‘816 patent was invalidated by an on-sale bar in ITC Investigation No. 337-TA-726 (“the 726 Investigation”). (Opp. At 5.) HTC further explains, “Flash Point is again claiming that HTC infringes patents arising from the FlashPoint project work conducted in the 1990s, and HTC is again raising the on-sale bar…” (Opp. At 6.) Thus it appears HTC’s motivation for the on-sale bar is its suspicion that because the asserted patents and the invalidated ‘816 patent were related to the same project work, the asserted patents might also be subject to the on-sale bar. HTC also briefly explains the motivation for its implied license defense, namely that HTC is a customer of a licensee of FlashPoint’s technology.”
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After the recent global settlement between Apple and HTC, the terms of which Apple and HTC agreed to keep confidential, Samsung requested production of the agreement from Apple. Samsung moved to compel the production of the agreement.

Samsung sought discovery of the agreement with HTC to support its opposition to Apple’s motion for a permanent injunction. Samsung asserted that the settlement agreement undermined Apple’s assertion that an injunction is a more appropriate remedy than monetary damages. Apple responded by stating that it was willing to provide the settlement agreement but asserted that HTC objected to the production of the agreement because the agreement’s financial terms had competitive value.
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Brandywine Communications Technologies, LLC (“Brandywine”) filed a patent infringement action against Cisco Systems, Inc. (“Cisco”). During the initial case management conference, the parties were given additional time to supplement their initial disclosures and were told to do so “on pain of preclusion.” Cisco contended that the damage disclosures remained inadequate and the district court was called on to address the issue of to what extent Fed.R.Civ.P. 26(a) requires a plaintiff in a patent cases to disclose and specify damages at the outset of the litigation even though some of the necessary information is only in the hands of the accused infringer.

Rule 26(a)(1)(A)(iii) provides: “A party must, without awaiting a discovery request, provide to the other parties a computation of each category of damages claimed by the disclosing party — who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered.”
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In December 2010, plaintiff Multimedia Patent Trust (“MPT”) filed a complaint for patent infringement against several defendants, including Apple, LG and Canon. The complaint accused the defendants of infringing several patents pertaining to video compression technology. The district court subsequently granted Canon’s motion for summary judgment based on exhaustion. Prior to trial, the remaining defendants filed a motion to exclude MPT’s infringement expert’s analysis under the doctrine of equivalents.

After reviewing the standard for a Daubert motion to exclude expert testimony, the district court turned to the specific standard for infringement of means-plus-function claims. “A patent infringement analysis proceeds in two steps. Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995), aff’d 517 U.S. 370. In the first step, the court construes the asserted claims as a matter of law. See id. In the second step, the factfinder compares the claimed invention to the accused device. Id.; see also Verizon Servs. Corp. v. Cox Fibernet Va., Inc., 602 F.3d 1325, 1340 (Fed. Cir. 2010) (“A determination of infringement is a question of fact . . . .”). “To prove literal infringement, the patentee must show that the accused device contains every limitation in the asserted claims. If even one limitation is missing or not met as claimed, there is no literal infringement.” Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1308 (Fed. Cir. 2002) (quoting Mas-Hamilton Group v. LaGard, Inc., 156 F.3d 1206, 1211 (Fed. Cir. 1998)).”
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With the Federal Circuit’s recent decision in Akamai Techs., Inc. v. Limelight Networks, Inc., 2012 U.S. App. LEXIS 18532 (Fed. Cir. Aug. 31, 2012), the elements for proving inducing infringement changed significantly. As a result, we can expect that a number of plaintiffs in pending patent cases will seek to amend their complaints to take advantage of the new standard. Whether amendment will be granted or not will vary depending on the stage of the case.
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The court previously awarded sanctions in the form of attorneys’ fees pursuant to Fed.R.Civ.P. 37 to both Samsung and Apple based on various discovery motions. Apple and Samsung both filed applications for attorneys’ fees and then objected to each other’s applications. The court found the descriptions of the attorneys’ fees, despite two attempts to submit detailed invoices, lacking. As explained below, the lack of detailed invoices caused the court to reduce the attorneys’ fees for both Apple and Samsung.

Samsung was awarded attorneys’ fees because Apple failed to turn over to Samsung certain deposition testimony by Apple’s employees in other matters. After granting three motions to compel, the court awarded sanctions in favor of Samsung, and Samsung requested approximately $258,000 in fees. Apple was awarded attorneys’ fees because Samsung was dilatory in producing documents to Apple. Apple sought approximately $116,000 in attorneys’ fees.
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With a trial pending in late November in this patent infringement action, Marvell Technology Group, LTD (“Marvell”) moved to strike Carnegie Mellon University’s (“CMU”) expert report on damages. Specifically, Marvell asserted that the expert’s reference to overall price, profit or margin of the chips accused of infringement in the litigation was irrelevant and highly prejudicial in light of the Federal Circuit’s recent decision in LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012). CMU opposed the motion asserting that LaserDynamics did not impact the damage expert because the expert’s royalty calculation was not based on the entire market value, which was at issue in LaserDynamics.

The patents-in-suit are directed to sequence detection in high density magnetic recording devices, specifically high density magnetic recording sequence detectors. CMU asserted that Marvell infringed the patents-in-suit throughout its “sales cycle,” which involves testing of both computer programs and manufactured chips. As explained by the district court, if a sales cycle is successful, it culminates with a “design win” and Marvell makes mass sales of chips that then allegedly perform the patented methods. CMU sought a reasonable royalty for Marvell’s alleged infringement throughout the entire process.
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Over the weekend, Apple and HTC settled all of the long running patent suits that both companies had filed against each other in multiple jurisdictions. Although few details of the settlement were released in the two sentence press release that included brief quotes from HTC and Apple, the companies did state the the they had reached a “global settlement” that included dismissal of all current lawsuits. The companies also specified that the license extends to current and future patents held by both parties for the next ten years. The remainder of the terms, including the financial terms, are confidential.

And so one of the earliest and longest patent battles over smartphones ended quietly. Although no monetary terms were disclosed, it is likely that HTC is paying a royalty to Apple in order to put an end to the litigation. The impact on HTC from the Apple lawsuits was significant, hurting both its stock price and its ability to timely ship product due to the exclusion order Apple obtained at the ITC. As a result of the settlement, HTC will now be able to focus on making and selling products instead of litigation. That can only be a positive for HTC.

But what about Apple?
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Defendants BRP US Inc. and Bombardier Recreational Products, Inc. (“Bombardier” or “BRP”) filed a motion to stay pending the inter partes reexamination of the patents-in-suit asserted by Polaris Industries, Inc. (“Polaris”). Polar manufactures recreational vehicles, including snowmobiles and Polaris obtained patents for rear suspension technology for snowmobiles. Polaris asserts the designs related to these patents improve rider comfort over rough terrain.

Bombardier is a Canadian recreational vehicle company that manufactures the “Ski-Doo” line of snowmobiles and it is also a competitor of Polaris. Bombardier introduced a rear suspension technology for snowmobiles called “rMotion.” Polaris alleged Bombardier’s suspension technology infringes the patents-in-suit. Prior to filing the patent infringement action, Polaris sent Bombardier a notice of infringement letter. As a result, Bombardier initiated an inter partes reexamination of the patents. The patent infringement action was filed one week after the reexamination. The PTO subsequently granted the request for reexamination and Bombardier moved to stay the case.
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