This episode is audio of the State of Play in District Courts panel from the Engelberg Center's Rethinking Patent Prosecution, Review, and Litigation event. It was recorded on March 28, 2024.
Panel One: The State of Play in District Courts
John Desmarais (moderator), Desmarais LLP
Judge Raymond Chen, U.S. Court of Appeals for the Federal Circuit
Nicholas Groombridge, Groombridge, Wu, Baughman & Stone LLP
Judge Maryellen Noreika, U.S. District Court for the District of Delaware
Saurabh Vishnubhakat, Cardozo Law
Announcer 0:01
Welcome to engelberg center live a collection of audio from events held by the engelberg center on innovation Law and Policy at NYU Law. This episode is audio of the state of play in district courts panel from the engelberg center is rethinking patent prosecution review and litigation events. It was recorded on March 28 2024.
John M. Desmarais 0:27
Okay, welcome, everybody. I'm moderating this awesome panel. Let me just tell you, briefly, who, who's here with me. So judge Chen, you just heard from was appointed to the Federal Circuit in 2013. His short bio starts with his fantastic legal education that he got here at NYU Law School. He also has an electrical engineering degree University to California, started as an associated canobie. Martens so he knows a little bit about patent litigation, then left there to get a job at the Federal Circuit as a tech assistant, moved to the PTO became solicitor, the PTO, and then then got appointed to the Federal Circuit. So we get both PTO expertise, litigation expertise in court of appeals expertise with my good friend, Judge Chen. Then we have judge Noreika appointed of Delaware District Court in 2018. biology background from Lehigh University and Master's from Columbia. So she knows her way around the Bio Lab. She went to University of Pittsburgh law school and started practicing Delaware, Morris Nichols became an IP litigator unfair competition cases as well. So it's got a nice litigation background before she was appointed to the bench, and 2018. And I haven't had the pleasure of trying a case in front of her but I'm looking forward to it. And hopefully, now that I've said nice things, she'll treat me nicely when I get them treated as Exactly. At the end we have Professor Vishnu McCann from Cardozo, he's a director of IP and information law could or Cardozo Law School teaches patent law, Cipro and IP policy, also a scientist, he has a chemistry degree from Georgia Tech and a JD from New Hampshire Law School. He worked at the PTO as well as an advisor and the Office of the Chief Economist, which I didn't know the PTO had an office of the Chief Economist, but let's see good, pretty good. Yeah, maybe we'll learn a little bit about that. Then he left the PTO to start teaching started at Duke then went to Texas a&m And, and now has his current role at Cardozo. And last but not least, my good friend Nick Grow Rich, his partner at his own firm Trowbridge, who and and a few others. Prior to that he headed up the IP practice of Paul Weiss. He was educated in London, and received an LLB from the University of London. But he's been practicing here in the United States for decades, which you couldn't tell because he still has his London accent, which is very cool. But he's run dozens of patent trials and had dozens of appeals and is one of the top people in this field. So excited to hear his comments today. And his real claim to fame as he teaches patent litigation here at NYU, so. So he's teaching some good passing on what he has learned. Alright, so that's the great panel we have let's jump right in. So let's start with our good professor from Cardozo. We heard judge Chen, give his dire commentary on the state of patent quality and how the IP hours are going. And I understand you have some statistics so we can we can get a real look at how it's been going. Why don't you tell us what you've learned?
Saurabh Vishnubhakat 3:46
Absolutely. So what I'll offer is just a few slides, everybody can hear me, okay. Just a few slides, sketching out a story over the last 12 years 11 and a half years or so, about the inter parties review system, and how it has intersected at various times with the district courts and the strategic incentives of various litigants who come before that tribunal to challenge or defend hattons IPR filings. pretty noisy, right. This is month over month data, actually. But the main takeaway here is that they peaked in about late 2015, late 2016, there was a relatively upward direct upward trend and then since then, has been gradually declining and that trend continues to this day. It's it's not particularly robust at the level it was since about mid 2018. Institution decisions this is an important metric that Judge chan pointed to as far as the propensity of panels of the board to institute upon petitions that come before them. Now, of course, the likelihood that litigants thing petitioners think that their petitions will be instituted upon or not instituted upon acts as an inducement or a deterrent to file in the first place. But once filed, we saw until about April 2018. And I'll explain in a moment, for those who don't remember why that data is significant, that there were three possible outcomes, it can be fully instituted, fully denied, or partially instituted and partially denied. And the share, right, if you look at the orange portion, which is fully denied, and the blue portion, which is fully instituted, we see a sort of generally increasing trend of full institution, a generally increasing trend of full denial, and this sort of gray middle ground of partial institution which don't really know what to make of it. Partial institution came to an end in April 2018, and Supreme Court decided SAS Institute, and how that the the IPR institutions statute require full institution or full denial. And so from that point on, we have one of two choices. And it's been relatively even as between denials, and, and grants. But that still doesn't tell us what the early story was. And so if you stop and step back for a moment, from the petition level view that the USPTO has taken, most public websites that track IPR statistics look at petitions, it's actually more valuable to look at this. In terms of the actual workload imposed by these petitions, not all petitions are created equal. And some petitions have multiple claims that are being challenged some only a few, some are being challenged on many grounds with respect to those claims, some only a few. So if you combine the claims and grounds and take the sort of permutations of those claim ground pairs per petition, some petitions will represent a much greater workload for the P tab than other petitions will and the share of claim ground pairs that are instituted or denied. There's no partiality there. Because that's the smallest level of granularity. It's actually fairly even across the entire history of the P tab. So any notion that this has been getting significantly better or significantly worse, depending on your perspective, over time, is perhaps a little bit misguided by the way in which we've been measuring it. The P tabs filtering at the institution stage has been pretty stable. There's been some variation, but pretty stable. You'll see at the very beginning, it was a pretty high rate of institution even as to claim ground pairs. And that was predicted by many people, including some in this room, including my co author already, right, who, you know, sort of identified that look, the low hanging fruit, the patents that are clearly invalid or clearly suspect are most likely to be the ones brought to the agency first. And so that seems to be what's borne out by this historical view. Now, what about the share of petitions that eventually result in patent validity determinations one way or the other, either they are invalid or they are not invalid? Well, that's been gently declining over time as well, the rate at which these petitions actually reach a final written decision that reveals a determination about validity has been declining, more of them are settling, which also perhaps means that more petitions of you know, contentious or contestable quality, not happens, the petitions of contestable quality are being filed than they used to be the low hanging fruit has been picked, in other words of this relatively small share, but 30% lately that make it all the way to final written decision. The rate at which patents are fully cancelled is quite high. The rate at which they fully survive or partially survive is relatively low. Now, what is this a function of patent quality is undoubtedly one. But bear in mind that at the outset of the institution decision, the standard by which the P tab measures whether Institute is a likelihood of success on the merits. And so if they have indicated that after an initial review, the likelihood of success on the merits does exist. And then we see the eventual determination of success on the merits. That is at least partially attributed to the the ability of the board to accurately forecast how a petition will play out based on the information they received at the time. Right in the same way that a in district court a preliminary injunction motion includes a sort of likelihood of success determination at the outset. It immediately prompt settlement. And so also in the pita, there's a significant amount of settlement going on, once it's clear that an institution has taken place. So the slides I'm happy to share. I assume they'll be part of the Cle materials has details at the bottom about the numbers involved at each stage. You're welcome to pour over these at your leisure, but the That's where we sort of set the stage. And and I've turned it back to John to continue the discussion. Great.
John M. Desmarais 10:06
Thank you. That was interesting data's and it's seems consistent with what we heard in judge Chen's opening comments. Our panel is focused then on what what is the state of play in the district courts as a result of all of this activity at the P tab and with invalidating these patents at the rate that we are? So let me ask Nick, who who's a patent litigator on the front lines here? What are you seeing in in your practice, Nick? And is is this gloomy picture that we're hearing playing at? How's it playing out? Think this
Nicholas Groombridge 10:40
the some gloominess? John, I think, you know, if we step back and look at this the however many years ago, it was now 12 years ago, the United States elected to create a bifurcated system. And to me, there's no small irony in that, that when I grew up started in this field in the 1980s, it was commonplace to hear us practitioners speak with derision of foreign systems following typically the historically German model and saying that bifurcated systems were a recipe for bad things to happen. And, you know, there's some interest in terms of how do we get to that place ourselves. But to me, how would you go if you implement a bifurcated system, it's inevitable that there's going to be some period of trying to really harmonize the two the two parts of it, and how long that's gonna go on for and what the consequences are, are, I think, are really the question that we're talking about here? are certainly we have seen waste. In some instances, shocking levels of wastefulness in terms of duplicative procedure proceedings. I haven't worked. I'm sure it's an extreme example, but I had a case where there were there was district court litigation. A petition IPR petition was filed, the petition was successful as a final written decision. But the district judge decided that nonetheless, we had to proceed with the trial. And we actually had a jury trial on a patent that had been revoked. Right, and we couldn't breathe one word to the jury about that. Right. We as the
John M. Desmarais 12:31
candidate probably lost on validity. We we
Nicholas Groombridge 12:35
actually, we actually did lose on invalidity. I'd like to think we won on damages. But the but it was moot because once it got to the good offices of the Federal Circuit that's
Judge Maryellen Noreika 12:45
Have you tried, he or she have you try the validity to Yes, we tried validity, even though you are stopped what? From the final written decision we
Nicholas Groombridge 12:55
asked. The defendant was super careful not to touch anything that might implicate the art that had been the basis for the IPR, we had other art as an to this question of wastefulness. Now it's commonplace to say I'm going to have my my my best set of printed prior art that goes in the IPR. But I'm going to have my non printed prior art, in this case of what I thought was a pretty robust you know, we did it first defense right now. And we proceeded with this, we wasted the time of the citizenry. We, there we were, we had this case, and and then, you know, approximately six months later, the got to the federal there was an argument in the Federal Circuit, and approximately a few months after that there was a decision say, affirmed, and it's hard to imagine a more wasteful set of legal proceedings, right. And, you know, at every level or and that's certainly, as I said, an extreme example, but it then feeds into the next thing that I want to talk about that in bifurcated systems, you have to deal with how do you what is finality. And here, what I don't feel we have yet done is, is come to a good harmonization of these two sides of the system. And so we have what people sometimes refer to as a race to finality. And we have these distortions where one side is trying to push one proceeding along and hold up the other one, and the other side is doing the opposite. And, you know, that's, again, if you were sitting down, John, as you said to design a patent system, this would not be it. Right. And I think I think part of the reason we got here is that for a set of reasons, largely historical, the there has been a lack of a good off ramp in district court litigation, is that many of you in the room have heard me say that my view of the reasonable I want to one emerged was because certain stakeholders, mostly the tech industry needed desperately needed a means to throw out bad patterns. And one on one came to serve that purpose because it could be raised at emotional dismissal stage with a set of then ensuing distortions in the system that we're grappling with, right? And these are all signs of something where system searching for the answer to certain questions, but what it finds is imperfect and so on. Likewise, we've got this there's still you know, the the APR system came into being because of the lack of a good off ramp, but it comes with its own set of problems. My view would be to put together a good IPR take several months, even if you're cranking on the thing, right. Not doing much less than a couple of months, right. And to judge Chen's question searching people, you know, very often all have their own favorite search techniques. And sometimes we crowdsource these things. There's, there's a whole cottage industry of how we go about searching. And one of the effects is we can't, can't get to having a good petition on file for several months. And then the district courts have not wrongfully come to the point, I think very largely, I'm saying I'm not going to grant a stay until I know whether this is getting instituted. So that's six more months. So very commonly, we're, you know, we're nine to 12 months into the district court litigation, at the time when a stay happens. And that's far enough in in most courts that we've got into discovery, and there's a significant bolus of cost that has occurred, even if we're going to have a stay. And and, you know, these are not very good ways in my mind to to harmonize these systems. So I won't go on much further. I will just say that, I think also the near the ubiquity of continuation practices, another thing that's bringing, that is another layer of difficulty that comes in here. What happens when the patent holder inevitably is prosecuting, continuing to prosecute related patents? And another complicating factor, you know, both not only at the intersection of IPs, and district court proceedings, but just in pure district court proceedings? How do you deal with that, as these patterns are continuing to issue that are clearly overlapping, but by design, not identical? Now, there's another sort of significant systemic case management issue there. John,
Judge Raymond Chen 17:36
can I ask a question? Of course, you were saying that there's a need for an off ramp? Yes. Did can you identify what a possible off ramp would look like? Well,
Nicholas Groombridge 17:46
so to me, it would be it's a way to weed out unmeritorious patterns relatively close to the front end, which is what what I want has served as the problem with that is it it for procedural reasons, because it rule 12 imposes a set of limitations that are imperfect, and that have led to my mind to distortions in the system. If I were sitting down with a clean sheet of paper, I'd say I want something where there can be some level of plenary review of this, not within the confines, the artificiality, of rule 12. And someone can say that, you know, there's a piece of rubbish, we're not going to spend $2 million on Discovery on this thing. Right, like, you know, and, and, you know, with the concomitant opportunities for arbitrage that, you know, I have a client, for example, who, when they get sued by non practicing entity, now, they don't even hire outside counsel, they send the NPC This is our form settlement, this is how much pay, sign it send it back. It's not negotiable. Right? And, you know, In what world is that a good thing? Right? They so what I would say is, we, you know, that there ought to be such an opportunity for, for perfectly in their day, good historical reasons, there isn't. And so and that has brought us to a place where we, that created the pressure that led to the modern P tap system, it created in my, my opinion, 101. And you've got this set of stresses within the system, because we can't just say let's let's just have plenary review early on, it's not possible because of the Seventh Amendment and other things.
John M. Desmarais 19:32
So So Nick, thanks for your comments. I think that you're you're pointing out the waste in the current system for bad patents is, is huge. And I've experienced that many times on the defense side where by time you get to the point of a stay, your clients already spent literally millions of dollars on Discovery. But But let me say a word before we pass it over to the district court judge to talk about what she sees. Let me say a word for good patents because I think the the waste is also prevalent in our current system for good patents. So we have a case of my firm where we're representing an individual who was a physician who started his own company has a fantastic patents that revolutionized prenatal care. He was hailed in all the major medical journals as the father of this industry, the non invasive prenatal testing, written up in JAMA, New England Journal of Medicine, the lancet as a revolutionary invention. All the big diagnostics companies copied it. So we brought cases against them. They all instituted IPR simultaneously. So this individual, it had to defend 10 separate IP PRs on, you know, similar art, but everyone had a different art. So I'm representing this individual, and he's got to pay for 10, separate IP prs. And we had all going simultaneously. And we had cases in Delaware, Texas and Los Angeles, because that's where the defendants were. And the courts in Texas, and Los Angeles did not stay the cases, Delaware stayed the cases. So we're representing an individual who's defending 10, separate IPR simultaneously. Two cases in Texas, a case in LA. And you know, we got to get through all of that it takes years. All the patents come through, not a single claim and validated and all 10 IPR is, and now we've got cases that have finally been on state and Delaware that are moving forward. And when you think about the amount of money that this individual had to spend, to defend these patents, that everybody objectively could have said, these were revolutionary patents at the time. You know, it seems like the system is broken on the plaintiff side,
Nicholas Groombridge 21:43
don't get me wrong. I mean, I'm, you know, I think, you know, more generally pro patents, right. I'm not suggesting that I think that, you know, patents are bad by any means. And it's a matter of public record that we we represent Novo Nordisk on the, you know, the molecule that is that you all think of as ozempic and would go v. And, you know, it's hard to imagine it that maybe I should talk about this, because it's the litigation ongoing, but, but there's an incentive in this for people to take a swing just obviously can't. Right. And, you know, that patent, which is a candidate to be the most valuable patent in existence, right, nonetheless, was challenged in a way that struck me as being frankly, you know, not meritorious.
John M. Desmarais 22:29
Yeah. Well, maybe judge America has the solution. But, Your Honor, what are you seeing? And then on the District Court bench? And how do you handle this, these simultaneous proceedings in the in the waste that comes from this? What do you do with stays, you know, give us a sense of what's happening from your point,
Judge Maryellen Noreika 22:44
your perspective. All right, well, let me get to the end. Spoiler alert, I do not have the solution. Next, no. So I mean, I take the points that Nick has raised as being valid. But in terms of efficiencies, I haven't found that any off ramp that I've seen has actually been that efficient. I mean, the when I first became a judge, the cases that I had that were the oldest were the ones that had been to the Federal Circuit and back two or three times because someone had convinced the judge that we could take a shortcut. If we just do this summary judgment on this one issue, and you hold everything off, we can get this case off your docket, and the judge bit, and the Federal Circuit said, no, no. So they came back. And then I had one case where she bid a second time. And the Federal Circuit said no, and they came back. And so for me looking at that my initial take was, it's gonna take a lot for me to give you the shortcut, rather than let's just try and go through the litigation. I understand that may be inefficient in many ways. But so is having a case that, you know, requires both the district court and the Federal Circuit to look at it multiple times. 101. I mean, I don't think we have enough time for me to talk about 101. I keep getting these cases saying it's a threshold issue, yet. There are factual issues undermining it, I have to give someone an opportunity to replete it, they can reap somehow plead out of 101 if you have enough in your pleading, so I don't even know how anyone can seriously tell me it's a threshold issue. So that's not an off ramp that seems to work. So the off ramp, the best that I can think of is what we currently have, which is a stay of the district court proceedings in appropriate inappropriate circumstances. And you're right the often the motion to stay doesn't come in until after some significant discovery has been done. But you know, I can't help that at this point. As for me, when I grant a stay, my thoughts on this are evolving, it's evolving both as to when to grant a stay, and if granted when to lift the stay. Because both of those things come into play in front of me. And my thoughts are evolving on this largely because of what's happened to me, and in my case is when patents have survived IPR, and they come back and I have to sort of try and I try and make them go a little bit faster, because the patentee has a valid patent and has not been able to assert it. And I also have found that there's some sort of like oddities in the, in what's happened, and I'm gonna get into a few of those. But for starters, if the parties both agree to a stay, I will use you I will, I don't think I've ever not granted the state. So in the case that you were talking about John, where you had a plaintiff, who was litigating in Texas and California, while also dealing with the IPR, if that person was the plaintiff, did your plaintiff move first day? Or did did the proposed defendants do? So the defendants did? So your your client was litigating in those those places? Because he chose to? Yes. Okay. So but it for me, if you if you stay it, if you agree to a stay all granted, if it is a contested motion, then I'm going to look at the factors that the courts are supposed to look at in determining whether to exercise discretion. Hint, if all the claims have been instituted, you're probably going to have a better argument to get a stay, if none of the claims have been yet instituted. Because there's just two petitions filed and you come to me and you say, Gosh, it's a really good one, though, Judge, I never come to you with a petition. But this is a good one, you're probably still going not going to get the stay at that point. Now, it was interesting, because when the professor was talking, he was talking about we don't have partial, you know, institutions anymore. But for me, I still think of partial as coming up in terms of requests for stays, because often I have three or four panels, three or four patents issued, or five patents that are at issue in front of me. And it's not uncommon, that the P tab will institute on some claims of some of those patents or Institute on the claims of some of those patents, but not Institute on others. So then I'm kind of left in a balancing act. And I don't do you know, it's not a purely mathematical exercise. But certainly if I'm looking at factors like how much this is going to simplify the case, I have to look at what portion of the institution it affects my case. Another thing that that comes up in terms of my willingness to stay a case is something that that Nick mentioned, and he thought it was such a good thing. I think it's a horrible thing, which is system art. Right. So if I have to consider is this stay going to simplify things. What has happened to me in the past is that we I stay a case it goes through IPR, and the defendant comes back and they say, Oh, guess what, we still have one or two, one or three 112? One, one. And I realized that not much got simplified by the estoppel. That was that was in effect as because of the final written decision. So now, and there's a split in the district courts as to what the effect of that estoppel is on system art. So the split is whether at some point someone I don't know me, the jury, someone is supposed to say, Well, gosh, that system art is really not substantially different from the paper art that was in front of the P tab, or whether you just look at the statute, and the statute says you could not bring the defendant could not bring system art. And so therefore, there is no estoppel on that. I have taken the position that the system art is is not the subject of an estoppel because the person or the the defendant couldn't bring now I have we have two I have two former or one two current Federal Circuit judges, one one who's dead, both of whom are still doing District Court work on my my district, one of them has said, has agreed with me. And one of them has gone the other way. So I'm really looking forward to some guidance on this one, Judge Chen. But in any event, what I do now is when a defendant comes to me and asks for a stay, I say, Well, are you going to agree that that estoppel applies to system art? Do you have system art? Are you going to agree that it applies? If the if they say, Yes, we do have system art, and it's not going to apply to it, that's probably one of the things that will weigh against granting a stay, it's not going to be dispositive. But I certainly now asked that question. Another place where things get a little complicated in a stay is when you have one party, you have multiple defendants in the case who have things being asserted against them, one party petitioned for IPR, the IPR is instituted. Technically, that party that gets it assuming there's a written decision is going to be subject to an estoppel. But all the other five aren't. Right. So we need to sort of grapple with Will those other parties agree to be bound by a scope of estoppel? That the party petitioning would? And if they won't, again, it's a reason that perhaps a stay isn't, in at least the efficiencies of my court? Makes sense? So these are, these are like real practical issues that I have to grapple with. But they certainly are. So I can't even though I may think of things like well, you know, gosh, this patent, so many patents are invalidated, and I could just take them off my plate, I have to think that there are still plenty that come back. And I can't have, you know, just this entire mess where all we've done was delay the rights of someone who has a valid patent in asserting them. I will say that. I have also had I I can't believe you just made it sound like the judge was so horrible. And now I'm worried that that was my case. I did. I was like, in my head, I'm like, Okay, who were the council who were the council.
So just to give that judge a little bit of, of, of, of an out here. So I had a case where there were multiple patents at issue. I think there were three that were originally filed in the complaint, two of them came out of IPR with valid claims, one of them did not one of them all of the claims were invalidated. When we got to trial, there was a pre trial motion that said, don't let the plaintiff the plaintiff still wants to assert infringement of these claims. And don't let them because the claims are dead. They're invalidated by the P tab, but the Federal Circuit hadn't yet ruled. And so what I wound up doing in that case was I mean, I was reading the opinion yesterday, and I was feeling really bad for the defendant. But I said the plaintiff could assert infringement. And the defendant was subject to a stop, because there was a final written decision. So there was an estoppel. So the defendant, I think, had some won 12 arguments. But the plaintiff went forward at that trial. And asserted infringement, the defendant did not assert 102 or 103. Now turned out okay for that plaintiff or me for that defendant, because there was a finding of no infringement. But, but I did that now, whether I would have I don't think I would have done that if all the claims that were in front of me, had been invalidated. Because that does seem like it's rife with inefficiencies. But here where I was faced with the choice of the inefficiency being a second trial, if, if that patent were to return, I let it go. So that's just a little bit of some of the practical things that we grapple with and the District Court. And
John M. Desmarais 34:25
I think the scope of estoppel is a real problem. You know, I think the defendants should have to choose where do you want to fight? Pick your best weapon and pick a for
Judge Maryellen Noreika 34:35
the statute. I mean, and I spend there was there were good, good reasons for this, but the statue which really only knocks off some of your bases for for invalidity and only have those even a smaller subset, it's it's kind of rough what
Nicholas Groombridge 34:54
we have as practical matter, bifurcated validity, right? Because I mean for And again, I don't fault those. I see some of them here who worked on the statute. But they were good and proper reasons for doing that, which, you know, speed and certainty. But it sets up a situation where now we have a fight the always now, two tiers of invalidity argument. Yeah, that's
Judge Raymond Chen 35:17
right. I think part of this whole post get Grant, administrative post grant review, has been an evolution of 40 year evolution. And so it's an iterative process. I mean, I know many people thought, IPR is PGRs CPMs, were finally the solution. But I think if you look, take a step back and look back to the 40 years, it's probably just one step significant step in a still ongoing process, because 40 years ago, that's when ex parte re exams were created. And that was the first time where the agency had an opportunity to take a second look at the patents granted. And then that was ultimately deemed to be not maybe fair enough to the requester, or it was taking too long. Then 20 years later, they came up with inter party's re exam. And that seemed to be something that had a lot of advantages, but then again, it was taking too long. And I think that's why we got the IP ers and PGRs. That seemed like there was going to be a lot more process for everyone. It was supposed to go fast. But still, as we can see, it doesn't go fast enough. And the reason why we're just limited to prior art challenges is because in many ways, these IPR czar, an outgrowth of the RE exams, which were just prior art based, but now that we are where we are, where these IPR is they don't really look like a charged up reexamine to me anymore, they look much more like a, like a, like a true alternative to a district court litigation. There's no, there ought to be live testimony probably in a patent board proceeding. But it seems to now make more sense to let the board look at everything, and not just half of it. So now we just have this half dog half cat thing at the patent board
Nicholas Groombridge 37:17
with like could go to a truly bifurcated system as in Germany, where the court the Terek infringement doesn't have jurisdiction to decide validity on any years.
John M. Desmarais 37:26
I think that's a more sensible approach. But But I think we shouldn't let Judge chan off because I do think we're waiting for a ruling on the estoppel question. Let's solve the district courts problem.
Judge Raymond Chen 37:38
Mary Ellen, I'll tell you at the break, okay.
John M. Desmarais 37:45
All right, so you're not gonna you're not gonna issue a ruling on which is the correct form of okay.
Judge Maryellen Noreika 37:53
I did have, by the way, someone who was applying for a clerkship, and she sent me a copy of her law review article, and her law review article was about which way the estoppel should apply. And she did not agree with me.
John M. Desmarais 38:12
Well, you know, we talked about some flaws with the system, and maybe ways we should change it. I don't know, Professor, are there is anyone considering changing these stopple rules or the prior art rules or what's going on in Congress?
Saurabh Vishnubhakat 38:24
Yeah. So the the legislative reforms that are being considered now right in, in Congress, particularly in the prevail Act, which is taken prior iterations, the strong Patents Act, the stronger Patents Act, and so on. It actually hasn't taken very much aim at the problems we're talking about here, as far as prior art is concerned, or as far as expanding the scope of IPR is to include more grounds for for invalidity to take that off the district courts claim or act as a more complete substitute. But there are some structural changes that are being considered that I think are actually probably well advised. As far as the the overall substitutability of IP, RS and PGRs, for that matter, with district court litigation. And I'll point to two in particular, and this draws on sort of prior work that I've done on my own and with co authors on the the way in which IPR is really sold as a really efficient, really expert faster, cheaper, more accurate substitute for district court litigation, that we could take this off the district court's plate. Most of the petitioners who come to the PTO, for IPR historically have been folks who were sued first in the district court and are acting in a defensive posture. So that in our in a paper from about eight years ago, my co authors and I found that it was about 70%. Prior defendants suing on the say, a petitioning on the same patent that they have been. They are now challenging the other 30% are acting preemptively in the sense that they haven't been sued on that patent might have been sued on different waters. I've seen somebody else get sued on a on the same patent. But it's a defensive response. And that's great. Whether the state issues whether the P tab exercises its discretion, right, the the very controversial now and HK fintiba doctrine, which has been around for a while where the P tab says we're going to stay our hand, because the district court is sufficiently far along are likely to resolve this first and so forth, still leaves open two very important sources of divergence. One was that the P tab, from the earliest days of AIA trial review, interpreted claims under the broadest reasonable interpretations standard, right. That was claim construction until 2018. When by rule change, it became aligned with the Phillips standard that's used in the courts. Now, what rulemaking giveth rulemaking taketh away sometimes, and so the sort of codification of that approach to use Phillips, the codification into statute is one of the provisions that the prevail Act includes. And I think that's well advised for the same reason that many of my colleagues and I urged to the PTO in support of the 2018 rule change. It gives the P tab, the benefit of prior claim constructions, it puts everybody on a level playing field, it reduces the opportunity for arbitrage in different legal standards, where the broadest reasonable interpretation approach leaves the patent more vulnerable at the margin to invalidation. Whereas the same patent under a film standard might survive in district court. The other major thing and this is something that can't be solved by rulemaking is the divergence in the burdens of proof patents and District Court invalidity determinations have to be proven and valid by clear and convincing evidence, in spite of attempts during the early 2000s. To reduce that, that burden, that Supreme Court reaffirmed in Microsoft vs AI for AI and said that clear and convincing evidence is the approach that must be taken. Now the statute the IPR statute says, patents of the P tab patent claims and the P tab must be invalidated by mere preponderance. And so it is possible for a patent to survive clear and convincing evidence review in the courts, sometimes multiple times. And for no other reason than that you need a lower burden of proof to be satisfied in the P tab, then fall. And that does happen quite a bit. In fact, a paper I published a couple of years ago in the Indiana Law Journal tracks the extent to which serial petitioning and the arbitraging of different burdens of proof has created an incentive not just to allow duplication, but to encourage and invite it. So remedying that by making a clear and convincing evidence burden apply and the P tab again, would create greater procedural and structural similarity and the extent to which estoppel is justifiable. Under ordinary principles of preclusion if there are different burdens, different legal standards involved, preclusion is less likely to be justifiable as a matter of common law. And so you're changing the conditions of the proceedings in a way that makes preclusion more likely, that makes the opportunity for arbitrage much less attractive, and I think that will go a long way to making the pizza have an attractive substitute and not merely another place to fight.
John M. Desmarais 43:18
Alright, well, thank you. I think I think that's a wrap for us. I think we ate up all the question time so hold your questions till the next panel
Announcer 43:32
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