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Tribunal Rule Among Top Patent Litigation Issues Going Into 2022

Dec. 28, 2021, 10:02 AM

Debates have been simmering over a rule that allows the Patent Trial and Appeal Board to turn away a patent challenge based on the progress of a parallel infringement case. Next year could be a tipping point.

The NHK-Fintiv rule headlines a set of issues in patent litigation that attorneys will be watching heading into 2022.

The rule, which grew out of agency precedent, allows the PTAB to reject a patent validity challenge when a parallel infringement case is in its later stages. The rule can make it harder for accused infringers to get board review, some companies say.

Questions around the rule have been swirling for months. Apple Inc. is challenging the framework in court. Members of Congress have questioned the rule and how it’s applied. NHK-Fintiv was also a point of questioning for the nominee to be the patent office director.

“There’s a whole constellation of issues that are likely to come to a head over the next year,” said J.C. Rozendaal, an attorney at Sterne Kessler Goldstein & Fox PLLC in Washington.

The patent office has argued the rule offers flexibility to help make sure the PTAB is an alternative to infringement proceedings, rather than being a place for redundant validity challenges. Apple Inc. and other targets of patent suits argue it’s fostering abusive litigation.

Sen. Patrick Leahy (D-Vt.) has introduced legislation that would limit the PTAB’s use of such denials. Sen. Thom Tillis (R-N.C.) also questioned the PTAB’s reliance on district court trial dates that he said can be “unrealistic.”

Both senators asked Kathi Vidal, who is President Joe Biden’s pick to lead the patent office, about the rule during her recent confirmation hearing. Vidal promised to give the rule a fresh look if she’s confirmed to the position.

Meanwhile, litigants are adjusting litigation strategies. Patent defendants, for example, are giving ex parte reexaminations a closer look. Use of the proceeding had been on the decline since inter partes reviews were introduced in 2012, but has started to trend up.

“I think that’ll be a trend over the next couple years while the rest of the IPR landscape shakes out,” said Michael Oakes, an attorney with Hunton Andrews Kurth LLP in Washington.

Ex parte reexams don’t have some of the same advantages as IPRs. For one, challengers are sidelined during a reexam. There also is no set timeline, while IPRs are typically done in 18 months. Still, attorneys say the invalidation rates are comparable. And NHK-Fintiv isn’t a factor.

“Patent challengers more likely will find that avenue to be a welcome forum where there is an opportunity for discretionary denials,” said Syed Fareed, an attorney at Baker Botts LLP in Austin, Texas.

Other patent litigation issues that will be closely watched in 2022 are West Texas venue arguments and Hatch-Waxman suits.

West Texas and Venue

Since taking the bench in 2018, Judge Alan Albright has turned Waco, Texas, into a major hub for patent litigation. Albright’s courtroom has seen more new patent complaints in 2021 than any other federal district court in the U.S., according to Bloomberg Law data.

There are perceptions the court is friendly to patent owners, and companies such as Apple, Hulu LLC, and Skullcandy Inc. have fought to get suits sent elsewhere by arguing either that venue isn’t appropriate in West Texas or another court would be more convenient.

Albright’s reluctance to send patent suits away has led to some pushback from the U.S. Court of Appeals for the Federal Circuit. Patent owners have also taken some unusual approaches in an attempt to keep their cases in Waco.

The U.S. District Court for the Western District of Texas has “basically turned into a laboratory” for people to try out new venue arguments, said Christopher Loh, a New York-based Venable LLP attorney.

Ikorongo Technology LLC, for example, divided up rights to patents covering location-sharing technology, giving a related business, Ikorongo Texas, the right to sue in Texas. Ikorongo argued this prevented suits filed against Uber Technologies Inc. and other companies from being sent to California.

The Federal Circuit rejected Ikorongo’s approach, calling it “just the sort of maneuver in anticipation of litigation that has been routinely rejected.”

“There are a lot of creative arguments and the ones that get too creative get struck by the Federal Circuit,” Loh said.

Hatch-Waxman Lawsuits

While the number of patent lawsuits has been on the upswing lately, the volume of new suits has been dropping in one notable area: Hatch-Waxman lawsuits.

The suits, which involve brand-name drugmakers’ attempt to keep generic competition out of the market, have slipped every year since nearly 400 were filed in 2017, according to data compiled by attorneys at Fish & Richardson PC.

The firm has projected around 215 Hatch-Waxman suits in 2021.

A mix of factors have contributed to the downturn, including fewer approvals by the Food and Drug Administration of new drugs, attorneys say. The Covid-19 pandemic also may have been a factor, as pharmaceutical companies shifted their attention to finding ways to end the pandemic.

There are also lingering questions about where the suits will be filed. The Federal Circuit in November upheld a decision kicking a Celgene Corp. lawsuit against Mylan Inc. from the U.S. District Court for the District of New Jersey because Mylan isn’t based in the district and didn’t commit acts of infringement there.

Hatch-Waxman cases traditionally have been clustered in New Jersey and the U.S. District Court for the District of Delaware. Attorneys are watching to see whether more of these suits end up in other districts.

“Where you are able to file your case can have a very direct impact on how you litigate it, what judges you’re in front of, and perhaps the result you may hope to obtain,” said Megan Chacon, a Fish & Richardson attorney in San Diego.

To contact the reporter on this story: Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Kibkabe Araya at karaya@bloombergindustry.com

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