A Petitioner faces great peril if it gets an IPR instituted but then doesn’t prevail in the final written decision. That is, the Petitioner puts in enough to get a trial but not enough to win it. A Petitioner thus caught finds itself bound even more inextricably to the patent it sought to free itself from.
How can this happen? After all, if there was enough in the Petition to persuade the PTAB that a trial is justified, how then can the PTAB turn around in the final decision and hold for the Patent Owner?
This can happen because the standard for instituting trial is less stringent than the standard for reaching a final determination of unpatentability. The Leahy-Smith America Invents Act of 2011 requires a Petitioner simply to demonstrate a “reasonable likelihood” that it will prevail in showing at least one challenged claim to be unpatentable. 35 U.S.C. § 314(a). A “reasonable likelihood” leaves room for a substantial chance that the Petitioner would not prevail; hence, a “reasonable likelihood” well may be less than a 50% chance.
The statue states, by contrast, that the Petitioner bears the burden of proving any proposition of unpatentability by a “preponderance of the evidence.” 35 U.S.C. § 316(e). That standard requires that the Petition evidence, when combined with the evidence Patent Owner puts forward, demonstrates unpatentability more likely than not. Thus when confronted by a Petition that it thinks may be insufficient to prevail in the final written decision, the PTAB nevertheless may conclude that a “reasonable likelihood” has been shown and institute a trial in which the Petitioner might already be doomed.
The difference between a “reasonable likelihood of success” and a “preponderance of the evidence” is perhaps best illustrated by the difference between a preliminary injunction and a final judgment. To obtain a preliminary injunction, a Patent Owner must demonstrate (among other things) a “reasonable likelihood of success on the merits,” essentially exactly the same standard as for institution of IPR. Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348, 1352 (Fed. Cir. 2012). In contrast, to prevail in a judgment of infringement, a Patent Owner must prove it by a “preponderance of the evidence,” again the same evidentiary standard as for a final written decision in IPR. It’s quite possible, and plausible, for a court to grant a preliminary injunction to a Patent Owner who then fails to prove infringement. See, e.g., CVI/Beta Ventures, Inc. v. Tura LP, 112 F.3d 1146, 1160 n.7 (Fed. Cir. 1997) (reversing judgment of infringement despite having earlier affirmed grant of preliminary injunction).
When the arguments and evidence presented in the Petition are sufficient to demonstrate a reasonable likelihood that the Petitioner would prevail in showing unpatentability, but a preponderance of evidence does not emerge from the full record to show unpatentability, the Petitioner finds itself in what I call the “Death Valley” of IPR: a place from which there is no escape other than by settlement with the Patent Owner.
Why does this matter? Estoppel. 35 U.S.C. § 315(e) prevents a Petitioner from maintaining any challenge or invalidity position on a ground that was raised or reasonably could have been raised during the IPR. There is some debate as to whether challenges presented in the Petition but not instituted by the PTAB trigger estoppel, but there is little question that challenges actually tried during the IPR and addressed in the final written decision trigger estoppel.
This unpleasant situation is best avoided by taking a self-critical and uncompromising look at the draft Petition and evidence to determine whether it really will stand up to whatever evidence the Patent Owner might raise. It’s often not difficult to predict which arguments a Patent Owner will make in IPR, because those arguments will fall into familiar categories and might have been raised in related district court litigation or perhaps during negotiations during the parties. In an obviousness challenge, for example, expect an attack on the rationale to combine. Prepare for it in the Petition by having your expert explain in detail, and with reference to published evidence, why one of ordinary skill in the art would have had reason to combine or modify references to reach the claimed subject matter. If the Petitioner presents only a conclusory assertion to support the rationale in the Petition, and if the Patent Owner manages to blow it out of the water, it’s too late for the Petitioner to repair the damage in Reply. A discredited Petition rationale cannot be rescued by an alternative Reply rationale without a cry of “sandbagging!” from the Patent Owner, a complaint for which the PTAB has considerable sympathy.
For these reasons, the Petitioner should present its complete case in the Petition and should assume that it will not have any further opportunity to embellish that case. Those not doing so are advised to pack plenty of water.