September 29, 2023

by Dennis Crouch

The pending case of Leap Rope Methods v. Coulter Ventures is fascinating to me as somebody who teaches each property and civil process. The fundamental questions: (1) As an inter partes evaluate (IPR) continuing attracts to a detailed – towards cancellation – at what level are the claims not enforceable? (2) What’s the impact of cancellation, specifically, is it like canceling {a magazine} subscription the place the previous subscriber isn’t off the hook for past-due payments; or, is it like an annulment – an Ab Initio Extinguishment?  The case additionally (3) raises a straight-up due course of problem to the IPR system.

A typical IPR the place the petitioner prevails consists of the next three-step sequence:

  1. Unpatentable Determination: PTAB points a last written determination concluding that the challenged declare has been confirmed unpatentable with a preponderance of the proof.
  2. Affirmed on Attraction: On enchantment, the Federal Circuit affirms that judgment.
  3. Certificates of Cancellation: As soon as the enchantment is full, the USPTO Director then points a certificates canceling the declare. 35 U.S.C. 316.

The primary query — if the patentee is concerned in concurrent district court docket infringement litigation, at what step is the patent not enforceable?

Clearly, the patent declare is canceled at Step-3 and by that time can’t be enforced going ahead. The Federal Circuit although has held that the declare is already unenforceable at Step-2 primarily based upon the court docket’s questionable utility of collateral estoppel.   I name it questionable due to the totally different requirements  of proof utilized within the PTAB vs the District Court docket.  The affirmed PTAB determination discovered the declare invalid with a preponderance of the proof.  However, in district court docket litigation invalidation requires clear and convincing proof, a considerably greater customary. And, a conclusion of invalidity below a decrease customary doesn’t conclusively inform us that the identical declare would have been confirmed invalid below a better customary.  Utilizing a normal method akin to discovered within the Restatement (Second) of Judgments, collateral estoppel wouldn’t apply right here due to the distinction in requirements.  Right here, we have a tendency to make use of an exacting customary for res judicata ideas due to their due course of implications — the end result bars a celebration from making their argument in court docket.  The Federal Circuit’s fudging of the rule makes some sensible sense – the statute seems to make the issuance of the cancellation certificates a ministerial course of with its “Director shall” language.  And but, fudging the principles in a method that undermines due course of is troubling.  I’ll observe right here that courts seem to typically be ready for the enchantment determination earlier than saying preclusion, though it’s unclear whether or not that method is in some way required or just prudential (since district courts typically see the Federal Circuit as unpredictable).  I’ll additionally observe that I beforehand referred to as out the Federal Circuit for improper enlargement of preclusion regulation with regard to the Kessler Doctrine – they didn’t hearken to me there both.

The second query at concern in Leap Rope Methods includes the impression of cancellation — what about infringement that occurred (and lawsuits pending) previous to the cancellation?

The reissue system is a somewhat-close relative to inter partes evaluate and has the advantage of 150 years of case regulation, together with quite a few Supreme Court docket selections.  With reissues, courts have clearly held that cancellation of claims throughout reissue render these claims completely moot.  See, as an illustration, Moffitt v. Garr, 66 U.S. 273, 283 (1861) and Meyer v. Pritchard, 23 L. Ed. 961 (1877).  However, the reissue system has a big distinction — a reissue begins with a patentee surrendering its patent as required by statute. 35 U.S.C. 251.  It’s that surrendering that makes the cancellation of claims in a reissue so dramatic.

With inter partes evaluate, the patentee doesn’t give up the patent and so we now have a probably totally different state of affairs.  Nonetheless, courts have recurrently handled cancellation of claims as voiding the claims back and forth by means of time.  However, it isn’t so clear that method is right and there are various conditions the place the courts have given “cancel” to solely potential impact.  In its briefing, Leap Rope cites a protracted string of instances in numerous areas of regulation in addition to easy plain which means of the phrase:

Plain English is in accord. “Canceling” {a magazine} subscription stops future deliveries, however previous points stay in hand.

Jump Rope Reply Brief. If Leap Rope wins on this, an IPR petition that cancels claims would solely cut-off potential damages and injunctive reduction.  The patentee might nonetheless get better pre-cancellation damages as long as the defendant did not show the claims invalid in district court docket on the greater customary.

= = =

The briefing additionally consists of an vital due course of problem — arguing that the usage of IPRs to stop infringement lawsuits violate due course of.  In Oil States, numerous the patentee raised numerous challenges to the system, however didn’t deliver a due course of problem. Oil States Vitality Servs., LLC v. Greene’s Vitality Group, LLC, 138 S. Ct. 1365 (“We emphasize the narrowness of our holding. . . . Oil States [has not] raised a due course of problem.”).

Right here, the patentee makes two arguments:

  1. “First, front-line adjudicators usually are not sufficiently insulated from political forces. United States v. Arthrex, Inc., 141 S. Ct. 1970, 1993 (2021) (Gorsuch, J., concurring partly & dissenting partly) (‘The Court docket’s determination in Oil States permitting govt officers to imagine an historic judicial perform was all the time destined to ask acquainted due course of issues. . . . [P]owerful pursuits are able to amassing armies of lobbyists and legal professionals to affect (and even seize) politically accountable bureaucracies.’) (citations and inner citation marks omitted).”
  2. “Second, by not allowing conventional reside cross-examination of witnesses
    (as an alternative, counting on written depositions), IPR procedures violate due course of in view of the significance of the property proper at concern. See Goldberg v. Kelly, 397 U.S. 254, 269 (1970) (‘In nearly each setting the place vital selections activate questions of truth, due course of requires a chance to confront and cross-examine opposed witnesses.’)”

Nice questions from petitioner.

Robert Greenspoon (Dunlap Bennett) is counsel for the patentee Leap Rope Methods. Louis DiSanto (Banner Witcoff) is representing the accused infringer Coulter Ventures.   Their workplaces are a couple of blocks aside in downtown Chicago.