Day 1, Panel 6: Post-Grant Strategies in a Changing World
December 4, 2025
B-CLE Recording (CLE: $100) | Agenda | Event Resources | Speaker Biographies
Download Panel Transcript Here
Speakers
Jessica Kaiser, Perkins Coie
Thomas Broughan, Sidley
Tim Saulsbury, Morrison Foerster
Panel Resources
Panel Summary
Debra McComas opened by provocatively declaring that IPRs are “not dead yet,” framing the session around the eleven pending mandamus petitions challenging various aspects of the PTAB’s new institution procedures under Acting Director Stewart and now Director Squires. Jessica Kaiser provided a comprehensive statistical overview, explaining that the historical IPR institution rate of approximately two-thirds has been effectively cut in half under the new bifurcated discretionary review process — with roughly 60% of petitions discretionarily denied before receiving any merits review, and only about 30% of total petitions reaching institution, compared to 66-69% previously. She further noted that under Director Squires’ new summary notice regime — which began on Halloween 2025 — early data from approximately 170 cases shows a consistent pattern with the prior bifurcated process, though the sample is too small to draw definitive conclusions about the long-term institution rate under pure Director review. Tim Saulsbury observed that because sophisticated petitioners are already self-selecting and filing only their strongest cases in the current environment, the fact that institution rates remain similarly low under Squires suggests he may actually be applying an even stricter standard than his predecessor, or has simply set a fixed percentage target for institution regardless of petition quality. McComas then introduced the concept of “deinstitution” — a disturbing development in which the Director has vacated final written decisions already issued by PTAB panels, effectively revoking institution after a full year of proceedings, raising profound questions under the Supreme Court’s SAS decision about when institution becomes irrevocable, and creating an appeals procedural mess in cases like In re Verizon and Blackhawk where it is unclear whether a final written decision even exists to appeal.
The panel then turned to practical guidance for navigating the new regime and a detailed discussion of the pending NPRM. Thomas Broughan III illustrated how the settled expectations doctrine has perverse real-world consequences in the medical device space — where startup companies asserting their own young patents face full IPR exposure while large incumbent companies use their older patents aggressively, knowing those patents are now effectively shielded from IPR challenge — inverting the stated policy rationale of protecting small innovators. Tim Saulsbury argued that the settled expectations rule disproportionately benefits sophisticated NPEs, who rationally wait for markets to mature before asserting patents and thus almost always have patents older than six years, while legitimate operating companies with recent patents bear the full burden of IPR exposure. Jessica Kaiser walked through the proposed NPRM’s four major elements — a sweeping stipulation requiring petitioners to waive all 102 and 103 grounds in co-pending litigation including system art and public use; a bar on IPRs if any prior tribunal has found the patent not invalid; a codification of the trial date bar; and a first-filer priority rule that would effectively force co-defendants to race to coordinate a single joint petition — and characterized the package as likely to make IPR even more restrictive than the current administrative policies. McComas closed by urging practitioners to consider district court APA challenges as an alternative to mandamus for the procedural issues not yet addressed in pending Federal Circuit review, while candidly acknowledging that the Apple v. Squires district court challenge faces a difficult uphill battle given courts’ broad deference to agency policy decisions not requiring notice and comment rulemaking.
Key Learning Points:
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The IPR Institution Rate Has Been Cut in Half — and Settled Expectations Doctrine Perversely Protects NPEs and Large Incumbents: The historical two-thirds institution rate has collapsed to approximately one-third under the new bifurcated discretionary review process, with the settled expectations doctrine creating a de facto six-year age bar that shields the very patents most commonly asserted by sophisticated NPEs and incumbent large companies while leaving younger startup and operating company patents fully exposed to IPR challenge — the exact opposite of the stated policy rationale (Jessica Kaiser; Thomas Broughan III; Tim Saulsbury).
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Filing an IPR Now Requires a Highly Tailored Case-by-Case Analysis with Careful Attention to Estoppel Risk: In high-value matters with strong prior art, an IPR may still be worth filing alongside a parallel ex parte reexam to preserve non-patent prior art options — but practitioners must assess patent age against the six-year presumption, evaluate co-pending trial dates against final written decision timing, identify whether the examiner made a clear prosecutorial mistake that could overcome discretionary denial, and carefully plan stipulation strategy before filing, because the proposed NPRM would expand stipulation obligations to all 102 and 103 grounds including system art and public use (Tim Saulsbury; Jessica Kaiser; Debra McComas).
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The Proposed NPRM Would Make IPR Effectively a First-Come-First-Served Single-Petition System — Forcing Co-Defendant Coordination: The proposed rules would bar IPR if any prior tribunal found the patent not invalid, require a mega-stipulation covering all invalidity grounds including those unavailable in IPR, codify the trial date bar, and establish a first-filer priority rule — collectively transforming IPR into a race where co-defendants must either coordinate on a single joint petition or risk being precluded entirely, and where any prior litigation loss by any party in the world on the same patent would foreclose the proceeding for all future challengers (Jessica Kaiser; Thomas Broughan III; Debra McComas).
Program Transcript
Key Terms: IPR Institution Rate, Historical Two-Thirds Rate, Bifurcated Process, Discretionary Denial Rate, Merits Review Rate, 60% Discretionary Denial, 30% Overall Institution Rate, Summary Notice Process, Director Review Process, Halloween 2025 Implementation, 600 Bifurcated Cases, 170 Summary Notice Cases, Six-Year Presumption, Patent Age Bar, Merits Panel Referral, Acting Director Stewart, Director Squires, Deputy Director Stewart, Director Review, Bifurcated Institution Process, Summary Notice Regime, One-Word Decision, Black Box Decision, Settled Expectations Doctrine, Discretionary Denial Criteria, Director Centralization, No Reasoned Decision, $25,000 Filing Fee, Director Policy Fluctuation, Political Administrative Agency, Mandamus Petition, Eleven Mandamus Petitions, In re SanDisk, In re Verizon, Blackhawk Case, Apple v. Squires, Apple v. Vidal, Fintiv Challenge, Retroactive Application Challenge, Due Process Violation, Notice and Comment Challenge, APA Challenge, District Court APA Action, Federal Circuit Mandamus, Mandamus Denial, Deinstitution, Final Written Decision Vacatur, SAS Decision, Director Review Vacatur, Magritte Painting Analogy, This is Not a Pipe, Jurisdictional Question, Notice of Appeal, Mandamus Alternative, Final Written Decision Definition, Post-Decision Deinstitution, Expert Credibility Reversal, Settled Expectations Doctrine, Six-Year Age Presumption, Patent Issuance Date, Statute of Limitations Parallel, Six-Year Bar, Older Patent Protection, Younger Patent Exposure, Patent Lapse Factor, Maintenance Fee Non-Payment, Patentee Conduct Factor, Settled Expectations NPRM, Settled Expectations Mandamus, NPRM PTAB Rules, 10,000 NPRM Comments, Economically Significant Designation, Broad Stipulation Requirement, Sotera Stipulation, Sotera Plus Stipulation, Mega Sotera Stipulation, All Claims Challenge Requirement, 102 103 Waiver, System Art Waiver, Prior Finding Bar, First Filer Priority Rule, Trial Date Codification, Retroactive NPRM Application, Co-Defendant Coordination, Statutory Estoppel, IPR Estoppel, Sotera Stipulation, Broader Than Statutory Estoppel, All Claims Estoppel, System Art Estoppel, Public Use Estoppel, Prior Art Waiver, Claim-Level Estoppel, Patent-Level Estoppel, Co-Pending Litigation Estoppel, Third Party IPR Estoppel, IPR Filing Decision, Case Value Analysis, High Stakes IPR, Ex Parte Reexam Parallel, System Art Alternative, Six-Year Age Analysis, Trial Date Analysis, Examiner Mistake Factor, Prosecution Error Factor, Technology Complexity Factor, Demand Letter Response, Pre-Revenue Startup Decision, Joint Defendant Coordination, First Filer Race, Ex Parte Reexamination, Post-Grant Review (PGR), Inter Partes Reexamination, District Court Invalidity, Summary Judgment Invalidity, 102 Summary Judgment, ITC Invalidity Determination, Jury Trial Invalidity, System Art District Court, Public Use Defense, On-Sale Bar Defense, NPE Benefit Analysis, Sophisticated NPE Strategy, Market Maturity Waiting, Old Patent Assertion, Incumbent Patent Protection, Startup Patent Exposure, Medical Device Startup, Regulatory Approval Timeline, Young Patent Vulnerability, AIA Legislative History, AIA Original Goals, Patent Troll Policy, Extortion Patent, Low Hanging Fruit, Eastern District of Texas, Northern District California, Judge Albright Trial Dates, Texas Venue Strategy, Foreign Defendant Targeting, Downstream Implementer Targeting, Asian Subsidiary Targeting, European Defendant Targeting, Venue Statute, Summary Judgment Invalidity Rate, Biden Appointments Impact, NPE Venue Selection, Separation of Powers, APA Violation, Shenanigans Standard, Constitutional Level Violation, Notice and Comment Rulemaking, Agency Policy Change, Statutory Obligation, Congressional Intent AIA, Arthrex Decision, Political Appointee Authority, Independent Judiciary Principle, Reasonable Likelihood Standard, SAS Institute Decision
[MODERATOR]
So, based on some of the earlier discussions today, this panel may or may not be relevant to you. Uh, seems that a few things might matter, I’m not sure. But we wanted to build on the day and talk about post-grant review or the death of post-grant review, whatever path this panel is gonna take.
But you’ll see this, the final two panels here build on this, and then the other piece about the injunction issues that have been so hotly discussed the first two panels today. So with that, I wanna introduce Debbie McComas.
Debbie McComas from Haynes & Boone, one of the, I guess, one of the leading Federal Circuit appellate lawyers, and used to have a great practice at the PTAB. We can figure out what it looks like today. Sorry, couldn’t resist.
(laughter)
[DEBRA MCCOMAS]
Wow, with that introduction, and how about our topic, right? It reads just like doom and gloom. But we’re gonna double down on what you heard this morning.
So we have a very esteemed panel. Um, I have, on the end, I have Tom Broughan from Sidley. I have Tim Saulsbury from MOFO.
And I have Jessica Kaiser from Perkins Coie. All of us have been in the trenches, deep in the trenches, on these issues this year. And what a journey it’s been.
So I’m gonna start by stating the provocative statement that as much as you heard people saying, “IPRs don’t exist anymore,” I’m gonna say they’re not dead yet. And I have to say that because my name is on half the mandamus that are pending that are challenging what’s going on in Fed Circuit.
(audience laughing)
So we’re gonna start there, and we’re gonna talk about what is pending, what we’re challenging, and these guys are gonna poke holes in whether it’s gonna give you any hope or not. So we have a series of mandamus. As you know, there have been 11 mandamus filed challenging the various procedures that have gone on this year, somewhat changing what our expectations are as to when an IPR might or might not be granted.
Those run the gamut. The first three have already been denied.
Those are what I would call were on softer due process questions that came early on. They were retroactive arguments and effectively, I’m gonna summarize it real simple there is in your materials, if you wanna look, I did a summary chart that gives you a little bit more detail.
But the first three were denied either notice and comment is not something you can challenge by mandamus, and you have to file a district court APA action. Call me if you’re interested in doing that. I’m looking for it. And the other is that there wasn’t a due process violation just because these rules were applied retroactive to you, because no one ever has a right to have IPR granted.
That it’s so discretionary that we can’t look at it. We’re not gonna get to review it, which means the Board can decide, Director can decide, or decide not to, and we’re not gonna do anything. That is the challenge we have that’s still pending in the Federal Circuit is that that’s not right.
That’s not right. There are limits in this statute, and we get at it several ways. The first one that was filed was settled expectations.
And the case we have up, that’s the first one up and is fully briefed, is In re SanDisk. And in that one, that was the sole basis for denying institution was settled expectations.
So we have a nice, clean challenge. Professor Limley led the law professors on the amicus on that one, and that’s pending. We could get denied any day.
We’re not denied yet. So that one is still out there. The second kind of series that we have are “Go file an ex parte reexam instead.”
Yeah. Yeah. You know, there are other ways you could challenge this. Well, of course there are other ways you could challenge this, right?
That’s always been the case. So those issues are up, and they’re pending. And then we have a series that have doubled down that even the Fintuv, wait a minute, when you decided Fintuv, nobody really challenged whether or not all of these time to trial and all these issues could actually be challenged, could actually be considerations for institution.
So, those are near and dear to my heart, so I just told you where I stand on these issues. So my first question to my panel, and Jessica’s done some statistics for us, is it, does it really matter? Where are we?
We’ve seen some sky is falling in the last three weeks. But over the course of this year, where are we on denials?
[JESSICA KAISER]
Yeah, and just to set the table, and I think anyone who’s been following the PTAB closely over this last year is probably as exhausted as I am, because one day you think you know what’s happening, and the next day it changes. Just, and that’s true across the patent office.
Just while we’ve been sitting in here, there’s been new memos that came out on 101 from the patent office. I even, haven’t even had a chance to read them yet, but– Um, So to kind of set the stage, we, a– after Acting Director Stewart came into the office, she set up this bifurcated process where she took over discretion. So, should an IPR be discretionarily denied or should it get a review on the merits? And under that process, there were about 600 cases that received discretion decisions.
Those happened between about mid to end of May of this year and middle of October, so about five months. And there are about 600 cases. And maybe just taking a big step back, historically, over the last several years, the institution rate for IPRs has been right around two-thirds. So it’s kind of gone between 66% and 69%, but about two-thirds go on to get a full trial.
Under this bifurcated process with Acting Director Stewart, now Deputy Director Stewart, about 60% of the cases were discretionarily denied. So that means you get 60% that just don’t even get a look at the merits at all. But for the cases that got referred to a merits panel, so that means, okay, now, we’ve, they’ve gotten past discretionary considerations. We’re gonna look at the petition and decide whether they meet the reasonable likelihood of success.
About 77% of those were instituted. So what does that mean overall? About a 30% institution rate, so we went from two-thirds instituted to less than one third instituted. So that’s a big shift in statistics.
[DEBRA MCCOMAS]
Is that over the course of this year?
[JESSICA KAISER]
That is from May to October, so that’s under the bifurcated process.
[DEBRA MCCOMAS]
Okay.
[JESSICA KAISER]
And we’re still seeing some trickle of merits decisions by three-judge panels that are cases that were referred previously under that process. So then, in the middle of October what happens is Director Vidal now is, is in place, and he issues a memo saying that he’s gonna take over the entire institution decisions, so discretion, merits, all of it. And what we hear initially is that we’re gonna get summary notices in almost all cases that are not gonna tell us any reasoning, and they’re not even gonna tell us whether the discretionary decision or the institution decision is discretionary or merit. So we think we’re just kinda gonna get thumbs up, thumbs down.
And we start getting these summary notices, and the first couple were actually that way, where they didn’t say discretionary or anything. Then it shifted, and so now we’re getting summary notices that say, “Discretionary denial,” that says, “This case has been referred to a merits,” not a merits panel but, “been referred for consideration of the merits,” and then, “Institute on the merits.
Denied on the merits.” But this process is very, very new, right? So we’ve only started seeing decisions under it since October 31. Halloween was the first set.
So we’re literally just over a month into it. And because of that, what we’ve seen so far are decisions on that discretion piece, but very few decisions on the merits. And when we look at the decisions that we’ve gotten now, and it’s about 170 IPRs, so not a small number, they are about the same as under that bifurcated process.
So we’re seeing about 60% discretionarily denied and about 40% that are getting a merits look. We’ve only had, I believe it’s eight decisions after that merits look that have gotten an institution decision. So we’ve had 70 that have been referred for a merits decision, and eight that have actually gotten it so far.
And of those eight, six have been instituted, and two have been denied institution. So–
[DEBRA MCCOMAS]
All right, do that math for me. What’s that percent?
[JESSICA KAISER]
It’s about 75%. So basically, the bottom line, I know I talked for a long time, but the bottom line is, that statistically so far, and again it’s very early, but statistically, so far, we are seeing the same breakdown under the summary notices under Vidal that we did in the bifurcated process under Acting Director Stewart.
[DEBRA MCCOMAS]
But that’s still half of what we saw a year ago.
[JESSICA KAISER]
Yes. So, no question that it has changed the game, that it has essentially flipped the statistics, so before two thirds instituted, now about one third instituted, but it is not 4%. It is 4% right now, but you’ve got 62 cases that we don’t know yet.
So we just don’t have enough of a data set to say that 4% is a real number at this point, that it’s statistically significant.
[DEBRA MCCOMAS]
Did I mention that Jessica’s kind of a glass-half-full person?
(laughing)
So Tim, what’s your experience?
[TIM SAULSBURY]
Yeah, so I mean, we’ve been watching this happen over the the months, and we were wondering, ‘Look, are things gonna change under Squires?’ We had a lot of reason to believe they were not gonna improve, and I think the numbers bear that out. And in fact, if you take into account the fact that your would-be petitioners are gonna be sort of rational about filing a petition versus their alternative actions like reX or just deciding you’re gonna pursue ability in the district court, you’d actually expect there to be higher quality petitions, especially with respect to the discretionary factors in the Squires age, right? So if we’re arriving at the same sort of numerator under Squires as we did with Coke, I think what’s actually happening is he’s applying an even stricter standard, right, to arrive at the same outcomes if he’s seeing higher quality petitions, for the most part. Either that or he just has a percentage in mind, and that’s sort of what we’re seeing, right?
[DEBRA MCCOMAS]
I mean, Tom, isn’t the problem that we don’t know, right? It’s falling into a black box with no explanation. So, how do we know unless we go and do our own independent analysis of what we think the director should have decided on?
[THOMAS BROUGHAN III]
Well, I think that’s part of the problem that we’re seeing with the new decisions that are coming out, because there is no explanation in them as to why he’s reaching the decisions that he is. We do have some guidance on it from the earlier decisions from, particularly from Coke Stewart, and there is a little bit of a road map about what you need to do, about what circumstances in IPR, they will find that it’s worth instituting. I mean, of course, younger patents still follow essentially the older regime, which is, if it’s younger, less than six years old, you have a potential bar from FinTiv, but beyond that, it, there’s no clear discretionary denial that would be applied. For the older ones, you know, there’s a few factors that, that ha– that he set out, or that Coke Stewart set out, that could, –uh, be persuasive.
Things like a mistake by the examiner or something that was overlooked during prosecution or if there’s a particularly complex set of patents that are being asserted, and you manage to convince him that PTAB is really better situated than a jury to consider, for example, technologies from four or five different technology spaces. But beyond that, you know, the few guide, we have a handful of guideposts, but there’s just not a lot out there to really guide what’s going on, so there’s a huge amount of uncertainty.
[DEBRA MCCOMAS]
Okay, before we get to the exciting part of what we might do to kind of navigate this new world, I want to raise one more depressing factor, and that is this concept of deinstitution. What we’ve seen in several cases is in two, at least two cases that we’ve seen now that are pending on appeal, we’ve gotten past a final written decision, and then there was a deinstitution.
Yeah, I saw several people go, “What?” We agree.
(all laughing)
Um, that’s pending on appeal and– And the question is, that kind of raises the SAS question from the Supreme Court as to once you institute, at what point do you get to take that away, and then shield that under the concept of deinstitution? So one of the cases that’s pending is– is Verizon, In re Verizon. It’s actually, they’re filed as notices of appeal because there’s a clear question on whether or not there’s a final written decision to be appealed, or whether or not this has to be addressed by mandamus.
Procedurally, it’s an absolute mess, but that one has been briefed as a mandamus in response to a motion to dismiss claiming that there’s no jurisdiction to review it. Because when you deinstitute, it’s totally insulated and can never be reviewed, even if you’ve gone through a year of your entire final, all the way to final written decisions.
So there’s a second case that’s coming up called Blackhawk. Jessica, you wanna talk a little about that one?
[JESSICA KAISER]
Yeah, so this case is really interesting because the, like with the Verizon case, it got all the way through a final written decision. And the Director took it on Director Review and issued a Director Review decision.
The initial decision that was issued said that he was reversing based on his evaluation of expert credibility, so evidence that was developed after the institution decision. So he said he was reversing and then at the end of the decision it said, “This is not a final written decision.” And then reissued it, and instead of reversing said he was vacating, so effectively deinstituting again, this is not a final written decision.
So a question will become and I’m sure this will be raised when it gets appealed, is, is it not a final written decision because you say it’s not a final written decision? And my joke has been that there’s a– A Magritte painting that says, “This is not a pipe,” and that’s what it feels like to me.
So,
[DEBRA MCCOMAS]
As far as timing on those just to put that in context before we get down to the what do we do next the timing of those, the mandamus at least the issue of settled expectations is fully briefed and it’s pending before the court, and they may decide to address all of these at once or they may go ahead and start ruling. With respect to the first three, the Motorola, the SAS, and the Google original petitions, those were done kind of en masse, the three together. So I suspect they’re going to do something similar here, particularly if they reach the question of what is the scope of the discretionary review.
So let’s take some of the issues that are being challenged and talk about how we as practitioners might navigate those in the Patent Office. And Tom, you had a thought specifically about the impact of the settled expectations rule.
[THOMAS BROUGHAN III]
Yes, it, the stated rationale for the rule is that small companies or innovators are unfairly punished by not being able to have their kind of quiet titles of the patents they’ve issued, and when they get into disputes with larger companies, the patents get thrown back to the PTO. But that– that’s not exactly the experience that I’ve had in a lot of the cases that I worked on. A big part of my practice is with respect to medical device companies, and the way litigation tends to work in the medical device space is you often have an established incumbent company who’s been there for decades and then there’s a newer startup company who thinks they’ve come up with a better way to do something that’s on the market right now, and they get patent protection for the new thing that they’re doing, it goes through regulatory approval process. Then when they try to get on the market, they rely on those patents to carve out what they do and to own what they do so that the big companies can’t come in and take it.
So all those patents are– are young, and so under this new settled expectations regime, their patents, if they get into a dispute with these larger companies are highly likely to be under six years, and so not subject to any of the discretionary denial criteria that Squares has set forth. On the flip side, the larger incumbent company tends to have older patents, 10 years, 15 years, that then they assert against the newcomer to try to keep them out or to force the newcomer to negotiate so that they can get a license to the new technology. Those patents will not be subject to IPR under the settled expectations doctrine. And so even though kind of one of the stated rationales for this rule is to protect smaller companies at least in this industry, this is kind of having the opposite effect.
So the smaller companies are punished but the larger companies are sort of protected by this rule.
[DEBRA MCCOMAS]
Okay, so to me for a minute about if– if we’re in the environment that we’re in, don’t have rulings on mandamus that are gonna change everything–what do you do when you’re advising a client on whether to pursue an IPR? Is it just never at this point, or are there instances where it might still make sense?
[TIM SAULSBURY]
Yeah. So, it’s certainly not never. For me, it really comes down to case value, right? Because if you’re in marshal and have okay non-infringement arguments and are looking at, you know, $500 million or $1 billion potential verdict, you know, even a low probability of winning an IPR is worth it, especially if you pursue a third-party EPR in parallel, right? So, in the high-stakes matters, I think might as well.
It’s relatively easy to justify. There’s relatively little downside. There’s estoppel, right?
But if you have your plan for estoppel in terms of having good system art, then there’s relatively little risk to filing your petition. But you do have to be prepared to fight on multiple fronts, including potentially lining up that third-party EPR. Now, in the lower value cases, or where you’re in a jurisdiction where juries are more comfortable invalidating, then the calculus is very different.
And in those situations, you know, if I’m in San Jose, right? And I have really great system art, I’m usually advising the client, “Look, it’s not worth filing this IPR,” right? Very low probability of success. We just heard the statistics.
And my better art is this system art and so it really ends up just being a very tailored decision based on the specifics of the case.
[DEBRA MCCOMAS]
Okay.
[JESSICA KAISER]
Yeah, and can I chime in on that?
[DEBRA MCCOMAS]
Yes, please.
[JESSICA KAISER]
I would say, like, I also agree that it’s a very tailored decision. And for me, in addition to the things that you talked about, it’s also looking at how does it fit into what we saw in the Coke-Stewart discretion decisions? Um, because–just because I like statistics, I’ll, I’ll also say, so we’ve been talking about settled expectations and what that, I, I think was, was clear from it, I’ll just say, is it seems like there’s sort of a six-year presumption.
So if you’re more than six years past issuance, then there’s sort of a presumption that the Office is gonna discretionarily deny your petition. And if you’re less than six years, then there’s a presumption the other way. And the statistics bear that out. So for the bifurcated cases, that initial set of 600, for patents that were more than six years old, 80% were discretionarily denied and for patents that were less than six years old it was only 40%.
So big difference there. So look at that. Obviously, you also look at the trial date.
That sort of become a firm bar, too. If the trial date in your co-pending litigation is gonna come before your final written decision and your IPR, there’s not a ton of wiggle room there to argue around discretionary denial. So and then the other thing that has been, I think, taken more prominence is looking at whether the examiner made some kind of clear mistake during the prosecution of the patent. And if you can show that, you have a lot better chance of getting past discretion.
So I, I really also look at the merits and, you know, if the patent is more than six years old, then I’m starting from the, the place of, is there something else we can show that would have at least some chance of getting us over the discretion hump in IPR? And if not, it may not be worth the money to go that way.
[TIM SAULSBURY]
Right. And just a few additional thoughts on that. That something extra could just be something unusual with respect to the patentee.
And so, eh, in the December order, one, one of the cases that got through discretionary denial was a situation where the patentee let the patent lapse two different times.
[THOMAS BROUGHAN III]
Hm.
[TIM SAULSBURY]
And so the petitioner argued, “How could you have settled expectations if you weren’t even paying the maintenance fees,” right? And so something unusual like that could be something that tips the scales. On time to trial 100% agree, it’s something to really focus on. What’s interesting is, I think the, the, even with respect to Squires, there seems to be some comfort, not taking as given Judge Albright’s trial dates because there’s now this body of law coming out of the Board saying, “If you actually look at the data, he doesn’t hold his trials when he says he’s gonna set them, and so we’re gonna, even if you’d get your final written decision a few months after the trial date, fine, because you’re not actually gonna get a trial another six, you know, months after that.”
[JESSICA KAISER]
Yeah, and to clarify on that, it’s not necessarily the set trial date as you said, but you have to be able to justify through statistics why the final written decision’s likely to come before the trial date.
[THOMAS BROUGHAN III]
I agree with everything you both just said. One scenario that I’ve come across that is, that we’ve kind of grappled with on this similar issue is outside of the context of litigation, when you receive a demand letter.
You know, what do we do now? And, you know, sometimes the patent that you receive a demand letter on might be four years old, five years old. Do you go after that patent now because you’re coming up to that six-year sort of, like, bar? Or do you wait and hope that the, you know, the patentee is not interested anymore or takes it somewhere else?
It’s a hard decision point to make, and you know, it sort of depends on who you’re talking to. Are you talking to a big company?
That might be one calculus. Another one, but if you’re talking to a startup, maybe some pre-revenue, it’s a very different calculation because for them to divert money from research and development and getting it to market, and instead devote it to IPRs is a hard decision to make.
[DEBRA MCCOMAS]
Oh, no, it’s not lost on me that that six-year number seems to equate to a certain statute of limitations, so if you’re a patent owner and you wait until six years and six months, you know, now you’ve gotten past settled expectations, but you’ve got almost your full statute of limitations backwards too, so maybe that number was a little accidental.
[JESSICA KAISER]
That statute was cited in the first settled expectations case, so that, you know, I don’t understand the rationale for tying it to that statute, but that does seem to be where the six years came from.
[THOMAS BROUGHAN III]
I certainly from a patent owner’s perspective or a plaintiff’s perspective, you know, when you’re in a dispute with a competitor, you’re looking through the portfolio to see what is here that we can use to, you know, kind of bolster our dispute, and there is a much larger value placed on these older patents now when we’re evaluating them, because those are going to be insulated from—well, the expectation is that they’re going to be more insulated from IPR review because of these new rules, whereas the newer patents, you know, we have to think twice before you want to add one of those new ones to the case because it could, you know, be subject to IPR, or that one patent could delay the rest of the case if it gets hit by the IPR when others don’t.
[DEBRA MCCOMAS]
Yeah, so I didn’t plan on being this cynical when we got up here, but here I come.
(laughing)
So, you know, it’s my understanding, because we did do a lot of, you know, going back to the legislative history when we filed the mandamus, that what we were really trying to attack with the AIA back in the day, when it was implemented was to really capture the NPEs and kind of the low-hanging fruit on just kind of the extortion claims. Let’s call it that, and I didn’t use the word troll directly.
Um
(panelists laughing)
[TIM SAULSBURY]
–extortion is the most.
[DEBRA MCCOMAS]
Exactly.
(laughing)
Exactly. But the idea was, and the way those play out is, you know, investors look at a lot of times when someone has patented something, they don’t wanna keep paying the fees anymore, so it’s usually an older patent that is picked up by the NPEs, right? So, this settled expectations rule, it doesn’t really make sense, but the problem is, it’s capturing, like I said, the young investor, inventor that’s trying to actually assert its patent in the market as, you know, for market dominance, and those that have let their stuff lapse and now has just become the new thing to attack is impenetrable, and they get to go through an entire $6 million lawsuit in legal fees before you get to prove that. And as we heard this morning, sometimes it takes two or three times up to the Federal Circuit to get those damages reversed.
So it seems that we’ve completely unwound the AIA. You guys feel free to disagree with me.
[JESSICA KAISER]
No. I mean, I think one thing that’s really notable when we’re talking about the PTAB this year is we’re very rarely in conferences like this, talking about the merits of the challenges, right? We’re talking about the co-pending litigation.
We’re talking about how old the patent is, but we’re not talking about how strong the patent is or how strong the prior art challenges that are being presented are, and even though in the, the memo that a– at the time Acting Director Stewart put out, the strength of the merits was a factor that was still listed in that memo, that appeared exactly none in any of these bifurcated decisions, and I think that just, to me, says a lot about where we’re at in this issue right now.
[DEBRA MCCOMAS]
Okay, before I double down on that, agreeing with it, you guys have different thoughts?
[TIM SAULSBURY]
No, I mean, the idea that the settled expectations doctrine especially benefit NPEs, I mean, I very much agree. I mean, if you are, you’re a sophisticated NPE, you’re gonna wait till the market matures. Doesn’t make sense to file within the first six years.
You want people to start adopting standards, so on and so forth, so you’re usually asserting older patents. And, you know, most of these NPEs are extremely sophisticated. What I expect them to be doing these days is, like, if I can sue people in a venue where the juries just aren’t willing to pull the trigger on the inability and where judges are gonna let you get by summary judgment, I’m gonna pick an extraordinarily, extraordinarily broad patent because what’s the defendant’s end, endgame then, right?
[THOMAS BROUGHAN III]
Right.
[TIM SAULSBURY]
Like, what is their shot really? ’cause you do have these patents where they’re almost certainly infringed, it’s just that they should have never been issued in the first place.
[DEBRA MCCOMAS]
So yeah,
[JESSICA KAISER]
And one thing just wanted to note is, you know, in the, and I don’t have data on this, so I’ll, I’ll put my statistics to the side, but just anecdotally, I know in the panel this morning from the patent owner perspective The answer was sort of that this isn’t really changing litigation behavior. But at least anecdotally, when you look at the Docket Navigator report every morning, what I see is a lot of old patents being asserted and then the patents that are being challenged in IPR petitions that are being filed are newer patents, so it, it does seem to me like at least we’re starting to see that, that self-selection for these reasons.
[DEBRA MCCOMAS]
And, Tim, you had a thought too about where the, that we’re doubling down in certain Texas venues because of this as well, right?
[TIM SAULSBURY]
And I think it’s completely rational, right? You know, this is not uniformly true, especially after the Biden appointments, but here in the Northern District, there are many judges who will take a really hard look at your 102 reference, and if the expert gave up the right admissions, you have a shot. You’re not– far from guaranteed, but you have a shot of getting a 102 ruling on summary judgment.
I mean, the, the proportion of, of cases that result in a 102 summary judgment ruling coming out of the Eastern District are just, you know, mini– minuscule. And so, of course, if you’re a rational assertion entity, you’re gonna be filing as many of the cases you can in the Eastern District. And we’re seeing really clever behavior, actually, right?
We’re seeing a lot of folks target, not the sort of first implementer. They target the downstream implementers because they’re in Asia and they’re in Europe.
They can’t avail themselves of the venue statute. They leave out the American subsidiary that actually sells the thing, so they have a little bit of problem with respect to quantum of infringement, right?
But, like, they can essentially ensure venue in Texas by, by suing those foreign defendants.
[DEBRA MCCOMAS]
So we mentioned 101, and it’s fun, we kind of started this conversation with whomever had the misfortune of sitting down with us at lunch today. And I think everybody universally says 101 is still such a common defense in district court.
We haven’t talked yet about the pending notice for comment on new rulemaking. So Jessica, can you just tell us a little bit about what those rules are and how they might impact this discussion?
[JESSICA KAISER]
Yeah. So you know, I started this off by giving statistics about sort of where we are at this point, and I think that you know, could totally change in the next few months, as we’ve been used to this year. Um, because in October I believe, the the office put out a notice of proposed rulemaking on PTAB rules. Um, the comment period closed this week on Tuesday, and there were over 10,000 comments.
So not a lot of interest in this, which makes sense because the office has designated this rulemaking package as not being economically significant.
(laughing)
Um, but I’m b– if you can’t tell, I’m being sarcastic. I’m sorry.
(Debbie laughing)
[DEBRA MCCOMAS]
So, what is–
[JESSICA KAISER]
Somebody got it. What?
(laughing)
What is in the rule package? So, or the proposed rules, there’s really four parts. One is that it would require a stipulation, a very broad stipulation.
So in this new regime, we’ve talked about stipulations that are broader than Sottera, and I’ve heard them called Soterra Plus, Soterra Plus Plus, Soterra Plus Plus Plus. But, so I guess this is, like, the mega Soterra stipulation.
But it would be essentially to have your IPR instituted or maintained, so suggesting that at least in the proposal, the office is planning to retroactively apply these rules to pending IPRs. You would have to give up all 102 and 103 grounds in your co-pending litigation. And that includes grounds that you could not bring in IPR. So that, you know, you talked about System Art.
System Art would be off the table.
[TIM SAULSBURY]
Yeah.
[JESSICA KAISER]
If this rule, if that rule goes into effect. It also unlike the statutory estoppel, would require you to stipulate to the patent as a whole.
So the statutory estoppel is by the claims that you challenge. This stipulation would be to the entire patent.
So say there’s a patent that’s asserted against you that has 150 claims. If you challenge 20 of those in IPR, you would have to give up 102, 103 forever as to all 150 claims. So if the patent owner then comes back and sues you on a different set of claims later on, you’re basically screwed in terms of being able to bring an IPR. The second proposed regulation looks at was there a prior finding in any tribunal that the claims were not invalid.
So that’s, you know, was there a prior jury trial? Was there a prior summary judgment? Was there a prior ITC determination? Did somebody bring an IPR before that was unsuccessful?
And this is not by you. So this could be by anyone.
And so if you know, if, say, the first party that’s sued in an enforcement campaign, maybe they’re not as well funded, maybe they’re a smaller player, I mean, they don’t do as good of a job as maybe you would have done. You’re still precluded from bringing IPR because they lost on invalidity in another forum.
And then lastly, it sort of enshrines the trial date piece that we were talking about. So proposed regulation would say, if it’s more likely than not that a district court or the ITC, or another PTAB proceeding would get to trial before yours, then the PTO is not gonna go forward. One thing that’s interesting about this, again, is it’s not limited to cases that you have. Um, so say a patent owner sues one defendant in district court in, say, Eastern District of Texas and then they sue you, so their, their trial is gonna get there first.
So you can’t file an IPR. Then their case settles, then you might be able to file an IPR, so, because no longer is that gonna get to trial before your IPR would.
So there’s a lot of these weird nuances in these rules. And like I said, there’s been 10,000 comments. Um, so we’ll see if they come forward in the same form ultimately, although I, you know, at least what I’ve heard is they’re quite likely to.
[DEBRA MCCOMAS]
Well, honestly, a lot of that they’ve already been applying, and that’s some of what we have pending in the mandamus. Particularly, like, even the go file it in ex parte reexam, and there’s been a lot of just hand waving of this has been raised somewhere else sometime before, it’s not pending before us now.
So there’s a lot of sounds like a 315-type problem, but it’s not really because there’s nothing pending before the Board at the time. Those issues are being brought up.
But when we said not dead yet, really mentioning these new rules, that they can make it much harder. I think the biggest one of those, you guys let me know if you disagree, but to me the biggest one of those is that you’ve got to challenge every claim. So, I mean, sometimes you do anyway– so that doesn’t really make a difference, but sometimes it doesn’t make sense to challenge all the claims, and that’s gonna foreclose a large percentage of our IPRs.
You agree?
[JESSICA KAISER]
I think it depends on the case, right? I mean, in the extreme circumstance that I gave with the hundreds of claims, then, yeah, I think that’s a real challenge, but, you know, most IPRs that I see are 20 claims. And so it will definitely be a consideration.
[THOMAS BROUGHAN III]
Yeah, I mean, I think we typically will challenge anything that you think there might be an infringement risk because there’s always the possibility that the plaintiff will later on try to amend the complaint or add new claims in, so you can’t strictly speaking rely on a subset of claims that they’ve identified in a complaint or somewhere else, so usually we try to challenge as much as possible.
[DEBRA MCCOMAS]
Yeah. Unless there’s some random dependent claim that, you know, just has its own little unusual issue and hasn’t been asserted, so why waste your time and money? But, Um–
[THOMAS BROUGHAN III]
I mean, I think another issue brought up by some of these is kind of as a practical matter is how do you– what do you do in the joint defendant scenario or where there’s multiple companies sued, whether in the same case or separate cases? Uh, you know, I– based on my experience, it seems like parties are usually pretty careful not to coordinate so that they don’t create real partying interest issues.
But if the PTAB’s only going to consider one challenge to a patent, maybe that changes going forward. Maybe there is a reason for defendants to coordinate so that everyone makes sure that their interests are all put into a single petition, ’cause otherwise it turns into a race.
Whoever gets there first is more likely to have their challenge with their view of the issues considered first and everyone else, if they have slightly different views, they’re not gonna get the time of day since they’re late. So as a practical matter, this might change how, I think, defendants decide what to– you know, when to file and how to file.
[JESSICA KAISER]
I can–
[DEBRA MCCOMAS]
Okay. Go ahead. No.
[JESSICA KAISER]
No, I was just gonna say, I mean, I think that is one clear effect of the proposed rules if they go into effect is it is clear that only the first challenger will get their IPR petition considered. It’s a little unclear to me how that applies to joinder petitions. I think, you know, how those will be considered? But we’re even seeing right now where, with joinder, the Office will really only consider the first filer for joinder and has discretionarily denied, like, second joinder petitions.
[DEBRA MCCOMAS]
Okay, so now we’ve made you guys all sad.
(all laughing)
[TIM SAULSBURY]
Or happy. Depends on your perspective, yeah.
[DEBRA MCCOMAS]
Well, the three people in here that, you know, were on the panel this morning for the patent owner Yeah, And by the way, we all represent patent owners from time to time, too. I think to be clear, and, you know, since this is being recorded and publicized that we do represent– Patent owners, too. The, the problem I’m having personally, and this is totally my own personal opinion, is just the lack of clarity from the Board and I really struggle any time we so disregard what I think your statutory obligation is.
And here, I really feel like we’ve gone off the rails, so that’s my personal opinion.
[JESSICA KAISER]
Yeah, and, you know, I share that. And I do, I think all of us represent patent owners in addition to petitioners. And I used to be an APJ at the PTAB. And I think what is really hard is watching the changes happen without really any sort of explanation or rationalization that makes logical sense, and being totally contrary to the statute at the same time.
So I think reasonable people can disagree about how these things should be applied, and how discretion should be applied, but I think hopefully, as lawyers, we can agree we’d like to follow the rules and that’s what keeps me up at night.
[DEBRA MCCOMAS]
Yes, so that’s the glass half full, is that I have, I have hope in our court system that they will listen, and what we have from the Supreme Court is a very narrow opportunity to review that requires a constitutional level violation, or what was referred to as shenanigans. So, a level of an APA violation that would be defined as shenanigans. Holy cow, nobody knows what that means.
But we’re working on it. And that’s what the petitions are saying, so I have to say if anybody, what we haven’t seen yet, and I know I’m talking to a lot of people that have the power to be part of this, what we haven’t seen yet is a new district court action that takes on the procedural issues head-on.
So, some of the things that aren’t reviewable by mandamus, we might actually be able to get relief in the district court. So, I’m gonna ask my colleagues here, because I keep giving them like the sad piece, and I get to be the, you know, ‘We, we can do this together,’ is the timing of that is, is the struggle, right?
So, assume we bring a district court action, where are we on the Apple v. Vidale challenge?
[TIM SAULSBURY]
Well, it’s now Apple v. Squires, and I mean, I don’t know.
(Debbie laughing)
This isn’t gonna get you the optimism maybe you were looking for but I think it’s fairly easy to characterize as a patent office, it’s fairly easy to characterize these decisions not as fundamentally changing policy and being subject to a facial APA challenge, and so that’s my concern with the outcome in that case. And I think probably why we haven’t seen additional APA challenges is ’cause folks are waiting to see how that plays out.
[DEBRA MCCOMAS]
Yeah. So for background some of you, the, the original Fintive decision was challenged not on the grounds that we’re talking about now, which is what are the limitations in the statute? Do you really have to determine the reasonable likelihood on the merit of the case? And are you bound by that?
It doesn’t go that far, the challenges that are, that are pending, but there is a case that’s being argued in January that argues for the lack of rulemaking in the Fintive standards, which I think all of us would love to see now, compared to what we’re looking at now, But but that is pending. It’s being argued next month, the first week of January, in the Federal Circuit.
[TIM SAULSBURY]
In the trial court decision that’s being appealed was that this wasn’t a decision that required rule-making.
[DEBRA MCCOMAS]
Correct. Correct.
[TIM SAULSBURY]
And so, my– my concern as applied to discretionary denial on the basis of settled expectations, for example, is that the PTO, if the logic of the, the Northern District’s decision in the district court cases followed, the PTO is gonna be able to characterize things like the new discretionary denial policies as also not subject to the rule-making obligations.
[JESSIKA KEATEN]
I think there are other issues that could be raised now, too, like for example, the lack of reasoned decisions. I mean, I just mentioned 170 cases, none of which are getting any reasoning for the decision that’s coming out, and yet the petitioners are being charged, you know, $25,000 for essentially seeing their case name on a piece of paper with, you know, 70 other case names. So I think there, there are other avenues here than there were in Fintiff.
[THOMAS DOUGHERTY]
Looking at the decisions we’ve had so far from the Federal Circuit, I think there’s an uphill battle to get these, these rules changed, but I guess something maybe a bit more from a patent owner’s side. While I, I don’t, I very much don’t like the settled expectation rule, I think it’s a crude cudgel that doesn’t achieve the goal that it’s trying to.
[THOMAS BROUGHAN III]
I do have a lot of sympathy for what Squires is trying to do in the sense that, over the past 10 years the pendulum has swung very far, kind of towards defendants and petitioners, and does it really make sense that you go through this entire examination process, you know, finally get your patent, and then you go to litigation, and before you can get relief you have to go back to the PTO and establish — what they, that the first time was right? There’s a certain inefficiency about that, you know, that in every single case that happens, that just strikes me as maybe there was a little bit of an issue there. But I think the way that the Office is going about it is not quite the right way of doing it, but in the idea of swinging the pendulum back a little bit, I think there is some merit to that, but there’s a question of how you do it.
[TIM SAULSBURY]
I also think it comes down to the separation of powers, right? Like Congress presumably anticipated that you’d have to get your patent through the Patent Office and then have to fight it when you got litigated, right?
And they passed the AA notwithstanding that, and so like, it’s not clear to me that there’s anything sort of unanticipated that warrants an agency changing the policy like this, but that’s obviously the subject of dispute.
[JESSICA KAISER]
Well, and then for, you know, for the two different sides that we heard on panels today, I mean, you also have to consider that, okay, well, this is the current regime and the current administration, and how are they gonna feel in three years if we take it all the way back to the other side? You know?
And is this something that we want to do every four years? Is that good for our patent system?
[TIM SAULSBURY]
It’s good for us. Good point.
[JESSICA KAISER]
Yeah.
(Debbie laughing)
I mean, there’s, there’s no question that I think that this leads to more patent litigation, which, you know, is what a lot of us do as well, and so there’s plenty of work for patent lawyers, but I’m not sure it’s great for industry, for the economy, and for our patent system.
[DEBRA MCCOMAS]
Yeah. So the moral is, “We’re out of time, but we’re more than happy to talk about this ad infinitum.” But the, I think the moral of it is that if you want to join the mandamus boat, there’s still room.
(all laughing)
And in the meantime, you do have to be very sensitive to what the moving standards are, and if you are going to file an IPR, you need to be very thoughtful about what you’re giving up. So, unless and until we get some relief and, and we get some definition of what the parameters and restrictions are on, on how far the Patent Office can go, everyone in this room needs to think very carefully each time they file an IPR about how that impacts their broader strategy.
Thanks, everybody.
[THOMAS BROUGHAN III]
Thank you.
[TIM SAULSBURY]
Thank you.
(audience applause)