By: John Marlott

The AIA expressly anticipates and permits a patent owner and a petitioner to reach a settlement during the pendency of a post-grant proceeding. For IPRs, 35 U.S.C. § 317(a) is entitled “Settlement” and provides, in pertinent part:

An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. * * *  If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).

A parallel provision governs party settlements and requests to terminate PGRs (including CBMs).  See 35 U.S.C. § 327(a).

Despite the seemingly mandatory “shall be terminated” statutory language in §§ 317(a) and 327(a), a settlement between the parties—especially one that comes late in time—does not guarantee that the PTAB will agree to end a post-grant proceeding. The PTAB’s position is that it “is not a party to the settlement and may independently determine any question of jurisdiction, patentability, or Office practice.” 37 C.F.R. § 42.74. In a recent IPR, for example, the PTAB denied a late-filed joint termination request and proceeded to issue a final written decision addressing the merits of the challenged patent claims.

In Rubicon Communications, LP, v. Lego A/S, the parties jointly moved to terminate an IPR one day after they reached a settlement of two related district court litigations.  IPR2016-01187 (Paper No. 100, Dec. 14, 2017). Although the PTAB panel had not yet issued a final written decision, the panel explained that it had already “deliberated and decided the merits of the proceeding” before the parties asked to terminate the IPR. Id. at 3. Moreover, according to the panel, the joint termination request came “very near the conclusion of the proceeding,” after all briefing had been completed and about 2 months after the oral hearing, and “less than one week prior to the statutory due date to enter a final written decision.” Id. at 2. Given the lateness in time, the panel observed that “the public’s interest in the status of the challenged claims of each patent is at its peak,” and it cited several prior decisions where the PTAB had denied similar termination motions filed late in the proceedings. Id. at 2-3 (citing Apple Inc. v. OpenTV, Inc., IPR2015-00969 (Paper 29, Sept. 10, 2016); Kinetic Technologies, Inc. v. Skyworks Solutions, Inc., IPR2014-00690 (Paper 43, Oct. 19, 2015)). Notably, though, there have been other PTAB decisions in which a panel has agreed to terminate an IPR based upon a party settlement near the end of a PTAB proceeding, even in the final week before the statutory deadline for the final written decision, see our prior post discussing Petroleum Geo-Services Inc. v. Westerngeco LLC, IPR2016-00407 (Paper No. 29, July 5, 2017)) (“At this juncture, termination is suitable because it promotes efficiency and minimizes unnecessary costs.”).

Having denied the parties’ joint request in Rubicon v. Lego to terminate the IPR, the PTAB panel then proceeded to issue a final written decision on the merits.  The panel determined to be unpatentable 4 of the 8 claims of the challenged patent. IPR2016-01187 (Paper No. 101, Dec. 14, 2017). The patent owner thus lost half of its patent claims, despite having a settlement agreement in hand with the petitioner.

Take-away: A settlement between the parties and a joint request to terminate a post-grant proceeding will not guarantee an end to the proceedings. Generally, the earlier in time a termination request is submitted, the greater the chance the PTAB will agree to end a post-grant challenge. But if, as in Rubicon v. Lego, the settlement and request to terminate come late in the process, with the panel having fully vetted the patentability issues and poised to issue a final written decision, then despite a joint request by the parties, the PTAB may decline to terminate a post-grant proceeding and may proceed to a decision on the merits.

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John Marlott brings more than 30 years of intellectual property law experience to his role as lead counsel in IP disputes for Jones Day clients. He focuses on high-stakes district court and ITC patent litigation, post-grant patent proceedings before the PTAB, and appeals to the U.S. Court of Appeals for the Federal Circuit.