In a recent webinar hosted by ChIPs, Venable associate Kaitlyn Rodnick moderated a panel that included Venable partners Megan Woodworth and Sarah Brooks, as well as Amanda Dittmar, in-house counsel at VIAVI Solutions. ChIPs, which stands for "Chiefs in Intellectual Property," is a nonprofit community that advances and connects women in intellectual property, technology, law, and policy.
The group discussed patent litigation trends and what to anticipate in 2023.
The Impact of TC Heartland on Venue Selection
Six years after the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, venue selection continues to be an extremely hot topic in patent infringement cases.
The ruling caused the number of filings in the plaintiff-friendly Eastern District of Texas to fall, though not as significantly as expected. Alternatively, the number of filings in the District of Delaware has increased, and California courts have seen an uptick as well. During the COVID pandemic, the Western District of Texas was the busiest of all venues in terms of patent infringement cases, as many cases from the state's Eastern District shifted there. Between 2020 and 2022:
- 23% of all patent litigations were filed in the Western District of Texas
- The second-most popular venue was the District of Delaware, with 19% of filings
- Third was the Eastern District of Texas, accounting for 11% of filings
During that period, the Western District of Texas, particularly Judge Alan Albright's plaintiff-friendly Waco division, faced criticism from U.S. Chief Justice John Roberts and members of Congress concerning the misbalance between patent cases and the districts in which they were filed. In response, in July 2022, the chief judge of the Western District of Texas issued a standing order in order to more equally distribute cases in the district. Civil cases involving patents would be randomly assigned to district court judges throughout the Western District of Texas.
Since the standing order, there has been a shift, but not a drastic one. Despite there being more than a dozen judges in the district, from July through December 2022 Judge Albright received 53% of the filed patent cases. The belief is that cases "related" to earlier litigation that he handled continue to be assigned to him. He has received 41% of patent cases filed since
January of 2023, and this percentage will likely continue to fall as the distribution of cases among district judges becomes even more equitable.
Litigation Funding Trends
Certain courts and judges require plaintiffs to disclose particular information regarding business relationships and funding sources. One recent example is the District of Delaware. In April 2022, Judge Colm F. Connolly issued a standing order regarding third-party litigation funding arrangements. The requirements include:
- Disclosing information to identify the funders
- Addressing whether their approval is necessary for litigation or settlement decisions in the action
- A brief description of the financial interest of the funder
Parties may seek additional discovery of the terms of a party's arrangement with any third-party funder if the funder is authorized to make litigation or settlement decisions. The order also states that "nothing herein precludes the court from ordering such other relief as may be appropriate," meaning that the judge may use his discretion to further inquire and obtain discovery from a particular plaintiff, which he did in the recent case In Re Nimitz Technologies LLC.
The Northern District of California, District of New Jersey, and Northern District of Georgia are among the courts with similar requirements. The plaintiff-friendly Eastern and Western Texas districts do not have such disclosure obligations and seem unlikely to adopt such measures in the near future. Local rules and orders like these may lead to an overall decline in patent case filings and continue to make the Texas courts seemingly preferable venues in which to file.
The Supreme Court (SCOTUS)
All eyes are on Amgen Inc. v. Sanofi, as SCOTUS weighs enablement issues that impact patents in the life sciences industry. Will the justices set a specific new standard, or will they direct courts to go back to the language of Section 112 of the Patent Act? Will their guidance apply only to the pharmaceutical and life sciences industries, or go beyond that scope?
This case dates back to 2014, when Amgen first filed suit against Sanofi and others concerning its patented technology used to develop a cholesterol-reducing drug. The defendants acknowledged infringement but argued that the patents were invalid to begin with on several grounds, including written description and enablement. This case went through several appeals.
- In 2016, the District of Delaware held that Sanofi had failed to prove that the asserted claims were invalid for either a lack of written description or enablement. Sanofi appealed and the Federal Circuit reversed, holding that the district court had erred in its evidentiary rulings and jury instructions on enablement
- In 2017, a second jury trial again found the patents valid. Sanofi moved for judgment as a matter of law (JMOL) on lack of enablement, and the district court granted the motion—holding the patents invalid
- In 2021, the Federal Circuit affirmed that ruling
- On March 27, 2023, SCOTUS heard oral arguments
Typically, when SCOTUS takes a case from the Federal Circuit, it does so to implement changes or clarify a given standard. In taking this case, the justices may shift the burden to defendants, who will have to align with older SCOTUS case law in identifying specific embodiments that fall within the scope of the claims that cannot be practiced based on the teachings of the patent. This case may also impact the ability to protect broader foundational innovations, as patent holders might need to draft more specific claims and/or include longer specifications, likely at a greater cost.
Patent stakeholders are also waiting to see if SCOTUS will take any 35 U.S.C. § 101 cases this term. Last summer, it declined to hear American Axle & Mfg. Inc. v. Neapco Holdings LLC, a case that could have clarified which inventions and technological breakthroughs warrant a patent. That decision against hearing the case suggests that the justices will not take similar cases this term.
Since SCOTUS seems unlikely to provide guidance, the burden may fall on Congress to make a change. Last year, Sen. Thom Tillis (R-NC) took a step toward reform by proposing the Patent Eligibility Restoration Act of 2022. The bill, which is pending, proposes a clarified definition of "useful" and provides specific examples of what is patent eligible and what is not.
Changes at the Patent Trial and Appeal Board (PTAB) Under Director Vidal
Late last year, United States Patent Trademark Office (USPTO) Director Kathi Vidal issued decisions in OpenSky v. VLSI and Patent Quality Assurance LLC v. VLSI, dismissing the plaintiffs from their respective challenges of VLSI patents. This was surprising, as the PTO director had not previously issued discovery or sanctions in any PTAB proceeding. However, the facts of the case were also unique, so it remains to be seen whether this outlier action will be repeated.
Another hot topic regarding the PTAB and Director Vidal is her guidance issued last summer concerning discretionary denials under Fintiv. The six-factor test resulting from Apple v. Fintiv failed to provide a clear picture of whether the PTAB should, at its own discretion, deny institution of an inter partes review (IPR) based on parallel district court litigation. Vidal's guidance clarified that the PTAB will not deny institution of an IPR or PGR under Fintiv in the following situations:
- A petition presents compelling evidence of unpatentability
- A request for denial under Fintiv is based on a parallel International Trade Commission (ITC) proceeding
- A petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition (Sotera stipulations)
In February 2023, in the CommScope IPR proceeding, the PTAB issued an institution decision based on this guidance, but Vidal vacated and remanded the decision back to the board. In that director review, she clarified that it was the intent of the guidance to only allow the "compelling evidence" merits determination if the first few Fintiv factors suggested that denial was appropriate.
In March 2023, a case led by Apple and other technology companies (Apple Inc. v. Vidal) came out of the Federal Circuit challenging whether the USPTO had the right to issue these discretionary denials at all under the Administrative Procedure Act (APA). The practice of issuing discretionary denials was not established through formal notice-and-comment procedure, but rather through an institution decision that then became precedential, in which there was then guidance issued and a director review. In the coming months, the district court will decide this matter.
At the same time, the PTAB is seeking to establish definitive practice through formal rulemaking, but it is not clear what will happen first—the district court decision or the completion of the PTAB's formal rulemaking process. So Apple Inc. v. Vidal is definitely a case worth monitoring in the coming months, as it may have major repercussions for director review in patent infringement proceedings.
Venable attorneys are closely monitoring the shifting patent litigation landscape. Watch the full webinar here, find out more about our Patent Litigation and Patent Prosecution and Counseling practices, and contact us to learn how we can help.