PTAB Invalidates Patent Despite Settlement

04 March 2014 IP Litigation Current Blog

As more and more AIA post-grant review decisions are being issued, practitioners should be aware that the Patent Trial and Appeal Board (PTAB) may rule on the validity of the patent at issue despite settlement by the parties. Unlike ex parte and inter partes reexamination proceedings, AIA statutory provisions allow for settlement of post-grant trials before the Board. However, recent PTAB decisions show the broad discretion used in determining whether a post-grant proceeding will be terminated upon settlement between the parties.

In Interthinx, Inc. v. Corelogic Solutions, LLC, the PTAB issued a final written decision on the validity of a patent, cancelling the claims of the patent even though a district court had previously ruled them valid, the parties had reached settlement, and the patent eventually expired. CBM2012-00007, Paper No. 58 (PTAB, Jan. 30, 2014).

Interthinx petitioned the PTAB for covered business method (CBM) review of U.S. Patent No. 5,361,201 (the ’201 patent) on September 19, 2012. The challenged claims focused on a computer implemented method for appraising a real estate property. Interthinx, along with others, had been sued by Corelogic for patent infringement in the Eastern District of Texas. Adopting the claim constructions applied by the district court, the PTAB instituted trial on January 31, 2013.

During this time, the district court case progressed. Following a jury verdict on September 28, 2012, the district court entered judgment of non-infringement in favor of Interthinx. See CoreLogic Information Solutions, Inc. v. Fiserv, Inc., No. 2:10-CV-132-RSP (E.D. Tex. Oct. 2, 2012). The court also found that the patent was valid. The parties filed several post-trial motions including (1) Corelogic’s Motion for Judgment as a Matter of Law that Interthinx infringed the ’201 patent, (2) Interthinx’s Motion for Judgment as a Matter of Law that certain claims were invalid under § 102 and/or § 103, and (3) Interthinx’s Motion for Judgment as a Matter of Law that the ’201 patent was invalid under § 101. The district court denied all post-trial motions on September 30, 2013. No appeal has been filed. However, the patent is still at issue in a later-filed case.  See CoreLogic Solutions, LLC v. Redfin, No. 2:12-CV-305 (E.D. Tex.).

In October 2013, the parties moved to terminate the CBM review proceeding. Although the PTAB terminated Interthinx’s involvement in the proceeding, the PTAB retained jurisdiction to issue a final written decision pursuant to 37 C.F.R. § 327(a). After an oral hearing where only Corelogic presented arguments, the PTAB issued its final written decision invalidating the contested claims of the patent.

The PTAB first found that the district court’s holding did not bar its review of the § 101 case under res judicata or collateral estoppel because the USPTO was not a party to the district court action and did not have a full and fair opportunity to litigate the patentability issues there.

Moreover, the PTAB explained that the issue decided in the CBM proceeding is not identical to the issue litigated in the district court because of different subject matter eligibility standards applied by the district court and the PTAB. The district court applied the clear and convincing standard while the PTAB reviews the patentability of a claim under a preponderance of evidence standard. Corelogic also argued that the PTAB should apply the higher standard because the ’201 patent expired and could not be amended. However, the Board found that the statute does not provide an exception for expired patents.

Additionally, the PTAB found that the jury’s finding that Interthinx had not proved any claim of the ’201 patent invalid was not binding on the PTAB. The PTAB then concluded that all four contested claims were unpatentable under § 101 and invalid under § 102 and § 103 in view of a prior art publication that was also before the district court. The PTAB cancelled all four claims.

Because of the PTAB’s decision in Interthinx v. Corelogic, practitioners considering post-grant review proceedings should be mindful of the relevant time periods as they impact whether and when a party should seek post-grant review, whether and when the parties should focus on settlement, and the impact (if any) of a district court judgment in concurrent litigation. A patent owner just may end up continuing to expend resources litigating the validity of its patent even where a district court has ruled it valid and it has settled with the accused infringer.

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