Boston | Hartford | New York | Providence | Stamford | Albany | Los Angeles | Miami | New London | rc.com © 2015 Robinson & Cole LLPrc.com JIM NAULT, IP LITIGATION SECTION MONDAY JUNE 13, 2016 Alice – Impact on Patent Infringement Litigation Strategy

22 Overall Strategy Tip For Plaintiff Patent-holders:  Make a thorough assessment of patent vulnerability to Alice 101 patent ineligibility challenge before filing suit For Defendant Alleged Infringers:  Use all of the new tools available after the AIA and Alice to most appropriately combat the threat

33 Defendant Alleged Infringer – Step 1 Determine asserted patent vulnerability to an Alice 101 patent ineligibility challenge Determine if patent asserted in other patent infringement actions, where, how many, against who  Pattern of where suit brought? Is that venue appropriate for you? If not, investigate most appropriate venue.  Is this a one-off or have hundreds of suits been filed? ● NPE or not?  Are the defendants bigger or smaller players in their industry? ● Is there an apparent strategy by the plaintiff to pick off smaller players?  Have any declaratory judgment actions been brought? PTAB CBMRs?

44 Defendant Alleged Infringers – Step 2 Review docket for each asserted action  Have any dispositive motions been brought (12(b)(6)?/MSJ?) ● Determine validity of argument’s presented ● Abstract idea appropriately characterized? ● “Inventive Concept” analysis proper?  Have any proceeded to dispositive resolution?  Is there a pattern of settlement?  Have there been any motions to stay filed?  Have proceedings been instituted at the PTAB? (CBMR?/IPR?)

55 Defendant Alleged Infringers – Step 3 Make decision as to most appropriate strategy  File declaratory judgment action?  Petition for CBMR at PTAB?  File motion for stay (if CBMR petitioned at PTAB or if PTAB proceedings in progress)?  File dispositive motion (12(b)(6) / 12(c) / MSJ) in district court? ● Status of claim construction?

66 Covered Business Method Review (CBMR) at the Patent Trial & Appeal Board (PTAB) “[T] he term ‘covered business method patent’ means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service [interpreted broadly], except that the term does not include patents for technological inventions [interpreted narrowly].” AIA Section 18(d)(1) (emphasis added). Two-step process: Decision to institute – then, if yes, trial

77 CBMR Motion for Stay If a party seeks a stay of a civil action alleging infringement of a patent under section 281 of title 35, United States Code, relating to a transitional proceeding for that patent, the court shall decide whether to enter a stay based on—  (A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;  (B) whether discovery is complete and whether a trial date has been set;  (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and  (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. AIA Section 18(b).

88 Congressional Record on CBMR Stays “The [CBMR] program is intended to provide a cost- effective alternative to litigation to examine business- method patents.” Senator Leahy (emphasis added). “This [CBMR] program... Is designed to provide a cheaper, faster alternative to district court litigation over the validity of business-method patents. This program should be used instead of, rather than in addition to, civil litigation.... [The CBMR program] expressly authorizes a stay of litigation in relation to such proceedings and places a very heavy thumb on the scale in favor of a stay being granted.” Senator Schumer (emphasis added).

99 CBMR v. Filing Dispositive Motion CBMR Benefits:  18 months maximum from petition filing to decision  Potentially more hospitable to challenge, preponderance of the evidence v. clear and convincing evidence (initial institution rate = 80-90%)  Estoppel only applies to grounds actually raised at PTAB (101, 102, 103, or 112)  Joint defense group can petition together, reducing cost  Stay of district court proceedings likely District Court Dispositive Motion Filing Benefits:  Can induce NPE to settle (even before filing motion)  Eliminates PTAB filing fee ($30,000)  Potentially quicker than CBMR proceeding Study Court’s predisposition to grant dispositive motions

10 Two Real-World Examples #1: Demand letter to Connecticut business entity Review revealed the following:  Asserted patent extremely vulnerability to 101 ineligibility challenge under Alice  Dozens of suits filed, all in the Southern District of Florida  Not one case yet proceeded to disposition on the merits Strategy: File declaratory judgment action in the District of Connecticut / plan to file motion for judgment on the pleadings of 101 patent ineligibility under Alice before claim construction Disposition: Declaratory judgment defendant patent holder immediately settled for nuisance value upon filing of declaratory judgment action

11 Real-world example #2 Patent infringement action filed in D. Conn. Review revealed the following:  Asserted patent extremely vulnerability to 101 ineligibility challenge under Alice  Dozens of suits filed in D. Conn. and E.D. Tex., one DJ action in W.D. Tex., and one PTAB CBMR petition  Not one case yet proceeded to disposition on the merits Strategy: Filed for CBMR stay immediately despite not being CBMR petitioner. While request for stay pending, drafted motion to dismiss (12(b)(6)) and threatened filing. Plaintiff immediately settled for nuisance value to prevent filing of 12(b)(6) motion

12 Why Not CBMR Proceeding in these 2 Instances? Extreme vulnerability of asserted patents to 101 Alice ineligibility challenge negated lower bar at PTAB Saved PTAB filing fee Estimate in both cases that opposing party was NPE meant settlement likely if pushed

13 When is CBMR Most Appropriate? Patent holder not an NPE looking for quick settlement Patent vulnerability to 101 Alice ineligibility challenge questionable: take advantage of lower bar at PTAB Ability to petition for some, but not all grounds of invalidity and not be estopped on grounds not asserted at PTAB Avoid full-blown patent infringement proceedings as envisioned by Senators Leahy and Schumer

14 Questions? Jim Nault