Rembrandt Social Media LP, a unit of Rembrandt IP Management, is asking the Court of Appeals for the Federal Circuit to reverse a district court ruling of invalidity in an infringement case against Facebook Inc. (FB) on the basis of a final written decision upholding the validity of the patent by the Patent Trial and Appeals Board in an inter partes review.
Such situations are rare because typically district courts stay infringement actions once an IPR has been filed pending a decision on validity by PTAB.
The underlying infringement claim was brought in February 2013 in U.S. District Court in Alexandria, Virginia before Judge T.S. Ellis III. Facebook filed the IPR a year later.
It concerned U.S. Patent No. 6,415,317 entitled "method and apparatus for implementing a web page diary" and was issued on July 2, 2002 to Joannes Josef Evaradus Van der Meer, a now deceased computer scientist.
After Van der Meer’s death, his family enlisted the help of Rembrandt IP to act as its agent in bringing the suit.
The district court handed down its finding of invalidity based on obviousness and the prior art in August 2014, and Rembrandt filed its notice of appeal soon afterward.
The PTAB’s final written decision issued on June 22, the same day Rembrandt’s reply brief in the appeal was due. Rembrandt’s motion to enforce estoppel from IPR final written decision was filed July 24.
The motion noted that that Facebook has not requested rehearing of the final written decision, and the deadline for doing so has past. The motion also noted Facebook also has not filed a notice of appeal to the Federal Circuit of the final written decision.
“The prerequisites for estoppel under Section 315(e)(2) have plainly been met, and the effect of the estoppel in this context is dismissal of the estopped claims,” Rembrandt’s motion says. “Asa result, Rembrandt requests reversal of the judgment of invalidity and dismissal of Facebook’s second affirmative defense of invalidity with respect to the ’316 patent in Facebook’s Answer to Rembrandt’s Second Amended Complaint.”
To support its argument, Rembrandt’s motion goes into some of the history of the America Invents Act of 2011, which created the IPR process as low cost more efficient alternative to litigation.
“Congress designed IPR proceedings to give patent challengers an alternative to litigation for validity challenges based on “paper” prior art, i.e., patents and printed publications.
As such, if a patent challenger has filed a declaratory judgment action, it may not file an IPR petition because it has selected the alternative of litigation.
“For the same reason, if a party chooses to file an IPR that results in a final written decision confirming patentability, the statute is clear that the party cannot pursue, in litigation, invalidity grounds it brought or could have brought in the IPR—it has selected the Patent Office alternative.
“The statutory text also makes plain that this estoppel attaches as soon as the Board issues a final written decision in the IPR, and thus before any appeals of that Board decision.”
“Contrary to the intent of the AIA which created IPRs as a lower cost alternative to civil litigation, Facebook chose to simultaneously pursue parallel attacks on the ’316 claims in court and the Patent Office.
“While the AIA may not have prohibited the initiation of such parallel challenges, Congress made clear through the estoppel provisions of 35 U.S.C. § 315(e)(2) that such parallel civil litigation challenges must end upon a final written decision confirming patentability.
“Simply put, having chosen to challenge validity in the Patent Office and lost, Facebook is estopped from asserting invalidity in this action.
“As has long been established in analogous contexts, once estoppel attaches, it applies to any stage of ongoing non-final litigation, including after a jury trial or during an appeal. Because Facebook is now estopped from asserting the ’316 patent’s invalidity over the only prior art raised at trial or in this appeal, the judgment of invalidity of the ’316 patent must be reversed.
Patent market observers such as Dex Wheeler, the chief research analyst at M-CAM, the Charlottesville, Virginia based IP investment advisory firm, said he expects the Federal Circuit to honor Rembrandt's request because their appeal is still open.
"We've seen USPTO invalidity rulings be considered during appeals before (Apple v. Samsung comes to mind) and we should see the same here," he said. "Of course, even if the initial findings are reversed, any potential award of damages could be years down the road.
Officials of Bala Cynwyd, Pennsylvania-based Rembrandt IP declined to comment.
Thomas Melsheimer, a partner in the Dallas office of Fish & Richardson P.C., couldn’t be reached immediately for comment.
Heidi Keefe, a partner in the Palo Alto office of Cooley LLP, who represents Facebook, also couldn’t be immediately reached for comment.
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