Settlement Does Not Guarantee Termination of IPR (Inter Partes Review) Proceedings

The Patent Trial and Appeal Board (the Board) can terminate inter partes review (IPR) and post-grant review proceedings following a settlement between the parties. Parties should note, however, that settlement does not guarantee termination of the proceeding. Recent decisions have made clear that the Board retains—and will sometimes exercise—the power to enter a final decision on patentability even after the parties have settled. In particular, the Board appears less inclined to terminate when settlement occurs at an advanced stage in the proceedings, and patent owners should therefore be wary of settling too late.

A. Statutory Basis for Settlement

The laws governing IPR and post-grant review proceedings expressly provide for voluntary termination after settlement. An instituted IPR “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.” 35 U.S.C. §§ 317(a); see also id. § 327(a). When settlement occurs, however, the Board “may terminate the review or proceed to a final written decision.” Id.

B. The Board’s Approach to Termination Requests

How can one predict whether the Board will choose to terminate or continue a proceeding after settlement? Two general considerations may affect the Board’s decision: (i) the stage of the proceeding at settlement, and (ii) the strength of the petitioner’s case against the patent.

1) Settlement Timing

In numerous cases, the Board has agreed to terminate proceedings settled during the petition stage, i.e., before institution of trial. E.g., IBM Corp. v. Financial Systems Technology, IPR2013-00078, Paper No. 11, at 2 (PTAB Feb. 12, 2013). The Board has also agreed to terminate proceedings settled within the first few months of trial, Hitachi Cable America Inc. v. Belden Inc., IPR2013-00408, Paper No. 14, at 2 (PTAB Jan. 30, 2014), and as late as ten days before a scheduled oral argument, Sony Corp. v. Tessera, Inc., IPR2012-00033, Paper No. 39, at 2 (PTAB Nov. 15, 2013).

In other instances, however, the Board has denied motions to terminate after settlement. For example, the parties in Blackberry Corp. v. Mobilemedia Ideas LLC, IPR2013-00016, filed a joint motion to terminate seven months after institution of the IPR and just one day before a scheduled oral hearing. The Board declined to terminate “in view of the advanced stage of this proceeding.” Paper 31, at 2–3 (PTAB Dec. 11, 2013). In another case, the parties unsuccessfully sought termination almost two months after oral argument; the Board explained that “the issues for trial had been briefed fully at the time the parties moved to terminate the proceeding.” Blackberry Corp. v. Mobilemedia Ideas LLC, IPR2013-00036, Paper No. 64, at 2–3 (PTAB Jan. 21, 2014). In sum, the Board appears more likely to grant early termination motions, and denials have been most frequent at later stages, particularly if the Board has already prepared for or conducted oral argument.

2) Manifestly Unpatentable Claims

A second factor that may influence the Board’s response to a settlement could be the relative strength of the unpatentability arguments asserted in the petition. In a case presenting one or more obviously unpatentable claims, the Board might be reluctant to terminate without requiring cancellation or amendment. Consistent with that notion, the Board has indicated that it “if the records clearly show that the challenged claims are unpatentable and the patent owner has not yet filed a patent owner response and/or amendment, the Board may continue the proceeding” for the patent owner to do so. 77 Fed. Reg. 48,648 (Aug. 14, 2012).