Are Peace and Love Breaking Out at the PTAB? – (Settlement of IPR Proceedings: Part 2)

By Tom Engellenner

The proverbial ink had barely dried on our first posting on this topic (noting that few parties in Inter Partes Review (IPR) proceedings had taken advantage of the settlement option) when we saw an outbreak of judgments terminating proceedings by mutual consent.  It seems that parties are indeed availing themselves of the provisions of the AIA that allow terminations without findings when they reach a settlement agreement.

On July 22, 2013, the PTAB terminated eighteen different IPR proceedings involving Oracle Corporation and Clouding IP, LLC.  The 18 petitions had been filed by Oracle challenging the validity of eleven patents asserted by Clouding IP in a patent infringement suit filed last year in the federal district court for Delaware.  The petitions had been filed by Oracle late in 2012 and early in 2013 in response to the infringement suit.  (The base cost for requesting inter partes review in each instance is a nonrefundable official fee of $23,000.  Hence, Oracle’s out-of-pocket costs in filing the eighteen IPR petitions were at least $414,000 – not considering the fees they paid to their attorneys to prepare the petitions.)

In granting the joint motions to terminate, the PTAB noted that in each of the proceedings Clouding has not yet filed its Patent Owner Response or any Motion to Amend Claims.  Oracle represented that it would no longer participate even if the Board did not terminate the review.  The PTAB panel also noted that a copy of a settlement agreement had been filed under seal and counsel for the parties represented that they will move to dismiss related district court litigation between the parties.  The board terminated the 18 proceedings and also granted the parties joint request to have their settlement agreement treated as confidential business information under 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c).

The settlements do not appear to have chastened Clouding IP.  A week after the termination of the Oracle IPR petitions, Clouding IP was back in the Delaware federal district court – this time asserting its patents against Hewlett Packard Co., AT&T, Inc and CA Technologies, Inc.

In addition to the Oracle terminations, four other proceedings were terminated in July.  Proceedings Nos. 2013000104 and 2013000176 between Hyundai Motor America (petitioner) and Clear with Computers, LLC (patent owner) were terminated based on a joint motion of the parties.  In the Hyundai cases, however, the PTAB questioned the settlement agreement because it had no terms other than an agreement to move to terminate the IPR proceedings.

Before granting the motion to terminate, the Board ordered Hyundai and the patent owner to certify in writing that there were no other written or oral agreements or understandings, including any collateral agreements, between them, “including but not limited to, licenses, covenants not sue, confidentiality agreements, or other agreements of any kind, that are made in connection with, or in contemplation of, the termination of the IPR Proceedings.”  The parties confirmed there were no other agreements and certified that there were no pending patent infringement suits involving the patent-in-suit.

In Proceeding No. IPR2013000216, the board granted a joint motion by Applied Voice & Speech Technologies (petitioner) and IPVX Patent Holdings, Inc. (patent owner) to terminate.  In this instance, the PTAB panel accepted the motion and a copy of the settlement agreement under seal.  The board also noted that it had not yet authorized institution of the inter partes review and, hence, no trial had yet been instituted based on AVST’s petition.  Because the proceeding was in the preliminary proceeding stage the PTAB concluded it was appropriate to enter judgment.

In Proceeding No. IPR2013000245 between A. L. Lee Corporation (petitioner) and Brookville Equipment Corporation (patent owner), the PTAB likewise noted that the proceedings were in a preliminary stage and entered  judgment terminating the proceeding based on the filing of a settlement agreement under seal and a joint motion to terminate.

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