Victory comes if you are lucky on dices

In what could become a common patent challenge strategy, PeroxyChem, a chemical company that sells products useful in water and soil remediation, has employed a three-front assault—combining the relatively young post-grant review procedure, with an IPR and litigation–to take on one of its competitors, Innovative Environmental Technologies (IET).  Litigation together with an IPR has become a rather common means to challenge a competitor’s patent. However, post grant review is gaining in popularity among litigants, adding to the available strategies of overcoming potential barriers to market entry for companies.  For example, while 12 Petitions for PGR were filed in all of 2015, 15 have been filed so far in the first half of 2016. 

On June 6, 2016, in PeroxyChem LLC v Innovative Environmental Technologies Inc. (PGR-2016-00002), PeroxyChem became one of the few successful Petitioners to date to be granted institution of Post Grant Review.  PeroxyChem’s PGR success represents the third installment in of the battle between these parties.

In the initial confrontation, PeroxyChem sued IET in November of 2014 in the Eastern District of Pennsylvania for infringement of PeroxyChem patent U.S. 7,785,038 (PAED-2-14-cv-06446, E. D. PA, 2014).  In June of 2015, IET countersued PeroxyChem, asserting that PeroxyChem infringes IET patent US 7,531,709 (PAED-2-15-cv-03145, E. D. PA, 2015), directed to a method of dechlorinating soil.  PeroxyChem filed a counterclaim arguing they do not infringe the ‘709 patent, and alternatively that the ‘709 patent is invalid as lacking written description and enablement, and as anticipated and obvious.

In the battle’s second stage, PeroxyChem filed a Petition for Inter Partes Review in November of 2015 of IET’s ‘709 patent (IPR2016-00241) asserting the claims were anticipated by or obvious over various prior art publications.  The IPR against the ‘709 patent was instituted in May 2016 on grounds of both anticipation and obviousness.  (To counter, IET filed a Petition for IPR against PeroxyChem patent US 7,785,038 (IPR2016-00198), which was instituted on §102 grounds, but denied on §103 grounds.)

Third, in November 2015 PeroxyChem filed a Petition for Post-Grant Review of IET Patent No. 9,126,245 (PGR-2016-00002) directed to methods for oxidation and attenuation of organic compounds in soil and ground water.  The Board instituted PGR on the ground of lack of written description, but denied institution on grounds of lack of enablement, obviousness and for alleged unpatentable subject matter under 35 USC §101.  It should be noted that the patent at issue in the PeroxyChem PGR is different than the patent involved in the IPR and district court litigation, and the art cited in the PGR was different from that cited in the earlier-filed IPR.  In its decision, the Board agreed that it was more likely than not that the Petitioner would prevail on the grounds that the claims of the IET patent lacked description for a certain range of metals in the composition of the claimed method.

It is interesting that PeroxyChem filed a PGR of the ‘245 patent and not simply an IPR.  An important benefit of the PGR over the IPR is that grounds in addition to §102 and §103 can be raised in the petition.  In the PeroxyChem PGR, the written description grounds could not have been raised in an IPR and if only the §102 and §103 grounds were raised in an IPR it could have been denied in whole, thus filing the PGR instead of an IPR was beneficial.

To investigate whether the three-pronged approach used by PeroxyChem is an isolated incident or the beginning of a trend, this blog looked at a snapshot of parties filing PGRs to date, and what else they have been up to.  A non-exhaustive look at the parties filing petitions for PGR shows that a three front approach is not an isolated incident.  There are multiple instances of parties that have filed Petitions for PGR as well as Petitions for IPR against different, but related patents (e.g., U.S. Endodontics, Global Tel*Link Corp., Amneal Pharmaceuticals, Mylan Pharmaceuticals).  Certain parties are also involved in district court litigation over patent infringement of the same or related patents.  Additionally, some parties have been successful in getting institution of both PGR and IPR, at least on certain grounds, while other PGR are awaiting an institution decision.  However, because so few of the PGRs filed have reached the institution and final decision stage, it is difficult at this time to correlate success in PGR with any sort of success in IPRs.

What remains to be seen is the impact that employing a trifurcated litigation strategy holds for the Petitioner.  The district court has a different standard for determining invalidity and does not employ the PTAB’s broadest reasonable interpretation standard, which could be beneficial in running the different types of proceedings.  However, it is not uncommon to get a stay in litigation pending the outcome of an IPR of the same patent.  So while a party may decide to carry out a three-part litigation strategy, one part may be decided before it begins if the PTAB has its say.  Additionally, it is not uncommon to settle cases at the district court level and end the litigation so no decision is made on any parties’ patent.  However, if an IPR has proceeded to a certain point in the process and one party may wish to end the IPR due to settlement, the PTAB may decline to terminate proceedings, and ultimately render an adverse judgment against the patent owner (see e.g., Petition for Inter Partes Review by LG Display Co., Ltd., IPR2015-00885).

In view of the nascent field of PGR practice and its unknown effects on co-pending IPR or litigation proceedings, both the PTAB and courts will be watched very closely to see how they manage the interplay between all the different proceedings and how parties themselves address the specific and potentially conflicting issues that each of the three proceedings, IPR, PGR and litigation, could raise.