Forming a Monetization Strategy – Assessments re: Validity, Forum Considerations (Part 4(iii)(a) of 6)

Creating an effective monetization strategy requires a multi-dimensional game plan, a game plan involving (1) acquisition considerations; (2) campaign costs; (3) revenue potential, taking into account the (i) market landscape and (ii) importance of the read; (4) assessments regarding the (i) strength of the read; (ii) claim construction positions; (iii) validity, including (a) forum considerations and (b) validity assessments; (5) filing strategies; and (6) compelling story telling.

In this post, I’ll be discussing (4)(iii)(a) validity assessments, including forum considerations.

Validity Assessment – Forum Considerations

Validity rulings are yet another pitfall in a monetization campaign—for each of these pitfalls, you’ll need to cross safely.

If your patent claims are ruled invalid, then game over.  If you survive validity, your claims are bullet proof, barring a contradictory ruling from another forum or another reference surfacing.

Validity-ruling outcomes are a coin toss—groups of other people will ultimately decide whether the invention defined by the claims are novel and non-obvious over previously-published material (prior art).

To assess your validity position, factor in the following: (1) the forum(s) in which validity will be heard; and (2) the factors affecting its outcome.

In this post, I’ll discuss (1) forum considerations.

(1) Forum

Understanding the forum in which validity will be heard will help orient you. 

There are at least three forums to determine validity—the district court, patent office, and appellate court. 

When you file a lawsuit, the district-court forum is immediately implicated.  If the defendant initiates a reexamination in one form or another, then the patent office will be involved in the decision-making process. 

The third forum, the appeals court, will be implicated when either side appeals a district-court or patent-office ruling of validity—the appellate court trumps either of the prior forums.

Any one or all of these forums could be implicated.  There are pros and cons to each–you’ll need to assess your validity strength in each. 

District court

In this forum, your advantage is that the patent’s validity is derailed by nothing less than clear and convincing evidence.  Hence, the defendants have a steeper uphill battle.

Within the district court, either a judge or jury could make the determination. 

If a judge makes a decision to cut-off your rights to a jury determination and instead rule from the bench, some of your claims are likely in jeopardy (this is called a summary judgment ruling—I’ll discuss more about this in another post).

If you pass summary judgment and go to a jury, you’re in good shape—anything can happen in front a jury, which makes it unpredictable.  This unpredictability adds to your leverage.

Patent Office

The forum can switch to the patent office on the defendants move—typically when it files a reexamination of some sort, whether a post-grant review, ex parte reexamination, inter partes reexamination, or an Inter Partes Review (I’ll be discussing each of these in more detail in another post). 

At the patent office, the patent’s validity is upheld by merely a preponderance of the evidence (more likely than not)—this is the most significant advantage to a defendant. 

But while the burden is less than the district court’s, your advantage here is that you’ll have an opportunity to amend the claims, in light of the prior art presented by the defendants. 

This opportunity to amend your claims adds a level of variability in your favor, to potentially preserve your read over the prior art.  There are other implications here (e.g., resetting the damages clock), but the important point is that you’ll have an opportunity to overcome the references.

If the defendant initiates patent-office proceedings, it may attempt to halt the litigation by filing a motion to stay with the district court.  If the defendants successfully stay the litigation, your time to money will be delayed by 2-to-4 years—you’ll want to avoid this at all costs. 

But don’t be overly concerned on this point, because you can mitigate your chances of a stay by filing in a venue that historically does not stay district-court litigations—I’ll discuss this later. 

Appeals Court

Regardless of the above forums and their respective outcomes, either side will have an opportunity to appeal a district-court or patent-office decision to the Federal Circuit.  At the Federal Circuit, the appellate court will have an opportunity to confirm or overturn a lower decision.

With the current-day makeup of the bench, the Federal Circuit is much more defendant friendly regarding validity rulings than most juries, plaintiff-friendly judges, and patent-holder friendly examiners.  Expect validity to be more at risk at the Federal Circuit than at other forums. 

Though defendants may have advantage with a defendant-friendly appellate bench, your advantage here is that the time and money required to have a case heard before the appellate court is an lengthy and expensive one—typically a 3-to-5 year process.  This protracted length of time to reach an appeals court provides numerous opportunities to settle.

Tying it together, you’ll need to appreciate the various forums that may be implicated when making a validity assessment.  You’ll want your validity case to hold, regardless of the forum.

In the next post, I’ll be discussing how to do so.


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