Along with Covered Business Method patent review (“CBM”) and Post-Grant Review (“PGR”) to a much lesser degree, Inter Partes Review (“IPR”) has become a powerful tool for retailers fighting patent trolls. One of the key benefits of IPRs is that courts routinely, although not always, stay district court litigation pending the IPR’s outcome. But earlier this month, the E.D. Virginia’s Judge Davis added an interesting duty of disclosure that retailers that use IPRs or CBMs should be aware of in Virginia Innovation Sciences, Inc. v. Samsung Electronics Co., Ltd., et. al., 2-12-cv-00548 (E.D. Va. May 2, 2014). (Hat tip to Docket Navigator for identifying the case in its daily email.)
The Court granted Samsung summary judgment of invalidity, and the PTAB later held the patent claims not invalid. The Court then denied plaintiff’s reconsideration motion, which argued that the Court should follow the PTAB’s reasoning. The Court also held that the parties’ each breached their duty of candor by not informing the Court of the IPR for six months:
By failing to advise this Court of the existence of the IPR proceedings, [the parties] in effect had two bites at the apple regarding the validity of the disputed claims. Moreover, they deprived this Court of the opportunity to inquire of the parties and decide for itself whether to await a ruling from the PTAB on that issue. . . .
The Court did not formally reprimand the parties, but did suggest that future failures to disclose would be met with formal sanctions:
However, in light of the undeveloped state of the law on this relatively new PTO review procedure, this Court’s admonition of all counsel involved in this case falls short of a formal reprimand of any of the individual lawyers. That said, the issuance of this Opinion is more than sufficient to place all patent practitioners on notice that future failures to disclose to the Court any concurrent inter partes review proceedings will be met with far sharper consequences.
While it would seem to be a rare set of circumstances which would lead a retailer not to seek a stay of district court litigation after filing an IPR and while Judge Davis’ E.D. Virginia decision is not controlling, retailers should take heed of Judge Davis’ warning and make sure they disclose IPRs to any court with a related case pending, at least after the IPR is instituted.