Patent infringement suits today are quite the rich man’s game.  From the moment it is initiated, a patent infringement suit takes an enormous toll on a defendant, of which arguably the greatest portion includes attorneys’ fees and litigation costs in federal court.  As such, proceedings before the newly renamed Patent Trial and Appeal Board (PTAB), formerly Board of Patent Appeals and Interferences, can be very attractive for litigants.

Typically, proceedings before the PTAB are more efficient and less expensive than those filed in federal court.  Partly in light of the ever-growing costs of litigating patents, the relatively new American Invents Act (AIA) has established the inter partes review (IPR) and post-grant review (PGR) processes in order to, at least in part, discourage litigation.  In particular, under the AIA, an IPR proceeding must be resolved within three months, and though the costs to petition for an IPR before the PTAB is steep at $20,000, the amount is very often low compared to the staggering millions that may be spent on litigation.  Furthermore, the AIA prescribes the stay of federal action once an IPR is instituted.

In a recent decision by the United States District Court for the Eastern District of Pennsylvania, the court granted a defendant’s motion to stay proceedings pending a decision by the PTAB.  In Destination Maternity v. Target, Target was accused of copying Destination Maternity’s patented designs for maternity pants that have flexible material over the stomach area in order to adjust for different stages of the pregnancy.  In opposition, Target petitioned for IPR before the PTAB for twenty-seven of the twenty-nine claims asserted against it by Destination Maternity, and plans to petition for review of the remaining claims as well.

In deciding to grant the stay, the court weighed several factors, promulgated by common law and formalized in the AIA, including (1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set.  The AIA also includes a fourth factor, namely, whether a stay will reduce the burden of litigation on the parties and on the court (AIA § 18(b)).  Regardless, the court was swayed by the first three factors enough to grant a stay.

Destination Maternity argued that Target had waited too long to petition for IPR and that it would be prejudiced by losing valuable market share to Target due to the delay.  The court, however, decided that Target was just one of several of Destination Maternity’s main market competitors and any market share loss in the interim would not be substantial enough to constitute prejudice.  The court noted that Destination Maternity had many competitors in the market, including H&M, Babies R’ Us, Walmart, Old Navy, J.C. Penney, and Gap, the latter two of which Destination Maternity had threatened, but failed, to sue over the same infringement claims as it did Target.  Furthermore, the court also decided with respect to the second factor that the PTAB decision would simplify the issues and streamline the case, and with respect to the third factor, that discovery was not yet complete and the case was not at an advanced stage.

In addition to the new review processes and associated preclusion effects that may hinder patent litigation generally, it remains to be seen whether the nascent AIA can help to stem the tide of rising costs of litigating patent infringement claims, or at least avoid them altogether.  For now at least, it seems as though courts are at least willing to give it a chance.

Promoting the advancement of science through a system of guaranteeing certain exclusive rights to inventors of new and useful articles reaches back to the very foundation of the United States Constitution.  Article II, Section 8 specifically provides that Congress shall have the power “[t]o promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  Ever since that enigmatic phrase was scribed, patent law in the United States has struggled with identifying just what types of subject matter are eligible for patent protection.

Patent law defines four categories of patentable subject matter, into at least one of which any invention must fall to be eligible for patent protection: process, machine, manufacture, or composition of matter.  In contrast, laws of nature, physical phenomena, and abstract ideas cannot receive patent protection.  As discovery and innovation grow, courts continue to struggle with categorizing new inventions as either patentable or not patentable subject matter.

The most recent struggle, looming for the U.S. Supreme Court in June of 2014, is whether new software, arguably the most prevalent current form of innovation, will definitively be deemed too abstract to patent.  Decisions to date have been adjudicated mostly with respect to the principles determining the patentability of mathematical algorithms set out in the Supreme Court Trilogy decisions (Gottschalk v. BensonParker v. Flook, and Diamond v. Diehr) and the patentability of business methods in the seminal 2010 Bilski v. Kappos decision.  In so doing, the Supreme Court has mostly decided the eligibility of software for patent protection on a case-by-case basis, maintaining unclear standards and divisive majority opinions on whether software patents categorically can be considered patentable or not.

In May of 2013, in Alice Corp. Pty Ltd v. CLS Bank Int’l, an extremely divided ten-judge panel of United States Court of Appeals for the Federal Circuit ruled that Alice Corp.’s patented software, which provides a way to reduce the settlement risk in financial transactions between two parties, was actually ineligible for patent protection, but produced seven different opinions on the patentability of computer software inventions.  In the end, the court failed to settle on a cognizable standard that would once and for all determine the eligibility of computer software for patent protection.  This decision has been granted certiorari by the Supreme Court, with oral arguments currently set for March 31, 2014.  In the meantime, the upcoming decision has drawn the attention of many scholars and players in the software industry, evidenced by over forty amicus curiae briefs filed by third parties.  It seems that many hope the Supreme Court will finally either deem software definitively patentable subject matter, or force software engineers to look to other legal means through which to protect their innovations.