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Patent litigation probably can’t get more high stakes than a lawsuit unfolding in Delaware federal court against Intel Corp. Transmeta Corp. has accused the Silicon Valley giant of infringing on 10 patents with its hugely successful Pentium products. Yet rather than battle it out in court, Intel is trying to put the brakes on. The company is making use of a relatively new government process, known as inter partes re-examination, that has become an increasingly popular way for accused infringers to get patents invalidated. It’s far less costly than litigation, and even when the patent is ultimately upheld, the stall in court proceedings increases the likelihood of a settlement, patent attorneys say. Since the inter partes procedure was created in 1999, the number of requests seeking re-examination by the U.S. Patent and Trademark Office has increased dramatically. In 2006, there were 70 requests. Six months into this year, there had already been 90. Moreover, PTO statistics show that the process is likely to result in the invalidation of patents — 88 percent of the time so far. HEAVY PRESSURE Inter partes re-exams can be a tactical tool in litigation. If a judge grants a stay once the PTO agrees to re-examine the patent, the resulting delay can put heavy pressure on the other side, says Mark Rowland, a partner in the Palo Alto, Calif., office of Ropes & Gray who represents Transmeta. At Intel’s request, the PTO has agreed to re-evaluate nine Transmeta patents. Transmeta has cried foul, accusing Intel of stalling the case and stressing that its survival hangs in the balance. Most judges are likely to grant stays, according to a study done by Sonnenschein Nath & Rosenthal partner Yar Chaikovsky and a colleague. Out of 83 requests for stays pending re-examination, judges granted 60. U.S. District Judge Leonard Davis of the Eastern District of Texas, where many patent cases are litigated, expressed some wariness about stays in a 2005 order denying one to Amazon in a dispute with Soverain Software. Davis said that he wouldn’t grant a stay even though the patents for which Amazon sought re-examination were central to the case. To do so, he wrote, “would invite parties to unilaterally derail timely patent case resolution by seeking reexamination.” When inter partes re-exams first began, many in the patent community were wary. But now there’s proof that the process leads to favorable outcomes for accused infringers, the process is getting more attention from defendants, says Joseph Cohen, a patent litigator with Stoel Rives in Portland, Ore. “They were very skeptical about it early on because a lot of people thought . . . that basically things were not being examined even as carefully as they would be in initial [patent] examination, and I think that has proven to be untrue,” Cohen says. Re-exams are not without risk: If an accused infringer seeks a re-exam and the PTO concludes the patent is valid, that party will be barred from challenging the patent’s validity in any other forum. To some extent that aspect still scares people, Chaikovsky says. Still, not every company can afford to battle infringement accusations in court. “Litigation is the sport of kings,” Chaikovsky says. With inter partes re-examination, a party may still need to pay its lawyers anywhere from $50,000 to $100,000 or more depending on the complexity of the patents. But that, Chaikovsky says, is still “orders of magnitude” cheaper than litigation.
Jessie Seyfer is a reporter with The Recorder , an ALM publication where a longer version of this article originally ran.

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