The U.S. Patent and Trademark Office is opening a Texas regional satellite office in downtown Dallas, serving the regional patent community in connection with patent procurement and proceedings before the newly formed Patent Trial and Appeal Board (PTAB). While a regional patent office will benefit Texas-based inventors, it also will handle contested trial proceedings such as inter partes review and post-grant review proceedings.

These contested review proceedings typically will occur parallel to district court litigation. Many district court cases likely will be stayed during at least part of the PTAB review. For this and other reasons, the PTAB review proceedings will impact patent litigation in Texas and elsewhere.

The potential for parallel litigation at the district court and PTAB gives rise to a number of strategic considerations for patent holders and alleged infringers. Some of the strategic considerations for the now-discontinued inter partes re-examination carry over and apply equally to inter partes review. Other considerations will change or be entirely new. Here are some questions general counsel will need to consider.

• Estoppel: This can be a risk or an opportunity. For most district court patent litigators, the most significant strategic consideration for review proceedings is whether an adverse result at the PTAB will hamstring the invalidity defense at trial. This is probably the wrong question for in-house legal departments to ask, however.

The right question is whether a PTAB review improves the company’s chances of prevailing at trial or reaching a favorable settlement. The estoppel risk impacts both sides, so counsel should weigh the downside risk against the potential for avoiding expensive litigation by invalidating the patent at the PTAB.

The main consideration when evaluating whether to request PTAB review is the strength of the patent compared to the prior art. A patent that is subject to a strong prior-art challenge is a good candidate for review by the PTAB. That’s particularly true if the patent’s subject matter is technical and difficult for a jury to understand and evaluate.

Next, counsel for companies who face allegations of infringement must consider whether they have other defenses for trial. What would the trial look like if invalidity based on written references were not a triable issue? How would review impact claim construction? Would the court permit the patent owner to brag to the jury about winning at the PTAB review stage?

Once the trial issues become clear, in-house lawyers evaluating inter partes review should consider settlement dynamics. Most cases settle based on the parties’ expectations of what will happen at trial. Unlike inter partes re-examination, PTAB proceedings are designed to stop once the parties reach settlement. In many cases, PTAB review may provide a checkpoint where the parties can reach a reasonable settlement.

The most important thing for in-house counsel to remember is that each case presents a different set of issues to consider when evaluating whether to institute PTAB review. Considering these issues requires a fairly detailed and sober upfront evaluation of the case.

• Timing: PTAB review proceedings are subject to strict timing limitations. For example, unlike inter partes re-examination, which could be brought at any time, a defendant must bring inter partes review within 12 months of the plaintiff filing suit.

Many parties will wait until the 12-month deadline approaches, hoping to use a patentee’s broad claim-construction proposals against it at PTAB. Other parties will request review earlier to maximize their chances of staying the simultaneous district court litigation. Each strategy will make sense in an appropriate case depending on the patent, the venue and the aggressiveness of the patent-holder’s infringement positions.

• Experts: One issue for legal departments on both sides to consider is whether to rely on expert declarations. The PTAB does not require expert testimony, but failure to employ an expert may be a mistake.

The U.S. Court of Appeals for the Federal Circuit held in Invitrogen Corp. v. Clontech Labs Inc. (2005) that “unsubstantiated attorney argument regarding the meaning of technical evidence is no substitute for competent, substantiated expert testimony.” Thus, for the foreseeable future, parties considering PTAB review should plan on engaging expert witnesses. Otherwise, they run the risk that their arguments will not receive their due weight during the proceeding.

• Planning costs: Inter partes review is designed to be substantially less expensive than district court litigation. Firsthand experience will provide better estimates in the future, but for now a crude estimate would be to expect the total cost of inter partes review to be about 15 percent of the cost of corresponding litigation through trial.

A petitioner for inter partes review bears much of the cost up front: the prior art search, preparation of the petition, expert evaluation and the filing fees. Some of these costs would arise in the litigation anyway as part of preparing an invalidity defense. Shifting these expenditures to an earlier stage of the case is a consideration for companies that frequently find themselves to be patent defendants. Such businesses likely will use PTAB review as a way to resolve cases early and reduce litigation expenses overall.

The new regime of PTAB review appears to offer an efficient approach to resolving validity in patent disputes. Early adopters of inter partes review, as indicated by the public records, tend to be entities with experience in re-examination that are willing to undertake diligent, early investigation of patents to perhaps minimize their total spend on patent assertions.