Chinese companies are playing a more and more important role in the global supply chain, and with the rising trade war between the US and China, domestic companies are under increasingly fierce attack from large international NPEs. Recently, Purplevine IP team assisted our clients to successfully respond to the sniping from international NPEs, and effectively repelled the NPEs through the U.S. Inter Partes Review (hereinafter referred to as "IPR") process, helping our client to reach a settlement with excellent terms.

Case Overview

The client served by Purplevine IP team is a large multinational communications group (hereinafter referred to as "Purplevine’s client"). In 2019, Purplevine's client was sued for patent infringement in the U.S. District Court by an international NPE (Non-Practicing Entity), which claimed that Purplevine's client's products infringed one of its patents relating to data storage devices (the "Patent-in-suit"). It is reported that since 2008, the NPE has launched a number of patent infringement lawsuits against computer manufacturers, including Dell, HP and Toshiba.The NPE then targeted smartphone manufacturers, filing patent infringement lawsuits against Apple, HTC, Samsung, LG, Sony, Lenovo and Purplevine’s client since the end of 2010.

Case Strategies and Difficulties

After taking over the case management, the Purplevine IP team conducted technical analysis and formulated litigation response strategies for the patent in question. In addition to fighting this NPE in litigation proceedings, the Purplevine team evaluated the feasibility of bringing IPR proceedings before the Patent Trial and Appeal Board (PTAB). If taking the measure of applying for the U.S. IPR invalidation process, the difficult work faced is:

The first and most difficult challenge is the search for prior art. To find the best prior art, a comprehensive and extensive prior art search is necessary to establish a reasonable likelihood of successfully challenging at least one of the patentable ranges based on the prior art.

The second challenge is time constraints. Because IPR requests must be filed within one year of service of the pleadings, there are significant challenges to scheduling, prior art search programs, U.S. law firm selection, expert selection, and other work processes. The Purplevine team actively communicated with the client on the matter of IPR request and immediately carried out the work related to the IPR request after reaching a consensus.

Case Results

The PTAB issued a decision to open an investigation in early 2021, finding various claims of the patent-in-suit invalid. This is a very difficult victory, especially since the NPE has successfully persuaded judges in previous patent litigation and invalidation challenges to interpret the scope of the patent application in its favor. The Purplevine IP team and its U.S. attorneys successfully persuaded the PTAB in the IPR proceeding with strong arguments to achieve results that had previously eluded several defendant companies.

In addition, according to USPTO data, the success rate of PTAB cases declined in mid-2020 (primarily due to the PTAB's greater discretion to deny cases, which is not discussed in detail here), and also declined relative to pre-2019. After filing an IPR motion, the Purplevine IP team and its U.S. attorneys filed a motion to stay the proceedings in the district court and successfully persuaded the judge to specify in the order on the motion to stay that the judge was willing to stay the proceedings in the district court in the event that IPR proceedings were filed. The order successfully prevents the possibility of a PTAB denial by requiring the PTAB to review the merits of the IPR petition to make a decision on whether to file a case. With this strategy, the Purplevine IP team and its U.S. attorneys successfully achieved their planning objectives and helped the client win a battle in the IPR process.

Finally, as a result of the PTAB's investigation, the NPE's ongoing patent infringement litigation may be suspended; if the patent in question is eventually invalidated, the damages arising from the series of lawsuits initiated will also be extinguished. The NPE chose to quickly reach a settlement with Purplevine's client and filed a joint motion to stay proceedings with the PTAB. As for the proceedings, the parties also filed a motion to stay with the district court due to the settlement of the case.

In addition, as a result of the case, other defendant companies that had been on the fence filed IPR requests (essentially copying the IPR requests filed by Purplevine and the U.S. law firm) with a view to consolidating the IPR process into the IPR process for Purplevine's client. Subsequent developments in the IPR process are still ongoing, and the outcome is worth watching.

Observations and Conclusions

The IPR filing rate has dropped from 80% in 2014 to 60% in 2020, and as a result, many people have gradually lost confidence in the IPR process. “However, the IPR process is still an economical, professional and fast process compared to litigation,” said attorney Frank Jeng, Chief International Marketing Officer and Vice President of the Purplevine IP Group. For defendant companies, the most important way to ensure victory with low success rate is to output the most effective litigation strategy for companies through professional IP litigation management team, combined with full communication and cooperation with the U.S. attorneys to finally win a good battle in the District Court and PTAB.

In this case, attorney Frank Jeng, Chief International Marketing Officer and Vice President of the Purplevine IP Group, believes:

“This case is a perfect example of Purplevine's philosophy of 'professionalism, efficiency, and dedication to client needs'. With our own professionalism, thorough schedule planning, and close cooperation with the U.S. law firms and experts, we were able to deliver a satisfactory result to our client with the most efficient budget.”