PTAB Precedential Decision Requires Filing of Collateral Agreements

The parties filed a Joint Motion to Terminate the PTAB proceedings pursuant to a settlement agreement and filed a copy of the settlement agreement. Upon review of the settlement agreement, the PTAB requested a telephone conference to discuss the need to file other agreements (Collateral Agreements) that were referenced in the settlement agreement. The PTAB took the position that the parties needed to file the Collateral Agreements before the proceedings could be terminated pursuant to 35 U.S.C. §317. The parties disagreed that the Collateral Agreements needed to be filed pursuant to 35 U.S.C. §317 and 37 C.F.R. § 42.74. After a subsequent telephone conference with the PTAB, the parties filed the Collateral Agreements, together with the Joint Motions to Expunge, and Joint Motions to treat the Collateral Agreements as business confidential information.

With respect to the Joint Motions to Expunge, the parties contended that the Collateral Agreements were not between the patent owner and petitioner and thus, were not required to be filed pursuant to 35 U.S.C. §317(b). In this case, the patent owner Farms Technology LLC was not a party to either of the Collateral Agreements. The PTAB disagreed, noting that 35 U.S.C. §317(b) requires the filing of “[a]ny agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding ....” The Collateral Agreements were referred to in the Whereas clauses of the settlement agreement between the patent owner and the petitioner. The PTAB therefore concluded that “any” agreement that is referred to in an agreement between the patent owner and the petitioner (the settlement agreement) must be filed with the PTAB.

The PTAB similarly disagreed with the parties’ contention that because the Collateral Agreements were not “made in connection with, or in contemplation of” the inter partes review (IPR) proceedings, they did not need to be filed. The PTAB held that “§ 317(b) does not require the Collateral Agreements to have been ‘made in connection with, or in contemplation of, the termination’ of the IPR proceedings.”

The risk to the parties filing the Collateral Agreements, even though designated as “business confidential,” is that the Collateral Agreements might be the subject of a Freedom of Information Act (FOIA) request. The risk of the PTAB disclosing the Collateral Agreements, however, was significantly reduced last June when the Supreme Court decided Food Marketing Institute v. Argus Leader Media, 139 S.Ct. 2356 (2019). The Supreme Court held that where commercial or financial information is treated as private by its owner and provided to the government under an assurance it will be kept confidential, the information is exempt from disclosure under FOIA Exemption 4.

Having denied the Joint Motions to Expunge, the PTAB granted the Joint Motions to treat the Collateral Agreements as business confidential information under 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c) and granted the Joint Motions to Terminate.

This precedential decision instructs attorneys to be careful when drafting settlement agreements to PTAB proceedings, especially when the patent(s) at issue have been or are being litigated, and/or were the subject of other agreements unrelated to the PTAB proceeding. If they are not needed to interpret the PTAB settlement agreement, then do not refer to them in the PTAB settlement agreement.