As with any new creature in the law, inter partes review proceedings, created in the America Invents Act, will require time and interpretation before their nuances will be understood. Virtually every new order issued by the Patent Trial and Appeals Board has provided at least some level of context for the new IPR rules, and the third ever decision instituting an inter partes review is no different. In Macauto USA v. BOS Gmbh & KG, IPR2012-00004, the PTAB decided on January 24, 2013 to institute an inter partes review trial on most, but not all, of the claims challenged by the petitioner therein. Most interesting about the decision, however, is the interpretation provided regarding two key issues in the IPR rules; namely clarification of: 1) the statutory bar from 35 USC §315(b); and 2) the effect of a prior proceeding (here a reexamination of the patent-in-suit), on the institution of an inter partes review, pursuant to 35 USC §325(d).
[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]35 USC §315(b) — “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” [/pullquote]
The patent owner in this case asserted that the patent challenger was statutorily barred from filing the IPR petition in light of a previous lawsuit between the parties. On April 7, 2011, the patent owner filed complaint in federal district court, alleging infringement of the patent-in-suit by petitioner’s Taiwanese parent company. The complaint was delivered to that Taiwanese company on or about May 13, 2011. The lawsuit case was later dismissed, without prejudice, pursuant to a stipulation between the parties.
35 USC §315(b) states that a patent challenger has only one year from the date a patent infringement complaint has been served on it to file a petition seeking inter partes review regarding that patent. Because the petitioner’s parent company was served with an infringement complaint more than one year prior to the filing of the petition for inter partes review, the patent owner argued, this IPR proceeding was statutorily barred.
The Board disagreed that the patent owner demonstrated that the statutory bar was applicable. First, the Board looked to Federal Circuit precedence that interpreted dismissals without prejudice, and found that such dismissals were treated as returning the parties to a position as though the action had never been brought. The dismissal of the case with prejudice against the parent corporation, therefore, nullified the effect of the alleged service of the complaint on the petitioner. Further, while the parent corporation apparently signed and returned a waiver of service, that waiver of service was apparently never filed. Thus, the patent owner’s failure to demonstrate that a waiver of service was filed was a second, independent reason to not institute the statutory bar.
Effect of Prior Proceeding
The America Invents Act was seemingly enacted with a built-in bias against re-litigating issues that have already been considered by the Office. Specifically, 35 USC §325(d) states that the Director may reject a petition if the same or substantially the same prior art or arguments were previously considered.
[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]35 USC §325(d) – “…the Director may…reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.”[/pullquote]
Prior to the petition for inter partes review filed in this case, the patent-in-suit was the subject of a request for ex parte reexamination (brought by the same petitioner). While the request was granted, ultimately all 21 claims of the patent were confirmed as patentable by the Office. In its Order granting inter partes review, the Board took issue with several determinations by the Examiner in the reexamination — to a large extent second-guessing the previous determinations by the Office. For example, the Board stated that it “reviewed the declarations [submitted in the reexamination proceeding] and agree[d] with Petitioner that they should not have been given determinative weight by the Examiner.” Specifically, the Board provided several reasons why it disagreed with the analysis provided by the patent owner’s expert witnesses in the reexamination. In what will certainly be fodder for future commentary, the Board admitted in its Order that the petitioner did not provide any declarations of its own to refute the declarations provided by the patent owner in the underlying reexamination. Thus, the Board has disagreed with the analysis and conclusions of the patent owner’s experts on its own, without any countervailing evidence having been provided by the petitioner.
In the end, the Board noted that it is not required by statute to reject the petition just because it was based on facts and arguments previously presented, and it chooses not to do so here, given its disagreement with the patent owner’s experts.
With each passing PTAB Order, more granulation and clarity is brought to inter partes review practice. In the end, the success or failure of these proceedings to function as an effective and efficient alternative to federal court litigation is going to largely be based upon how comfortable the proceedings are to patent challengers. The PTAB’s decision to initiate an IPR in the Macauto case has aspects that are certainly favorable to patent challengers – the estoppel of §315(b) has been interpreted in a narrow sense and the option to not re-litigate issues previously before the office, set forth in §325(d), was not exercised. In addition, the Board challenged the findings and conclusions of a patent owner’s expert witnesses, even in the absence of any argument or expert testimony from the patent challenger. It is still early, but signs point to inter partes review proceedings being a favorable forum for patent challengers.