Split 5-Judge Panel Allows Issue Joinder as a Way Around the One-Year Filing Deadline

34416501_sThe Board continues to grapple with the issue of joinder where a party seeks to join a petition that would otherwise be time-barred with an earlier-filed petition.  In Zhongshan v. Nidec Motor, an expanded 5-judge panel–with two members dissenting–allowed Petitioner to join a petition with an earlier (partially denied) petition which had been filed by the same petitioner, involving the same prior art.  After allowing joinder, the Board instituted trial on the previously-denied grounds. See IPR2015-00762, now combined with IPR2014-01121, Paper 67.  In short, this expanded panel, like some others before it, decided that 35 U.S.C. § 315(c) allows joinder of issues, not just joinder of parties.  As noted by the dissent, this allows for a way around the one-year time bar imposed by § 315(b).

Some explanation of this proceeding’s relatively complicated procedure history provides helpful context.  Petitioner originally challenged the validity of the patent-in-issue in IPR2014-01121.  Trial in that case was instituted on January 21, 2015, but the petition was denied in part.  The denial was, according to the Board, “not on the merits, but because Petitioner failed to include an attesting affidavit with the English translation” of the prior art, as is required by Rule 42.63(b).  One month later (the deadline imposed by Rule 42.122(b)), Petitioner filed a motion for joinder along with another petition which included the required translation attestation.

The Board initially denied that second petition based on the one-year statutory bar.  Petitioner then sought rehearing, which resulted in this decision from the expanded panel.  Here, a 3-judge majority determined the joinder statute (§ 315(c)) allows joinder of issues, not just parties, even when the joinder allows a petitioner to avoid the one-year deadline. Noting that joinder is discretionary, the Board found that institution here was within the public interest, relying on the fact that the petition did not add new prior art over the first petition, but rather corrected a technical deficiency (as opposed to trying to cure a deficiency in the merits).

The 2-judge dissent argues the institution was contrary to the clear language of §§ 315(b) and (c), particularly arguing that the joinder statute (§ 315(b)) should be considered limited by both the time bar of § 315(c) and by § 314(c)’s limitation to one who can be “join[ed] as a party.”  The dissent also argued that allowing this subversion of the one-year bar is contrary to Congress’s intent to fashion the IPR statute so as to avoid serial filings against patentees (as can happen in reexaminations).

As of this posting, the Zhongshan decision has not been identified as precedential.  So, this may not be the Board’s final word on this issue.

Joinder Provisions of IPR Continue to Save Co-Defendants in Litigation

5097986_sThe joinder provisions of inter partes review proceedings were instituted as a direct response to the ability of parties to settle proceedings before a final written decision is instituted. Via the joinder rules, a second Petitioner can join a previous proceeding to continue a challenge to a patent in the event that the first Petitioner settles with the Patent Owner, and even if the second Petitioner would otherwise be barred pursuant to 35 USC 315(b). This scenario played out in IPR2015-00568, Nintendo of America, Inc. and Nintendo Co., Ltd. v. Babbage Holdings, LLC involving U.S. Pat. No. 5,561,811. A key factor in all joinder cases has been the strong similarity between the petitions in the proceedings that are sought to be joined, to ensure the Board has the ability to maintain a reasonable schedule in the original proceeding.

Petitioner Nintendo filed a Motion to join with another petition challenging the ‘811 patent, field by 505 Games Interactive, Inc. v. Babbage Holdings, LLC (IPR2014-00954). Nintendo’s petition asserted the same ground on which the Board instituted IPR in the ‘954 petition. Decision at 2. Nintendo’s joinder motion also represented that it would take an “understudy role” “unless and until all ‘954 petitioners settle with the patent owner.”

Although the Patent Owner later settled with 505 Games, the Board allowed Nintendo to join, and instituted review. First, Nintendo’s motion was timely filed to satisfy the requirement that the request for joinder be filed no later than one month after the institution date of the ‘954 proceeding (See 37 C.F.R. § 42.122(b)). The Board also noted that this petition was essentially the same as the ‘954 petition in grounds, prior art, expert testimony, and arguments presented, with the lone exception being Nintendo’s petition adopting the Board’s claim constructions in the ‘954 proceeding. Id. at 3.

Patent Owner opposed the motion, arguing that Patent Challenger’s decision to delay 8 months in attempting to join the petitioners in the ‘954 proceeding is prejudicial because Patent Owner settled the ‘954 proceeding under the impression that the IPR would be totally disposed of. Id. at 4. Patent Owner further asserted that Patent Challenger’s intent to at reserve the right to bring forth different positions than those asserted in the ‘954 proceeding would derail the trial schedule due to additional briefing and discovery.

The Board was unpersuaded. The Board stated that Patent Owner’s argument regarding settlements was not persuasive because at the time of the Motion for Joinder in this proceeding, there had been no Motion to Terminate in the ‘954 proceeding. Also, in light of expected termination of the the earlier proceeding, there would be no disruption in the instant trial schedule, given no briefing/discovery coordination will be needed post-termination. Id. at 4-5. Accordingly, the Board joined the two proceedings.

IPR Motions for Joinder are Common, But Not Automatic

11155838_sRecent statistics show that motions for joinder are granted about 60% of the time. While parties can, therefore, expect a sympathetic ear regarding these motions, they are not always successful and it is worth noting the shortcomings of one such motion from Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC v. Arendi S.A.R.L, IPR2014-01143, involving US Pat. No. 7,496,854. In that case, the Board denied a motion for joinder due to several deficiencies in the motion.

Petitioner moved to join the instant petition with a related proceeding (IPR2014-00206) because the related proceeding involved the same patent, claims, prior art, and ground of unpatentability. Decision at 4. Further, Petitioner argued that the two proceedings have three other similarities: (1)  that the claim charts in both petitions are “substantially identical” with respect to the common ground of unpatentability; (2)  the instant petition adopts rationale of the Board advanced in the related proceeding; and (3)  the instant petition presents no new issues that would complicate the related proceeding. Id. at 5.

The Board disagreed, however, noting several deficiencies and issues in Petitioner’s Motion for Joinder which weighed against joining the proceedings. First, Petitioner failed to set forth in its motion a statement of differences between the instant proceeding and related proceeding with which joinder is sought. Second, Petitioner failed to set forth any statement of the meaning of “substantially identical,” regarding the claim charts in the two proceedings. Third, the Board found that there were, in fact, new issues presented in the instant proceeding, as Petitioner relied upon testimony which introduced argument and evidence not presented in the related proceeding. Id. at 5. Fourth, Petitioner stated that briefing and discovery would be simplified with joinder, but failed to explain how. Lastly, the Board noted that Petitioner’s promise to increase efficiency by working with the petitioner in the related proceeding rang hollow because there was no indication that the petitioner in the related proceeding would work with the instant Petitioner.  Id. at 6.

The PTAB is more than willing to join proceedings, but only if the joinder will not effect the fair, efficient, and just administration of the IPR proceedings. Here, Petitioner came up short in its showing regarding why the Board could grant joinder and maintain a fair and efficient proceeding.

 

 

PTAB Clarifies its Stances on § 315 on the Way to the Federal Circuit

cafc1In an apparent attempt to better explain itself prior to Federal Circuit appeal, the PTAB reiterated and further clarified its decision in Ariosa Diagnostics v. Isis Innovations, IPR2012-00022 regarding three sections of 35 U.S.C. § 315: the effect of the filing of a declaratory judgment of non-infringement, and an affirmative defense of invalidity, relative to § 315(a); the effect of a dismissal without prejudice on the time-bar of § 315(b); and the effect of joinder of IPRs between the same parties under § 315(c).

By way of refresher on the facts, Petitioner filed a declaratory judgment of non-infringement in District Court, but did not include a count seeking a declaration of invalidity. Patent Owner counterclaimed for infringement and, as an affirmative defense to that infringement claim, Petitioner alleged patent invalidity. Thereafter, the parties agreed to dismiss the civil action without prejudice. Petitioner then filed a first petition seeking inter partes review and, ultimately, a second petition seeking inter partes review and the two IPRs were joined. Of interest in this decision is that the second petition was filed more than one year after Petitioner had been served with the civil action.

35 U.S.C. § 315(a)

35 U.S.C. § 315(a)(1) states that “An inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.” Patent Owner had argued that the filing of a declaratory judgment action of non-infringement, followed up by an affirmative defense of invalidity, met the definition of filing a “civil action” and the petition was barred. In its Decision to Institute Trial, the Board disagreed.

In the Final Written Decision, the Board reiterated that a claim of invalidity in a declaratory judgment complaint is different than asserting an affirmative defense, citing the Supreme Court’s decision in Cardinal Chem. Co. v. Mortion Int’l, Inc., 508 U.S. 833 (1993). Specifically, the Board stated that “it is clear from Cardinal Chem. Co. that there is a fundamental difference between an affirmative defense of invalidity and a counterclaim of invalidity.” Order at 13.

Additionally, the Board dismissed Patent Owner’s argument that to allow a Petitioner to undertake both a declaratory judgment suit and inter partes review petition thwarted the intent of Congress. The Board held that, allowing both actions did not constitute harassment of a patent owner because, to bring the declaratory judgment action, a party must still satisfy the Article III case-or-controversy requirements. Order at 15-16.

35 U.S.C. § 315(b)

This Final Written Decision also provided the Board the opportunity to expound further on its position that a complaint served more than one year prior to the filing of an inter partes review petition does not amount to a bar, under 35 U.S.C. § 315(b), if the complaint is later dismissed without prejudice. The Board determined that Federal Circuit precedent “has consistently interpreted the effect of [dismissals without prejudice] as leaving the parties as though the action had never been brought.” Id. at 17. Thus, although the second IPR petition was filed more than one year after the service of the civil action alleging infringement, the dismissal of that action without prejudice saved Petitioner here.

35 U.S.C. § 315(c)

Lastly, the Board considered Patent Owner’s argument that 35 U.S.C. § 315(c) only allows for joinder of parties, not joinder of issues. This is an issue that the Federal Circuit must weigh in on, given that the Board has issued conflicting opinions on the issue. In a rare break from its typical solid wall of consistency, certain panels of the Board have recently decided that decisions like this Ariosa case are wrong and that § 315(c) only applies to joinder between parties. This particular panel, however, stuck to its initial position on this issue, finding that § 315(c) is not limited to merely joinder of parties and joinder of issues in IPR proceedings involving the same parties is appropriate.

The issues raised here are not “new,” but interesting to note in any event because, as the case heads to the Federal Circuit, the Board has expounded on these important bar issues that arise in many IPR proceedings.

IPR Joinder, While Common, is Not a Matter of Right

iStock_000026550425SmallIn IPR2014-00702, the Board denied Petitioner’s Motion for Joinder with a similar proceeding (IPR2014-00057), in a case styled as Unified Patents, Inc. v. PersonalWeb Technologies, LLC & Level 3 Communications, involving US Pat. No. 5,978,791. The -00057 proceeding challenged the same patent. While motions to join proceedings based on the same patent have been consistently granted, the Board denied the motion to join in this instance because the Petitioner failed to demonstrate that it met its burden to obtain the requested relief.

Joinder is governed by 35 U.S.C. § 315(c), which states:

“If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.”

Thus, the Board has discretion to grant a request for joinder when it is warranted and, therefore, evaluates motions for joinder on a case-by-case basis. The Board noted that the key factor is this determination is to secure the just, speedy, and inexpensive resolution of every proceeding. In light of this discretionary power, the Board rejected an argument by Petitioner that joinder was a matter of right when two proceedings were nearly identical.

More specifically, the Board noted that the instant proceeding contains at least one new substantive issue that was not raised in the earlier -00057 proceeding. Here, the Board noted that Patent Challenger, Unified Patents, was an organization formed by Google, NetApp, and others.  Accordingly, Patent Owner argued, and the Board agreed, that additional discovery may be necessary in the instant proceeding to determine if there are additional real-parties-in-interest.

In addition, in view of the fact that the -00057 proceeding (which Petitioner sought to join) was one of five other IPRs, Petitioner had an obligation to explain what impact, if any, the joinder would have on the other proceedings. For example, all five of the other IPRs had synchronized schedules, etc. Petitioner’s failure to explain what impact joinder would have on those schedules undermined the request for joinder.

Given these issues, Petitioner was deemed not to have met its burden of demonstrating that joinder was warranted.

Joinder in Inter Partes Review Proceedings Takes Shape

iStock_000026550425SmallTo date, three distinct scenarios relating to joinder have been presented to the Board, each demonstrating inter partes review strategies being employed by Petitioners, as well as the Board’s willingness to join proceedings to ensure the just, inexpensive, and speedy resolution of IPR.

Before digging into those scenarios, however, we first note the statutory and regulatory underpinnings of joinder.  While the first sentence of § 315(b) sets forth the well-known 1 year bar date by which a Petitioner must bring a petition seeking inter partes review after being served with a patent infringement complaint, the second sentence of this section makes clear that the 1 year deadline does not apply when joinder is sought.  37 CFR § 42.122(b) further defines this point, requiring that any request for joinder must be brought “no later than one month after the institution date of any inter partes review for which joinder is requested.”

35 USC § 315(b) – Patent Owner’s Action. — An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 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.  The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

37 CFR § 42.122(b) – Request for Joinder. Joinder may be requested by a patent owner or petitioner.  Any request for joinder must be filed, as a motion under § 42.22, no later than one month after the institution date of any inter partes review for which joinder is requested.  The time period set forth in § 42.101(b) shall not apply when the petition is accompanied by a request for joinder.

SCENARIO 1:

The first scenario presented to the Board relating to joinder involves the case of a petitioner who brings a second petition against the same patent, asserting new grounds of challenge against claims set forth in the first petition, as well as additional claims from the patent.  Microsoft Corp. v. Proxyconn, Inc., IPR2013-00109 (Paper 15).  In this situation, the Board relied on the authority granted in § 315(b) and § 42.122(b) to join the proceedings, even though the second petition was brought outside the one year critical date.  Factors cited by the Board include that the same patents and parties were involved; there was an overlap in the prior art; there was no discernible prejudice to either party; and petitioner was diligent in filing the motion.

SCENARIO 2:

The second type of situation in which joinder has been requested in IPR proceedings is a second petition filed by a third party after the 1 year critical date of § 315(b), but within 30 days of a decision to institute, along with a motion to join under § 315(c).  This situation arose in the cases of Kyocera Corp. v. Softview, LLC IPR2013-00004 (Paper 15) and Dell, Inc. v. Network-1 Security Solutions, Inc. IPR2013-00385 (Paper 17).  In both proceedings, the Board granted the motion to join, but instituted procedural safeguards to ensure the proceeding did not become too cumbersome.  To that end, the Board required consolidated filings wherein the second petitioner would only be allowed 7 pages of additional briefing if it disagreed with first petitioner.  Relatedly, Patent Owner was granted 7 pages to respond to any such additional briefing. Also, the first petitioner was permitted to ask questions at deposition before second petitioner, and first petitioner was permitted to present argument at oral hearing before second petitioner.  The parties were instructed by the Board to work together to allocate the time normally allotted to a petitioner.

SCENARIO 3:

The last scenario that has been presented to the Board is one step further from Scenario 2.  In Sony Corp. of Am. v. Network-1 Security Solutions, Inc. IPR2013-00495, Paper 13, the Board considered a request for joinder brought by Sony and Hewlett-Packard against the same patent referenced above in the Dell proceeding.  In this case, Sony and HP brought their petition within 30 days of the second Dell petition being joined to the original proceeding, but outside the 1 year critical date and outside the 30 day window, of § 42.122, after the original decision to institute.  While the Board concluded that Sony and HP fell outside the scope of § 42.122, they still granted the motion to join, using its broad power to administer IPR proceedings under § 42.5.  This decision is understandable given the unique arrangement under which Sony and HP were willing to operate.  More specifically, the grounds asserted were identical to the earlier petitions (indeed, they were identical), and Sony and HP were willing to take virtually no role in the proceeding – no briefing, no questioning at depositions, no role at oral hearing – unless one of the earlier petitioners settled the case.

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In general, the joinder provisions, and the cases that have flowed from them, demonstrate the Board’s goal of providing for just, speedy, and inexpensive proceedings. The Board has bent over backwards to allow joinder – especially in cases in which the later-filed petition is identical to the first-filed petition.  Relatedly, it is clear to see the strategies of defendants in multi-defendant litigation.  Where a first defendant files a petition within the one year critical period from service of a district court complaint, second and subsequent defendants can sit back and see if the petition is ultimately granted.  If it is, they can easily join the proceeding, via the joinder provisions, and ensure they have a seat at the table in case Patent Owner decides to settle with the first petitioner (an occurrence that could otherwise shut other defendants out of the IPR process).

Another Motion to Stay Reexamination Granted in Inter Partes Review

One of the goals of this site is to provide a comprehensive, one-stop-shop, for all “inter partes review” Orders issued by the Board.  While the rationale for staying a pending reexamination in view of an IPR relating to the same patent has been covered in past posts (for example, HERE), for the sake of completeness, we briefly note here that another reexamination proceeding has been stayed in view of an inter partes review.

Specifically, in a pair of Orders issued in Motorola Solutions v. Mobile Scanning Technologies (IPR2013-00093), the Board decided not to join an ex parte reexamination and inter partes review that were directed at the same patent.  Instead, the Board chose to stay the reexamination in view of the IPR.

The motion for joinder was based on a concern by the patent challenger that separate proceedings could result in different claim constructions, examinations based on incomplete information, and inconsistent amendments or arguments made with respect to the patent-in-issue.  While the Board was sympathetic to these concerns, it decided that merging the two proceedings could complicate and delay the inter partes review.

Instead, the Board granted the concurrent motion to stay the ex parte reexamination in view of the IPR.  As has been its practice, the Board gave a nod toward the general rule that it will not ordinarily stay a reexamination in view of an inter partes review.  But, the Board then went on to, again, stay the co-pending reexamination because the decision to institute an IPR, and any final written decision relating thereto, will simplify issues in the reexamination. Only time will tell if the Board actually decides not to stay a co-pending reexamination in view of an IPR.