Paragraph IV Certification Does Not Constitute “Civil Action” That Bars IPR

13731151_sMomentum is growing in the filing of inter partes petitions by drug companies seeking to invalidated Orange Book patents. We will be keeping a close eye on some of the issues that are unique to these pharmaceutical IPR proceedings, including Noven Pharm., Inc. v. Novartis AG and LTS Lohmann Therapie-Systeme AG, IPR2014-00550, involving US Pat. No. 6,335,031. In this case, the PTAB considered whether the filing of a Paragraph IV certification constitutes a “civil action” for inter partes review purposes, barring the filing of an IPR petition.

In its preliminary response, Patent Owner argued that the petition-at-issue was barred pursuant to 35 U.S.C. § 315(a) because Petitioner filed a Paragraph IV certification with the FDA prior to filing the IPR petition. § 315(a) states that an IPR shall not be instituted if petitioner filed a “civil action,” challenging validity of the patent, prior to filing the IPR petition. Petitioner argued that, because of the Paragraph IV certification stated that the ‘031 patent was invalid, Patent Owner was forced to bring a civil action to defend the ‘031 patent. Decision at 6. Thus, even though it was Patent Owner that actually filed the civil action, Petitioner’s action in filing the Paragraph IV certification should be considered the filing of a civil action.  Id. at 7.

The Board disagreed, determining that, when § 315(a) refers to a “civil action,” it means the filing a complaint with a court. Though Petitioner’s filing of a Paragraph IV certification with the FDA was a form of challenge to the ‘031 validity, it was not a filing of complaint with a court. Therefore, the Petition is not barred.  Id. at 7.

35 U.S.C. § 315(b) Time-Bar Period Starts Running with 1st Complaint

hourglass35 U.S.C. § 315(b) requires that an IPR is barred if the petition is filed more than a year after the date which petitioner is served with a complaint alleging infringement of the patent.  In Apple Inc. v. Vernetx, Inc. and Science Application International Corporation (Case IPR 2013-00393), the Board addressed the statutory interpretation of the term “complaint” and clarified several issues relating to the effect that subsequent infringement complaints have on earlier-served complaints.

Petitioner was served with a complaint relating to the Patent-at-issue on two occasions — the earlier complaint was served more than one year before Petitioner filed the IPR petition; the latter, less than one year.  The Board denied institution because the petition was not timely filed under 35 U.S.C. § 315(b), finding that service of the first complaint started the one-year time bar.

In a follow-up decision on a Motion for Rehearing, the Board made several key points in dispatching Petitioner’s arguments:

(1)    Congressional intent does not trump the plain meaning of the statute.  Congress made a specific provision (35 U.S.C. § 315(c)) which allowed requests for joinder to be exempted from the time-bar limitation of 35 U.S.C. § 315(b).  If Congress intended that § 315(b) time-bar not apply to infringement litigation unless it’s concurrent with the filing of the petition (as Patent Challenger maintained was the case), then it would have explicitly stated so in a similar provision to 35 U.S.C. § 315(c).  But, because Congress did not insert such a provision, legislative intent clearly points toward the opposition of Petitioner’s assertion.

(2)    Adopting Petitioner’s reading of the statute would lead to undesirable results.  If the statute is read to mean that the time-bar does not apply to infringement litigation unless it’s concurrent with the filing of the petition, then a defendant could lose a patent infringement suit and then file for IPR challenging the same patent after the one year time-bar expires.  This is clearly not a positive result.

(3)    The § 315(b) time-bar applies to any patent issued before, on, or after the enactment of the AIA.  The language of the statute is clear on this subject, contrary to Petitioner’s assertion that the time-bar should only apply to actions after the enactment of the AIA.

In short, the § 315(b) time-bar applies to first-served complaint alleging patent infringement.

1 Year Statutory Bar for IPR Defendant Begins to Run Only After Summons is Served

The PTAB was faced with its first statutory construction issue, relating to the meaning of the term “served,” in the inter partes review styled as Motorola Mobility LLC v. Arnouse, (IPR2013-00010). The Board found that a Patent Challenger must be served with a summons and complaint before the statutory bar for filing an inter partes review begins to run.

[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 1 year after the date on which the petitioner…is served with a complaint alleging infringement of the patent.[/pullquote]

§315(b) serves as a statutory bar that prevents a patent challenger from filing of a petition seeking inter partes review if that patent challenger had been “served” with a complaint alleging patent infringement more than one year prior to the IPR filing.  The issue brought to the Board was whether service required mere presentation of the complaint, or the more rigorous service requirements of the Federal Rules of Civil Procedure, Rule 4.

In its argument, Patent Owner argued that “service” under §315(b) merely requires that the defendant/Patent Challenger is provided a copy of the complaint and received actual notice of the filed complaint. Patent Challenger replied that the term “service” has special meaning under federal law, and requires that the plaintiff/Patent Owner comply with the service requirement of Rule 4 of the Federal Rules of Civil Procedure.

The Board agreed with Patent Challenger. Per the Board, Congress could have used language such as “receive,” “deliver,” or “present,” but did not. Instead, the statutory language indicates true “service,” as that term is known under federal law. To further support its statutory construction, the Board looked to the legislative history to determine Congress’s intent. To that end, the Board’s inquiry revealed that the primary concern during debate regarding the AIA was the need to provide defendants with sufficient time to analyze patent claims, but not create an open ended process. Order at 4.

With that legislative intent in mind, the Board found that mere presentation of the complaint, and not full service, would frustrate the legislative intent because the one year period would begin to run even when Patent Challenger is not yet a defendant in the litigation. The Board did not believe that Congress intended to start the time period for the statutory bar prior to the Patent Challenger officially becoming a defendant in the lawsuit. Indeed, the Board envisioned a scenario when the entire one year time period would run without the Patent Challenger ever becoming a defendant – for example, if a first complaint is “presented” but never served in favor of a second or third complaint.

In the end, Patent Owner should not have much grounds to complain about the ruling.  In the end, it is Patent Owner that has the power to start the 1 year statutory bar by actually serving the complaint, or obtaining a waiver of service.

Eleventh Inter Partes Review Trial Instituted

The Patent Owner winning streak, for repelling inter partes review challenges, was halted at just one in view of the Board’s institution of an IPR trial in the proceeding styled as Synopsys, Inc. v. Mentor Graphics Corp., (IPR2012-00042), involving US Patent No. 6,240,376. The Board instituted an inter partes review trial with regard to 12 of the 29 proposed claims, using one (anticipation) of the 11 proposed grounds. This record 41 page order is loaded with aspects of IPR practice that are worth noting.

The subject matter of the ‘376 patent claims is the simulation and prototyping of integrated circuits. The Board started its analysis at a logical starting point – claim construction. At threshold, the Board made a point of emphasizing that no claim construction is necessary for terms if one of skill in the art would recognize the ordinary and customary meaning of those terms.  Citing Biotec Biologische v. Biocorp, Inc., 249 F.3d 1341, 1349 (Fed. Cir. 2001) (finding no error in non-construction of “melting”); Mentor H/S, Inc. v. Med. Device Alliance, Inc., 244 F.3d 1365, 1380 (Fed. Cir. 2001). The Board found that many terms in the challenged claims did not require construction for this reason.

Other terms, however, required construction, including “instrumentation signal,” “gate-level netlist,” “gate-level design,” and “sensitivity list.” To come to its opinion regarding claim scope, the Board relied upon two claim construction principles that are worth noting. First, regarding the first three of the above-listed terms, the Board noted that the terms were not explicitly defined in the specification, but found that the specification (including the examples) did contain useful context that would help define the terms. Thus, using the specification as a claim construction guide, the Board synthesized the various relevant specification excerpts to develop claim constructions of the relevant terms. Second, in defining “sensitivity list,” the Board determined that its construction was informed by certain dictionary definitions relevant to that limitation, citing to both an online definition and an IEEE reference.

Using these defined terms, the Board instituted an inter partes review trial on 12 of the 29 proposed claims, using one of the 11 proposed grounds.

Turning to its decision to institute an IPR trial, the Board first considered Patent Owner’s argument that the petition was statutorily-barred in view of 35 USC §315(b). Per that section of the Patent Act, an inter partes review may not be instituted if the petition was filed more than one year after the service of a federal court complaint alleging infringement of the subject patent. Here, the Patent Owner served a complaint on a third party company over five years earlier. That third party had since become a subsidiary of Patent Challenger and, thus, per Patent Owner, the challenger and third party were in privy with one another, preventing the filing of the petition.  The Board disagreed with this argument, finding that Patent Challenger was not a privy of the third party at the time the third party was served with the federal court complaint. Further, no evidence was even submitted that showed privity between the parties at the time the petition was filed. While Patent Owner argued that the relevant time for the analysis is the date on which the IPR is instituted, the Board again disagreed.  Privity is measured as of the date of the filing of the petition.

Having cleared the statutory bar argument presented by Patent Owner, the Board proceeded to consider each of the 11 grounds of unpatentability set forth in the petition by Patent Challenger. In general, however, the Board based its denial of most proposed anticipation grounds on the all elements rule and denied all obviousness grounds in view of Patent Challenger’s failure to identify with particularity the basis for its obviousness argument. See, e.g., Order at 21 (“Petitioner asserts, in a single sentence, that [the prior art reference], by itself, renders claims 1-5, 8-10, 20-24, 28, 32, and 33 obvious under 35 U.S.C. §103….Petitioner does not explain the reasoning behind this assertion.”).

But, among the arguments submitted by Patent Challenger, was an unpatentability ground that was based on a prior art brochure. The interesting issue was whether the brochure was actually a printed publication because it did not include any indication of when it was created or whether it was publicly disseminated. Patent Challenger had asserted that it was published at least as early as July 9, 1996 because it was filed in an Invention Disclosure Statement on that date. But, Patent Owner responded that inclusion on an IDS was insufficient to provide proof of publication and the file history for the patent did not become public until the patent issued, on November 17, 1998. Based on these facts, the Board agreed with Patent Owner that the brochure was not a printed publication.  Patent Challenger had simply failed to adequately prove that the brochure was publicly-available during the relevant time frame.  Order at 36.

Lastly, it is worth noting that in another portion of the Board’s decision, it denied certain obviousness grounds because “[Patent Challenger] does not address why a person of skill in the art would have combined the two references.” Order at 34. This is yet another indication that it is essential to include expert testimony with any petition to ensure an adequate basis for any proposed unpatentability grounds.

In the end, the Board granted yet another IPR trial, but did so only after an exhaustive review of various challenges by both parties.  Most beneficial for future inter partes review participants is the fact that this analysis yields many insights into IPR practice that will inform later proceedings.


Third Inter Partes Review Trial Offers Clarification on Several Key Issues

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]

Statutory Bar

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.