IPR Petition Time-Barred Even Where First Lawsuit “Dismissed” and Folded Into Later Lawsuit

hourglassThe PTAB has been presented, of late, several cases that call upon the Board to consider whether a complaint served on a defendant is sufficient to trigger the a time-bar pursuant to 35 U.S.C. § 315(b). For example, as discussed HERE, a complaint that is served, but then later dismissed without prejudice, does not trigger the § 315(b) time bar. In eBay, Inc. v. Advanced Auctions LLC, IPR2014-00806, the Board addressed a factual situation in which a first lawsuit is later folded into a second lawsuit, purportedly because of a defect in the patent assignment raised an issue of whether standing was appropriate. The Board determined that there was no evidence that the assignment was defective and, as such, Patent Owner had standing to file and serve the first complaint. Even though that first complaint was later “dismissed” and folded into a second lawsuit, such an occurrence does not negate service of the first complaint.

On February 13, 2013, Petitioner was served with a first complaint for infringement, resulting in a first district court action. Thereafter, Patent Owner executed an assignment of the patent rights and, on July 11, 2013, Petitioner was served with a second complaint for infringement, resulting in a second district court action.  On May 23, 2014, more than one year after the first complaint was served, but within one year from when the second complaint was served, Petitioner filed the Petition at issue. On July 14, 2014, the court granted a motion to dismiss the first litigation, and effectively folded that action into the second action, allowing work from the first action to carry over to the second action.  Decision at 3. Because the IPR Petition was filed more than one year after service of the first complaint, if service of the first complaint was effective, such service would result in a time-bar of the instant petition under 35 U.S.C. § 315(b).  Id. at 4.

Petitioner argued that Patent Owner did not have rights in the ‘000 patent as of the filing and service of the first action as a result of a late and defective assignment. As such, per Petitioner, Patent Owner lacked standing to assert the subject patent, the first action had no legal effect, and the time-bar of 35 U.S.C. § 315(b) did not apply.

The Board disagreed, finding that Petitioner failed to identify any specific defects in the assignment documents or provide further explanation why the assignments were defective. Id. at 5. As proof that the assignment was defective, Petitioner relied solely on the fact that Patent Owner executed a second assignment after Petitioner had raised the standing issue in the first action. Patent Owner responded that the second assignment was initiated in response to an unrelated case and further that the second assignment expressly stated the belief that the first assignments were valid.  Id. at 6.

With Petitioner pointing out no specific defects in the assignment and the Board finding none, the Board rejected Petitioner’s argument that Patent Owner lacked standing. The Board agreed with Patent Owner, stating that the mere existence of a second assignment was not enough to convince the Board that the first assignment was defective.  Id. at 6. Accordingly, the Board found that Patent Owner did have standing in the first action, service was effectuated, and the instant Petition was time-barred. Further, despite the fact that the first action was “dismissed” as part of a procedural move to fold it into the second action, because the work from the first action carried over to the second action, this situation is not akin to a dismissal without prejudice, wherein the parties were left in the same legal position as if the underlying complaint had never been served. Order at 6-7. Thus, with the complaint in the first action served more than a year prior to the filing date of the instant petition, the Board denied the petition as time-barred under 35 U.S.C. § 315(b).

Dismissal of District Court Case, Without Prejudice, Removes Time Bar of 35 USC § 315(b)

iStock_000020200155XSmallChallenging claims of a patent which it had already previously challenged, Ariosa Diagnostics was able to get six challenged claims of an Isis Innovation patent into a trial for inter partes review in a case styled as Ariosa Diagnostics v. Isis Innovation, Ltd., (IPR2013-00250), involving U.S. Pat. No. 6,258,540.

The Board began by noting that this IPR petition was related to IPR2012-00022 (discussed HERE), which was also a challenge of the ‘540 patent. The Board also noted that Patent Owner renews its argument that inter partes review is improper because Ariosa had filed a civil action seeking declaratory judgment of noninfringement. Citing reasons presented in the previous challenge of the ‘540 patent, the Board rejected the argument again.

Interesting in the Board’s analysis, though, was a discussion of Patent Owner’s argument that the petition was time barred because the petition was filed more than one year after the date on which Petitioner was served with a complaint alleging patent infringement.  Because that complaint was ultimately dismissed without prejudice, however, the one-year time bar of 35 USC § 315(b) did not apply (citing Macauto U.S.C. v. BOS GMBH & KG, IPR 2012-00004).  

The remainder of the decision is a tale of Petitioner fixing errors from the previous proceeding.  For example, finding that Patent Challenger corrected the deficiencies in its argument for disclosure of a limitation involving amplification of certain genetic primers, the Board granted the Petition as a ground previously rejected. Next, the Board considered another anticipation ground relying upon a reference which relates to fetal DNA and its detection in maternal plasma and serum. Citing the fact that Patent Challenger already established anticipation of the main claim 1 by this reference, the Board granted the Petition as to the dependent claims in the instant Petition.

Reviving and improving arguments from an earlier challenge of the ‘540 patent, Ariosa was able to get six challenged claims of the ‘540 patent into a trial for inter partes review.

Non-Infringement DJ Action Does Not Preclude Inter Partes Review

As previously reported, Patent Owner in the inter partes review styled as Ariosa Diagnostics v. Isis Innovation Ltd. (IPR 2012-00022) earlier sought authorization to file a motion challenging the standing of Patent Challenger to bring the IPR petition.  The Board held that such issues could be addressed in the Patent Owner Preliminary Response and, therefore, denied Patent Owner’s request for authorization at an early stage of the IPR.

35 USC §315 – (a) Infringer’s civil action.  (1) Inter partes review barred by civile action.—An inter partes review may not be instituted if, before the date on which the petition for such review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent…(3) Treatment of counterclaim.—A counterclaim challenging the validity of a claim of a patent does not constitute a civil action challenging the validity of a claim for purposes of this subsection.

Since that ruling, however, Patent Owner made its argument that Patent Challenger lacked standing to bring the inter partes review in its Preliminary Response.  Further, on February 12th, the Board denied Patent Owner’s request and ruled that the Patent Challenger did, indeed, have standing to bring the present inter partes review proceeding.  In short, a party’s filing of a declaratory judgment action seeking judgment of non-infringement does not preclude that party from later filing a petition for inter partes review, even if the challenger later files an affirmative defense of invalidity.

More specifically, Patent Owner argued in its Preliminary Response that Patent Challenger lacked standing because the challenger filed a civil action seeking a declaration of non-infringement and then, in response to an inevitable counterclaim of infringement in the same suit, Patent Challenger asserted an affirmative defense of invalidity.  That sequence of events, per Patent Owner, was tantamount to bringing a civil action challenging the validity of a claim of the patent, contrary to the estoppel provisions of 35 USC §315.  Further, per Patent Owner, to allow this proceeding to move forward would thwart the intent of Congress.

The Board’s decision turned on the language of 35 USC §315 that “clearly defines which civil actions, when filed, bar a party from filing an inter partes review – civil actions challenging the validity of a patent.”  Order at 7.  Because a civil action for a declaratory judgment of non-infringement is not a civil action challenging the validity of a patent, there is no bar to the filing of a petition seeking inter partes review when such civil action has been filed.

Lastly, in response to the Patent Owner’s argument that the path taken by the challenger in this case thwarts Congress’s intent, the Board found persuasive the fact that the challenger cannot just file a declaratory judgment action – some action on the part of the Patent Owner creating a case or controversy is necessary.  As such, allowing a party to file both a declaratory judgment action of non-infringement and an inter partes review petition does not allow for harassment of a patent owner.