Posts Tagged ‘inter partes review’

Patent Board Denies First Data Corp. IPR Petitions Based on Real Party In Interest and One-Year Bar

Tuesday, October 21st, 2014

October 21, 2014

In 2013, Cardsoft, LLC (Patent Owner) sued First Data Corp. (Petitioner) and First Data Merchant Services Corp. for patent infringement in the Eastern District of Texas, serving its complaint on May 2, 2013.  (Cardsoft (Assignment for the Benefit of Creditors) LLC v. First Data Corp., Civil Action No. 2:13-cv-290 (E.D. Tex.).)  The complaint alleged infringement of U.S. 6,934,945 and U.S. 7,302,683, relating to sending and receiving information over a network.

On April 30, 2014, Petitioner filed IPR petitions requesting review of the ’945 and ’683 patents (IPR2014-00715 and IPR2014-00720, respectively).  An issue arose in the IPRs because VeriFone had a duty of indemnification to First Data Corporation. But VeriFone had been sued in 2008 by Cardsoft LLC for patent infringement of the same patents, and therefore was statutorily barred under 35 U.S.C. § 315(b).  (Cardsoft, Inc. v. VeriFone Systems, Inc., Civil Action No. 2:08-cv-00098 (E.D. Tex.).)

The Mandatory Notices of the ’945 IPR Petition state:

The real party in interest is First Data Corporation []. We believe that VeriFone is NOT a real party in interest. VeriFone, per an indemnity with First Data, is providing the funding for this petition. However, the sole and exclusive control over this petition rests entirely with First Data. To the extent that the VeriFone indemnity agreement provided for any ability to assume control of any litigation, VeriFone has disclaimed any right to such control (see Ex. 1011 ). First Data determined which counsel to use, and is using its normal patent counsel for this petition, not counsel for VeriFone. The prior art used in this petition was discovered from the Cardsoft v. VeriFone litigation records, but First Data decided which references to use. Copies of some prior art were obtained from VeriFone, and VeriFone counsel indicated certain references which it believed rendered the subject patent invalid, but First Data counsel exercised independent judgment in determining which prior art to use and in fact selected different prior art references than those which VeriFone believed were the strongest.

It should be noted that First Data was sued after Cardsoft obtained a jury verdict victory against VeriFone. Instead of suing VeriFone for willful infringement for post-verdict sales, Cardsoft elected to sue First Data, likely with knowledge of the indemnity which provides indemnification for some although not all of the accused devices. It would be contrary to the reasons for establishing Inter Partes Reviews to deny First Data the opportunity for an IPR challenge in such a situation.

(’945 Petition, pp. 1-2 (IPR2014-00715).)  The Petition summarized different PTAB decisions which declined to find a real party in interest based on funding and sharing of prior art.  It also referenced PTAB Chief Judge James Smith:

Chief Judge James Donald Smith of the BPAI explained that the Proposed Rules from February of 2012 deliberately declined to promulgate particular factors as the future Patent Trial and Appeal Board (PTAB) intends to consider each case on its specific facts. [Explanation of Real Party in Interest Requirement provided by Chief Judge James Donald Smith, Board of Patent and Appeals and interferences ("BPAI"). Available at http:/ /www.uspto.gov/aia implementation/smith-blogextravaganza. j sp#heading-2.]

(Id., p. 3.)  The ’683 Petition in the -00720 proceeding includes similar Mandatory Notices.

But in parallel Decisions dated October 17, 2014, the Board disagreed with the Petitioner and found VeriFone to be a real party in interest in both proceedings.  The Board also decided that each petition was barred under 35 U.S.C. § 315(b), based on the following factors:

Petitioner’s Control and Funding:

The evidence demonstrates that VeriFone desires an inter partes review of the ’945 patent and has controlled, and/or has had an opportunity to control, the events leading up to the filing of the Petition. Petitioner acknowledges that “VeriFone, per an indemnity with [Petitioner], is providing the funding for this petition.” Corr. Pet. 1. Per the Letter Addendum, we understand this “funding” to include Petitioner’s attorney fees and at least the nearly $24,000 petition fees associated with filing the Petition. Ex. 1011, 1; Master Engagement Agreement, Section 6.1. We find that per this same indemnity agreement VeriFone had an opportunity to control all of the events leading up to the filing of the Petition. In particular, Section 6.1.3 of the Master Engagement Agreement indicates that VeriFone “shall have the right at its expense to employ counsel . . . to defend against Claims that VeriFone is responsible for . . . and to compromise, settle and otherwise dispose of such Claims.” Id., 3. The Letter Addendum indicates that “VeriFone has agreed to this associated indemnification as to the IPR.” Id., 1. Thus, up to April 28, 2014 (i.e., two days prior to the Petition being filed), VeriFone had every opportunity and right, per the indemnification agreement, to control the filing of the Petition and pursue an inter partes review of the challenged patent. That the opportunity to control ended just two days prior to filing the Petition, does not negate the control or opportunity to control the events leading up to the filing of the Petition. By Petitioner’s own admission, and during the period leading up to the filing of the Petition, counsel for VeriFone communicated with counsel for Petitioner about initiating an IPR, including discussing what prior art to assert. Corr. Pet. 2. Moreover, VeriFone agreed to, and did, pay for all costs associated with the filing of the Petition. We have considered Petitioner’s arguments that it alone decided to use different prior art for this proceeding compared to the prior art that VeriFone asserted in the 2008 Litigation. See id. Petitioner, however, does not provide sufficient evidence that would support this assertion, and in any event, even if true, that alone would not outweigh the other evidence of record that tends to show that VeriFone controlled and/or had the opportunity to control the filing of the Petition.

Decision Denying Institution, IPR2014-00715, Paper 9, Oct. 17, 2014, pp. 7-8.

VeriFone’s Current Interest in the Proceeding:

The Board found that VeriFone had an interest in the outcome of these IPR proceedings:

Moreover, we find that VeriFone has an interest in the review of the ’945 patent in this proceeding. VeriFone was found to have infringed the ’945 patent in the 2008 Litigation and was unable to invalidate the ’945 patent in that proceeding. See Ex. 1007 ¶ 8. VeriFone also must defend and indemnify Petitioner in the 2013 Litigation for Petitioner’s alleged willful infringement of the ’945 patent from the sale of VeriFone products that were found to have infringed the ’945 patent in the 2008 Litigation. Invalidity of the ’945 patent has been asserted in the 2013 Litigation that VeriFone is defending under its indemnity agreement with First Data Merchant Services. Ex. 2003, 3 (second affirmative defense). VeriFone has an interest in an inter partes review of the ’945 patent at least equal to that of Petitioner. The record evidence establishes, however, that VeriFone could not have pursued an inter partes review on its own or in conjunction with the Petitioner, because VeriFone would have been barred from doing so pursuant to 35 U.S.C. § 315(b).

Id., pp. 8-9.

Petitioner’s Failure to Name RPI Within One Year Bar

The Board also found that the Petition itself lacked a proper statement of the real parties in interest, and therefore was barred under § 315(b) because Petitioner’s correction would have occurred after the one year bar date:

Moreover, because VeriFone is a real party-in-interest, the Petition does not identify “all real parties in interest” as required by 35 U.S.C. § 312(a). As a result, the Board determines that the Petition is incomplete.

Section 42.106(b) of Title 37 of the Code of Federal Regulations provides:

(b) Incomplete petition. Where a party files an incomplete petition, no filing date will be accorded, and the Office will dismiss the petition if the deficiency in the petition is not corrected within one month from the notice of an incomplete petition.

Ordinarily, because the Petition is incomplete, the Board would give Petitioner one month from the date of this decision to correct the deficiency and list VeriFone as a real party-in-interest. In this instance, however, curing the omission of VeriFone as a real party-in-interest would be futile because, even if corrected, the earliest filing date that could be accorded to the Petition that identifies VeriFone as a real party-in-interest would not fall within the one-year period specified by 35 U.S.C. § 315(b).

Id., p. 10.

So the Board seems to have denied these IPR petitions on the grounds that: (1) a real party in interest (e.g., VeriFone) would have been barred due to the 2008 litigation, and (2) because, procedurally, any correction of the petition would also fall necessarily outside of the statutory one-year bar of the 2013 litigation.  This case provides another example of how the Board interprets facts relating to real parties in interest and an example of the Board’s decision to apply the one-year IPR bar under 35 U.S.C. 315(b) to corrections of real parties in interest in IPR petitions.

 

Target Corp. Requests Rehearing of Denied IPRs by Expanded PTAB Panel

Friday, October 17th, 2014

October 17, 2014

Last month, the Patent Trial and Appeal Board (PTAB or Board) interpreted the IPR joinder provision, 35 U.S.C. § 315(c), to preclude joinder requests by an existing party to an ongoing proceeding.  (Target Corp. v. Destination Maternity Corp., IPR2014-00508 and IPR2014-00509.)  In these recent decisions, the Board decided that § 315(c) requires “party joinder” and not only “issue joinder.”  Interestingly, before this interpretation was announced the Board had allowed “issue joinder” without requiring joinder of a new party to the proceeding (Microsoft v. Proxyconn, IPR2013- 00109), and after this interpretation was announced at least one panel of the Board applied an analysis that did not appear to adopt this new interpretation (Microsoft Corp. v. Enfish LLC, IPRs 2014-00574, -00575, -00576, and -00577).

Last week, Target Corp. filed rehearing requests in both affected IPR proceedings in an effort to have the Board reconsider its interpretation of  35 U.S.C. § 315(c) with an expanded panel.  Target’s arguments are quite clearly stated in its Motion for Rehearing, some of which include:

  • The AIA was implemented for broad remedial purposes to improve patent quality and to provide a more efficient system for challenging patents that should not have issued.
  • These broad remedial purposes of the AIA empower the PTO to administer IPR proceedings in a way to reduce duplication of efforts and costs.
  • Laws pertaining to patent quality which are “remedial in nature, based on fundamental principles of equity and fairness” can be construed liberally.
  • The PTAB should interpret the joinder provision liberally to allow for consistency of prior decisions, and reduce gamesmanship in parallel district court litigation.

On that last point Target’s motion states:

Target’s Joinder Motion sets forth the unique facts of this case, which reveal that a significant prior art reference long known to the patent owner was withheld from Target in the parties’ parallel district court litigation until several weeks after Target’s one-year deadline under 35 U.S.C. § 315(b). (Paper 3, at 1-6.) Under the Board’s decision here, a patent owner in parallel litigation with a petitioner can readily subvert the purposes of the AIA, see supra Part II.A, and the IPR process by withholding any significant prior art it may be uniquely aware of, or additional asserted claims, until after the petitioner’s one-year deadline under § 315(b).

Of course, joinder motions cannot be filed any time after institution of the prior proceeding — they must be filed within a month after the date of institution of the IPR for which joinder is requested:

§ 42.122 Multiple proceedings and Joinder.

(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.

However, in many cases the possibility of joinder of issues to a petitioner about a year after service of the lawsuit is still quite valuable to the petitioner and has been used to assert improved grounds and to attack newly asserted claims. (Microsoft v. Proxyconn, IPR2013- 00109.)

It will be interesting to see what the PTAB decides to do in Target’s IPR proceedings.  More importantly, it would be a great thing if this rehearing would result in  consistent joinder practice across panels in the future.

PTAB Applies “Issue Joinder” Analysis to Deny Microsoft’s IPR Joinder Requests

Thursday, October 2nd, 2014

October 1, 2014

The reader may recall that last week an expanded PTAB panel announced an interpretation of 35 U.S.C. § 315(c) that essentially ruled out a joinder request for a subsequent IPR petition made by an existing party to the instituted proceeding.  Target Corp. v. Destination Maternity Corp. (IPR2014-00508 and -00509.)  In Target, the Board adopted a “party joinder” interpretation of the § 315(c) IPR joinder statute that provided for new persons to join an instituted IPR, but not for joinder of new issues raised by the same petitioner.

This interpretation was a departure from an earlier interpretation of § 315(c) that allowed a party to the instituted IPR the ability to request joinder of a later-filed petition based on new issues (“issue joinder”).  As noted by the Board in Target:

In other decisions, the Board has granted joinder of an additional petition or proceeding (as opposed to an additional person) to an instituted inter partes review. See Ariosa Diagnostics v. Isis Innovation Ltd., Case IPR2012-00022 (PTAB Sept. 2, 2014) (Paper 66) (“Ariosa”); Samsung Elecs. Co. v. Virgina Innovation Scis., Inc., Case IPR2014-00557 (PTAB June 13, 2014) (Paper 10) (“Samsung”); Microsoft Corp. v. Proxyconn, Inc., Case IPR2013-00109 (PTAB Feb. 25, 2013) (Paper 15); ABB Inc. v. Roy-G-Biv Corp., Case IPR2013-00286 (PTAB Aug. 9, 2013) (Paper 14); Sony Corp. v. Yissum Research Dev. Co. of the Hebrew Univ. of Jerusalem, Case IPR2013-00327 (PTAB Sept. 24, 2013) (Paper 15).

Decision Denying Motion for Joinder for IPR2014-00508 at p. 3.

The issue joinder interpretation provided a petitioner a mechanism to attempt to “cure” a partial institution based on new grounds of unpatentability or to challenge claims newly added to the litigation since the filing of the original IPR petition.  And this could be done even if the later-filed IPR petition was filed after the § 315(b) one-year bar date.

This week, the Board rejected four IPR petitions with joinder requests based on the earlier ‘issued joinder” interpretation of  § 315(c).  In Microsoft Corp. v. Enfish LLC (IPRs 2014-00574, -00575, -00576, and -00577), the Board denied joinder, but only after it made a full analysis of Microsoft’s joinder request based on the issues raised by Microsoft.  Since Microsoft was the Petitioner in the underlying instituted proceedings, these later-filed IPR petitions and their respective joinder requests were made by the same party (Microsoft), yet the Board did not apply the “party joinder” interpretation announced in Target.  Had the Board used the party joinder interpretation the decisions would have been much shorter.

Microsoft had filed these four IPRs and their respective joinder requests after the one-year IPR bar, so failure to obtain joinder resulted in each later-filed petition being denied based on the § 315(b) one-year bar.

The Target and Microsoft decisions were only four days apart.  It may take more time to determine whether the Board intends to use the issue joinder or party joinder approach to decide future IPR joinder motions.

 

PTAB Joinder Practice Update: Board Interprets 35 U.S.C. § 315(c) to Require Party Joinder

Tuesday, September 30th, 2014

Sep. 30, 2014

In at least two decisions last week, the Patent Trial and Appeal Board (PTAB or Board) interpreted the IPR joinder provision, 35 U.S.C. § 315(c), to preclude a joinder request by an existing party to the proceeding.  The Board had allowed this practice in the past, for example, when a party timely filed its request for joinder with a petition that asserted new grounds of challenging one or more claims of the patent under IPR.  In these most recent decisions, the Board seems to have decided that § 315(c) requires “party joinder.”

In two IPRs styled Target Corp. v. Destination Maternity Corp. (IPR2014-00508 and -00509) the Board provided its rationale for why subsequent IPR petitions by Target could not be joined to the instituted IPR proceedings (IPR2013-00531 and -00533, respectively).  The Decision Denying Motion for Joinder for the -00508 IPR provides this reason (which is referenced by the parallel Decision Denying Motion for Joinder in the -00509 IPR):

The statute does not refer to the joining of a petition. Rather, it refers to the joining of a petitioner (i.e., “any person who properly files a petition . . .”). Id. Further, it refers to the joining of that petitioner “as a party to [the instituted] inter partes review.” Id. Because Target is already a party to the proceeding in IPR2013-00531, Target cannot be joined to IPR2013-00531.

The -00508 IPR Decision included a dissent which summarized prior cases allowing such joinder:

The majority opinion chooses not to address the issues as presented by the parties. Instead, the majority bases its decision to deny the motion entirely on a construction of 35 U.S.C. § 315(c), concluding that the statute enabling joinder does not apply here because it allows only joinder of parties, not joinder of issues. According to the majority, the language in § 315(c) addresses only joinder of a “party” to a proceeding, and does not permit joinder in the situation present in this case, where Petitioner seeks the “joinder” of additional grounds by the same party. The majority opinion acknowledges, however, the Board has consistently allowed joinder of additional grounds by the same party See, e.g., Ariosa Diagnostics v. Isis Innovation Ltd., Case IPR2012-00022 (PTAB Sept. 2, 2014) (Paper 66)(“Ariosa”); Samsung Elecs. Co. v. Virginia Innovation Scis., Inc., Case IPR2014-00557, (PTAB June 13, 2014) (Paper 10); Microsoft Corp. v. Proxyconn, Inc., Case IPR2013-00109 (PTAB Feb. 25, 2013) (Paper 15); ABB Inc. v. Roy-G-Biv Corp.,Case IPR2013-00282 (PTAB Aug. 9, 2013) (Paper 15).

As the majority opinion observes, the Board in Ariosa concluded that the language in § 315(c) that allows joinder of “any person who properly joins a petition under section 311” should be construed as not prohibiting the joinder of inter partes review proceedings involving the same party. Here, however, the majority opinion concludes that “the relief described in § 315(c) is something an existing party already has, namely, party status in the instituted inter partes review.” The majority opinion states further in a footnote that

solely focusing upon “any person” does not give full effect to the other words in the statute that limit who “any person” may be. Other language in § 315(c) excludes from “any person” at least two persons from among those who may be joined to a proceeding. More specifically, the phrase “who properly files a petition under section 311” excludes the patent owner, and “as a party,” excludes persons who are already a party.

We note initially that as this issue of statutory construction was not addressed, and thus not briefed, by the parties, the majority should not have denied joinder solely on statutory construction grounds. Apart from and independent of this failure to address the issues presented by the parties, however, we disagree with the majority’s construction of § 315(c), for the reasons discussed below.

Joinder is of particular importance to PTAB practitioners because the AIA imposes strict rules on the timing and content of IPR petition filings to challenge patentability.  It is especially important in IPRs, because a petitioner is barred from filing another petition over a year after service of a complaint alleging infringement under 35 U.S.C. § 315(b).  Before the decisions of the past week, a petitioner had one more chance to argue a different ground of challenge in an IPR using § 315(c) joinder.  Although not guaranteed, on occasion the Board had allowed joinder of a later-filed petition by the same petitioner to an instituted proceeding when the later-filed petition met certain conditions of timeliness and where the later-filed petition will not pose an undue delay or burden on the existing proceeding.  This afforded the petitioner one more opportunity to “tune” challenges when the Board granted partial institution of the claims challenged in the instituted IPR after the one-year bar.  It also afforded the petitioner another chance to challenge claims newly added in a parallel litigation after the one-year IPR bar.  Essentially, the former practice gave the petitioner one more opportunity to consolidate challenges in one proceeding.

If the Board follows the recent decisions precluding joinder requests by a party to the proceeding, petitioners will have to be more diligent to challenge every claim that could be possibly asserted in the parallel litigation.  Petitioners will have to continue to be thorough in exploring the best prior art challenges in the original petition and to assert robust grounds of unpatentability that will withstand the Board’s institution decision.  Accordingly, time will tell if last week’s ruling will be the rule for joinder and whether it will result in more IPR petitions to meet these challenges.  After all, in post-grant practice, that which you do not successfully challenge is likely to be harder to challenge later.

Lex Machina’s 2013 Patent Litigation Report Shows Disparity Between Litigated Patents and those under PTAB Review

Wednesday, May 14th, 2014

Litigation and post-grant proceedings often go hand-in-hand. A new litigation report published by Lex Machina summarizes patent litigation data for 2013 and prior years.  It is an interesting report and very easy to digest.  Two findings caught my eye.  The first one relates to the overall number of patent litigation cases filed in 2013:

Plaintiffs filed 6,092 new patent cases in U.S. District Courts in 2013 . . .

The second finding is the number of U.S. Patents at issue in those filings:

4,917 patents were at issue in all cases filed during 2013.

That second number is surprising, because if understood correctly, the findings indicate that about 5 out of every 6 lawsuits filed in 2013 relate to different patents.  That ratio seems high — especially in view of the AIA litigation joinder provisions.  However, if we assume these numbers are roughly correct, they show a large difference between the number of patents asserted and the petitions filed in the PTAB.

For example, compare Lex Machina’s reported 4,917 patents at issue in 2013 suits with the 1,312 total IPR and CBM petitions on file in the PTAB from September 16, 2012 to May 8, 2014.  These numbers indicate that  at most about 1 out of 3 patents in litigation are the subject of a PTAB petition.  If true, that means several patents in litigation have not been submitted for review by the PTAB.

Of course, bear in mind that this is just a rough, unscientific approximation because:

  • not every petition in the PTAB relates to a new patent,
  • not every patent being challenged in the PTAB is in litigation, and
  • this crude approach does not attempt to correlate the petitions before the PTAB with a certain year of patent assertion.

Not every patent in suit is eligible for a post-issuance proceeding in the PTAB, so there is no reason to expect that every patent in suit will be the subject of a petition.  But, this data seems to indicate that there is still a large number of litigated patents that could be subject to future post-grant challenges. Readers are invited to contact me with better data than this admittedly rough approximation.  Please send me that information and I will try to post it to give a more accurate representation of patents in litigation versus those challenged in the PTAB.

 

See You at the AIPLA 2014 Spring Meeting!

Wednesday, April 30th, 2014

I am presenting at the AIPLA Spring Meeting on May 15, 2014 in Philadelphia and hope to see you there.  My task is to provide strategies for filing inter partes reviews, covered business method reviews and post-grant reviews.  I hope to see you there!

I just got back from the PLI Post-Grant Conference held in San Francisco.  The new world of patent litigation has only just begun and we are seeing many interesting ways that the AIA post-grant provisions are changing the way we view and value patents.  This year already has brought a lot of patent-related decisions from the PTAB, Federal Circuit, and Supreme Court.  There will be a lot to process in the months to come.  Stay tuned.

Federal Circuit Dismisses Appeals by Petitioners Who Were Denied Inter Partes Reviews

Friday, April 25th, 2014

The Federal Circuit issued two orders on April 24, 2014 dismissing appeals by petitioners in proceedings where the Patent Trial and Appeal Board (PTAB) denied institution of inter partes review (IPR).  Each appeal is summarized as follows:

St. Jude Medical, Cardiology Div. v. Volcano Corp. & Michelle K. Lee (as Deputy Director) - Appeal of Denial of IPR Petition

St. Jude brought suit against Volcano for patent infringement of five patents in 2010.  St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., No. 10-cv- 631 (D. Del. filed July 27, 2010).  Volcano counterclaimed alleging patent infringement of its U.S. Pat. 7,134,994 in September of 2010.  More than two years later, the district court dismissed all claims relating to the ’994 patent (based on stipulations by the parties).

About a half year after the district court dismissal, St. Jude filed a petition for IPR of the ’994 patent.  IPR2013-00109.  But that petition was dismissed by the Board (acting as a delegee of the Director) based on the one-year bar for IPR petitions.  35 U.S.C. § 315(b).  In a case of first impression, the Board determined that a counterclaim alleging infringement of a patent asserted over a year before the filing of the IPR petition triggered the 315(b) bar.  St. Jude appealed the Board’s decision not to institute IPR to the Federal Circuit.  Volcano and the PTO Director moved to dismiss St. Jude’s Federal Circuit appeal.

The Federal Circuit dismissed St. Jude’s appeal, holding that it may not hear appeals from the Director’s denial of petition for inter partes review.  In making its decision, the Court applied 35 U.S.C. § 314(d) and explained that an appeal to the Federal Circuit of a decision on IPR lacks jurisdiction unless the Board institutes trial:

Chapter 31 authorizes appeals to this court only from “the final written decision of the [Board] under section 318(a).” Id. § 319. Likewise, section 141(c) in relevant part authorizes appeal only by “a party to an inter partes review . . . who is dissatisfied with the final written decision of the [Board] under section 318(a).” Id. § 141(c). What St. Jude now challenges, however, is the Director’s non-institution decision under section 314(a) & (b). That is not a “final written decision” of the Board under section 318(a), and the statutory provisions addressing inter partes review contain no authorization to appeal a noninstitution decision to this court.  . . .

The statute thus establishes a two-step procedure for inter partes review: the Director’s decision whether to institute a proceeding, followed (if the proceeding is instituted) by the Board’s conduct of the proceeding and decision with respect to patentability.  . . . The statute provides for an appeal to this court only of the Board’s decision at the second step, not the Director’s decision at the first step.

The Federal Circuit’s position on direct appeals from the Director’s decision whether to institute an inter partes review is summarized in the next paragraph:

In fact, the statute goes beyond merely omitting, and underscoring through its structure the omission of, a right to appeal the non-institution decision. It contains a broadly worded bar on appeal. Under the title, “No Appeal,” Section 314(d) declares that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” Id. § 314(d). That declaration may well preclude all review by any route, which we need not decide. It certainly bars an appeal of the non-institution decision here.

The Court’s holding in St. Jude Medical was also used to dismiss the next appeal which requested mandamus relief:

In re Dominion Dealer Solutions, LLC. - Petition for Writ of Mandamus to the USPTO

Dominion Dealer Solutions filed several IPR petitions to challenge the patentability of several patents owned by AutoAlert, Inc.  IPR2013-00220, -00222, -00223, -00224 and -00225.  The Board denied institution of trial for five of the IPR petitions.  Dominion filed requests for rehearing, but they were also denied by the Board.  Dominion then filed an action in the Eastern District of Virginia to challenge the Board’s decision under the Administrative Procedures Act (see my earlier post).  Dominion also filed a “Petition for Writ of Mandamus to the Director” with the Federal Circuit.

The Federal Circuit denied the petition for mandamus.  In denying Dominion’s appeal, the Federal Circuit referenced the St. Jude Medical decision made that same day:

In another Order issued today, we dismiss an appeal by a patent challenger seeking review of the Director’s decision not to institute an inter partes review. See Order Dismissing Appeal, St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., No. 2014-1183 (Fed. Cir. Apr. 24, 2014). We explain that such a challenger may not appeal the non-institution decision to this court. We conclude that such an appeal is precluded by the statutory provisions addressing inter partes review, including section 314(d)’s broad declaration that the Director’s decision “whether to institute an inter partes review under this section shall be final and nonappealable,” and by our jurisdictional statute. See St. Jude, slip op. at 5-6.

Those conclusions require denial of Dominion’s petition for mandamus relief. At a minimum, given our conclusions about the statutory scheme, Dominion has no “clear and indisputable” right to challenge a noninstitution decision directly in this court, including by way of mandamus. That is all we need to decide.

The Court noted Dominion’s appeal in the Eastern District of Virginia, and its dismissal on April 18, 2014, but concluded “[w]e need not decide that issue here.”

_______

These decisions remind petitioners that they should take every reasonable measure to obtain institution of trial, because appeals of Board decisions denying institution of trial will not easily survive a motion for dismissal in light of the holding in St. Jude Medical. It will be interesting to see whether Dominion will decide to appeal the district court’s dismissal of its APA challenge now that the Federal Circuit has rejected mandamus relief under the St. Jude Medical holding.

Eastern District of Virginia Decides PTAB Decision to not institute IPR is Not Appealable

Monday, April 21st, 2014

A patent owner insists that your company infringes a patent and makes a claim of patent infringement.  You have settled patent infringement assertions before, but this patent seems invalid over known prior art.  You consult with your patent counsel and a decision is made to file a petition for inter partes review (IPR) under the new post-grant challenges afforded by the America Invents Act.

A lot of hard work goes into preparing the IPR petition.  You include a declaration by an expert and multiple prior art grounds of invalidity.  You file your petition, knowing that in six months you will get a decision on whether the Patent Trial and Appeal Board (PTAB) will institute trial.  You get notice that a decision has been made and you read it, only to learn that your petition for IPR has been denied in total.  You believe the decision not to institute is a mistake.  What do you do?

To know your options you consult the statute:

§ 314. Institution of inter partes review

. . .

(d) NO APPEAL.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

Final and nonappealable?  That does not sound good.  After all, you recall hearing something about requests for reconsideration.  So you consult the CFR:

§ 42.71 Decision on petitions or motions.

. . .

(c) Petition decisions. A decision by the Board on whether to institute a trial is final and nonappealable. A party may request rehearing on a decision by the Board on whether to institute a trial pursuant to paragraph (d) of this section. When rehearing a decision on petition, a panel will review the decision for an abuse of discretion.

(d) Rehearing. A party dissatisfied with a decision may file a request for rehearing, without prior authorization from the Board. The burden of showing a decision should be modified lies with the party challenging the decision. The request must specifically identify all matters the party believes the Board misapprehended or overlooked, and the place where each matter was previously addressed in a motion, an opposition, or a reply. A request for rehearing does not toll times for taking action. Any request must be filed: . . .  (2) Within 30 days of the entry of a final decision or a decision not to institute a trial.

You prepare and file a request for rehearing according to the rules, but the PTAB affirms its earlier decision.  What can you do now?

Petitioners are starting to explore different avenues to attempt to challenge a decision not to institute trial.  Some have filed for relief in the Eastern District of Virginia, some have appealed to the Court of Appeals for the Federal Circuit, and some have made claims in both courts.  A recent decision by the Eastern District of Virginia relies on § 314(d) to hold that appeals of PTAB decisions to not institute trial are  final and nonappealable.

In Dominion Dealer Solutions, LLC, v. Michele K. Lee, 3:13CV699, ____ (E.D. Va. 2014), Judge Robert E. Payne denied  Dominon’s challenge of the PTAB’s decision not to institute trial in five IPR petitions filed by Dominion against patents owned by AutoAlert, Inc.  The court instead granted the PTO’s motion to dismiss based on its interpretation that the PTAB’s decision not to institute trial is final an nonappealable under 35 U.S.C. § 314(d).

As it turns out, the Federal Circuit already has a petition for mandamus from Dominion requesting relief from the PTAB decision to not institute IPR.  It will be interesting to see how the Federal Circuit decides that petition, because that may be an indicator of the Federal Circuit’s approach to other persons that are also seeking a writ of mandamus — some of which we will be discussing in future posts.

 

 

 

Join Me in San Francisco for PLI’s Post-Grant CLE Program on April 28

Friday, March 7th, 2014

I will be presenting at PLI’s “USPTO Post-Grant Patent Trials 2014″ CLE Program on April 28th with a number of other post-grant practitioners. Please join us there or attend via webinar! — Timothy Bianchi

USPTO Statistics Show Inter Partes Patent Reviews are Frequently Settled Before Final Board Decision

Monday, February 17th, 2014

The U.S. Patent Office regularly posts statistics on post-grant proceedings such as inter partes review and covered business method patent review.   An excerpt of PTAB statistics for February 13, 2014 is found below.  The acronyms “FWD” and “RAJ” stand for “Final Written Decision on the merits” and “Request for Adverse Judgment.”  The “Other” category includes terminations due to dismissal.

IPR Stats for 2-13-2014

The number of trials with a final written decision on the merits (FWD) remains relatively small because IPR proceedings take roughly about a year and a half from filing of a petition to conclusion, and the AIA provision allowing IPRs is only about 17 months old.

Interestingly, the data shows a relatively high number of settled IPR proceedings.  These settlements can occur any time after the filing of the petition and before a final written decision on the merits.  Therefore, these settlements are made within months of the Petition filing rather than years.  Of course, all settlements are not equal.  Some result in the termination of both the Patent Office proceeding and the concurrent District Court litigation. Others may only  terminate the Patent Office proceeding.  And, as discussed in earlier posts, some settlements may dismiss the Petitioner from the Patent Office proceeding but maintain the proceeding against the Patent Owner.  Regardless, early settlements often favor the Petitioner and provide a “win” for the Petitioner.  And even if that is not the case, settlements executed before a final decision on the merits provide another opportunity for early discussion and resolution of patent disputes.

It should be noted that IPRs are responsible for more settlements than can be provided by these statistics, because many disputes are resolved by settlements achieved prior to any filing of IPR petitions (i.e., in cases where the Patent Owner is afforded an opportunity to settle before an IPR petition is filed).

It will be some time before more accurate statistics on IPRs will be available, however these settlement statistics show that parties can achieve some resolution of patent disputes very early in post-grant proceedings, and likely much earlier than in traditional litigation time frames.