“Barred”? – Not So Much. Appellate Review of IPR Institution Decisions

Since the enactment of the America Invents Act in 2011 and the inception of newer post-grant proceedings at the U.S. Patent Office, there have been many questions about the appealability of Patent Office institution decisions. The U.S. Code indicates that institution decisions generally will not be appealable. 35 USC §314(d) (states that the Director’s determination of “whether to institute an inter partes review under this section shall be final and nonappealable.”). In 2015, the Court of Appeals, sitting en banc, decided Achates Reference Publishing, which originally interpreted §314 to mean that essentially no institution decisions would be heard on appeal. However, in 2016 in Cuozzo Speed, the U.S. Supreme Court instructed that despite the language of §314 there may be more instances than expected in which appellate review of PTO institution decisions would be appropriate. (J. Breyer, speaking for the unanimous majority, used examples like due process violations, issues less closely related to the §§102&103 patentability jurisdiction of IPRs and other administrative “shenanigans”).

Earlier this year the Court of Appeals overruled Achates in Wi-Fi One v. Broadcom (Jan. 2018)(en banc). The court in Wi-Fi stated that the natural reading of §314’s limitation on reviewability related to “substantive issues” of patentability on institution. The court then reviewed an institution decision based upon a time bar included in the Code. Section 315(b) requires that “[a]n 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.” (emphasis given). While the Court of Appeals in Achates instructed that review of PTO decisions on time bar were unreviewable, after Cuozzo Speed the court en banc found decisions under §315(b)’s time bar to be non-substantive questions, reviewable on appeal.

Wi-Fi, and knowing that time-bar institution decisions are reviewable on appeal, has opened a can of nuances for litigators with respect to that issue. Some recent appeals have asked for review of whether petitioners were actually “in privity” under §315(b) and thus subject to the 1-year ban. WesternGeco v. ION Geophysical (May 2018)(where the IPR petitioner was found to not be in privity with prior accused infringers to an earlier litigation as the earlier accused infringer exercised no control over the IPR and petitioned separately under a “spectator status.”). Other appeals have questioned whether a prior accused infringer was a “real party in interest” under §315(b). Applications in Internet Time v. RPX (July 2018)(in an unsealed opinion; the COA panel found that the prior accused infringer, a member to the patent licensing group petitioning for IPR, was a real party in interest to the IPR since the earlier accused infringer had an ownership interest in the prior litigation, an interest in the later filed IPR and would benefit from both – as a member-client to the licensing group petitioning for IPR. It was therefore reasonable to hold that the accused infringer was a real party in interest with the IPR.). Applications in Internet Time possibly suggests that licensing groups should not get involved in post-grant proceedings at least because §325(d)’s estoppel provision could apply to not only the petitioner but also to their “priv[ities]” and “real part[ies] in interest,” i.e., all group members.

Recently two COA panels differently decided whether the time bar applied to petitioners who had been “served with a complaint” under §315(b) that was, however, later voluntarily dismissed pursuant to FCRP 42(b) leading to en banc review. Click-to-Call Technologies, LP v. Ingenio, Inc. et al., Case No.: 2015-1242 (Fed. Cir. Aug. 16, 2018)(en banc), J. Dyk Dissent; see also, Luminara Worldwide v. US PTO (Aug. 16, 2018). Click-to-Call, the patentee, obtained the patent from an owner whose exclusive licensee filed an infringement lawsuit against one of the joint petitioners in a (much) later filed inter partes review petition, 12 years later. After the licensee merged with the prior accused infringer, now Ingenio, the parties agreed to voluntarily dismiss the infringement case without prejudice. A year later, Ingenio requested an ex parte reexam of the claims that eventually narrowed the claims and added several new ones. After obtaining the patent, in 2012, Click-to-Call asserted it against Oracle and Ingenio, inter alia, who joined in the filing of an inter partes review petition. Click-to-Call argued that the petition was barred by 35 USC §315(b) due to the 2001 lawsuit brought against Ingenio. The PTAB found that the petition was not barred and issued a final written decision; however, the en banc COA panel found that the Board erred and that the petition was barred as Ingenio was “served with a complaint” more than a year before petitioning for IPR. J. O’Malley wrote the opinion for the panel; nine other COA judges agreed on this issue.

J. O’Malley et al. stopped at the first step in the Chevron analysis in interpreting §315(b): “whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case.” The panel reasoned that the clear language of §315 instructs that service of the complaint triggers tolling. (“The ‘ordinary, contemporary, common meaning[s]’ of the operative terms ‘served’ and ‘complaint’ support the understanding that it is wholly irrelevant to the § 315(b) inquiry whether the civil action in which the complaint was filed is later voluntarily dismissed without prejudice.”). The court rejected the Board’s analysis that because the voluntary dismissal in many ways nullifies the complaint Ingenio had not been “served with a complaint” under 315. J. O’Malley reasoned that because it is not firmly and unequivocally established that voluntary dismissal nullifies the complaint for all purposes – e.g., not for Rule 11 costs and fees, some subsequent filings and Article III subject matter jurisdiction – said doctrinal exception is not strong enough to override the plain language of the statute. The panel also found unavailing the argument that since the patent had been reexamined after the first suit it should be treated like a new patent under §315 because reexams only narrow the claims, thus the pre-reexam litigation would give notice of the infringement potential of the broader claims as well as any narrower claims that resulted from reexam.

Finally, the joint status of the petition for IPR filed by the petitioners was relevant to the unilateral ban. Each petitioning party was treated like a unitary, single petitioner based upon the statute’s indiscriminate disposition towards joint petitioners. It might have made a difference if petitioners had filed separate IPR petitions or certainly an IPR petition separate from Ingenio. Thus, hindsight teaches that parties having separate histories with the patent owner should probably file separate petitions for post-grant proceedings. A covenant not to be sued when one sells a patent that one expects to infringe might also be beneficial down the road.

Additional developments like Click-to-Call are sure to continue with respect to appellate review of post-grant institution decisions. So, stay tuned!