November 11, 2014

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

In 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.