CAFC Says “Use IPR In Time Or Lose It”

By Peter Schechter


The US Court of Appeals for the Federal Circuit (CAFC) ended the USPTO’s procedure allowing a petitioner in an instituted inter partes review (IPR) to file another otherwise time-barred IPR petition in the Patent Trial and Appeal Board (PTAB) and to then have that later-filed petition, including new challenges to additional patent claims on different grounds than were previously raised in the instituted IPR, joined with the existing instituted IPR.  In Facebook, Inc. V. Windy City Innovations, LLC, Appeal No. 18-1400 (Fed. Cir. Mar. 18, 2020), the CAFC held that Sections 315(b) and (c) of the patent statute are “clear and unambiguous” in their prohibition of such a procedure, and the PTAB’s previously-issued Precedential Opinion Panel (POP) Review reaching the contrary conclusion was wrong, and was not entitled to any judicial deference of any kind.

Until March 18, 2020, it was possible for a petitioner in the midst of an instituted inter partes review (IPR) challenging certain claims of a US patent to file a new and otherwise untimely petition challenging additional claims of the same patent, and to then have the two proceedings joined together in accordance with the provisions of 35 USC 315(c): “Joinder.— If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 …”  This was possible despite the AIA’s 1-year time bar: “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, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”  35 U.S.C. 315(b).  The USPTO’s Patent Trial and Appeal Board (PTAB) justified this result by relying on the last sentence of Section 315(b) which states: “The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).”

Within a few years of the advent of IPRs, different 3-member panels of PTAB Administrative Patent Judges (APJ) reached opposite conclusions on the propriety of allowing an existing party to an instituted IPR to “join” its own otherwise time-barred later petition with the existing instituted proceeding.  To resolve the conflicting panel decisions, the Director of the USPTO convened a Precedential Order Panel (POP) Review, and decided that such a procedure was permissible.  Proppant Express Investments, LLC v. Oren Technologies, LLC, No. IPR2018-00914, Paper 38 (PTAB Mar. 13, 2019).  POP Review decisions are binding on future panels of APJs.

In 2015, Windy City Innovations sued Facebook in a US district court for alleged infringement of four patents covering a system for communicating over a computer-based network.  In response, Facebook timely filed petitions for IPR of Windy City’s patents.  However, at the time Facebook its IPR petitions, Windy City had not yet been required to identify the specific claims it was asserting in its patent infringement lawsuit.  Shortly thereafter, Windy City identified which claims of the four patents-in-suit it was asserting against Facebook.  Facebook responded by filing two additional IPR petitions challenging the newly-identified asserted claims.  However, the 1-year time bar of Section 315(b) had already expired by then.  Despite 2 of the 3 APJs explicitly disagreeing with the Proppant Express POP Review decision, they acknowledged that they were bound to allow Facebook to use the procedure to join challenges to additional claims, based on different (even if similar) grounds, to the existing instituted IPRs.

On March 18, 2020, the US Court of Appeals for the Federal Circuit (CAFC) ended the procedure previously approved by PTAB and relied upon by Facebook.  In Facebook, Inc. V. Windy City Innovations, LLC, Appeal No. 18-1400 (Fed. Cir. Mar. 18, 2020), the CAFC held that Sections 315(b) and (c) are “clear and unambiguous” in their prohibition and that the PTAB had erred in granting Facebook’s joinder motion, and had erred in allowing Facebook to raise new time-barred challenges to Windy City’s patents.  While consolidation of properly instituted IPRs is authorized in certain circumstances, the statute only permits joinder of a new party to an existing instituted IPR in very limited circumstances, despite that new party’s petition being otherwise time-barred, as the CAFC explained.  A party cannot “join itself” in an IPR any more than a person can “marry itself,” the Court analogized.

The CAFC had been urged by the US Government to accord some level of deference to the PTAB’s contrary Proppant Express POP Review decision.  Importantly, the Court of Appeals ruled that the Proppant Express POP Review decision is not entitled to any more deference than any other ordinary adjudicative decision issued by the PTAB because Congress did not delegate any authority to the USPTO to interpret the meaning of the statutory provisions of the America Invents Act, including 35 USC 315.

In addition to restricting the use of IPR proceedings in some circumstances, the Facebook decision has important consequences in terms of US patent litigation strategy and tactics.  Facebook had argued that if it was not allowed to file and then join its untimely petitions to the already instituted ones, it would have been forced to challenge every single claim of all four Windy City patents in its timely filed petitions, because Windy City had not been required to identify its asserted patent claims within the 1-year period of Section 315(b).  The CAFC had little sympathy for this argument, and rebuffed it (in part) by noting that most trial courts have adopted “local patent rules” which require the patentee to identify which claims of its patents it is asserting early in the litigation.

It should be noted that while the trial court in which the Windy City v. Facebook infringement case is pending does, in fact, have such rules, there are many types of circumstances that result in delay of the deadlines established by those local patent rules, often by many months.  In any event, the CAFC pointed out that if the result of the “clear and unambiguous” statutory language was not what the US Congress intended, it was up to Congress, not the federal courts, to revise the America Invents Act.

In view of the Facebook decision, and particularly the CAFC’s comments explaining its ramifications, it is more important than ever for accused infringers to force patentees to specifically identify which claims of which patents are allegedly infringed, and for that identification to be binding in some fashion on the patentee.  If this cannot be done, the accused infringer must challenge every possibly asserted claim of every patent in suit in timely-filed IPR petitions, or else be barred from using the AIA inter partes review mechanism at all.  The patentee, on the other hand, will prefer to delay its specific identification of asserted patent claims allegedly infringed for as long as possible, in order to frustrate the accused infringer’s efforts to invalidate patent claims to the greatest extent permitted under the provisions of the America Invents Act and the particular trial court’s local patent rules.  While this sort of “strategic game” might seem unfair to one party or the other, as the Court of Appeals has said, it is up to Congress to fix any perceived problem created by the provisions of the statute, including the time bar and joinder provisions.