Simple Laws (Sometimes) Have Simple Meanings

By: Peter Schechter

The Court of Appeals for the Federal Circuit (CAFC), sitting en banc, has decided that the statutory phrase “served with a complaint” – which appears in a time bar provision regarding Inter Partes Review (IPR) means, quite simply: served with a complaint.  The statute is not concerned with any effect, or lack of effect, of such service of a complaint.  Nor is the statute concerned with what happens after a complaint has been served.  The fact that service of a complaint happened is all that matters.  Surprisingly, the correctness of this seemingly simple conclusion has been unsettled for nearly six years after enactment of the America Invents Act in September 2012.  In Click-To-Call Technologies, LP v. Ingenio, Inc., No. 2015-1242 (Fed. Cir., Aug. 16, 2018) (en banc) (“the CTC case”), the CAFC decided that simple words have simple meanings, a relief to litigants, practitioners, observers, and scholars who have long wondered how the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) failed to understand the meaning of such simple words.

IPR provides parties accused of patent infringement with a mechanism to challenge validity of patents other than through federal district court litigation procedures.  IPR is less expensive than district court litigation and provides numerous advantages to the patent challenger, commonly referred to as the petitioner.  Despite IPR being viewed as favoring petitioners, generally, when the U.S. Congress created IPR through enactment of the America Invents Act in 2012, some provisions were also included to protect, and for the benefit of, patent owners.  Section 315(b) of Title 35, U.S. Code, is one of these important protections; it prevents the Director of the USPTO from instituting an IPR when 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.

In the CTC case, Ingenio had been sued for patent infringement by Click-to-Call.  Years earlier, Ingenio’s predecessor was served with a complaint alleging infringement of the same patent; that lawsuit ended upon entry of a voluntary dismissal without prejudice.  The IPR was seemingly clearly timed barred under Section 315(b).  In what can only be described as classic “over-thinking,” the plain and simple answer was not the one reached by the PTAB, and the petition was not deemed time-barred.  The PTAB explained its rationale as follows: “because [the earlier lawsuit] was dismissed without prejudice, [CAFC] precedent interprets such a dismissal as leaving the parties in the same legal position as if the underlying complaint had never been served.”  The time bar provision says nothing whatsoever about any “legal position” of the parties, nor does it contain any exception for served complaints which are subsequently dismissed without prejudice.  None of the CAFC precedent relied on by the PTAB related to the AIA’s IPR time bar provision.  None of this mattered to the PTAB 3-judge panel that instituted Ingenio’s requested IPR proceeding in late 2013.

In the CTC case, the CAFC has finally corrected the PTAB’s plainly erroneous interpretation of the 1-year time bar of 35 U.S.C Section 315(b), albeit via the most circuitous appeal path imaginable due to the previous, and since overruled, precedent holding that PTAB time bar decisions were not appealable.  Explaining what should always have been the simple answer, the CAFC stated: “The statute does not contain any exceptions or exemptions for complaints served in civil actions that are subsequently dismissed, with or without prejudice.  Nor does it contain any indication that the application of § 315(b) is subject to any subsequent act or ruling. …  Simply put, § 315(b)’s time bar is implicated once a party receives notice through official delivery of a complaint [i.e., “service”] in a civil action, irrespective of subsequent events.”  It is only the fact of service of a complaint, not the legal effect of dismissal of the lawsuit started by that service of the complaint, which matters.  Patent owners are finally protected from belated IPR petitions as the U.S. Congress intended.

Simple, right?