Recently Formed “Precedential Opinion Panel” of the USPTO Issues First Decision, Addresses Joinder Rules and the One Year Time Bar for Petitioning for Inter Partes Review

March 28th, 2019

The U.S. Patent and Trademark Office (“USPTO”) recently created a Precedential Opinion Panel (“Panel”) to establish “binding agency authority” for “issues of exceptional importance.” United States Patent and Trademark Office, Patent Trial and Appeal Board, Standard Operating Procedure 2 (Revision 10) (Sept. 20, 2018), available at https://www.uspto.gov/sites/default/files/documents/SOP2%20R10%20FINAL.pdf, at 1-3 (last viewed March 19, 2019).  These issues may implicate the U.S. Constitution, statutes, rules, regulations, precedential case law, or other matters of “broad applicability” to the Patent Trial and Appeal Board (“Board”). Id. at 3.  Unlike the Board, which is formed of a rotating group of Administrative Patent Judges, the Panel includes the Director of the USPTO, the Commissioner for Patents, and the Chief Judge of the Board, by default. Id. at 4.

In its first decision, the Panel addressed issues of joinder in inter partes review (“IPR”) proceedings. See Proppant Express Invs., LLC v. Oren Tech., LLC, No. IPR2018-00914 (P.T.A.B. March 13, 2019).  IPR proceedings are often used as a separate mechanism to challenge the validity of a patent once it is asserted in litigation.  But 35 U.S.C. § 315(b) provides a one year time bar for petitioning for IPR. 35 U.S.C. § 315(b) (2011).  More specifically, § 315(b) bars IPR institution based on a petition filed more than one year after the petitioner (or “real party in interest” or “privy” of the petitioner) is served with a complaint alleging infringement of the patent. Id.  The time bar aims to “quiet title to patent owners” and prevent IPRs from being “tool[s] for harassment.” Proppant Express, No. IPR2018-00914 at 18.  But § 315(b) explicitly states that the time bar does not apply to joinder of a party to an existing IPR under 35 U.S.C. § 315(c) (2011). See id. at 17-18 (parsing statutory language of § 315(b)).

In Proppant Express, Oren Technologies, LLC (“Oren Tech.”) sued Proppant Express Investments, LLC and Proppant Express Solutions, LLC (collectively “Proppant”) alleging infringement of certain claims of U.S. Patent No. 9,511,929 (“’929 patent”). See id. at 2-3, 21.  Proppant then filed a petition requesting IPR of the asserted claims. Id. at 2.  In response, Oren Tech. argued against institution for claim 4 because Proppant’s petition failed to address all of its limitations. Id.  The Board agreed with Oren Tech. and declined to institute review of claim 4. Id.  It did, however, institute an IPR for the other asserted claims. Id.  Proppant then filed a new IPR petition for claim 4 and submitted a Motion for Joinder to consolidate the new IPR of claim 4 (if instituted) with the existing IPR of the other asserted claims. Id.  The Board interpreted § 315(c) as authorizing joinder only of “other parties to existing proceedings without introducing new issues of patentability.” Id. (citations omitted). The Board denied the Motion for Joinder as time barred under § 315(b) because (1) Proppant was already a party to the existing IPR and (2) Proppant had been served with the complaint alleging infringement of the ’929 patent more than one year before filing the petition for claim 4. Id. at 2-3.

The Panel reviewed the Board’s decision to address the following issues:

1. Under 35 U.S.C. § 315(c) may a petitioner be joined to a proceeding in which it is already a party?
2. Does 35 U.S.C. § 315(c) permit joinder of new issues into an existing proceeding?
3. Does the existence of a time bar under 35 U.S.C. § 315(b), or any other relevant facts, have any impact on the first two questions?

Id. at 3.  First, the Panel concluded that § 315(c) provides discretion for the Board to join a petitioner of a separately filed IPR to an already pending IPR when that petitioner is already a party to the pending IPR. Id. at 4.  Second, the Panel concluded that the Board has discretion to permit joinder of new issues into an existing IPR. Id.  And third, the Panel concluded that the time bar under § 315(b) is only one factor that the Board should consider when exercising the above discretion under § 315(c). Id.

In reaching these conclusions, the Panel considered a recent concurring opinion from the Court of Appeals for the Federal Circuit, which “express[ed] concerns” about the USPTO’s position on joinder. Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co., 868 F.3d 1013, 1019 (Fed. Cir. 2017).  The concurrence in Nidec found it unlikely that Congress intended for the joinder provisions to allow petitioners to “circumvent the time bar by adding time-barred issues to an otherwise timely proceeding.” Id. at 1020.  Regardless, the Nidec court did not decide this issue, as the concurrence acknowledged. Id. at 1019.  In seeming conflict with the Nidec concurrence, the Panel ultimately decided that the Board does have discretion to allow an otherwise time-barred party to join new issues to an existing IPR in limited circumstances. Proppant Express, No. IPR2018-00914 at 21.  The Panel concluded that the time bar of § 315(b) is one factor to consider when exercising its joinder discretion under § 315(c). Id. at 16.

More specifically, the Panel favored a case-by-case approach of balancing fairness and prejudice concerns with preventing harassment of patent holders. Id. at 18-19.  A strict one year time bar for joinder could create undesirable incentives to “game the system,” the Panel worried. Id. at 18.  For example, a patent holder could “strategically wait” to assert certain claims until a petition challenging those claims is time barred. Id.  Similarly, petitioners could “hedge against the time bar” by petitioning for IPR of claims that the patent owner did not assert in the co-pending litigation. Id.  This would undesirably increase costs and decrease efficiency of the entire system, the Panel cautioned. Id.  More generally, the Panel explained that the patent owner’s own actions are more likely to “implicate fairness and prejudice concerns” than those of the petitioner. Id. at 19.  Thus, the Board may consider the parties’ attempts to “game the system.” Id.  “[T]he Board can carefully balance the interest in preventing harassment against fairness and prejudice concerns on a case-by-case basis, based on the facts then before it,” the Panel concluded. Id.

Implementing its own guidance, the Panel denied Proppant’s Motion for Joinder, explaining that Proppant created the need for joinder by failing to address all limitations of claim 4. Id. at 20.  Accordingly, the Panel found that the facts of Proppant Express did not qualify as one of the “limited circumstances” where joinder is appropriate. Id.  Nonetheless, the Panel’s guidance is useful for understanding when the Board is likely to grant a Motion for Joinder by an otherwise time barred petitioner.

Takeaway: 35 U.S.C. § 315(b) bars institution of IPR from a petition filed more than one year after the petitioner is served with a complaint alleging infringement of the patent challenged by the petition.  According to a newly formed Precedential Opinion Panel of the USPTO, however, joinder under 35 U.S.C. § 315(c) provides a limited exception to that time bar where fairness and prejudice concerns outweigh the risk of the IPR being used to harass patent owners.