Highlights

The U.S. Court of Appeals for the Federal Circuit held in an opinion filed March 18, 2020, that petitioners to the Patent Trial and Appeal Board (PTAB) may not join themselves as a party to their earlier filed inter partes review (IPR) before the PTAB.

In Facebook Inc. v. Windy City Innovations LLC, case 18-1400, the Federal Circuit also ruled that existing IPR petitioners cannot add new issues to their earlier petition by joining later petitioners.

Background

In 2015, Windy City Innovations LLC (Windy City) sued the social network Facebook in the Northern District of California for infringement of four network communication patents, having a total of 830 claims.

According to statute, with respect to a patent that has been asserted in district court as infringed, a petitioner seeking to challenge such a patent before the PTAB must file an IPR within one year of having been served with the district court complaint. On the one-year anniversary of being served with the district court complaint but before being apprised in the district court case as to which of the 830 total patent claims Windy City planned to asserted, Facebook filed IPRs, challenging the validity of a portion of those total patent claims.

Shortly after Windy City identified the specific patent claims it would assert against Facebook in district court, Facebook filed additional IPRs, targeting those asserted claims that had not been challenged by Facebook in its earlier filed IPRs. However, Facebook's additional IPRs were filed more than a year after service of the district court complaint. Nonetheless, the PTAB panel allowed Facebook to join these additional IPRs to its earlier filed IPRs.

Self-Joinder Is No Longer a Permissible End-Around to 1-Year Time Bar, Nor a Means to Join New Issues to an Earlier Instituted Petition

Under the American Invents Act (AIA), the Director of the U.S. Patent and Trademark Office (USPTO) — whose authority is delegated to the PTAB — has the discretion to "join as a party to that [instituted] inter partes review any person who properly files a petition" that warrants institution. 35 U.S.C. § 315(c).

Some PTAB decisions interpreted "any person" to allow self-joinder to a party's earlier filed IPR, despite the later IPRs being filed more than a year after service of the district court complaint (i.e., when faced with new issues, such as later asserted patent claims in district court litigation). Other PTAB decisions did not permit this self-joinder. In March 2019, in its first-ever issued decision filed in an unrelated case, the PTAB's Precedential Opinion Panel — whose decisions are binding upon all PTAB judges — ruled that parties can join their own petition, interpreting "any" to have "an expansive meaning" that includes existing parties. Proppant Express Investments, No. IPR2018-914, 2019 WL 1283948 (PTAB March 13, 2019).

The Federal Circuit, however, found the statutory language at issue in this case to be clear, and held that the PTAB incorrectly interpreted it. Op. at 16. "It would be an extraordinary usage of the term 'join as a party' to refer to persons who were already parties." Id. at 15-16. The Court analogized that just as someone may, per statute, marry "any person" older than 16, statutory interpretation here would not allow one to marry oneself after reaching age 16. "The word 'marry' necessarily requires another person. The "join as a party" language does the same here." Id. at 16-17. "A party cannot logically be 'join[ed] as a party,' in a proceeding if it is already a party to that proceeding." Id. at 17.

Furthermore, the AIA does not permit joinder of petitions as a means to add new issues to an earlier instituted petition. To the contrary, the Federal Circuit explained that an instituted IPR "is governed by its own petition and is confined to the claims and grounds challenged in that petition." Op. at 18. "We therefore conclude that the unambiguous meaning of [the statute] is that it allows the director discretion to join a person as a party to an already instituted IPR but does not permit the joined party to bring new issues from the newer proceeding into the existing proceeding," Id.

In sum, the Federal Circuit held that "[t]he clear and unambiguous text of [the statute] does not authorize same-party joinder, and does not authorize the joinder of new issues." Op. at 22.

On Issues of Substantive Patent Law, Federal Circuit Will Continue to Exercise de novo Review Without Giving Deference to Any PTAB Decision, Including Decisions Issued by PTAB's Precedential Opinion Panel

In what effectively amounts to an advisory opinion, Chief Judge Sharon Prost and Circuit Judges Jay Plager and Kathleen O'Malley collectively filed additional views addressing whether Chevron deference would apply to an opinion issued by the PTAB's Precedential Opinion Panel (POP) in the case of ambiguous statutory language (where Chevron deference possible).

The Federal Circuit held that Chevron deference does not apply because the PTAB is not an agency given congressional authority to interpret the law and make rules that have the force of law:

Notably absent from the AIA, accordingly, is any congressional authorization, for either the Director or the Board, to undertake statutory interpretation through POP opinions. Thus, just as we give no deference to non-precedential Board decisions, we see no reason to afford deference to POP opinions.

Op. at 8.

Nor is there any basis for deference under Skidmore, 323 U.S. 134 (1941) (holding that an agency's interpretation may merit some deference whatever its form), because the USPTO Director's interpretation is inconsistent with the statute's plain meaning. Id. at 14-15.

Conclusions

The timing, and issued-based considerations, for petitioners to the PTAB have changed dramatically. Once-permissible techniques available to petitioners for expanding the time and scope of their petitions are means for patent owners to defend PTAB challenges to their patents. Petitioners now face the potential reality of having to challenge every claim in an IPR that could be asserted in district court litigation, or present a validity challenge to select claims in district court alone. To temper this potential burden, expect petitioners to seek means in district court litigation to require earlier identification and narrowing of asserted patent claims.

Furthermore, while POP decisions continue to be binding on all PTAB judges, those decisions do not carry the deferential weight on issues of substantive patent law that one might have previously imagined.