Ford Motor Co. v. Paice LLC

Addressing whether it has the authority to decide a contractual dispute in the context of a post issuance proceeding under the America Invents Act (AIA), the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB or Board) denied a patent owner’s argument that the petitioner lacked standing by virtue of a provision in an arbitration agreement with the petitioner that purportedly limits the petitioner’s ability to challenge the validity of the patent, finding that the issue was one of contract law that fell outside the PTAB’s authority under the AIA.  Ford Motor Co. v. Paice LLC, Case No. IPR2014-00570 (PTAB, Sept. 30, 2014) (DeFranco, APJ).

Ford filed a petition for inter partes review (IPR) against a patent owned by Paice.  Ford and Paice were also parties to a co-pending district court action.  In that action, Paice moved for a preliminary injunction based on an agreement between Ford and Paice.  Specifically, the issue before the district court was whether Ford’s IPR petition was a breach of an arbitration agreement with Paice, limiting Ford’s right to challenge Paice’s patent.  The district court had not yet decided that issue.

Nevertheless, Paice opposed Ford’s petition to the PTAB on similar grounds.  Paice asserted that Ford did not have standing to file its petition under 37 C.F.R. § 42.104(a).  Paice argued that the agreement is unambiguous and bars Ford from challenging the patent.  Ford’s petition, according to Paice, was a breach of the agreement that otherwise precludes Ford’s standing.

The PTAB rejected Paice’s standing argument, explaining that Paice was conflating a breach of contract issue with a standing issue.  As the PTAB explained, contractual disputes fall outside the PTAB’s purview under the AIA, and it thus declined Paice’s invitation to decide the breach-of-contract issue.  Noting that the contract dispute was still pending before the district court, the PTAB further concluded there was insufficient evidence to support Paice’s standing argument.  Accordingly, the PTAB authorized institution of IPR.