Update: The Supreme Court issued an order on June 24, 2019, granting a petition for a writ of certiorari to review the Federal Circuit’s judgment in Dex Media, Inc. v. Click-to-Call Technologies, LP, 899 F.3d 1321 (Fed. Cir. 2018). The Court will decide “[w]hether 35 U.S.C. § 314(d) permits appeal of the PTAB’s decision to institute an inter partes review upon finding that § 315(b)’s time bar did not apply.” The Court’s docket number for this case is 18-916, and its decision may be expected during the October 2019 term.
The Federal Circuit recently held that the statutory time bar in 35 U.S.C. § 315(b) precludes the PTAB from deciding an IPR petition filed more than one year after any of the petitioners have been served with a complaint alleging patent infringement, even if that complaint was voluntarily dismissed. Click-To-Call Technologies, LP v. Ingenio, Inc., et al., Case no. 2015-1242, 2018 WL 3893119 (Fed. Cir. Aug 16, 2018). This holding is found in an en banc footnote in a 3-judge panel decision, and is contrary to the PTAB’s long-standing interpretation and application of the § 315(b) time bar. The decision is important to those served with an infringement complaint that is later dismissed without prejudice. If one year has passed since service of that complaint, those parties no longer have an opportunity to challenge the patent’s validity in an IPR.
Ingenio was served with an infringement complaint in 2001 in a case that was ultimately voluntarily dismissed without prejudice. In 2013, the patent’s new owner, Click-to-Call, asserted several companies, including Ingenio, infringed the patent. Ingenio and several of its fellow defendants successfully petitioned the Board to institute an IPR. As discussed here, in a decision that it designated as precedential, the Board determined that the dismissal of an action without prejudice leaves the parties as though the action had never been brought. For that reason, the Board held that § 315(b) did not bar Ingenio from proceeding with the IPR.
Click-to-Call appealed the decision but originally faced obstacles from the Federal Circuit’s refusal to accept appeals challenging the time bar as discussed here, here, and here. Finally, after the Federal Circuit’s decision in Wifi-One, LLC v. Broadcom Corporation, 887 F.3d 1329 (Fed. Cir. 2018) (en banc), the court substantively addressed Click-to-Call’s challenge to the Board’s interpretation of the time bar.
Section 315(b) states that an IPR may not be instituted if the petition 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 patent infringement.” The panel decision holds that this language unambiguously triggers the one year bar after service of a complaint, without regard to what subsequently happens in that proceeding. Click-to-Call, 2018 WL 3893119 at *12-17. The court rejected the Board’s reasoning that Federal Circuit precedent requires that a voluntarily dismissed complaint must leave the parties in the same position as if the action had never been brought. The panel explained that this precedent is inapplicable because the filing and dismissal of a complaint in that precedent did not toll the pertinent limitations period. Id. at *22. Further, the court cited a number of instances in which the filing and voluntary dismissal of a complaint do have legal effect, including serving as proof of a defendant’s knowledge of a patent for purposes of willful infringement. Id. at *22-24.
Section 315(b) states that an IPR may not be instituted if the petition 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 patent infringement.”
The court also rejected Petitioner’s argument that, although one Petitioner – Ingenio – had been served with a complaint, the remaining Petitioners should be able to proceed with the IPR without Ingenio. Again, the court pointed to the language of the statute, which states that an IPR cannot proceed if “the petitioner, real-party-in-interest, or privy of the petitioner” has been served. Here, Ingenio was listed in the petition as both a petitioner and a real-party-in-interest. So, the IPR should not have been instituted.
Similarly, the Petitioners argued that the patent claims were amended in an ex parte reexamination, after the original complaint was filed. They argued therefore that the re-examined patent should be treated as a new patent for purposes of the time bar. The Federal Circuit again disagreed finding that the time bar is not determined on a claim-by-claim basis and Congress did not include any provision providing for different treatment of re-examined patents.
Judges Dyk and Lourie dissented from the en banc footnote, generally adopting the PTAB’s reading of the statute. The purpose of § 315(b), according to the dissent, is to allow accused infringers a full year after being placed on notice of a claim of infringement to understand the claims asserted before filing the IPR. If the claim of infringement is voluntarily dismissed, the dissent asserts that it would be reasonable for the accused infringer to believe that the controversy has dissipated and requires no further action. The dissent states therefore that the majority’s interpretation does not satisfy the policy behind the time bar. Instead, the majority’s interpretation, according to the dissent, provides patent owners an opportunity to abuse the system by filing suit against a number of defendants, dismissing it, waiting until one year has passed, and refilling the case to avoid IPR.
Judge Taranto addressed the dissent’s argument in his opinion concurring with footnote 3. First, he states that there is no evidence that patent owners are actually doing this. Second, he cautions a party shouldn’t rely on a dismissal without prejudice (particularly in view of such an obvious strategy to avoid IPRs) to believe that a matter is resolved. And third, it seems implausible, to him, that a patent owner would open itself up to the possibility of IPR from a wide range of defendants in this manner.
Under similar facts, the Federal Circuit also issued a decision in Luminara Worldwide, LLC v. Iancu, Case Nos. 2017-1629, 2017-1631, and 2017-1633, 2018 WL 3892991 (Fed. Cir. Aug. 16, 2018). In that case, Luminara filed a complaint alleging infringement in 2012, voluntarily dismissed it by stipulation without prejudice in 2013, and filed a new suit in 2014. The court held that the Board erred in instituting the IPR because the petition was filed more than a year after service of a complaint alleging patent infringement.
The import of the Federal Circuit’s decision in Click-to-Call is particularly harsh for co-defendants who, perhaps inadvertently, file a petition with another party ultimately found to be barred from bringing an IPR. When working together with other defendants, parties will need to perform their own diligence to avoid losing their own rights to challenge patent validity.