By Dennis Crouch
In re MCM Portfolios LLC (Fed. Cir. 2013) (pending on petition for writ of mandamus)
In a recent post, I wrote briefly about statutory bar against appealing PTO decisions to grant or deny a request for inter partes review. In particular, 35 U.S.C. § 314(d) reads as follows: No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable. MCM has now filed a somewhat direct challenge to the substance of that provision with a writ of mandamus to the Federal Circuit. Of course, a petition for writ of mandamus is not an appeal but instead a request for a particular order. By filing a writ (rather than an "appeal"), MCM avoids the statutory bar against appeals and also avoids the parallel problem arising from the lack of statutory support for a direct appeal. As I explain below, MCM would also argue that the statutory bar on appeals would not apply in its context because its petition challenges a PTO decision under § 315(b), not § 314.
MCM's Patent No. 7,162,549 covers a mechanism for controlling Flash storage devices that uses firmware error correction. According to the patentee, many Digital Picture Frames make use of the invention in their mode-of-operation. On September 21, 2011, MCM served PanDigital with a complaint for infringing the patent. Later, on March 28, 2012, MCM also sued HP for infringement. Now, the two lawsuits are largely the same because HP picture frames are actually made by PanDigital. MCM has provided expert testimony that HP DPFs are actually the PanDigital frames that have simply been re-branded with HPs name (with PanDigital's permission). Furthering the connection, HP publicly identifies PanDigital as its supplier; directs its customers to PanDigital for customer support; and sells its HP products on Amazon with an indication that they are also PanDigital products. Later, on March 28, 2013 HP filed its request for inter partes review. The date is important because it is just shy of one year after the March 28, 2012 date when HP was sued for infringement. It is, however, well over a year after PanDigital was sued.
35 U.S.C. § 315(b) creates a one-year statute of limitations for filing a request for inter partes review. The deadline is triggered when "the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent." Here, HP is the petitioners and filed within one-year of being served a complaint. However, as foreshadowed above, MCM argues that, for this action, PanDigital should also be considered a "privy of the petitioner."
In its decision, the PTAB sided with HP – writing that "[MCM] provides no persuasive evidence that HP could have exercised control over Pandigital's participation in the Texas Action. Thus, § 315(b) does not bar institution of inter partes review based on HP's Petition."
In the mandamus action, MCM argues that statute-of-limitations here is essentially a time-delayed res judicata action and, as such, it makes sense to interpret "privy" in the same manner as is done by the Supreme Court in those preclusion cases. In particular, MCM relies heavily on Taylor v. Sturgell, 553 U.S. 890 (2008) to argue that the grounds for binding related parties is much broader than the "control" grounds suggested by the USPTO. The PTO's approach consequently "systematically misconstrue[es] Taylor to allow late IPRs." Of note here, the PTO seemingly agrees that Taylor controls, but reads Taylor differently than MCM.
Because Mandamus is an extraordinary writ, the petitioner must do more than simply indicate that the Board was wrong in its decision. Rather, the petitioner must also convince that this is a case that needs to be heard immediately. MCM offers three key reasons:
- The Board's interpretation of §315(b) privity is incorrect as a matter of law.
- The systematic denial of Taylor's second ground for establishing privity justifies this Court's exercising its supervisory role to resolve important issues of first impression that involve alleged usurpation of power. Schlagenhauf v. Holder, 379 U.S. 104 (1964).
- The order of institution of an IPR cannot be remedied by a reversal on appeal.
Edward P. Heller is representing MCM in this appeal.