Challenging the PTO’s NonAppealable Decisions to Grant or Deny Petitions for Inter Partes Review

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.

Download InreMCMPortfolioLLCWrit

38 thoughts on “Challenging the PTO’s NonAppealable Decisions to Grant or Deny Petitions for Inter Partes Review

  1. 8

    314(d) limits appeals on IPRs ordered under this “section” (i.e., Section 314, which deals with patentability thresholds per Section 311). If they meant ALL IPR institutions are un-reviewable for all reasons, 314(d) would have said “Chapter” not “Section”. (Chapter 31 covers sections 311-319, the IPR rules.) I think 315(b) should be reviewable before final written decision.

    1. 8.1

      That seems like a very reasonable reading of the law. What if the Director decides that he simply doesn’t like the sound of your name and gives that as his reason for denying the IPR?

      1. 8.1.1

        That’s a great question…I have no idea. A denial to institute wouldn’t be a final order per Section 318(a). So I guess I will have spent all that money to create the petition and be out of luck?

  2. 7

    Why was this filed at CAFC instead of district court? Does CAFC have jurisdiction under the All Writs Act? I thought under 28 USC 1361, need to file the petition at district court.

    1. 7.1

      User, I urge you to read Schlagenhauf v. Holder, 379 US 104 – Supreme Court 1964 at Section II, pp. 109-110

  3. 5

    Good luck, Ned. It’s a very creative argument, and I mean that in a good way (at least a couple of judges have told me my arguments were creative in a bad way). I think it’s going to be really tough, though, to convince your panel that section 314(d) is not a flat prohibition of any type of appellate review of the decision on whether to institute IPR proceedings.

    1. 5.1

      Well I do expect the PTO will take that position. But where does that leave all of us? Is the PTO really above the law?

      1. 5.1.1

        Quite often in veterans’ claims cases, Federal Circuit judges express great sympathy for the veteran and the merits of his/her case. Still, for whatever reason Congress denied the Court the power to review CAVC factual determinations and applications of law to fact. You might be in a similar situation, no matter how clearly erroneous the decision on whether to institute the IPR proceeding was.


          The power to limit CAVC review derives from the limited waiver of sovereign immunity – a money claim by a veteran against the government. That is not the case in review of PTO actions. Indeed, one would hope the opposite would be true – since the pto is challenging the vested private property right of an issued patent.

      2. 5.1.2

        One argument against your position is that you haven’t exhausted all administrative remedies available to you, because you haven’t actually completed the IPR process yet. It could turn out that the patent survives the IPR unscathed..I know that at first, that sounds a bit Kafkaesque, but the IPR doesn’t actually take away any of your client’s rights in the patent until the PTO actually holds unpatentable one or more of the previously issued claims, and that decision is what’s appealable.


          But APoTU, even if the IPR proceeding has no substantive effect on the patent rights, being put through it is itself harmful to Ned’s client if it was error for the PTO to initiate it. There would be no way to remedy that error at the end of the proceedings.That’s classic mandamus material.Alas, I still can’t see a way around what appears to be an unequivocal and complete prohibition of appellate review of any kind in section 314(d).


            314(d) confusingly says no appeal under this “section” (i.e. section 314, which deals with substantive patentability issues, etc, not the procedural/collateral issues of 315(b)). To me, 315(b) deals with procedural issues and should be appealable/reviewable immediately.


              Jimmy, on the appeal aspect, I this were a district court where “final orders” are appealable, I would think 315(b) decisions would always be appealable, just like injunctions, under the collateral order doctrine as a final order. But, 319/141 only allows appeals from final written decisions under 318, not from final orders. There appears to be a problem with the appealability aspect regardless of 314(d).


                Well, I think 319 is actually silent on procedural 315(b) matters. 319 concerns appeals from Final Written Decisions, from 318, which stems from 311, etc, which all concern issues of substantive patentability on the merits, NOT 315(b) bars. 315(b) was designed to be immediately reviewable: 314(d) conspicuously used the word “section” instead of “chapter”.

                1. “Designed to be immediately appealable.” I fully agree, since the ruling is not on the merits and any delay simply destroys the right it provides … immunity from suit. But, given the structure of 141, which provides the only statutory vehicle for appeal and which specifically limits appeals to final written decisions on the merits, is there any statutory basis for an appeal of an adverse ruling under 315(b) at all?Suppose patent owner wins on the merits, there is no basis to appeal 315(b).Suppose the patent owner losses. He appeals and gets the merits reversed. Does that moot the 315(b) issue?Suppose the patent owner loses the merits appeal. Is the Federal Circuit really going vacate everything based on 315(b)?Clearly 315(b) is a threshold issue that cannot be deferred, but there is no basis for appeal under 141 as a “final order.” That leaves the only way to appeal adverse rulings is under mandamus, which is limited to clear error or abuse of discretion, a much higher standard than an ordinary appeal.Obviously, I think, there is something fundamentally flawed here and that we should be able to appeal under the collateral order doctrine.

    2. 5.2

      I think a better case for circumventing with the writ would be the one where, given these same facts, the PTO found privity between HP and PanDigital and, for that reason, denied HP the right to file its request.

      1. 5.2.1

        Indeed. I cannot wait to see what the PTO says about that. In Mentor Graphics v. Rae, they seemed to take the position that rulings on 315(b) were procedural and were appealable when the agency action was final, citing 5 USC 704. But 319/141 limits appeals to final written decisions on the merits. When there is no final decision on the merits, what then?

  4. 4

    Let’s look at this way: let’s say I’ve decided now to start selling a product that is identical to one of PanDigital’s accused products. I’m going to advertise the product as identical to the accused product. I might even buy PanDigital’s product and just rebrand it. I’m aware of the lawsuit, of course, because I read this blog. But I don’t care because I think MCM’s patents are invalid.Am I “bound” by this PanDigital case in any way (other than by my admissions that my products are the same)? If MCM amends their pending complaint to include me in the lawsuit, am I barred from filing an inter partes re-exam? If MCM “wins” against PanDigital, am I from precluding from arguing that MCM’s patent is invalid? This would seem to represent a significant change from previous Supreme Court decisions concerning res judicata and/or issue preclusion in patent cases.However this case turns out, in the meantime I suppose plaintiffs should be reminded to consider whether amending their complaints to include additional parties (who may or may not be in privity) is “worth it” given the risk that an inter partes review might spoil the program.

    1. 4.1

      Malcolm, if you are a complete stranger to Pandigital, you are not a privy. I recommend you read Aevoe, a distributor was found bound by a preliminary injunction because of privity and because of notice.Same with State Bottling Co. v. NLRB, 414 US 168 – Supreme Court 1973, a case Aevoe relied on.

      1. 4.1.1

        That case is about contempt of a preliminary injunction order, where the product maker enlisted the distributor to sell a “redesigned” product in a manner that violated the injunction order. The distributor in that case was bound by the preliminary junction by virtue of (1) the wording of the preliminary injunction and by virtue of (2) their being notified that the injunction applied to their distribution of the allegedly infringing products.But there’s no preliminary injunction in this case. There’s been no determination whatsoever as to the likelihood of success on the merits by the patentee. There was merely a complaint of patent infringement which was subsequently amended to name a new, independent defendant who had been distributing the product prior to the original complaint. That defendant filed a request for inter partes exam prior to the deadline.Note the footnote 3 in Aevoe: The court concluded that, while the S&F Defendants were subject to and had violated the injunction, sanctions against those defendants were not appropriate because they were not named parties at the time of the contempt.All that said, you appear to be citing the right cases. 😉

  5. 3

    Ned. Good luck. I can imagine a similar situation in the pharmaceutical industry. First generic files ANDA. Get sued. Second ANDA files a bit later. Gets sued. First ANDA does not file IPR, the second ANDA files IPR within first year of when litigation for first ANDA litigation filed. Then first year files it own IPR within its timeframe. Just too many opportunities for abusing the system.

  6. 2

    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.”I haven’t read MCM’s arguments (yet) but on its face this seems like a stretch. HP sells PanDigital’s products but is not controlled by PanDigital. PanDigital is sued for patent infringement and somehow that action triggers the clock for all unnamed, non-controlling entities who sell the accused infringer’s product to file a request for inter partes review of the patent? That doesn’t seem right. Taylor concerned privity between two different plaintiffs, not two defendants (and the Supremes threw out the district court’s finding of privity based on an “expansive notion” of privity via “virtual represenation”). Here, MCM chose to name only PanDigital in its original complaint. Had MCM won that lawsuit, surely it would not have meant that all sellers of PanDigital’s infringing products (or exact copies thereof) would be barred from challenging MCM’s patents in an inter partes proceeding. That’s because there is no “privity” between the defendant (PanDigital) and these other parties that would preclude them from defending themselves or asserting their right to challenge a patent. HP’s interests and PanDigital’s interests are surely not the same and the Supreme Court in Taylor is crystal clear that this remains a key factor (and that’s saying something because it was written by Ginsberg).

    1. 2.1

      Malcolm, read the petition. It is important that HP was notified of its own infringement and was notified of the Pandigital suit as well. HP and Pandigital are privies by law and are both bound by the outcome of the Pandigital case. See, the recent AEVOE case discussed here.

      1. 2.1.1

        HP and Pandigital are privies by lawPlease explain why. Being “notified of infringement” does not trigger the inter parties exam deadline clock. It’s the filing of the lawsuit that triggers the clock. And HP was not sued until later (and filed its request before the statutory deadline). HP does not control PanDigital. It’s not PanDigital’s agent. It’s merely a seller of PanDigital’s products.Until HP was named in the complaint, neither it nor any other seller of PanDigital’s products was “bound by the outcome” of the PanDigital case. Affected by the outcome? Sure. But bound by it so they could not challenge the patent in a subsequent lawsuit where damages were sought by the patentee? I don’t think so.


              315(b) — if the complaint is served on the privy, the other privy cannot file the IPR

      2. 2.1.2

        HP and Pandigital are privies by law and are both bound by the outcome of the Pandigital case.If HP was legally “bound” by whatever happened to PanDigital, then what was the point of spending the money to amend the complaint to name HP? It seems like it would be cheaper to simply get the judgment against PanDigital and then go collect your damages from all the other “bound” defendants.


          Different lawsuit against HP. Filed 7 months later. It concerned a lot more than digital picture frames.


            Different lawsuit against HP. Filed 7 months later. It concerned a lot more than digital picture frames.That seems like an extremely unhelpful fact for MCM.

      1. 1.1.1

        Good luck with it, Ned. It sounds like you might have a rough go of it, if MM is on the panel. Perhaps you’ll get a better draw…

      2. 1.1.2

        I like the touch of the writ ned, get em imo. I didn’t really read most of the case but I’m sure it’s super important or some such.

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