by Dennis Crouch
In an unusual en banc footnote, the Federal Circuit has ruled that the litigation time-bar found in 35 U.S.C. § 315(b) applies even in cases where the plaintiff-patentee voluntarily dismisses the lawsuit without prejudice. Click-to-Call Tech., LP v. Ingenio, Inc. and Iancu (Fed. Cir. 2018).
The statute provides:
An inter partes review (IPR) may not be instituted if the petition requesting the proceeding 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 infringement of the patent.
In this case, the Board acknowledged that a qualifying prior infringement lawsuit had been filed and served upon the prior-interest holder of the petitioner. However, the Board allowed the IPR to move forward because of the voluntary dismissal — noting that “[t]he Federal Circuit consistently has interpreted the effect of such dismissals as leaving the parties as though the action had never been brought.” Here, the en banc court has reversed that judgment — holding that the IPR must be dismissed.
The short en banc footnote was signed by ten members of the court. That footnote did not explain the reasons for its legal conclusions. Judge O’Malley filed the panel opinion in the case — offering a justification for the interpretation as did Judge Taranto in a concurring opinion. The two dissenters — Judges Dyk and Lourie — argue that the statute should be interpreted in light of tradition: “Courts have typically treated voluntary dismissals without prejudice as restoring the parties to the situation that existed before the case had ever been brought.”
= = = = =
The actual facts here are a bit convoluted. The challenged patent (U.S. Patent No. 5,818,836) was originally owned by its inventor Stephen DuVal and exclusively licensed to InfoRocket. Back in 2001, InfoRocket sued Keen for infringement. Keen then purchased InfoRocket and the case was voluntarily dismissed. Keen then changed its name to Ingenio. Although Ingenio then had rights to the patent — it apparently wanted to escape from paying royalties and so filed for reexamination. Meanwhile DuVal had gone through a bankruptcy but emerged still as the patent owner. That prior dispute resulted in an interesting 5th Circuit licensing decision. DuVal Wiedmann, LLC v. InfoRocket.com, Inc., 620 F.3d 496, 498 (5th Cir. 2010) (licensee did not accrue obligations to pay after date of filing reexam request). The IPR at issue here is a continuation of that longstanding battle.
= = = = =
The next question to follow this case might be what happens when an infringement complaint points to a particular patent but otherwise fails to satisfy Twiqbal. Is that sufficient under the statute to trigger the 1-year time bar? A patentee with a large number of patents could file a complaint listing their entire inventory as being potentially infringed, and then leave it as a guessing game for the defendant to decide which patents really need to be challenged in an IPR.
Served with “a” complaint…
vs
Served with “a valid” complaint…
Re: “A patentee with a large number of patents could file a complaint listing their entire [corporate products] inventory as being potentially infringed, and then leave it as a guessing game for the defendant to decide which patents really need to be challenged in an IPR.”
This already does occur in some PAE patent suits, and the PAE typically gets away with it. Because almost all judges will simply allow the PAE to cure their insufficiently-specific original complaint by filing an amended complaint later on. The Fed. Cir. never did care, supporting the [now-removed] bare-bones FRCP Form 18 for patent complaints as long as possible.
Hopefully the USPTO gets its systems up and running again soon. In case they don’t, here’s the info on how to file during an outage:
link to uspto.gov
OT but the USPTO portal outage going on two days now is crazy-making. I guess it serves as a reminder to everyone: don’t wait until the last minute to e-file because you might get stuck holding the bag.
PALM Reporting Emergency Maintenance
The USPTO is performing emergency maintenance on multiple systems which began at 12:01 a.m., Wednesday, August 15. This work is ongoing and we will provide updates as progress is made.
The systems listed below are unavailable during the maintenance period.
Electronic Filing System (EFS-Web)
Electronic Filing System and Contingency (EFS-Web and EFS-Web Contingency)
Electronic Freedom of Information Act (E-FOIA)
Electronic Patent Assignment System (ePAS)
Employee Locator Search
Global Dossier (GD)
Office of Enrollment and Discipline Information System (OEDIS)
Order Entry Management System (OEMS)
One Portal Dossier (OPD)
Patent Global Dossier Public Access Dossier (P-GD-PAD)
Patent Maintenance Fees Storefront
Private Patent Application Information Retrieval (Private PAIR)
Public Patent Application Information Retrieval (Public PAIR)
Patent Review Process System (PRPS)
Patent Trial and Appeal Board End-to-End (PTAB-2E)
I heard an inventor had an “idea” how to prevent these problems, but they figured that it would be held ineligible as abstract if they applied for a patent, and they figured that someone would just copy what they did without a patent.
The inventor did smile when they heard that MM was suffering. The inventor remarked that is always good when those that are burning down the innovation engine pay the price.
Don’t worry, in the oh, so predictable arts of computing, such problems cannot exist.
And if they do, all you need is some pizza for the local college boys down at the coffee shop and a weekend.
What, me worry?
(now where is my dripping sarcasm emoticon….)
I heard an inventor had an “idea” how to prevent these problems
Oh, I bet you did.
The inventor remarked that is always good when those that are burning down the innovation engine pay the price.
Right. Maybe a computer failure on a plane will kill a few hundred people tonight. Surely nothing could be better for the maximalists who want to own and “monetize” the right to improve aviation software. Because the link between software patents and better software is solid as a rock. Sure it is!
LOL – you quite miss the “fact” of the converse from the Anti-Software-Patent position.
Someone already disclosed “a black box configured to never crash”, so your “inventor” is probably out of luck.
Another anti that misses the point…
The outcome here is understandable and legally justified under the plain language of the statute. But as a practical matter, it does remove flexibility in allowing parties to structure settlements, flexibility that the PTAB rule allowed for more than five years.
Under the old PTAB rule, a “without prejudice” dismissal basically meant that the statute of limitations under Section 315 did not run. I personally know patent owners and defendants that have used this rule to structure more creative and limited settlements or licenses to resolve pending litigation. For example, parties could enter into a more limited settlement/covenant not to sue covering only current products, etc., and the parties could agree to dismiss the litigation “without prejudice” and address future infringement issues, in the future, if they ever came up. This allowed the parties to put the immediate case behind them quickly; the defendant would not be forfeiting its right to IPR in a potential future suit because of the without-prejudice nature of the dismissal. This was particularly useful for litigants who were in disputes and the underlying market was early or undeveloped; it wasn’t clear where things would go, so a temporary cease fire sometimes did the trick. It allowed parties to treat patent lawsuits, in certain classes of cases, as limited skirmishes and not all-out wars.
But the decision today, which overrules more than five years of consistent PTAB decisions on this topic, removes that flexibility. When a defendant gets sued on a patent, it has to file an IPR within one year, or never. Period. If it settles it will forever be giving up its right to IPR the patent listed in the complaint–basically its best avenue to pursue an invalidity defense based on prior art patents or publications. This basically means that defendants will be much less likely to agree to more creative or limited solutions, and more likely to push for fully-paid up and complete licenses to remove the threat of the patent. This will unfortunately result in some cases going on longer than they really need to.
This is a really good point. I listened to the oral arguments in both Click-to-Call and Luminara, and I do not remember this argument being made. It is a pity that this point was not raised (unless it was raised, and I simply did not notice).
The fallout is already being felt only days later. The biggest problem is turning out to be multi-year licenses; a lot of licensing entities sue but then settle by granting time-based licenses (e.g. three year, five year). These are appealing because licensees can offer a much more affordable license that runs for a more limited time, and the parties can renegotiate a new license, or fight, or whatever, at the expiration of the license term depending on the circumstances existing at the time.
Without the “without prejudice” dismissal option, these time-based licenses are really not an option anymore for defendants. Defendants are going to want full licenses for patents named in the complaint now that there’s no way they can preserve their IPR rights in the event of a future suit.
A short term patent license that expires shortly after the company commits to full production and sales sounds rather dangerous to me. But if that is really desirable, and one has good prior art, there is no reason why an IPR cannot be conducted in the meantime. I have seen O.C. fees for a negotiated license that make the cost of an IPR seem trivial in comparison.
LR, that is an interesting observation.
One policy argument to the contrary is that if you are really holding prior art that would win an IPR outcome as to all claims infringed or likely to be infringed, but keep that prior art to yourself, while extracting a low cost settlement just for yourself, and thus letting the patent owner keep on asserting invalid claims against others, is not in the public interest from either patent or competitive consumer product price policies. Of course publicly citing the prior art to the patent file after settlement under 35 USC 301 is an option, although in my limited experience the PTO does not even know how to handle that w/o supervision.
So maybe they don’t “circular file” those notices of potential infringement and have to take them seriously. Is that a bad thing?
35 USC 301 is for posting prior art in a patent file [not infringement notices], and if the patent owner later files another law suit, reissue or other PTO proceeding on that patent w/o considering it they may develop a problem.
“Notices of potential infringement” do not trigger the statute of limitations, “Patent Investor.” Only the service of a complaint alleging infringement of a patent will trigger it. So companies can continue to relegate the “notices of potential infringement” to the circular file which, in most cases, is exactly where they belong.
Totally off topic, but in another decision today (In re Power Integrations) the CAFC refused (again) to use mandamus jurisdiction to review a non-institution decision. Quite right and proper. On the way to that end, however, the court wrote (or at least quoted the PTAB in writing that) a given paper was not statutory prior art because the petitioner had not built the evidentiary foundation that the proffered paper had been presented to a relevant audience of skilled workers in the field. In particular, (slip op. at 2) “Dr. Tamas Szepesi… attended the conference and received a copy of the Mammano paper ‘as
part of the Technical Papers of the Conference,’… [but] PI did not argue that Dr. Szepesi was a person of ordinary skill in the art…”
I should hope that PI did not argue that Szepesi was a person of ordinary skill in the art. The person of ordinary skill is a legal fiction, a mythical construct that does not exist in the real world. In re Stemniski, 444 F.2d 581, 586 (C.C.P.A. 1971). To argue that Dr. Szepesi was a PHOSITA is to argue that Dr. Szepesi does not actually exist.
Honestly, it is language like this that makes me wonder if the PTAB really should be doing this work. If they cannot keep in mind that there are no PHOSITAs in the world, then it is a bit dangerous to let the PTAB evaluate obviousness. Much mischief comes from confusing real world people with PHOSITAs.
“Much mischief comes from confusing real world people with PHOSITAs.”
I absolutely agree.
Some sovereigns even purposefully do this to explain why they have chosen to use “secret prior art” in an inconsistent manner.
Maybe then you should stop calling them PHOSITAs or POSITAs or whatever and just call them what they are, imaginary men. And you should try to get them written out of the statute.
But if you do that then there’s always a chance that ordinary people start to catch on to the game and aren’t impressed by it. Better leave the sophisticated words in place! Hoity Toite and all that.
Maybe then you should stop calling them PHOSITAs or POSITAs or whatever and just call them what they are, imaginary men.
Do we need to stop calling the “reasonable man” in negligence law “reasonable” and starting call that man “imaginary” as well? Just because you give a legal construct a name does not mean that you foreclose the idea that the construct is a fiction. The statute gives a name to a legal fiction. This was understood from the beginning. No one is trying to “trick” anyone else by using the words as they have always been used.
“Do we need to stop calling the “reasonable man” in negligence law “reasonable” and starting call that man “imaginary” as well”
Man I’m all for simplifying the law. If you mean an imaginary reasonable man, or just an imaginary man that you impute is reasonable then by all means say what you mean. Complicated language helps nobody but lawlyers and maybe judges and is basically just a legal scam by the legal “caste” in society left over from hundreds of years of such scamming in the past.
Fair enough. That is actually a fair point. I have long wished that §103 were more explicit about what “person having ordinary skill in the art” actually means. It would be all for the best if the statute were revised accordingly, and the whole PHOSITA language were abandoned.
6, first time in all your years of posting you’ve said something sensible.
“This was understood from the beginning. ”
By a mere handful of people. The 1% of the population re: patents and associated legislation. And indeed, according to judge rich it wasn’t even well understood by the patent elite back in the day in his lawl article on the subject of the 1952 and the “concept of invention” being replaced by 103.
And I for one believe him. Never underestimate how much ignorance there is, especially of needless complexities.
“No one is trying to “trick” anyone else by using the words as they have always been used.”
The whole field of patent law elites are, in a way. It may not be intentional, sure, but literally every time the words are used the same ol trick/confusion has a chance of happening.
You are confusing and conflating Rich topics.
the petitioner had not built the evidentiary foundation that the proffered paper had been presented to a relevant audience of skilled workers in the field. In particular, (slip op. at 2) “Dr. Tamas Szepesi… attended the conference and received a copy of the Mammano paper ‘as
part of the Technical Papers of the Conference,’… [but] PI did not argue that Dr. Szepesi was a person of ordinary skill in the art…”
So … if I hand out 10,000 pamphlets describing in detail my new method of genetically engineering a microbe to the audience of a Willie Nelson concert, that pamphlet is not “prior art” to my later filed patent unless there is evidence that there was a biotech lab worker present?
Seems mighty odd.
“Seems mighty odd.”
Blame the Supremes. They introduced obviousness into the law of anticipation.
Blame the Supremes. They introduced obviousness into the law of anticipation.
I don’t think the Supremes ever said or meant that a publication which was a publication under any ordinary definition of the term was somehow not a publication if none of the thousands of people who read it was “one skilled in the art.”
We’re not talking about printing out one copy and, without notification to anyone, stuffing it in the corner of a book repository that isn’t indexed or searchable by the public. We’re talking about printing out multiple copies — hundreds or thousands, even — and handing them out to people without any restrictions. What difference should it make that those particular people were not “skilled in the art”?
The issue is not so much about what might constitute a “publication” but about when and if it is “printed.” The Supremes, prior to formation of the Federal Circuit, decided that consideration of the intended audience determines, in part, whether and when a publication is “printed.” I agree it doesn’t make a lot of sense in determining Section 102 prior art, but they are, well, Supreme.
Reminds me of all the Children of God pamphlets handed out at rock concerts in the ’70’s. They were invariably trashed and not passed on to one skilled in the religious arts. Not a printed publication.
“Printed?” Jeez, sorry for misstatement of the law. Substitute “published” for “printed,” e.g., when and if a document is shown to be “published” and thus a printed publication.
“What difference should it make that those particular people were not “skilled in the art”?”
Really?
You want to eliminate PHOSITA entirely?
On what basis, your majesty?
Well, first of all, that a “proffered paper had been presented to a relevant audience of skilled workers in the field” as required here is a variant on the normal authentication proofs needed in an IPR for a “printed publication” [as that term has been so broadly interpreted]. Such as regularly published books or magazines, published or laid open patent applications, internet publications, cataloged library documents, etc., plus proof their publication dates. To stretch your Willie Nelson concert handout hypo, how would you treat a biotech handout to an Tana Tuva sheep-shearing convention? Same problem – not a collection of those working in the field of the invention who would want to read and could understand the handout or other presentation materials. I.e., not made accessible to RELEVANT members of the “public” [unlike trade secrecy law or the “public use” patent defense].
Not sure if you noticed that Malcolm’s post was pretty much empty snark and that he really does not care about such things as “relevant audience”
To stretch your Willie Nelson concert handout hypo, how would you treat a biotech handout to an Tana Tuva sheep-shearing convention?
As a publication that destroys your ability to get a patent on the information in the handout.
Any rule other than this is just silliness.
Other than proof that the inventor handed out thousands of copies of his publication or put a copy on the Internet, the only other evidence that should be needed is evidence of the date on which that publication occurred. This business about “but was someone skilled in the art looking at it” introduces absurdity into the analysis.
What if you can prove that eight of those sheep-shearers had a family member or friend in biotech? That would seem important using the present “analysis”. And that’s very silly indeed.
The issue should be publication, period.
as noted – empty snark and just does not care about the law.
Greg, you are reading the PTAB’s statement in a hypertechnical and literal manner. Saying that someone “is” a person of ordinary skill in the art is simply a more casual and shorthand way of saying that someone possesses at least the education, knowledge, experience, that you attribute to a POSITA in the field. Obviously the PTAB was not asking whether Dr. Szepesi was a theoretical POSITA. The clear import of what they were saying is that the petitioner put forward no evidence that Dr. Szepesi had at least the level of education, knowledge, experience, etc., that a POSITA would have possessed in that field.
[Y]ou are reading the PTAB’s statement in a hypertechnical and literal manner.
Yes, I agree that my point depends on a hypertechnical and literal reading of the PTAB’s statement. If I had confidence that the PTAB did not regularly confuse the mythical PHOSITA with real-world investigators, then I would be just as dismissive of my point as you are. As it stands, however, I see this confusion popping up all over the place, and therefore I tend to want to police the boundaries between the legal fiction and the real world. I think that the world of patent law would be much improved if people took more care to think about what it meant by “PHOSITA” and not to use the word except in its very proper contexts. The sloppy shorthand that you described has real and deleterious consequences.
The just-Issued amended PTAB “Trial Guide” does seem to recognize some prior confusion on this issue, by making it clear [as it should have been already] that declarants do not need to be POSITAs themselves.
[Of course in patent litigation expert witnesses are often not even close to being POSITAs, e.g., college professors. ]
One point that the court glossed over is “the infringement of the patent”. At the top of page 26, “Instead, the provision asks on what date the petitioner, real party in interest, or privy of the petitioner “is served with a complaint alleging infringement of the patent,” making clear that the timeliness analysis is to be made with reference to “the patent.” The Director agrees with this conclusion.”
It is a common misspeak to refer to infringement of a patent. One does not infringe a patent. One can only infringe a claim of a patent.
Because the language of the statute states an impossibility (infringement of a patent and not infringement of a patent claim), further interpretation is needed to define what it means for “infringement of the patent”. Either the statute is invalid, or to save it, “the patent” needs to be interpreted to be a “patent claim”.
There were no facts in the opinion about which claims were asserted in the earlier action compared to the present action. For proper notice, the time bar should only apply to claims asserted in the action.
On a related note, what happens when in an earlier action product 1 is accused of infringement (either dismissed or reaching a final verdict) but product 2 (a new product that was manufactured after the conclusion of the first action) is accused of infringement in the second action? The language of the statue is not clear. There was no discussion of whether Ingenio’s current product/service is the same as from the first action. If it is the same, then the statue would apply. But if the product/service is different, then it does not seem that the time bar should apply. It seems that an analysis beyond the plain language is needed to fully reach what is a fair notice.
Interesting — but I think that “infringement of the patent” is the correct terminology. Section 271 is the provision that expressly defines infringement and it does so in terms of the patent rather than claims of the patent.
Of course, the claims are critical in any infringement analysis, but ultimately it is the patent that is infringed.
Interestingly enough, the (a) section uses the term “patented invention.”
Also (perhaps a bit less) interestingly, 35 USC 100 contains definitions for both: (a) invention, and (j) claimed invention, but does not define “patented invention.”
I agree with Prof. Crouch. It is true that one cannot infringe a patent without also infringing a claim, but that does not mean that one cannot—properly speaking—infringe a patent.
Can you infringe a claimless patent?
Yes, if you set the WABAC machine to pre-1836 Patent Act.
Yes. The cause of action is for infringement of the patent, not specific claims. That is why patent owners are not permitted to split their cause of action up into different cases involving different claims of the same patent against the same accused products.
Indeed. Also, an IPR can be initiated against any one [single] claim of a patent, or all claims, regardless of which claims were asserted in a first suit complaint. The first suit complaint on a patent more that sufficiently alerts a rational defendant that they need to seriously consider an IPR or other active defense against both their present and future products and all claims of that patent.
Greenacre,
Nice points and I find myself agreeing with you, except…
…the time bar is not written as to be limiting an IPR to only those claims upon which a complaint may have been served, and – in fact – an IPR may be made as to those claims in the complaint, those claims and other claims, only other claims, or all claims.
The expansive ability to bring an IPR thus is not tied to the claims, as much as it is tied to the patent for which any/all claims are a part of. Since the time limit is to the IPR and its actions, and “notice” is notice of the patent (any/all claims which may be open to be challenged, and NOT to only the claims in the complaint), the sense of notice you want to apply as “fair” is arguably too narrow.
Further, this reading requires no change in the words of the statute or such “savings” interpretation which is really not a proper interpretation but is instead a rewriting of the statute.
>On a related note, what happens when in an earlier action product 1 is
>accused of infringement (either dismissed or reaching a final verdict) but
>product 2 (a new product that was manufactured after the conclusion
>of the first action) is accused of infringement in the second action?
>The language of the statue is not clear.
Doesn’t matter. The time bar starts to run the moment the petitioner “is served with a complaint alleging infringement of the patent.” The service of the complaint in the first action triggers the statute of limitations. Period.
Why do you think that differences on the products in the first/second suits should make any different?
Here’s more such good news for patent owners in IPRs;
Scott McKeown in his Post Grant blog wrote:
“Is The Tide Turning for Patent Owners?” Noting the PTAB issued update to its ‘Trial Practice Guide’ including practice changes that favor Patent Owners. Patent Owners will have the last word in briefing, and at oral argument. Also noting the planned switch to Phillips claim construction in IPRs, and pro-patent owner Federal Circuit decisions even before this one.
I have long thought that the § 315 time bar was being applied in too toothless a manner, so I am very glad to see the CAFC en banc turning the ship relative to some of its more egregious early panel decisions (Achates most notably, and now this).
At each step of this process, Judge Taranto has covered himself in glory. Regrettably, the author of the dissent here has done just the opposite at each step in the process of implementing the AIA trial statutes.
Another example of the latter is the recent Federal Circuit decision in Applications in Internet Time (AIT) v. RPX, an appeal from a PTAB inter partes review decision, holding that the PTAB took an “impermissibly shallow” look at evidence presented by the patent owner about the relationship between the petitioner and another party asserted to be an estoppel-subject “privy” or real party in interest.
Is that an example of the anti-troll as troll business model being upended?
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