Federal Circuit Says No to PTAB’s IPR Joinder Approach

In a highly anticipated Patent Trial and Appeal Board (PTAB) decision, the Federal Circuit ruled that the PTAB erred in allowing Facebook to join itself to a PTAB proceeding in which it was already a party.

This decision focused on the interpretation of 35 U.S.C. § 315(c), which relates to the Patent Office’s ability to join a party in an inter partes review (IPR) proceeding. More specifically, the statute states:

(c) Joinder.— If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

The Patent Office filed a brief with the Federal Circuit in September 2019 urging the Federal Circuit to accept the PTAB’s Precedential Opinion Panel’s (POP) as long as the POP’s interpretation was reasonable. More specifically, the Patent Office argued that its precedential panel opinions interpreting the America Invents Act (AIA) were entitled to Chevron deference (the particular POP decision concluded that “§ 315(c) provides discretion to allow a petitioner to be joined to a proceeding in which it is already a party and provides discretion to allow joinder of new issues into an existing proceeding.”).

In this particular case, Windy City filed a complaint alleging that Facebook was infringing a number of patents (total claim number for these patents reached 830). This complaint did not identify which of the 830 claims Facebook allegedly infringed. After filing a motion attempting to have Windy City identify no more than 40 asserted claims (which was denied), Facebook filed a number of IPR petitions challenging the validity of some of the claims from the identified patents.

The PTAB instituted review on all but two of the challenged claims. Windy City ultimately identified its asserted claims – but this identification came after the one year mark of serving Facebook with the complaint. The one year mark is important because 35 U.S.C. § 315(b) prevents institution of an IPR if the petitioner (or related party) files an IPR petition more than one year after being served with the complaint. However, based on the newly identified claims, Facebook filed IPR petitions challenging those claims along with motions for joinder with the earlier-filed petitions in an attempt to circumvent the one year requirement set forth in § 315(b).

Over objections made by Windy City, the PTAB granted the motions for joinder. Interestingly, some of the Administrative Patent Judges expressed concerns with permitting a party to join itself in a concurring opinion but agreed to follow the Director’s interpretation of joinder set forth in the aforementioned POP decision.

Finding the statute at issue unambiguous, the Federal Circuit determined that the statute prohibits both same-party joinder and the inclusion of new issues (such as adding new claims that were not previously part of the original petition). The Federal Circuit focused its decision on the term “party” set forth in § 315(c) and the meaning of party within the context of the Federal Rules of Civil Procedure. More specifically, the Federal Circuit stated that “under the Federal Rules of Civil Procedure for example, joinder of a person as a party is uniformly about adding someone that is not already a party.”

Finding that the statute was unambiguous, the Federal Circuit moved to the deference issue as it relates to the PTAB’s Precedential Opinion that came to the opposite conclusion of the Federal Circuit.

As we all learned in Administrative Law, Chevron deference provided federal courts with a two-step process for reviewing an agency’s interpretation of a statute. More specifically, step one involves determining whether Congress expressed intent in the statute and, if so, whether the statute’s intent is ambiguous, and step two involves determining whether the agency’s interpretation was essentially reasonable in view of the ambiguity.

However, as set forth above, the Federal Circuit decided the statute unambiguous and found that the POP’s conclusion of allowing same-party joinder was incorrect under the unambiguous meaning of the statute. Thus, there was no deference to be afforded to the POP decision. Additionally, this decision rejected the notion that POP opinions are akin to notice-and-comment rulemaking. For example, the court noted that announcements that a POP will be convened are not published in the Federal Register and POP decisions themselves are not published in the Federal Register, which is a requirement for formal notice-and-comment rulemaking procedures.

The court did recognize the potential hardships of defendants – like Facebook in this case – of being faced with an enormous number of asserted claims. However, the court stated that the defendants do have options – such as filing petitions challenging “hundreds of claims” or challenging the validity of the asserted claims in district court.

In summary, this case clarified the meaning of joinder – no same-party joinder and no new issue joinder. Additionally, the Federal Circuit did not afford any deference to POP decisions and noted these POP decisions are not similar to notice-and-comment rulemaking.