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Patent Challengers Reassess Strategies After Ruling Bars Tactic

June 24, 2020, 10:31 AM

A Federal Circuit ruling barring patent challengers from adding more arguments after a patent office tribunal trial starts could drive companies to bring broader, more comprehensive challenges from the outset.

A three-judge panel at the U.S. Court of Appeals for the Federal Circuit in Facebook Inc. v Windy City Innovations LLC ruled the social media giant couldn’t join its own Patent Trial and Appeal Board challenges and introduce new issues.

Facebook has asked the full Federal Circuit to review the ruling, arguing that a recent U.S. Supreme Court ruling means the Federal Circuit can’t second-guess the patent office.

Accused patent infringers have typically looked to use self-joinders to circumvent their one-year time limit from being sued to challenge a patent at the PTAB, attorneys say. Until the Facebook ruling, the patent office allowed companies to file a challenge before the one-year deadline, then file another petition after the time bar to ask the PTAB to allow it to “join” its own initial challenge.

The phasing out of self-joinder could push patent challengers to find alternative methods to broaden validity challenges, known as inter partes review. Parties could instead move to file multiple, timely challenges against a patent and try to get them consolidated, attorneys say. Companies sued for patent infringement in federal court may also push for the court to force patent holders to sharpen their allegations.

“Petitioners now face the potential reality of having to challenge every claim in an IPR that could be asserted in district court litigation,” Bridget Smith, patent attorney at Lowenstein & Weatherwax LLP, said.

The change could spur companies accused of infringement and weighing attacks on a patent at the PTAB to push a court to make clear quickly what patent claims are being asserted, in order to avoid running into the tribunal’s time bar.

“I would expect to see defendants’ attorneys asking courts for even earlier identification and narrowing of asserted patent claims,” Smith said.

‘Any Person’

The Patent and Trademark Office director can add “any person” to an inter partes review, under patent law. The office’s Precedential Opinion Panel in 2019 interpreted that to mean a company can join its own ongoing dispute, and said parties can introduce new, otherwise time-barred issues to existing proceedings.

Windy City appealed PTAB decisions allowing Facebook to join petitions to its own ongoing challenges. Windy City sued Facebook in 2015, but waited until after the PTAB’s one-year time bar had passed to identify which claims Facebook allegedly infringed.

The Federal Circuit said on appeal that the patent act “does not authorize same-party joinder, and also does not authorize joinder of new issues, including issues that would otherwise be time-barred.”

But Facebook is now citing the Supreme Court’s April 20 ruling in Thryv, Inc. v. Click-to-Call Technologies, LP to argue the Federal Circuit shouldn’t have reviewed the self-joinder determinations. The justices said the Federal Circuit can’t review PTAB time-bar determinations.

Deadline Underscored

Curbing self-joinder will likely impact large companies that can mount a “comprehensive, spare-no-expense attack” on existing patents at the PTAB and in a courtroom, Smith said.

But the change could also affect smaller companies. Small companies may have to launch multiple proceedings to mount the same sort of challenge, a potentially costly tactic. Smaller companies may want to “avoid the expense of maintaining serial proceedings,” Smith said.

The “most likely alternative” to self-joinder for parties would be to file multiple, “timely filed” challenges and then try to get the PTAB to consolidate them, Saurabh Vishnubhakat, a Texas A&M School of Law professor, said.

The Facebook ruling’s main practical effect is “to put teeth back into the one-year time bar,” Vishnubhakat said.

Petitioners will push to get as much clarity in court as early as possible, and they can point to Windy City to argue why that clarity is urgent, he said.

Increased Urgency

Once the one-year window closes, additional validity challenges related to the PTAB case “will likely proceed in district court,” Stephanie Schonewald, patent attorney at Choate Hall & Stewart LLP, said.

With challengers mounting more claims before the deadline, parties could feel a sense of urgency to analyze all claims early in litigation, Schonewald said.

“As such, we start our review of asserted patents, possible prior art, and additional evidence as soon as reasonably possible,” she said.

Patent challengers could also turn to ex parte reexamination, Schonewald said. Under that type of challenge, an outside party can ask the agency to reconsider a patent’s validity, but the patent challenger doesn’t participate in proceedings once the request is submitted.

While generally less desirable than IPR given the challenger “has little to no control” over the reexamination direction, Schonewald noted there are benefits.

“The key here is that an otherwise barred patent challenger is permitted to bring a challenge at the Patent Office beyond the one year window,” Schonewald said.

Facebook is pointing to Thryv in arguing to the full Federal Circuit that its three-judge panel “lacked jurisdiction to review the PTO’s decisions to institute IPR and order joinder.”

“A lot of people are reading Thryv very broadly, that it would sweep up Facebook as well, but I’m not convinced that’s the case,” Smith said.

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editors responsible for this story: Roger Yu at ryu@bloomberglaw.com, Keith Perine at kperine@bloomberglaw.com

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