Supreme Court Update: Government Not a “Person” and Noteworthy Certiorari Decisions
In Return Mail, Inc. v. United States Postal Service et al., No. 17–1594 (June 10, 2019), the Supreme Court, in a 6-3 majority opinion, reversed the Federal Circuit and held that the term “person” in the AIA does not include federal agencies, such that the government is not permitted to petition for AIA review proceedings.
The AIA provides that “a person” other than the patent owner is permitted to file a petition for PGR, IPR, and CBM review. The Postal Service presented three arguments for why the presumption that the statutory term “person” excludes the Government should not apply: (1) other references to “person” in the patent statutes include the Government; (2) federal agencies can request ex parte reexaminations; and (3) the Postal Service should be provided the same benefits afforded to other accused infringers. Id. at 9.
The Court rejected all three arguments, finding: (1) there is no clear trend toward or against including the Government as a “person” in the Patent Act and AIA; (2) ex parte reexamination is a “fundamentally different process” than an AIA review proceeding, where the challenger is an active participant; and (3) in light of the restrictions in 28 U.S.C.§ 1498, the Government does not face the same risks as other accused infringers (i.e., no injunctions, demands for jury trials, or punitive damages) in infringement suits. As a result, the Court held that the Postal Service could not establish a basis to avoid the presumption that the government is not a “person.”
The Supreme Court’s involvement in PTAB-related cases continued with two cert. decisions:
- JTEKT Corp. v. GKN Automotive Ltd., No. 18-750: Denied
JTEKT Corp. asked the Court to review the Federal Circuit’s holding that JTEKT Corp. lacked standing to appeal a final written decision because it could not prove injury in fact where JTEKT Corp.’s allegedly infringing product remained under development.
- Dex Media, Inc. v. Click-to-Call Technologies, LP, et al., No. 18-916: Granted
The Court agreed to consider the first of two questions presented, which asks whether 35 U.S.C. § 314(d) permits appeal of the PTAB’s decision to institute an IPR upon a finding that § 315(b)’s time bar does not apply.
Takeaway: Government agencies remain free to challenge patent validity in the Court of Federal Claims in response to infringement actions, but cannot do so at the PTAB.
Although the AIA provides that a party may appeal an unfavorable outcome, standing to appeal is not automatic. Given that the Supreme Court has declined to provide guidance on this issue for now, some uncertainty remains for parties looking to appeal unfavorable outcomes when the potentially infringing product is not yet on the market.
We look forward to the Court’s consideration of whether a party can appeal the Board’s decision to institute an IPR upon finding that § 315(b)’s time bar did not apply.
State-Owned Patents Are Not Immune From IPR Proceedings
In Regents of the Univ. of Minn. v LSI Corp., No. 2018-1559 (Fed. Cir. June 14, 2019), the Federal Circuit affirmed the Board’s decision not to dismiss IPR petitions challenging patents assigned to the University of Minnesota (“UMN”) on the basis of state sovereign immunity. UMN sued LSI and customers of Ericsson for infringement of patents assigned to UMN. LSI and Ericsson subsequently petitioned for IPR of the asserted patents. UMN filed motions to dismiss the IPR petitions based on state sovereign immunity. The Board convened an expanded panel to hear these motions, and concluded that although state sovereign immunity applied, UMN had waived immunity by filing suit in district court. UMN appealed, and these cases were consolidated on appeal.
The Federal Circuit concluded that state sovereign immunity does not apply to IPR proceedings for the same reasons discussed in Saint Regis Mohawk Tribe. The Federal Circuit held that “state and tribal sovereign immunity do not differ in a way that is material” to this determination, and therefore, held that UMN was not immune from the IPR proceedings.
Takeaway: The Federal Circuit again made clear that AIA proceedings are akin to agency actions, and therefore, state-owned patents can be challenged in IPR proceedings.
Identification and Status of RPIs Can Impact Determination of § 315(B) Time Bar
In Power Integrations, Inc. v. Semiconductor Components Indus., LLC, No. 2018-1607, the Federal Circuit found the petition was time barred and vacated the Board’s final written decision. The petition was filed by ON Semiconductor before its merger with Fairchild Semiconductor, but the Board instituted the IPRs after the merger closed. Fairchild Semiconductor had been served with a complaint of infringement of the challenged patent more than one year before ON filed its petition.
The Federal Circuit concluded, as a matter of first impression, that § 315(b) requires consideration of privity and real party in interest (“RPI”) relationships arising after filing but before institution, because RPI issues affect whether the Board should institute the petition. The Federal Circuit noted that this interpretation is consistent with prior decisions holding that the § 315(b) time-bar is keyed to institution, and further consistent with common law principles of preclusion and privity.
In Mayne Pharma Int’l Pty. Ltd. v. Merck Sharp & Dohme Corp., No. 2018-1593, the Federal Circuit held that the Board did not err in allowing the petitioner Merck Sharp & Dohme Corp. (“MSD”) to add Merck & Co. Inc. (“MCI”) as an RPI without disrupting the filing date accorded to the petition. The Federal Circuit found that the identification of RPIs served its purpose here—the Board was able to adequately identify conflicts, and MCI agreed to be estopped as if it were the petitioner. The petition was filed within one year of Mayne’s district court complaint naming both MCI and MSD, so there was no prejudice to Mayne.
Takeaway: The Federal Circuit has made clear that § 315(b) time bars regarding RPIs and privity are assessed at institution, not at filing. Petitioners should be wary of any changes in corporate relationships that could impact institution of an IPR petition. Additionally, both the Board and the Federal Circuit have taken a practical view of the RPI rules, making it unlikely that arguments for the application of the § 315(b) time bar based purely on technicalities will succeed.
Complaint Filed by an Exclusive Licensee Triggers § 315(B) Time Bar
In MindGeek USA Inc., et al. v. Univ. of S. Cal., IPR2019-00420, Paper 9 (June 18, 2019), the Board found the petition was time-barred under 35 U.S.C. § 315(b). The Board held that, under Click-To-Call, the time bar of § 315(b) applies where an exclusive license of the Patent Owner served a complaint on the Petitioner. The Board rejected Petitioner’s argument that it should follow the decision in Sling TV (discussed in Issue Twelve), where a panel determined that § 315(b) requires petitioner be served with a patent owner’s complaint to trigger the one-year time bar.
Takeaway: Despite the narrow language used by the Board in Sling TV, service of a complaint by an exclusive licensee will suffice to invoke the time-bar of § 315(b). Filing of a complaint by an exclusive licensee, even if the suit is later dismissed, starts the clock on the one year period to file a petition.