Issue Fifteen: PTAB Trial Tracker

Estoppel Under § 315 Applies on Remand After Appeal

In Novartis Pharmaceuticals Corp. v. Par Pharmaceutical Inc., the Delaware district court applied IPR estoppel on remand after the Federal Circuit reversed its decision invalidating claims after trial. C.A. Nos. 14-1289-RGA, 14-1494-RGA, 15-0078-RGA, 2019 U.S. Dist. LEXIS 62489, at *9-10 (D. Del. Apr. 11, 2019). The case proceeded as follows:

The district court initially found the asserted claims invalid for obviousness-type double patenting, but did not address defendants’ obviousness arguments. The Federal Circuit reversed the obviousness-type double patenting decision and remanded the case for further determination. On remand, the district court was faced with a “matter of first impression”—determining the impact of an IPR decision that issued after trial and before remand. The court held that IPR estoppel precluded the defendant/IPR Petitioner from asserting obviousness arguments on remand based on prior art references that reasonably could have been raised in the IPR. In other words, estoppel was not “dependent on the order in which certain events occur.” The district court noted that, while the Federal Circuit has not yet directly addressed whether estoppel applies to prior art references not raised in the IPR proceeding, a broad interpretation of estoppel is in line with the general purpose of preventing petitioner from effectively having “two bites at the apple.”

Takeaway: Petitioners need to be aware that estoppel will likely attach after an IPR decision and will prevent any future assertion of arguments that could have been raised in the IPR. The likelihood of estoppel attaching on remand after an appeal should be factored into the decision regarding if and when to file an IPR while litigation is threatened or pending.

Applicant Admitted Prior Art is “Prior Art Consisting of Patents or Printed Publications”

In One World Techs., Inc. v. The Chamberlain Grp., Inc., the Board confirmed that Applicant Admitted Prior Art (“AAPA”) can be used to support arguments that the challenged claims are invalid as obvious in IPR petitions. IPR2017-00126, Paper 67 (April 4, 2019). The Board noted that the Federal Circuit and its predecessor court have long held that admissions of prior art in a patent are properly considered prior art. The Board rejected Patent Owner’s argument that AAPA is not proper evidence on which to base an IPR because it is not a “patent or printed publication,” explaining that these admissions are in a patent and there is nothing in the statutes or regulations that would prohibit such an application of prior art. 

Takeaway: Petitioners and Patent Owners alike should be mindful of the impact of admissions of prior art in patent specifications in proceedings before the PTAB. While AAPA is frequently used in arguments made to district courts, the Board made clear that these arguments are also proper in PTAB proceedings.

Precedential Decisions Provide Guidance on the Standards for Identifying Real Parties-in-Interest

The POP designated as precedential three decisions regarding issues surrounding Real Parties-in-Interest (RPIs), giving Petitioner’s further guidance on the requirements for identifying RPIs. The Federal Circuit recently explained that the determination of whether a party is an RPI requires a “flexible approach that takes into account both equitable and practical considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner.” See Applications in Internet Time, LLC v. RPX Corporation, 897 F.3d 1336, 1351 (2018). These precedential decisions provide additional information on how the Board will apply this standard.

In Ventex Co., Ltd. v. Columbia Sportswear N. Am., Inc., Case IPR2017-00651 (PTAB Jan. 24, 2019) (Paper 152), the Board dismissed the Petition and terminated the proceedings because the RPI, Serius, had been served with a complaint asserting infringement of the challenged claims more than one year before Ventex filed the petition. The Board held that Serius was an RPI and privy to Ventex because the companies had a “specially structured, preexisting, and well established business relationship with one another, including indemnification and exclusivity arrangements.” Id. at 10. The Board found that the relationship between these entities was such that both parties were incentivized to invalidate the challenged claims and Serius was a clear beneficiary of Vertex’s efforts in the IPR.

In Proppant Express Investments, LLC v. Oren Techs., LLC, Case IPR2017-01917 (PTAB Feb. 13, 2019) (Paper 86), the Board denied Patent Owner’s Motion to Terminate, confirming that a Petitioner may amend its identification of RPIs without disrupting the filing date of the petition as long as the newly added RPIs were not time-barred when the petition was originally filed. The Board noted that the identification of RPIs, while mandatory, is not a jurisdictional requirement and is not part of the timeliness inquiry under § 315. The Board also outlined four factors that other panels used to determine whether a party may add an RPI without disrupting the filing date of the petition: (1) Petitioners/RPI’s attempts to circumvent the § 315(b) bar or estoppel rules; (2) prejudice to the Patent Owner caused by the delay; (3) bad faith by the Petitioner; or (4) gamesmanship by the petitioner regarding the timing or manner of identifying the RPI.

In Adello Biologics LLC v. Amgen Inc., Case PGR2019-00001 (PTAB Feb. 14, 2019) (Paper 11), the Board granted Petitioner’s Motion to Update their Mandatory Notices, allowing Petitioner to add an RPI under 35 U.S.C. § 322(a)(2) without assigning a new filing date. The Petitioner submitted declarations attesting that it had not acted in bad faith or engaged in gamesmanship, and the Board found there was no prejudice to the Patent Owner. The Board held that allowing Petitioner to amend its identification of RPIs promoted the core functions of this requirement.

Takeaway: When practicable, Petitioners should take a broad view of identifying potential RPIs. If, however, an RPI is later discovered, Petitioners should immediately seek leave to amend their identification of RPIs and bolster their motion to amend with a declaration explaining the omission and the lack of bad faith in the RPI determinations.

Forum Selection Clauses Can Preclude PTAB Review

In Dodocase VR, Inc. v. MerchSource, LLC., No. 2018-1724 (Fed. Cir. April 18, 2019), the Federal Circuit affirmed the District Court’s grant of a preliminary injunction requiring MerchSource to attempt to withdraw three PTAB petitions because these petitions likely breached a forum selection clause in a license agreement between the parties.

The parties entered into a license agreement with a clause limiting the forum of disputes arising under the agreement to courts in San Francisco County or Orange County, CA. MerchSource later informed Dodocase it would no longer pay royalties under the license agreement because it believed all relevant patent claims were invalid.

Dodocase filed suit in N.D. Cal., seeking an injunction to prevent MerchSource from breaching the license agreement and a declaratory judgment that the patents at issue were valid and enforceable. MerchSource filed IPR and PGR petitions at the PTAB, challenging the validity of the licensed patents. Dodocase amended its complaint to allege that MerchSource breached the license agreement’s forum selection clause by filing the IPR and PGR petitions and moved for a preliminary injunction ordering MerchSource to withdraw the petitions.

The District Court granted the preliminary injunction, finding that the challenges to the validity of the licensed patents were disputes “arising out of or under” the license agreement, and therefore, MerchSource had likely breached the forum selection clause by bringing these challenges in a different forum. On appeal, the Federal Circuit affirmed, finding that “[p]atent infringement disputes do arise from license agreements,” and therefore, the forum selection clause applies.

Takeaway: Forum selection clauses in license agreements that govern disputes “arising out of or under” the license agreement will likely preclude PTAB review, even if such restriction is not explicitly contemplated. Licensees should be careful to consider the impact of such a restriction and explicitly address PTAB jurisdiction in forum selection clauses if they wish to reserve the right to challenge patents at the PTAB.