IP News

Federal Circuit: The PTAB Determination of the Timeliness of an IPR Petition Is Part of the Initial Decision to Institute an IPR, and Is Not Reviewable on Appeal

On Sept. 30, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Lourie, and Judge Linn issued a unanimous opinion, authored by Judge Linn, in Achates Reference Publishing, Inc. v. Apple Inc., Case No. 2014-1767, -1788. The panel held that it could not consider Achates' appeal either on the timeliness of Apple's inter partes review (IPR) petition or on its merits, and dismissed the appeals.

Achates first asserted its patent in district court against QuickOffice, Inc. One year after, Achates joined Apple to the suit. Apple then filed for IPR of Achates' patents. In response to Apple's petitions, Achates argued before the Patent Trial and Appeal Board (PTAB) that Apple's IPR was time-barred under 35 U.S.C. '315(b): “An inter partes review 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. The time limitation set forth in the preceding sentence shall not apply to a request for joinder.” Slip op. at 4 (citing 35 U.S.C. '315(b)). The PTAB determined that “none of the codefendants were real parties in interest or privies of Apple,” instituted the IPR proceedings, and invalidated all claims. Id. at 4-5. Achates appealed the PTAB's ruling on the applicability of the '315(b) time bar and its denial of Achates' motion for discovery to show the relevance of the '315(b) time bar through Apple's relationship with codefendants in the case.

In its opinion, the Federal Circuit panel first discussed IPR proceedings and covered business method review (CBMR) proceedings. Each has an initiation phase and a merits phase. The petition to initiate an IPR, which may concern any patent, is subject to the '315(b) time bar, while a CBMR, limited to certain types of business methods patents, is not subject to the time bar. See, Id. at 6. Under 35 U.S.C. '314(d) or '324(e), respectively, the PTAB's decision to initiate an IPR or CBMR is final and nonappealable. Id. Once initiated, both types of proceedings are judged on the merits and result in a final, appealable written decision.

Federal Circuit precedent has held that the decision whether to institute an IPR is not appealable. Id. at 7-8 (citing St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014) and In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (Fed. Cir. 2015)). However, the Federal Circuit has also held, in the context of a CBMR, that the decision whether a patent is of a type eligible for a CBMR, though “first determined by the Director at the initiation stage ' was necessarily implicated in the final merits determination and was appropriate for review.” Id. at 9 (citing Versata Dev. Grp., Inc. v. SAP America, Inc. (Versata II), 793 F.3d 1306 (Fed. Cir. 2015). This panel clarified that in the situation presented in Versata II “[t]he basis for this court's review ' was not merely that the Board decided it in the final determination stage but more significantly that it uniquely and fundamentally related to the Board's 'ultimate authority to invalidate' only CBM patents in a CBMR proceeding.” Id. at 10.

Here, the panel found that “because compliance with the time-bar does not itself give the Board the power to invalidate a patent,” the time bar decision did not go to the PTAB's “ultimate authority to invalidate.” Id. at 11. Therefore, the panel followed Cuozzo instead of Versata II, and held that '314(d) prohibited it from reviewing PTAB's determination that Apple was not time barred by '315(b). Because the Federal Circuit held that determination nonreviewable, the panel also could not review Achates' discovery motion appeals.

Federal Circuit: Laches Is an Affirmative Defense to Patent Infringement Codified in 35 U.S.C. '282

On Sept. 18, 2015, the Federal Circuit, sitting en banc , issued a precedential opinion, authored by Chief Judge Prost and joined by Judges Newman, Lourie, Dyk, O'Malley, and Reyna, in SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prod., LLC, Case No. 2013-1564. The en banc majority reinstated the prior Federal Circuit panel opinion affirming the district court's grant of summary judgment on laches and reversing the district court's grant of equitable estoppel, and remanded to the district court for consideration of laches within the eBay framework for equitable estoppel. Judge Hughes wrote a separate opinion, joined by Judges Moore, Wallach, Taranto, and Chen, concurring-in-part and dissenting-in-part.

Initially in 2003, SCA sent First Quality a letter alleging infringement of its adult incontinence product patent, U.S. Patent No. 6,375,646 ('646 patent). First Quality responded alleging invalidity of the '646 patent. In 2004, SCA petitioned for reexamination of the '646 patent, and in 2007 the USPTO concluded reexamination. Between 2003 and 2010, SCA and First Quality had no contact, and First Quality invested significant resources in developing its adult incontinence product line. In 2010, SCA sued First Quality for infringement of the '646 patent. The district court granted First Quality's motions for summary judgment of laches and equitable estoppel. SCA appealed. A Federal Circuit panel affirmed summary judgment as to laches, but reversed as to equitable estoppel. SCA petitioned for en banc rehearing to consider the U.S. Supreme Court decision in Petrella v. Metro-Goldwyn-Meyer, Inc., 134 S. Ct. 1962 (2014), which eliminated laches as an affirmative defense to copyright infringement.

The first question addressed was whether laches remained a valid affirmative defense to patent infringement after Petrella . Federal Circuit precedent A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), had held “that laches was codified in 35 U.S.C. '282.” Slip Op. at 11. Further, Aukerman held that laches did not conflict with 35 U.S.C. '286, the section providing a patent infringement damages limitation of six years, because “section 286 is not a statute of limitations in the sense of barring a suit for infringement.” Id. at 12 (citing Aukerman at 1030). Petrella compelled reexamination of this analysis of laches in patent infringement due to its reasoning that laches, as an equitable remedy, is “gap-filling, not legislation-overriding.” Id. at 14 (citing Petrella at 1974). Thus, the Federal Circuit reexamined the codification of '282.

The majority found no plain language supporting laches in the text of '282, but found a “catch-all provision in subsection (4): '[a]ny other fact or act made a defense by this title.'” Id. at 19 (citing 35 U.S.C. '282(b)(4)). To infer the contents of this “catch-all,” the majority discussed the legislative history contemporary to the enactment of the Act, finding reference to laches in a discussion of example defenses in the “catch-all” provision of '282. Since “'282 uses inclusive language” and the legislative history cites laches as an example defense within the scope of '282, the Federal Circuit majority concluded that '282 codifies laches as a defense to patent infringement. Id. at 22.

To further show that laches qualified as a legal remedy when codified in '282, the majority laid out in detail the landscape of the common law prior to enactment of the 1952 Patent Act, using the canon of construction that “[w]hen a statute covers an issue previously governed by the common law, we must presume that Congress intended to retain the substance of the common law.” Id. at 23 (citing Kirtsaeng v. John Wiley & Sons, Inc. , 133 S. Ct. 1351, 1363 (2013)). The majority found laches broadly available in many circuit courts as a defense to patent infringement prior to 1952, and therefore held laches under '282 to be an affirmative defense to legal relief.

The second question considered by the en banc court was “the extent to which laches can limit recovery of ongoing relief.” Id. at 37. Since the decision in Aukerman, the Supreme Court altered the test for equitable injunction in patent cases in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In light of eBay and Petrella , the majority opinion stated that “[c]onsideration of laches fits naturally into” the eBay four-factor test, and “district courts should consider all material facts, including those giving rise to laches, in exercising its discretion under eBay to grant or deny an injunction.” Id. at 38. Therefore, the majority reinstated the prior Federal Circuit panel's reversal of the district court's summary judgment grant of equitable estoppel, and remanded to district court for consideration of laches in weighing equitable relief.

In partial dissent, Judge Hughes stated that laches should be available only as an equitable defense to claims not governed by a statutory limitation period such as '286. The dissent argued that the majority opinion ignored common law precedent, before and after codification of the '286 statutory damages section of the 1952 Patent Act. Further, the legislative history of '286 contained no clear, direct reference to laches as a defense to infringement. In summary, Hughes stated that “[t]he Supreme Court's decision in Petrella did not depend on policies specific to copyright law. It turned on the conflict between laches and a statutory limitations period, and the longstanding principle that laches cannot bar a claim for legal relief.” Dissent at 18.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.

Federal Circuit: The PTAB Determination of the Timeliness of an IPR Petition Is Part of the Initial Decision to Institute an IPR, and Is Not Reviewable on Appeal

On Sept. 30, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Lourie, and Judge Linn issued a unanimous opinion, authored by Judge Linn, in Achates Reference Publishing, Inc. v. Apple Inc., Case No. 2014-1767, -1788. The panel held that it could not consider Achates' appeal either on the timeliness of Apple's inter partes review (IPR) petition or on its merits, and dismissed the appeals.

Achates first asserted its patent in district court against QuickOffice, Inc. One year after, Achates joined Apple to the suit. Apple then filed for IPR of Achates' patents. In response to Apple's petitions, Achates argued before the Patent Trial and Appeal Board (PTAB) that Apple's IPR was time-barred under 35 U.S.C. '315(b): “An inter partes review 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. The time limitation set forth in the preceding sentence shall not apply to a request for joinder.” Slip op. at 4 (citing 35 U.S.C. '315(b)). The PTAB determined that “none of the codefendants were real parties in interest or privies of Apple,” instituted the IPR proceedings, and invalidated all claims. Id. at 4-5. Achates appealed the PTAB's ruling on the applicability of the '315(b) time bar and its denial of Achates' motion for discovery to show the relevance of the '315(b) time bar through Apple's relationship with codefendants in the case.

In its opinion, the Federal Circuit panel first discussed IPR proceedings and covered business method review (CBMR) proceedings. Each has an initiation phase and a merits phase. The petition to initiate an IPR, which may concern any patent, is subject to the '315(b) time bar, while a CBMR, limited to certain types of business methods patents, is not subject to the time bar. See, Id. at 6. Under 35 U.S.C. '314(d) or '324(e), respectively, the PTAB's decision to initiate an IPR or CBMR is final and nonappealable. Id. Once initiated, both types of proceedings are judged on the merits and result in a final, appealable written decision.

Federal Circuit precedent has held that the decision whether to institute an IPR is not appealable. Id. at 7-8 (citing St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014) and In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (Fed. Cir. 2015)). However, the Federal Circuit has also held, in the context of a CBMR, that the decision whether a patent is of a type eligible for a CBMR, though “first determined by the Director at the initiation stage ' was necessarily implicated in the final merits determination and was appropriate for review.” Id. at 9 (citing Versata Dev. Grp., Inc. v. SAP America, Inc. (Versata II), 793 F.3d 1306 (Fed. Cir. 2015). This panel clarified that in the situation presented in Versata II “[t]he basis for this court's review ' was not merely that the Board decided it in the final determination stage but more significantly that it uniquely and fundamentally related to the Board's 'ultimate authority to invalidate' only CBM patents in a CBMR proceeding.” Id. at 10.

Here, the panel found that “because compliance with the time-bar does not itself give the Board the power to invalidate a patent,” the time bar decision did not go to the PTAB's “ultimate authority to invalidate.” Id. at 11. Therefore, the panel followed Cuozzo instead of Versata II, and held that '314(d) prohibited it from reviewing PTAB's determination that Apple was not time barred by '315(b). Because the Federal Circuit held that determination nonreviewable, the panel also could not review Achates' discovery motion appeals.

Federal Circuit: Laches Is an Affirmative Defense to Patent Infringement Codified in 35 U.S.C. '282

On Sept. 18, 2015, the Federal Circuit, sitting en banc , issued a precedential opinion, authored by Chief Judge Prost and joined by Judges Newman, Lourie, Dyk, O'Malley, and Reyna, in SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prod., LLC, Case No. 2013-1564. The en banc majority reinstated the prior Federal Circuit panel opinion affirming the district court's grant of summary judgment on laches and reversing the district court's grant of equitable estoppel, and remanded to the district court for consideration of laches within the eBay framework for equitable estoppel. Judge Hughes wrote a separate opinion, joined by Judges Moore, Wallach, Taranto, and Chen, concurring-in-part and dissenting-in-part.

Initially in 2003, SCA sent First Quality a letter alleging infringement of its adult incontinence product patent, U.S. Patent No. 6,375,646 ('646 patent). First Quality responded alleging invalidity of the '646 patent. In 2004, SCA petitioned for reexamination of the '646 patent, and in 2007 the USPTO concluded reexamination. Between 2003 and 2010, SCA and First Quality had no contact, and First Quality invested significant resources in developing its adult incontinence product line. In 2010, SCA sued First Quality for infringement of the '646 patent. The district court granted First Quality's motions for summary judgment of laches and equitable estoppel. SCA appealed. A Federal Circuit panel affirmed summary judgment as to laches, but reversed as to equitable estoppel. SCA petitioned for en banc rehearing to consider the U.S. Supreme Court decision in Petrella v. Metro-Goldwyn-Meyer, Inc., 134 S. Ct. 1962 (2014), which eliminated laches as an affirmative defense to copyright infringement.

The first question addressed was whether laches remained a valid affirmative defense to patent infringement after Petrella . Federal Circuit precedent A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), had held “that laches was codified in 35 U.S.C. '282.” Slip Op. at 11. Further, Aukerman held that laches did not conflict with 35 U.S.C. '286, the section providing a patent infringement damages limitation of six years, because “section 286 is not a statute of limitations in the sense of barring a suit for infringement.” Id. at 12 (citing Aukerman at 1030). Petrella compelled reexamination of this analysis of laches in patent infringement due to its reasoning that laches, as an equitable remedy, is “gap-filling, not legislation-overriding.” Id. at 14 (citing Petrella at 1974). Thus, the Federal Circuit reexamined the codification of '282.

The majority found no plain language supporting laches in the text of '282, but found a “catch-all provision in subsection (4): '[a]ny other fact or act made a defense by this title.'” Id. at 19 (citing 35 U.S.C. '282(b)(4)). To infer the contents of this “catch-all,” the majority discussed the legislative history contemporary to the enactment of the Act, finding reference to laches in a discussion of example defenses in the “catch-all” provision of '282. Since “'282 uses inclusive language” and the legislative history cites laches as an example defense within the scope of '282, the Federal Circuit majority concluded that '282 codifies laches as a defense to patent infringement. Id. at 22.

To further show that laches qualified as a legal remedy when codified in '282, the majority laid out in detail the landscape of the common law prior to enactment of the 1952 Patent Act, using the canon of construction that “[w]hen a statute covers an issue previously governed by the common law, we must presume that Congress intended to retain the substance of the common law.” Id. at 23 (citing Kirtsaeng v. John Wiley & Sons, Inc. , 133 S. Ct. 1351, 1363 (2013)). The majority found laches broadly available in many circuit courts as a defense to patent infringement prior to 1952, and therefore held laches under '282 to be an affirmative defense to legal relief.

The second question considered by the en banc court was “the extent to which laches can limit recovery of ongoing relief.” Id. at 37. Since the decision in Aukerman, the Supreme Court altered the test for equitable injunction in patent cases in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In light of eBay and Petrella , the majority opinion stated that “[c]onsideration of laches fits naturally into” the eBay four-factor test, and “district courts should consider all material facts, including those giving rise to laches, in exercising its discretion under eBay to grant or deny an injunction.” Id. at 38. Therefore, the majority reinstated the prior Federal Circuit panel's reversal of the district court's summary judgment grant of equitable estoppel, and remanded to district court for consideration of laches in weighing equitable relief.

In partial dissent, Judge Hughes stated that laches should be available only as an equitable defense to claims not governed by a statutory limitation period such as '286. The dissent argued that the majority opinion ignored common law precedent, before and after codification of the '286 statutory damages section of the 1952 Patent Act. Further, the legislative history of '286 contained no clear, direct reference to laches as a defense to infringement. In summary, Hughes stated that “[t]he Supreme Court's decision in Petrella did not depend on policies specific to copyright law. It turned on the conflict between laches and a statutory limitations period, and the longstanding principle that laches cannot bar a claim for legal relief.” Dissent at 18.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.