IP News

Almost two decades ago, in 2001, Inforocket.com sued Keen, Inc. for patent infringement of U.S. Patent No. 5,818,836 (the '836 Patent). Subsequently Keen, Inc. acquired Inforocket.com, and, as part of the merger, the parties dismissed the suit without prejudice in 2003. Keen, Inc. went through a series of mergers, acquisitions, and name changes from 2003 to 2019. It ended up becoming a part of Dex Media, Inc. and is now named Thryv, Inc. While the mergers and acquisitions were ongoing, the '836 Patent was assigned to Click-to-Call Technologies, L.P. and was asserted against various defendants. Ironically, Thryv, the owner of the '836 Patent in another life, found itself as one of the defendants accused of infringing the same. See generally, Click-To-Call Techs., L.P. v. Ingenio, Inc., 899 F.3d 1321 (Fed. Cir. 2018).

The defendants challenged the validity of the patent by filing a petition for an IPR, and the case has bounced up and down multiple times between the Federal Circuit and the PTAB since. At issue is whether the §315(b) time bar applies to Thryv, Inc. for the case that was filed against it in 2001 when it was Keen, Inc.

The AIA and IPR

With the AIA, Congress greenlit a process of post-grant litigation that was previously reserved only for Article III courts. IPRs, however, are adjudicated before the PTAB even though they take on a litigation-like persona. Expert testimony is used, extrinsic evidence is oftentimes considered, and the Board makes a decision that could ultimately invalidate a patent. IPR proceedings occur in two distinct phases. First, there is an institution phase during which the Board decides whether it will conduct the IPR trial after a petition is filed. Second, the Board proceeds to a merits phase during which the Board conducts a trial and determines the patentability of the challenged claims with the reasoning explained in a final written decision. Congress stated that "[t]he determination … whether to institute [and therefore move to the second phase of] an inter partes review … shall be final and nonappealable." 35 U.S.C. §314(d). While the Federal Circuit was allowed the opportunity to review a final written decision, they could not review the Board's decision whether or not to institute a petition for IPR in the first phase.

Pre-Suit History

As part of the terms of the merger, Inforocket.com dismissed its 2001 case without prejudice. The newly-merged Keen, Inc. then changed its name to Ingenio, Inc. and eventually assigned the rights to its patent to Click-To-Call in 2011. Click-To-Call then began asserting the '836 Patent against various parties in the Western District of Texas in 2012. Among the defendants was Ingenio, which, after further sales and name changes had become Dex Media, Inc. and is now Thryv, Inc.

In response to the lawsuit, the defendants collectively filed a single petition for IPR alleging the claims of '836 Patent were either anticipated or obvious. In an attempt to avoid institution, Click-To-Call responded by arguing the §315(b) time bar applied because Thryv was a party to the lawsuit involving the '836 patent in 2001 when it was known as Keane, Inc. The PTAB rejected Click-To-Call's argument and instituted the IPR trial phase where the Board determined the patent was invalid. On appeal, Click-To-Call challenged the Board's decision to institute notwithstanding its time bar argument, and ultimately, after en banc review considering multiple developments in both the Federal Circuit and the Supreme Court, the Federal Circuit held that not only could it review the Board's decision to institute, but also reversed the Board's rejection of the time bar.

Prior Cases

The Federal Circuit has weighed in on the same issue multiple times. In Achates Reference Publ'g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015), the Federal Circuit held "35 U.S.C. §314(d) prohibits [the Federal Circuit] from reviewing the Board's determination to initiate IPR proceedings based on its assessment of the time bar of §315(b)." 803 F.3d at 659. While Click-To-Call's case was on one of its many trips through the appeals process, the Supreme Court decided Cuozzo Speed Techs. v. Broadcom Corp., 136 S. Ct. 2131 (2016), where the Court blurred the lines of the seemingly straight-forward text of §314(d)'s bar to reviewing the Board's decision to institute. In reviewing whether the Board properly instituted an IPR after the respondent claimed that the petitioner had not pled with particularity as required by §312(a)(3), the Court did not close the door to appealing the Board's decision to institute an IPR altogether. Instead, the Court explained that "[f]or one thing, this is what §314(d) says" but then went on to note that §314(d) would not bar appeal of "constitutional questions" or questions that "depend on other less closely related statutes." 136 S. Ct. at 2139.

After considering Cuozzo, the Federal Circuit again denied to hear Click-To-Call's claims based on its related decision in Wi-Fi One, LLC v. Broadcom Corp., 837 F.3d 1329 (Fed. Cir. 2016). There, the Federal Circuit held Cuozzo did not overrule Achates. En banc, the court about-faced and expressly overruled Achates and held that time bar determinations and their relation to the Board's decision to institute were appealable. Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364 (Fed. Cir. 2018) (en banc). The majority found "no clear and convincing indication in the specific statutory language of the AIA, the legislative history of the AIA, or the statutory scheme as a whole that demonstrates Congress's intent to bar judicial review of §315(b) time bar determinations." Id. at 1372. According to the majority's reasoning, this was one instance of "less closely related statutes" that the Supreme Court had carved out exceptions for in Cuozzo.

Outlook

Click-To-Call's appeal tees up quite a few issues for the Supreme Court to resolve. At the most granular level, the Court will decide whether the §315(b) time bar can truly be appealed and whether this case was justiciable by an Article III court in the first place. At the highest level, the Court will add to its ever-evolving body of administrative law to provide more guidance on what level of autonomy and freedom Congress can bestow on Article I tribunals before impinging on the rights of litigants to access Article III courts.

The Dec. 9th, 2019 oral argument in Thryv highlights the ramifications of the interplay between the purpose of the IPR and allowing litigants avenues afforded by law. Thryv argued that, if affirmed, the Federal Circuit's ruling jettisons not only Cuozzo, but also one of the main purposes of IPRs in general — expediency and cost savings. But Click-To-Call seemed to make headway with its argument that expediency does not outweigh the right to a fair trial. Considering that a clearly time barred petitioner could be saved by an erroneous ruling by the Board that results in invalidating a patent, Justice Gorsuch pointed out how the system could be potentially abused, asking Thryv, "[y]ou're telling the court there's no review of that decision?"

Justice Ginsburg commented that the idea of going through the time and expense of an entire invalidity phase only to have the decision reversed because of an incorrect application of the §315(b) time bar to be "unseemly." Justice Kagan echoed Justice Ginsburg's concerns when she noted that an IPR proceeding could go all the way through on the merits, only to be reversed because of a time bar, when "what we know by now is an invalid patent." Both justices seemed to draw heavily on SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018), where the Court found the possibility of administrative tribunals to do as Justice Gorsuch foresaw to be exclusively in the realm of hypotheticals. "If a party believes the Patent Office has engaged in 'shenanigans' by exceeding its statutory bounds, judicial review remains available consistent with the Administrative Procedure Act, which directs courts to set aside agency action 'not in accordance with law' or 'in excess of statutory jurisdiction, authority, or limitations.'" 138. S. Ct. at 1360 (citations omitted).

From a litigant's point of view, this case puts a strain on petitioners and respondents alike. If affirmed, parties now have the threat of seemingly endless litigation back-and-forth between the PTAB and the Federal Circuit, with the threat of additional litigation in district court looming. With that, the promise of cost-savings by using IPR may be illusory. Adding the ability to review a §315(b) determination by the Board only adds more fuel for a litigant to draw out litigation. A party could go through all the discovery, briefing, and costs necessary for an IPR only to have a patent pried away from the grasp of certain death such as in Click-To-Call's case. The question remains if in such a case the resuscitated patent really has any force or is just a vehicle to delay litigation.

If reversed (the Supreme Court has reversed 70% of the Federal Circuit cases it has heard since 2007), efficiency comes at the cost of allowing or denying a litigant the chance to have the time bar reviewed.

One might posit that if the Supreme Court finds the §315(b) time bar appealable, the Court also would rule on whether a dismissal without prejudice, as in Thryv's case, negates the effect of service of the complaint under the time bar statute. It is possible that the Court declines to comment on that question because it is moot if the Court finds there is no appellate jurisdiction over the time bar issue.

The case, regardless of how it's decided, reminds parties to an IPR to remain cognizant of their corporate structure and history. In the fast-moving world of acquisitions and mergers, litigants need to be aware of how their predecessors' actions may affect their avenues for legal relief.

The case also highlights the interplay between Article I tribunals and Article III courts. When Congress makes the rules and then creates the body that adjudicates them, as it did with the AIA, it begs the question of where a line must be drawn in the sand as to who is the final arbiter of jurisdiction. At the end of the day, Article III lower courts must answer to the Supreme Court, but, according to Thryv, the Board, in its decisions whether to institute IPRs, answers to no one.

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Shaleen J. Patel is an associate in the Intellectual Property Department of Pepper Hamilton LLP, resident in the Boston office. He can be reached at [email protected].