USPTO leadership’s ruling all but eliminates exceptions to filing late IPR petitions

The Precedential Opinion Panel agreed with 360Heros that the one-year time-bar began tolling from the filing date of a counterclaim alleging patent infringement.

BY STEVE BRACHMANN

Could a recent decision by patent office leadership mean an escape route from the Patent Trial and Appeal Board “death squad”?

On August 23, the PTAB’s Precedential Opinion Panel issued a decision granting patent owner 360Heros’ request for rehearing of an earlier PTAB decision to institute an inter partes review requested by U.S. technology company GoPro. The decision also denied institution of that IPR under the one-year time-bar codified under patent law. (Editor’s note: An IPR challenges the validity of a patent.)

The panel agreed with 360Heros that the one-year time-bar began tolling from the filing date of a counterclaim alleging patent infringement, even though the consumer electronics retailer didn’t own the patent when the complaint was filed.

The POP held that the date of service of the complaint is all that matters, “regardless of whether the serving party lacked standing to sue or the pleading was otherwise deficient.”

The POP panel—which sets precedent for the PTAB—included U.S. Patent and Trademark Office Director Andrei Iancu, Commissioner for Patents Drew Hirshfeld and PTAB Chief Administrative Patent Judge Scott Boalick.

The dispute

The case stems from an action for declaratory judgment of, among other things, non-infringement of the patent in question filed by GoPro in April 2016. 360Heros filed a counterclaim alleging patent infringement in August 2016, two months before the patent-at-issue was formally assigned to the entity. The district court later dismissed the counterclaim for lack of standing on a motion for summary judgment.

GoPro filed for IPR proceedings to challenge the validity of U.S. Patent No. 9,152,019 in September 2018. This was within one year of a District of Delaware patent infringement complaint filed by 360Heros, which argued that the dismissed counterclaim filed in the Northern District of California should instead be considered the original complaint for patent infringement served, starting the time-bar.

In the original institution decision, the PTAB found that the California filing didn’t trigger the time-bar. The PTAB had disagreed with 360Heros that the United States Court of Appeals for the Federal Circuit’s 2018 en banc decision in Click-to-Call Technologies v. Ingenio didn’t apply to this case because the standing issue present wasn’t considered in that decision.

Further, the board found that 360Heros ignored other PTAB cases in which ownership of a patent at the time of filing a complaint or counterclaim for infringement was required to start the time-bar running.
360Heros filed a request for rehearing of the time-bar issue by the PTAB POP, and an oral hearing on the issues was conducted in late July. Megan Chung of Kilpatrick Townsend argued on behalf of GoPro; Robert Greenspoon of Flachsbart & Greenspoon argued on behalf of 360Heros.

Chung began oral arguments by offering three reasons a plaintiff’s counterclaim for patent infringement when that plaintiff lacks standing doesn’t start the time-bar: 1) Without standing, there is no proper complaint or service of the complaint; 2) The statute and its legislative history confirms that only a patent owner or a successor in interest can serve a proper complaint; and 3) the federal circuit’s decision in Hamilton Beach Brands v. f’real Foods confirmed that Click-to-Call didn’t consider whether standing affected the time-bar.

Director Iancu asked where standing was referenced in the statute:

“But there can be many deficiencies in any complaint, right? So, it doesn’t specify that it’s got to be a complaint, a proper complaint, a fully… ironclad complaint. It doesn’t say it’s a complaint with standing… The various requirements you are alluding to don’t seem to be in the statute per se, are they?”

Iancu: ’You were on notice’

Although the statute itself doesn’t include the world “proper,” Chung argued that the ordinary meaning of the statute’s wording would require proper official service. Responding to Commissioner Hirshfeld, Chung said that the statute was ambiguous and that other factors, such as the statute’s title, indicated that the statute must refer to the patent owner whose district court action must include a proper “complaint”—which GoPro used interchangeably with “counterclaim” throughout the hearing.

Chief Judge Boalick asked Chung how she reconciled her view on the statute’s ambiguity with Click-to-Call, which held that there was no ambiguity in the statutory language. Chung said that the federal circuit did end up interpreting service as official service complying with rules of the civil action. Because 360Heros’ complaint wasn’t proper, Chung argued that the service couldn’t be considered proper either.

Chief Judge Boalick inquired as to why GoPro’s nullification argument should hold any more weight than the nullification argument that failed in Click-to-Call. Chung answered that, while Click-to-Call involved a civil case dismissed without prejudice, the standing issues in the present case were more similar to issues decided by the Supreme Court in Lujan v. Defenders of Wildlife (1992), where standing was determined at the time that the lawsuit was initiated.

Director Iancu asked if it made a difference that GoPro started the civil action by filing the declaratory judgment action against the entity that it mistakenly believed owned the patent in question:

“[F]rom the Petitioner’s point of view, you were aware of the issues. In fact, you initiated the lawsuit. So, you could have at the same time or shortly thereafter filed a petition for IPR. As far as you are concerned, you were on notice about this particular patent.”

A new game?

The 360Heros ruling’s potential impacts are immense. For the first time since the America Invents Act became law in 2011, the shoe could be on the other foot for patent holders.

One IPWatchdog commenter, self-identified only as “Nobody of Consequence,” proposed the following approach:

“Independent inventors should jointly create a list of every patent they think is or may in the future be infringed by Apple, Google, Facebook, etc. Create a shell company in the Virgin Islands—no need to assign the patents to the shell. Have the shell company file and serve a complaint alleging infringement of 10,000+ patents and dismiss the case the next day. Wait a year before filing suit on any of the listed patents.”

Subsequent commenters pointed to the inherent risks of this type of gamesmanship. However, given the options for small inventors in the current climate, any leg up may be worth considering.

IPWatchdog founder and CEO Gene Quinn added:

“I suspect there will be patent owners who will look at this decision and seek ways to for the first time create leverage against infringers who for too long have engaged in a game of efficient infringement. These patent pirates have had the upper hand, and patent owners have been a punching bag.

“Whether what transpires amounts to gaming, as suggested by “Nobody of Consequence,” or just sound litigation strategy will likely be in the eye of the beholder and based on the magnitude and legitimacy of the complaints served.”

Emily Rapalino, a partner with Goodwin, said the decision has “created a bright line rule that’s easier for PTAB to administer.”