AIA Post-Issuance Proceedings – Patent Owner’s Preliminary Response Persuades PTAB Denial of IPR
In accordance with the statutory provisions of the America Invents Act, a patent owner may at his/her option file a preliminary response to a third-party petition requesting inter partes review (IPR) of a patent. Through the first quarter of 2014, about 55 percent of patent owners opted to file preliminary responses to IPR petitions, while 45 percent of patent owners opted instead either to expressly waive or file no preliminary response.
There are a number of factors that weigh against filing of preliminary responses. Like IPR petitions, preliminary responses are generally limited to 60 pages in length, and must be filed no later than three months after receiving notice that the IPR petition has been granted a filing date. In addition, preliminary responses may include no new testimonial evidence or claim amendments.
Whether or not opting to file a preliminary response, the patent owner will be provided with a subsequent opportunity to present a response three months after a decision on the petition. While subject to the same page limits as the preliminary response, the later-filed response is not subject to the same testimony restrictions and provides the patent owner with about six months of additional preparation time. As a result of this time difference, the filing of a preliminary response has been soundly criticized by some as disadvantageously conceding a patent owner’s “element of surprise.”
Experience suggests that a preliminary response may be advantageously filed in cases where a patent owner can identify compelling procedural and substantive reasons to deny the petition and avoid institution of the IPR. A recent example of this advantage is illustrated in Apple Inc. v. Rensselaer Polytechnic Institute and Dynamic Advances, LLC (IPR2014-00319). As explained by Apple in a Petition for Inter Partes Review (IPR2014-00319) filed January 3, 2014, the patent at issue (U.S. 7,177,798) was the subject of an earlier-filed petition for IPR (IPR2014-00077), a first infringement suit filed by Dynamic Advances in the Northern District of New York on October 19, 2012 (“Dynamic I”), and a second infringement suit filed by Rensselaer and Dynamic Advances in the Northern District of New York on June 6, 2013 (“Dynamic II”).
In an IPR petition, the petitioner is required to demonstrate standing. As one required element of standing, an IPR petition must be filed no later than “one year after the date on which the petitioner, the petitioner’s real party-in-interest, or a privy of the petitioner is served with a complaint alleging infringement of the patent.” In considering this requirement, Apple’s petition asserted that service of the Dynamic I complaint was immaterial, because the Dynamic I suit had been dismissed without prejudice and was therefore a “nullity.” (citing Macauto USA v. BOS GMBH, IPR2012-00004, Paper 18). Because service of the Dynamic II complaint occurred less than one year before the petition was filed, Apple contended that this required standing element was present.
In a preliminary response to the petition, patent owner Rensselaer argued that Apple’s reliance on Macauto was misapplied. Rensselaer argued that Macauto applied only under circumstances where a dismissal leaves the parties in a position “as though the action had never been brought,” and asserted that the dismissal of Dynamic I pursuant to a consolidation with Dynamic II under Fed. R. Civ. P. 42 failed to meet this criterion. Because service of the Dynamic I complaint occurred more than one year prior to the petition filing date of January 3, 2014, Rennselaer concluded that Apple’s petition was untimely and should be denied.
In a Decision Denying Institution of Inter Partes Review, the Patent Trial and Appeal Board (PTAB) of the U.S. Patent & Trademark Office agreed with Rensselaer:
Although the Court’s order consolidating Dynamic I and Dynamic II dismissed Dynamic I “without prejudice,” the Court’s order specifically stated that the “parties will proceed to litigate their claims and defenses in [Dynamic II],” stated that discovery from Dynamic I would be treated as if it was filed in Dynamic II, and specifically bound the parties to positions taken in Dynamic I. Ex. 1022. Given these facts, we conclude that the Dynamic I case did not cease in the same sense as a complaint dismissed without prejudice and without consolidation—it was consolidated with another case, and its complaint cannot be treated as if it never existed.
In sum, Petitioner has failed to show that we should treat a dismissal without prejudice pursuant to a consolidation under Fed. R. Civ. P. 42 in the same way as a dismissal without prejudice, without consolidation, under Fed. R. Civ. P. 41(a).
Rensselaer’s preliminary response asserted a number of other grounds for denying Apple’s petition, including disputed claim constructions and arguments that the asserted prior art grounds were redundant with grounds found unpersuasive in the earlier-filed IPR petition (IPR2014-00077). In the end, Rensselaer’s arguments with regard to standing presented a “slam dunk” sufficient for the PTAB to deny the petition without consideration of any of Rensselaer’s additional grounds.