Federal Circuit Holds that Issue Joinder is Unavailable in IPRs

March 24, 2020
Firm Publication

In Facebook, Inc. v. Windy City Innovations, LLC, No. 2018-1400 (Fed. Cir. Mar. 18, 2020), the Federal Circuit held that the “clear and unambiguous text of” 35 U.S.C. § 315(c) does not authorize “same-party joinder” and “issue joinder” in inter partes reviews (IPRs). In so doing, the court reversed the USPTO’s Precedential Opinion Panel (POP), which had issued a contrary precedential decision. The Federal Circuit’s decision is important because accused infringers now need early identification of the accused claims well before the one-year time-bar or else they may have to include every claim in their IPR petitions. The latter option would have been extraordinarily difficult and expensive in Facebook, because the patents at issue had a total of 830 claims.

The Statutes at Issue

Two issues concerning the interpretation of 35 U.S.C. 315(c) were at issue in this case:

  1. Whether that section permits a person to be joined as a party to a proceeding in which it was already a party (same-party joinder).
  2. Whether it permits new issues to be added to an existing IPR through joinder (new-issue joinder), including issues that would otherwise be time-barred under 35 U.S.C. 315(b).

Section 315(b) establishes the time-bar that prohibits institution of a petition filed by a petitioner, real party in interest, or privy of the petitioner more than one year after one of those is served with a complaint alleging patent infringement.  Section 315(c) grants the Director discretion to “join as a party” to a prior-filed IPR petition “any person who properly files a petition,” if warranted by the Director.

The Case’s Timeline Was Critical

Windy City Innovations, LLC (Windy City) filed a complaint against Facebook, Inc. (Facebook) accusing Facebook of infringing four patents containing a total of 830 claims, but that complaint did not identify the specific patent claims that were allegedly infringed. Nevertheless, Facebook filed IPRs for some of the claims of those patents.  Then, after expiration of the one-year time-bar period of § 315(b), Windy City identified the claims it was asserting in district court, and Facebook then filed two additional IPR petitions to cover those claims along with motions to join the petitions to the earlier proceedings to avoid the time-bar. The Patent Trial and Appeal Board (PTAB) instituted those two new petitions and joined them to the earlier petitions, eventually issuing Final Written Decisions finding some claims unpatentable as obvious. The PTAB allowed joinder here based on the POP’s prior finding in Proppant Express Investments, LLC v. Oren Techs., LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019), which we discussed here.  Facebook appealed the PTAB’s decisions that did not find certain claims unpatentable, and Windy City cross-appealed the decisions to challenge the PTAB’s joinder decision.

Same-Party Joinder

As a threshold consideration, the court noted that “the [PTAB] understood Facebook to be requesting that its later proceedings be joined to its earlier proceedings.” This was improper because § 315(c) allows for the joinder of parties, not proceedings.  Section 315(c) does not allow for the joinder of proceedings because that is what the consolidation provisions of § 315(d) provide and allowing joinder of proceedings under § 315(c) would render that provision superfluous.

After that clarification, the court addressed whether a person may be joined as a party to a proceeding in which it is already a party. It stated that an interpretation allowing such joinder would hinge on “an extraordinary usage of the term ‘join as a party’ to refer to persons who were already parties.” Further, comparison to the Federal Rules of Civil Procedure where “joinder of a person as a party is uniformly about adding someone that is not already a party” further supported the court’s construction of the statute’s terms as having “their customary, ordinary meaning in law.”

The court also addressed the POP’s decision in Proppant Express Investments, LLC.  There, the POP concluded that § 315(c) permits a petitioner to be joined to a proceeding in which it is already a party, but with the Federal Circuit’s decision here, it determined that USPTO precedential decision is incorrect because the interpretation of “any person” would not properly include oneself.

Therefore, § 315(c) is interpreted as not authorizing either joinder of two proceedings or joinder of a person to a proceeding in which that person is already a party.

New-Issue Joinder

The Federal Circuit explained that “the language in 315(c) does no more than authorize the Director to join 1) a person 2) as a party, 3) to an already instituted IPR,” so this language does not authorize an existing party to bring new issues into an existing proceeding, particularly when those issues are time-barred. Although the statute does not prohibit such a joinder, the lack of an express prohibition of issue joinder does not make the statute ambiguous as to the joinder of new issues.

While § 315(c) grants the Director the discretion to allow a party to join an already-existing proceeding, it “does not permit the joined party to bring new issues from the newer proceeding into the existing proceeding.” That interpretation would improperly join proceedings, rather than parties, which the court already deemed improper. The Federal Circuit additionally concluded that neither the legislative history nor the final committee reports on the bill compelled a different result.

Facebook’s Policy Argument

The court also addressed Facebook’s policy argument that prohibiting issue joinder when an accused infringer is not notified of which patent claims it is accused of infringing at the end of the one-year bar “leaves a dangerous incentive for patent owners to file suit on patents containing hundreds of claims.” The patent owner could then delay the suit to run the clock on § 315(b)’s time-bar, leaving the accused infringer without any practical possibility of seeking IPR. An accused infringer faced with alleged infringement of hundreds of claims (830 here) would thus be left with the difficult choice of seeking review of only some claims or addressing hundreds of claims, and incurring the costs and risks that go along with this. Facebook contended this would be at tension with the goal for IPRs to be quick, cost-effective alternatives to litigation. The Federal Circuit acknowledged this tension but was not persuaded, and noted that accused infringers are still left with the options of using IPR to challenge hundreds of claims, some claims, or none, and they also retain the ability to challenge those claims in district court without engaging in IPR at all. The court also suggested that “[a]ccused infringers who wish to protect their option of proceeding with an IPR may, moreover, make different strategy choices in federal court so as to force an earlier narrowing or identification of asserted claims.”

Deference to the USPTO’s Interpretation

Because it determined that § 315(c)’s language was clear and unambiguous, the Federal Circuit also concluded that the USPTO’s interpretation of that statute was owed no deference under Chevron, U.S.A., Inc. v. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984).

Conclusion

Defendants’ options narrow after Facebook. An accused infringer facing many claims needs to try to force the plaintiff to identify the accused claims as early as possible. If unable to do so, the accused infringer may be left challenging every claim at issue in IPRs at a potentially huge expense. The alternatives to this approach are to select those claims to challenge in IPRs where the remaining claims have a strong non-infringement defense or possibly fight everything out at the district court. Both of these options, however, effectively rob defendants of the powerful, cost-effective litigation alternative that IPRs provide. Using a hybrid approach of filing some IPRs and fighting the rest at the district court would cause the accused infringer’s costs to skyrocket because it is forced to prosecute perhaps several or more IPRs while simultaneously defending at the district court. And fighting the entire case at the district court in front of a jury provides its own set of risks.  Both of these alternatives are contrary to the goal of the AIA, and thus courts should require plaintiffs to identify the accused claims early in the litigation.

If you have questions about what recent USPTO decisions mean for your business, please contact the authors.