March 20, 2020Client Alert

Federal Circuit Rewrites the Rules on Joinder in PTAB Proceedings

On March 18, 2020, the United States Court of Appeals for the Federal Circuit overruled Patent Trial and Appeal Board (PTAB) precedent and restricted a party from joining its own inter partes review (IPR) and from joining new issues from a different proceeding to another existing IPR. Facebook, Inc. v. Windy City Innovations, LLC, No. 2018-1400 (Fed. Cir. Mar. 18, 2020). In a panel opinion authored by Chief Judge Sharon Prost, the appellate court held that 35 U.S.C. § 315(c) was “clear and unambiguous” in prohibiting same-party joinder and joinder of new issues.

In March 2019, the PTAB Precedential Opinion Panel (POP) issued an opinion permitting a petitioner to be joined to a proceeding in which it is already a party and allowing joinder of new issues into an existing proceeding. Proppant Express Invs., LLC v. Oren Techs., LLC, No. IPR2018- 00914, Paper 38, at 4 (P.T.A.B. Mar. 13, 2019). The PTAB followed that precedent in this case when it allowed Facebook to join its two new, time-barred IPRs to its existing IPRs of Windy City’s patents. On appeal of the PTAB’s final written decision on Facebook’s IPRs, Windy City argued that the PTAB’s same-party joinder and joinder of new issues to an existing IPR were improper under Section 315(c).

Section 315(c) provides in relevant part: “If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition.”  The court succinctly stated that Section 315(c) “does no more than authorize the Director to join 1) a person 2) as a party, 3) to an already instituted IPR.”  The court found the PTAB’s interpretation of the statute flouts this unambiguous meaning of the statute for two reasons. First, “any person” plainly does not extend to oneself because an existing party to a proceeding is not capable of being joined to a proceeding. Second, Section 315(c) does not authorize a joined party to bring new issues into the existing proceeding because doing so would “improperly join proceedings, rather than parties.” In addition to the plain language of the statute, the legislative history indicates that 315(c) was meant to allow other petitioners to join an IPR, but not to bring new issues into an existing IPR from a new proceeding, particularly a time-barred petition such as the two filed by Facebook.

Because the court held that the PTAB’s interpretation of Section 315(c) was erroneous under the unambiguous meaning of the statute, the majority opinion did not address whether the PTAB’s prior precedential opinion in Proppant is entitled to deference under the Supreme Court decision in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). An exception to the Chevron doctrine provides that a court does not owe deference to an administrative agency where there is no uncertainty in the statute. The court here found that it need not reach the issue of whether the precedential decision was owed deference because no uncertainty existed.

The parties and several amici curiae, including the United States, however, filed briefs arguing whether the Proppant opinion is entitled to deference. For this reason, in a relatively uncommon occurrence, the Federal Circuit panel also issued “additional views” accompanying the majority opinion to clarify how the judges would have ruled if the statute was ambiguous. These additional views conclude the patent statute does not authorize the PTAB or the Director of the USPTO to undertake statutory interpretation or rulemaking through precedential opinions and that, conversely, any rulemaking by the USPTO shall be made by prescribing regulations. As a result, the Proppant decision would not have been entitled to deference. Interestingly, this holding would avoid the issue of whether Chevron should be overruled should the case make its way to the Supreme Court.

This decision will have far reaching implications because joinder of petitions has become a common way of avoiding the time bar governing IPR petitions. The PTAB, the Federal Circuit, and perhaps ultimately the Supreme Court will continue to grapple with the scope of the PTAB’s authority both with respect to joinder and with respect to rulemaking in general. It will be important to monitor further developments in the case law that are certain to follow.

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