IPR Service of Complaint Bar applies if Party was Served with a Complaint More Than One Year Before IPR Filing Date and that Party was a Real Party in Interest or Privy of IPR Petitioner as of IPR Institution Date
In Power Integrations, Inc. v. Semiconductor Components Industries LLC, 2018-1607 (Fed. Cir. June 13, 2019), the Federal Circuit reversed the Patent Trial and Appeal Board (PTAB) final written decision that the challenged claims of Power Integration System’s patent US 6,212,079 were unpatentable. The Federal Circuit found that the IPR was barred due to service of a complaint on a party that merged with the petitioner after the IPR was filed, but before the IPR was instituted.
A petition for inter partes review (IPR) is barred if the petition is filed “more than 1 year after the date on which petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” 35 U.S.C. §315(b). Before this Federal Circuit decision, the PTAB has consistently held that the IPR filing date was the key date for determining whether any real-party-in-interest or privy of the petitioner had been served with a complaint more than one year before the IPR filing date. See Synopsis v . Mentor Graphics, IPR2012-00042, Paper 60 at 11-14 (PTAB Feb. 19, 2014); ARRIS v. TQ Delta, IPR2016-00430, Paper 9 at 6 (PTAB July 1, 2016). If a third party became a real-party-in-interest (RPI) or privy of the petitioner after the IPR was filed, then it did not matter whether the third party was served with a complaint more than one year before the IPR petition was filed.
In Power Integrations, petitioner ON Semiconductor informed the PTAB of a merger agreement with Fairchild but explained that the merger was not final. The merger was finalized after the IPR was filed but before the IPR was instituted. The PTAB instituted review, finding that the third party was not an RPI had “no role in the decision to file the IPR, had no control over the content of the IPR petition, and did not pay for the IPR petition.” See Power Integrations, Inc. v. Semiconductor Components Industries LLC, 2018-1607 at page 5. The PTAB instituted review and, after a trial, the final written decision held that all challenged claims were unpatentable.
The Federal Circuit disagreed with the PTAB, finding the statute’s language that the IPR “may not be instituted” means that “privity and RPI relationships after filing but before institution” are “relevant to the §315(b) analysis.” See Power Integrations, 2018-1607 at page 14 (emphasis in original). The USPTO rule requirement that the petitioner must send an update to the PTAB within 21 days of any change in real parties in interest “would make little sense unless it was relevant to the ongoing proceedings.” See Power Integrations, 2018-1607 at page 19. The Federal Circuit refused to give Chevron deference to the PTAB’s interpretation of the statute because the USPTO rule regarding the complaint service bar (37 C.F.R. 42.101(b)) “merely parrots the statutory language” and the PTAB’s previous final written decisions are not even binding on other PTAB panels. See Power Integrations, 2018-1607 at pages 20-21.
Potential IPR petitioners who are engaged in negotiations to merge with, acquire, or be acquired by another entity should be aware of this decision. The practice of quickly filing an IPR before a merger (or other acquisition) takes place is no longer available.
The Federal Circuit decision may be found at the following link: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1607.Opinion.6-13-2019.pdf
John M. Bird is a partner in the Washington, DC Office of Sughrue Mion PLLC. His focus is on the protection and enforcement of designs and a wide range of electrical and mechanical technologies, including analytical/measurement systems, medical devices, HVAC systems, printers/copiers, telecommunications systems, data recording mediums, semiconductor fabrication, bearings, welding processes, sports equipment, footwear, and various automobile components, such as tires, transmissions, engines, fuel-injection systems, motors, lamps, steering systems, connectors/wiring, valves, and control/monitoring systems.
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