Federal Circuit Nos. 2015-1726, 2015-1727
Author: L. Roman Rachuba
In Husky Injection Molding v. Athena Automation, the Federal Circuit (“CAFC”) held that the court did not have jurisdiction to determine whether the Patent Trial and Appeal Board (“PTAB”) properly refused to acknowledge assignor estoppel in instituting an Inter Partes Review (“IPR”).
Athena filed a petition to institute an IPR with respect to Husky’s patent No. 7,670,536 (“the ’536 Patent”) in 2012. In its reply, Husky argued that Athena should be estopped from petitioning to institute based on assigner estoppel. Assignor estoppel is an equitable doctrine which prevents one who assigned the rights of a patent from later claiming invalidity. See Diamond Sci. Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988). Specifically, Husky argued that since Athena was founded and owned by Robert Schad, who had previously owned Husky, and was one of the named inventors and original assignors of the ‘536 Patent, Athena was in privity with Schad. Typically, assignor estoppel applies to privies as well as assignors.
The PTAB held that assignor estoppel was not applicable in IPRs for two reasons. First, the Board interpreted 35 U.S.C. § 311, which provides that “a person who is not the owner of a patent may file with the Office a petition to institute”, to mean just that. Second, the Board determined that since Congress did not provide for “all legal and equitable defenses”, as they had in similar ITC investigations, Congress did not intent equitable defenses to apply to IPR proceedings. After the PTAB invalided several claims of the ‘536 Patent, Husky appealed to the CAFC.
35 U.S.C. § 314(d) provides that the PTAB’s decision to institute an IPR shall be final and non-appealable. Recently, in Couzzo Speed Techs., the Supreme Court held that there are certain exceptions to § 314(d)— when the decision to institute is based on constitutional questions, on a “less closely related statute”, and when there are other questions that go beyond § 314(d). Separately, the CAFC has held that there is another exception—when the PTAB’s decision implicates the PTAB’s “ultimate invalidation authority” with respect to a particular patent. Versata v. SAP, 793 F.3d 1320 (Fed. Cir. 2015).
In Husky, the CAFC held that because the PTAB based its decision on § 311, which they concluded was a “closely related” statute with respect to § 314(d), the court did not have jurisdiction to decide if the PTAB acted properly. In its holding, the CAFC determined that “at least those [statutes] that define the metes and bounds of the inter partes review process” are “closely related” to § 314(d).
Moving forward, as Judge Plager noted in his dissent, Husky may provide a means for parties to effectively insulate themselves from CAFC review in IPR proceedings. Parties may present arguments in such a way as to have the PTAB base a decision to institute on a “closely related” statute.