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IP Alert: Federal Circuit Rules § 315(c) Does Not Authorize Same-Party Joinder or Joinder of New Issues

March 23, 2020

On March 18, in Facebook, Inc. v. Windy City Innovations, LLC, the Federal Circuit held that the Patent Trial and Appeal Board (PTAB) erred in allowing a petitioner to join itself to an inter partes review (IPR) to which it was already a party and in allowing the petitioner to add new challenged claims through the joinder. In an addendum to its opinion, the Federal Circuit also maintained that decisions by the PTAB’s Precedential Opinion Panel (POP) are not entitled to what is known as Chevron deference by reviewing courts.

Windy City filed a patent infringement suit against Facebook, asserting four patents. In its complaint, Windy City did not specify which of the patents’ 830 claims Facebook infringed. On the last day of the one-year window under 35 U.S.C. § 315(b), Facebook filed four IPR petitions challenging some but not all of the claims in Windy City’s four asserted patents. The PTAB instituted these IPRs on nearly all grounds. Four months after the one-year window, Windy City identified the claims that it was asserting in the district court case. Of the asserted claims, some were not challenged in Facebook’s IPR petitions.

In response, Facebook prepared two additional IPR petitions to challenge Windy City’s additional asserted claims. Because the petitions were otherwise time-barred, Facebook filed motions to join these new proceedings with the already-instituted IPRs under section 315(c). The PTAB granted Facebook’s motions, reasoning that although the claims were not the same as those originally instituted, the substance of the claims was similar, so the addition of the claims would be unlikely to significantly impact the scope of the trial. Further, the PTAB reasoned that Facebook could not have reasonably determined the claims asserted against it within the one-year time bar.

In its final written decisions, the PTAB held that some but not all challenged claims were obvious. Facebook appealed, and Windy City cross-appealed. On appeal, Windy City argued that section 315(c) does not authorize same-party joinder and the joinder of new issues material to patentability. The Federal Circuit agreed.

The plain text of section 315(c) provides that the Director of the USPTO “may join as a party to [an IPR] any person who properly files a petition under section 311 that the Director . . . determines warrants the institution . . .” (emphasis added). As an initial matter, the Federal Circuit noted that when the PTAB granted Facebook’s joinder motions, it did not join Facebook as a party. Rather, the PTAB joined the later proceedings to the earlier proceedings. The court held that the language of section 315(c) does not provide for the consolidation of proceedings, which is governed by section 315(d).

Even assuming that the PTAB had in fact joined Facebook as a party, the Federal Circuit held that the plain text of section 315(c) does not authorize same-party joinder. The court reasoned that it would be an extraordinary usage of the term “join as a party” in section 315(c) to refer to persons who were already parties. The court acknowledged the PTAB’s POP decision in Proppant Express Invs., LLC v. Oren Techs., LLC, which determined that same-party joinder under section 315(c) was permissible. But the court held PTAB’s decision in Proppant was incorrect given the unambiguous language of the statute.

With respect to the joinder of new issues, the Federal Circuit held that section 315(c) also does not authorize a joined party to bring new issues into a proceeding. Instead, the consolidation of proceedings is covered under section 315(d). Reading section 315(c) to permit the consolidation of proceedings or issues would render section 315(d) superfluous.

Further, the court held that the clear and unambiguous language of section 315(c) could not be overridden by Facebook’s policy arguments that joinder was appropriate because Windy City did not identify which claims were asserted until after the one-year IPR deadline. The court noted that parties are free to challenge all claims of an asserted patent in an IPR or to challenge the invalidity of asserted claims in district court proceedings. The court also noted that Facebook could have made different strategy choices in federal court to force an earlier identification of asserted claims.

Because the plain language of section 315(c) was found to be unambiguous, the court did not reach the issue of what deference should be given to decisions by the POP. Here Facebook argued that the PTAB’s POP decision in Proppant, which permitted same-party joinder under section 315(c), should be given deference. Following the opinion, the court provided “additional views” on this issue.

The court explained that Chevron deference is afforded to an agency’s implementation of a particular statutory provision only when it appears that Congress delegated the authority to issue rules carrying the force of law. Of note, the court found that Congress did not authorize the Director of the USPTO or the PTAB to undertake statutory interpretation through POP opinions. Accordingly, even if section 315(c) were ambiguous, there would be no deference given to the POP decision in Proppant.

This decision is relevant to both parties involved in patent litigation as well as in IPR proceedings. First, a petitioner may no longer file a subsequent petition to join its own instituted IPR proceeding in an attempt to add new issues or claims. Accordingly, there will be more pressure on petitioners to challenge all potentially assertable claims in its IPR petition. As in this case, where a patent owner has not identified which claims it is asserting in litigation, the defendant should make a concerted effort to have the asserted claims identified well ahead of the one-year bar date to file an IPR. Alternatively, if possible, a petitioner should consider challenging each claim of a challenged patent out of an abundance of caution.

The case is further notable in that at least three judges of the Federal Circuit have indicated that they would not give Chevron deference to decisions deemed precedential by the PTAB. Thus parties should be wary of citing any such opinions to the courts as precedential authorities.

For more information on this holding, please contact Fitch Even partner Paul B. Henkelmann, author of this alert.

Fitch Even attorney Jacqueline L. Thompson contributed to this alert.

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