Source: https://blog.wolfgreenfield.com/postgrant/when-one-door-to-an-ipr-proceeding-closes-another-opens
Timestamp: 2019-04-21 14:29:45+00:00

Document:
On August 11, 2010, VirnetX served Apple with a complaint alleging, among other things, infringement of U.S. Patent Nos. 6,502,135 (“the ’135 patent”) and 7,490,151 (“the ’151 patent”). A five-day jury trial commenced on October 31, 2012, and the jury found all asserted claims of the ’135 and ’151 patents valid and infringed. The jury then awarded VirnetX $368 million in reasonable royalty damages. On appeal, the Federal Circuit largely affirmed the jury’s verdict, though it reversed certain infringement findings and vacated the damages award. On remand, a jury recently awarded VirnetX $625 million. The verdict in the retrial has yet to be appealed.
As has become the norm for most defendants in patent litigation, Apple filed an IPR petition with the PTAB challenging the patentability of the ’135 and ’151 patents. The problem for Apple was that it waited until June 2013—almost three years after VirnetX originally served Apple with a complaint alleging infringement of the patents—to file its petitions. This was a problem because 35 U.S.C. § 315(b) bars a petitioner from filing an IPR petition if the petitioner was served with a complaint alleging infringement of the challenged patent more than a year before the petition was filed. Relying on 35 U.S.C. § 315(b), the Board denied Apple’s petitions as time-barred.
As interpreted by the PTAB, the “joinder exception” allows petitioners that would otherwise be time-barred to join proceedings that others have instituted. All Apple needed was for someone else to challenge the VirnetX patents, and an unlikely someone did—Microsoft.
On April 10, 2014—almost four years after VirnetX originally sued Apple—Microsoft filed an IPR petition challenging the ’151 patent, and the Board instituted the proceeding. Apple now had its chance to file a new petition and seek to have it joined with the Microsoft petition, and Apple did precisely that.
Unfortunately for Apple, Microsoft and VirnetX settled their dispute and the PTAB terminated the Microsoft IPR proceeding based on VirnetX and Microsoft’s joint motion to do so. The PTAB thereafter denied institution of Apple’s petition because it could not be joined with the now-terminated Microsoft proceeding and thus was not eligible for the joinder exception under 35 U.S.C. § 315(b). The door to an IPR trial was closed on Apple again.
Apple’s quest to challenge the ’151 and ’135 patents through the IPR process was seemingly at a dead end until another party—the hedge fund Mangrove Partners—came out of the blue to challenge both patents in April 2015. The Board instituted the Mangrove proceedings on October 7, 2015.
Apple now had yet another opportunity to challenge the ’151 and ’135 patents, and it did not hesitate. On October 26, 2015—less than a month after the Board instituted the Mangrove proceedings and over five years after Apple had been served with VirnetX’s original complaint—Apple filed new IPR petitions challenging the ’135 and ’151 patents. With each petition, Apple also filed a motion to join the respective instituted Mangrove proceeding. To better its chance that the Board would grant its motions for joinder, Apple claimed that the grounds and declarations submitted with its petitions were “substantively the same” as those presented in the Mangrove petitions. Yet, both petitions also included new arguments as to the alleged public availability of a prior art reference at issue in the Mangrove proceeding, including arguments based on a declaration from a new declarant.
On January 25, 2016—days before a jury would find Apple owed VirnetX $625 million, in part for infringing the ’151 and ’135 patents—the Board instituted Apple’s IPR petitions and granted its motion for joinder. Apple’s third bite at the VirnetX patents had worked, and now Apple is involved in substantive aspects of the Mangrove proceeding, including using its lawyers to defend Mangrove’s expert at his deposition.
VirnetX did not take this “defeat” lying down. After having its request for a rehearing denied by the PTAB, VirnetX filed a writ of mandamus to the Federal Circuit. In its writ, VirnetX argued that the PTAB was misinterpreting the joinder exception to § 315(b). According to VirnetX, § 315(c) sets forth the criteria for joinder and it provides that “the Director… may join as a party to [a pending IPR proceeding] any person who properly files a petition under section 311.” VirnetX argued that the phrase “properly files” excludes those petitioners—like Apple—whose petitions would have been denied as procedurally improper due to the time-bar of § 315(b). As for the intended purpose of the joinder exception, VirnetX argued that it was only intended to allow a petitioner who could otherwise file its own proper petition to join that petition with an existing IPR proceeding, even if the motion for joinder was brought more than a year after the petitioner was served with a complaint alleging infringement of the challenged patent.
Although the Federal Circuit rarely grants writs of mandamus, it raised VirnetX’s hopes when it issued a temporary order staying the Mangrove and Apple proceedings and requiring the PTO (as well as Apple) to submit a brief in response to VirnetX’s writ. In its brief, the PTO first argued that 35 U.S.C. § 314(d)—which provides that the PTAB’s institution decision is “final and nonappealable”—barred VirnetX from bringing its mandamus petition in the first instance. The PTO then argued, assuming the decision was appealable, that its interpretation of the joinder exception in § 315(b) was reasonable and entitled to deference. According to the PTO, the joinder exception necessarily applies to the filing of a petition, not the filing of a joinder motion, because the first sentence of § 315(b) states only that the one-year deadline applies with respect to “the petition requesting the proceeding.” In other words, the only thing that the second sentence can exempt from the one-year deadline is the petition for IPR, because that is the only thing to which the one-year deadline is applied in the first place.
Shortly after receiving the parties’ briefing, the Federal Circuit issued an order denying VirnetX’s writ of mandamus and lifting the court’s temporary stay. The order was unaccompanied by analysis, though it did note that VirnetX was free to re-raise its argument on appeal after the Board issues its final written decision. However, that statement by the Federal Circuit was curious because under current Federal Circuit precedent, appellate review of the Board’s institution decision is unreviewable, even after a final written decision has issued. Of course, that very precedent may well be reversed by the Supreme Court in In re Cuozzo.
The VirnetX mandamus decision further reinforces that under the current statutory framework, patent owners can do little to prevent serial challenges to their patents. Absent Congress adding a standing requirement to the IPR statute, hedge funds and other entities like Mangrove will be free to file IPR petitions challenging any patent, and if such petitions are granted, otherwise time-barred petitioners will have an open door to join the proceedings. To avoid this situation, patent owners should seek to terminate IPR proceedings pre-institution or very shortly thereafter, before a time-barred petitioner can file a petition and motion for joinder.
On the other hand, a petitioner who is time-barred from challenging a particular patent should closely monitor the PTAB docket to identify any third-party petitions that are filed against the patent. While § 315(b) allows time-barred petitioners to join pending proceedings, the request for joinder must be made within one month after the proceeding has been instituted, so time is of the essence for petitioners, especially if they would like to submit new evidence to remedy a potential defect in the third party’s petition.

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