Federal Circuit Finds That 35 U.S.C. § 315(c) Does Not Permit New-Party Or New-Issue Joinder In IPR Proceedings
On March 18, 2020, the United States Court of Appeals for the Federal Circuit (“CAFC”) found that the Patent Trial and Appeal Board (“PTAB”) erred in allowing same-party and new-issue joinder in inter partes review (“IPR”) proceedings. Facebook, Inc. v. Windy City Innovations, Inc., Nos. 2018-1400, 2018-1401, 2018-1402, 2018-1403, 2018-1537, 2018-1540, 2018-1541, __ F.3d __ (Fed. Cir. Mar. 18, 2020). The CAFC vacated the PTAB’s final written decisions with respect to the claims that were improperly added through joinder.
On June 2, 2015, Windy City filed a complaint against Facebook in the United States District Court for the Western District of North Carolina alleging infringement of four patents, but did not specify which of the 830 total claims were asserted. Facebook was served the next day, meaning its deadline to petition for IPR under 35 U.S.C. § 315(b) was June 3, 2016. Shortly thereafter, Facebook moved to dismiss for failure to state a claim (because the complaint did not identify which patent claims were asserted) and to transfer to the Northern District of California. The Western District of North Carolina granted the transfer in March 2016, but did not rule on the motion to dismiss. Due to the timing of the transfer, Windy City was not required to identify asserted claims under the Northern District of California’s Patent Local Rules until after the expiration of the § 315(b) time-bar, and Facebook’s motion for an order requiring earlier disclosure was denied.
On June 3, 2016, Facebook petitioned for IPR of some (not all) of the 830 claims of the asserted patents. Four months later, Windy City asserted claims of two of the asserted patents that were not challenged in the original petitions. Facebook then filed two new petitions challenging these asserted claims, along with motions for joinder under 35 U.S.C. § 315(c) because the petitions would otherwise be time-barred. The PTAB instituted the original and new petitions and granted the motions for joinder. In December 2017, the PTAB issued final written decisions, with mixed results. The parties appealed and cross-appealed the PTAB’s invalidity determinations. Windy City also argued that the PTAB’s joinder of the new petitions was improper under § 315(c).
The CAFC found that the clear and unambiguous language of § 315(c) does not authorize same-party joinder or new-issue joinder, and that the PTAB’s determination to the contrary was not entitled to deference.
As to same-party joinder, the CAFC found that “[i]t would be an extraordinary usage of the term ‘join as a party’ to refer to persons who were already parties.” Referring to the Federal Rules of Civil Procedure as an example, the CAFC stated that “joinder of a person as a party is uniformly about adding someone that is not already a party.” The CAFC acknowledged that the PTAB determined the opposite in Proppant Express Investments, but found that the PTAB’s interpretation hinged on an incorrect reading of “any person” to include parties. To illustrate its point, the CAFC stated: “A statute saying that ‘a person may marry any person who is older than 16 . . .’ would not, by virtue of the ‘any person’ language, authorize marriage to oneself. The word ‘marry’ necessarily requires another person. The ‘join as a party’ language does the same here.”
As to new-issue joinder, the CAFC stated that “the language in 315(c) does no more than authorize the Director to join 1) a person 2) as a party, 3) to an already instituted IPR. This language does not authorize the joined party to bring new issues from its new proceeding into the existing proceeding, particularly when those new issues are other-wise time-barred.” The CAFC rejected arguments that § 315(c) does not expressly prohibit new-issue joinder, citing SAS Instruments in stating that “the already-instituted IPR to which a person may join is governed by its own petition and is confined to the claims and grounds challenged in that petition.” The CAFC found that permitting joinder of new issues under § 315(c) is further disfavored because it would, in effect, permit joinder of proceedings under § 315(c), rendering 35 U.S.C. § 315(d) superfluous.
The three-judge panel also issued a separate “Additional views” opinion concluding that, even if § 315(c) were not clear and unambiguous, the PTAB’s Precedential Opinion Panel’s (“POP”) opinion in Proppant Express Investments is not entitled to deference. The CAFC found Congress’ delegation of authority under the America Invents Act (“AIA”) did not include the authority “to undertake statutory interpretation through POP opinions.” The CAFC also found that the AIA separately delegated the authority to prescribe certain IPR regulations to the USPTO and the authority to adjudicate IPRs to the PTAB. Under this bilateral structure, “adjudication may not operate as an appropriate mechanism for the exercise of rulemaking.” The CAFC further rejected arguments that the POP process satisfies the requirements of traditional notice-and-comment rulemaking that could receive Chevron deference because (1) announcements about the convening of a POP and POP opinions are not published in the Federal Register and (2) there is no formal opportunity for public comment. The fact that the POP may invite the parties and amici to file briefs is not sufficient as an opportunity for public comment.