By Scott A. McKeown
| January 30, 2013
Stayed Litigations to Drive Joinder Practice
Inter partes reviews (IPRs) are now understood to be effective tools for parties defending against patent infringement suits filed by non-practicing entities, sometimes called “patent trolls.” Typically patent trolls launch suits against multiple entities and district courts commonly consolidate such cases for purposes of discovery. In some cases, this leads to the formation of joint defense groups, which provide various efficiencies and advantages on the litigation side of the fence. However, joint defense group members almost always have differing views when it comes to the decision whether and when to file an IPR.
In the typical situation, a "deep pocket" defendant with the most to lose will move forward in filing the IPR, then move to stay the costlier litigation proceeding. The Patentee will then oppose the motion, pointing out that the litigation is unlikely to be simplified by a stay because any potential estoppel stemming from the IPR is binding only with respect to the real party in interest (i.e. deep pocket filer). Faced with the prospect of the motion for stay being denied on this ground, the remaining defendants will begrudgingly stipulate to be bound by the same estoppel as that attaching to the real party in interest. Yet, this stipulation now places such defendants in the unenviable position of being bound by a proceeding they may not have wanted in the first instance.
In the past case of inter partes patent reexamination, such "me too' defendants were forced to sit on the sideline and place their fate in the hands of the real party in interest; such situations proved quite problematic. For example, should the deep pocket defendant settle with the Patentee, the reexamination could then proceed unopposed and the inter partes reexamination would transform into a statistically less desirable, pseudo, ex parte reexamination proceeding. In other words there was no way for the other defendants to secure a right to participate along side the real party, or substitute themselves in the place of the real party should settlement occur— not so in IPR.
The joinder rule set forth in 35 U.S.C. 315 provides joint defense group members a degree of flexibility in that they may be permitted to join an IPR filed earlier by another member of the group, even if the joinder request is filed more than a year after the complaint was served. As a reminder, Section 315(b) states that all IPRs must be filed within one year of service of a complaint alleging that the petitioner has infringed the patent. However, that section also provides that this time limit “shall not apply to a request for joinder under subsection (c).”
Section 315(c) states that “the Director, in his or her discretion, may join as a party to [a previously instituted] inter partes review any person who properly files a petition under section 311 that the Director . . . determines warrants institution of an inter partes review. . . .” The comments made by Senator Kyle during the AIA debates suggest that the legislature and the Office were contemplating that additional parties could, for instance, file the identical petition on which trial was instituted and thereby be permitted to participate in the proceeding:
The Office anticipates that joinder will be allowed as of right—if an inter partes review is instituted on the basis of a petition, for example, a party that files an identical petition will be joined to that proceeding, and thus allowed to file its own briefs and make its own arguments. If a party seeking joinder also presents additional challenges to validity that satisfy the threshold for instituting a proceeding, the Office will either join that party and its new arguments to the existing proceeding, or institute a second proceeding for the patent. (157 Cong. Rec. S1376)
The congressional record is also clear, however, that the Office would consider the totality of the circumstances in deciding whether to permit joinder in a particular case. (Id.) Senator Kyle commented that the Patent Office would exercise this discretion to “discourage late requests” for joinder. (Id.)
The foregoing suggests that prompt requests for joinder which do not raise substantial issues beyond those presented in the previous petition may receive favorable consideration by the PTAB. That, in turn, will provide individual joint defense group members greater flexibility in determining whether to participate in an IPR they would otherwise have no control over, or no recourse should the real party in interest decide to settle. To the extent that agreement cannot be reached in the first instance, there exists an avenue by which other joint defense group members may be permitted to join the IPR after trial is instituted, albeit only after the payment of an additional – and considerable – petition filing fee.
The availability of joinder after the one year deadline may also create circumstances which militate strongly in favor of a stay. Because section 315(b) enables joint defense group members to join an IPR instituted at the request of another joint defense group, more joint defense group members may be willing to agree to bound by the estoppel provisions on the condition the litigation is stayed...especially after they have seen the trial instituted with favorable claim constructions/unpatentability determinations.