Director’s Precedent Setting Power Likely to Unravel Issue Joinder?

Four years ago, a divided panel of the Patent Trial & Appeal Board (PTAB) denied issue joinder under 35 U.S.C. § 315(c) as a matter of law (i.e., the joining of two petitions of a same petitioning party) in Target Corp. v. Destination Maternity Corp., (IPR2014-00508). The decision was remarkable at the time, given that 315(c) had been previously interpreted under multiple PTAB decisions as permitting such joinder practices. In fact, one such decision, Microsoft Corp. v. Proxyconn, Inc., IPR2012-00026, Paper 17, Dec. 21, 2012, had even been published as a representative order on the PTO web site.

Target filed a request for rehearing challenging the decision.  In its Decision on Rehearing the PTAB expanded the panel reversed its original decision, granting Target’s petition for joinder and finding 315(c) to permit issue joinder. This decision became notorious thereafter as an example of the Board’s “panel stacking” to reach a desired outcome.  (At the time I explained this was more a function of the difficulty in designating decisions precedential rather than any nefarious design against Patent Owners, that is, the PTAB needed to pick a direction by brute force where conflicting decisions prevented a consensus vote of the Board)

More recently the USPTO has welcomed a new pro-patent Director that has made clear he believes the PTAB could use some pro-patent recalibration.  Recently, the agency has given the new Director the ability to make precedent virtually on his own. Based on a decision last week, it may be that the Director could unravel the Board’s chosen path on issue joinder to the delight of patent owners.

On November 8th, the PTAB reversed itself once more on the question of issue joinder. In Proppant Express Investments, LLC, Proppant Express Solutions, LLC v. Oren Technologies, LLC, (IPR2018-00914), a divided panel denied issue joinder under 315(c). The panel here, as in the original Target decision, focused on the phrase “joins as a party.” However, the original Target decision found this to mean that the Board may not apply this clause to parties as they, as a party, may not be joined (again) “as a party.” The panel here interpreted the language more broadly, finding that the Board “may not join new issues to an existing proceeding to an existing proceeding whether raised by the same petitioner or a different petitioner.”

The panel in Proppant Express justified their decision in part by referring to the dissent in the Target rehearing. The Board also referred to the recent Federal Circuit decision in Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. Matal, 868 F.3d 1013 (Fed. Cir. 2017), citing: “We think it unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding, whether the petitioner seeking to add new issues is the same party that brought the timely proceeding, as in this case, or the petitioner is a new party.” Id. at 1020. However, here the Federal Circuit explicitly refrained from deciding the interpretation of 315(c), as the PTAB acknowledged. The Board also looked to the Supreme Court’s decision in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018) for support, in which the Court indicated that “the Director may not deviate from statutory directives, even if policy considerations suggest doing so.”

Under these precedents, as the dissent found in the Target rehearing, the Board in Proppant Express found “no ambiguity in the language of 315(c)” that would allow for issue joinder. However, this conclusion is far from settled, as the Target rehearing majority and pre­-Target issue joinder opinions indicate. For this reason, the decision seems ripe for precedential designation.