Court Finds Issue Joinder Inconsistent with AIA Statute

As I predicted back in August, the Federal Circuit has now effectively reversed the PTAB’s first Precedential Opinion Panel (POP) decision in Proppant Express Investments v. Oren Technologies, Case IPR2018-00914 (PTAB Mar. 13, 2019) (Paper 38)  In this decision, the POP held that 35 U.S.C. § 315(c) provides discretion to allow a petitioner to be “joined” to a proceeding in which it is already a party, and provides discretion to allow joinder of new issues into an existing proceeding (here).

In  Facebook, Inc. v. Windy City Innovations, LLC, the Federal Circuit held that 315(c) was not ambiguous—an existing “party” to a proceeding cannot be joined as a party— and, as such there was no reason to even consider the earlier POP precedent for according any Chevron or Skidmore deference.  However, the Court then went on to explain that even if there were ambiguity, the POP decision would not be accorded deference in accordance with administrative law principles.

As to the text of the statute, the court explained (here):

[T]he plain language of § 315(c) allows the Director “to join as a party [to an already instituted IPR] any person” who meets certain requirements. 35 U.S.C. § 315 (emphases added). When the Board instituted Facebook’s later petitions and granted its joinder motions, however, the Board did not purport to be joining anyone as a party. Rather, the Board understood Facebook to be requesting that its later proceedings be joined to its earlier proceedings.  .  .   . In other words, an essential premise of the Board’s decision was that § 315(c) authorizes two proceedings to be joined, rather than joining a person as a party to an existing proceeding.

That understanding of § 315(c) is contrary to the plain language of the provision.

(internal citations omitted)

Finding no ambiguity (that would triggering potential deference to agency gap-filler), the question of deference to the earlier POP decision was deemed unnecessary to the majority holding.  Interestingly, however, the concurring opinions offered reasoning on why POP decisions would not be accorded deference in any case, largely following the concurrence of Judge Moore in Aqua Products, explaining:

In the AIA, Congress delegated certain rulemaking authority to the Director. Notably, such delegation specifically provides that the Director shall “prescribe regulations.” 35 U.S.C. § 316(a). For example, § 316(a)(4) recites that “[t]he Director shall prescribe regulations establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title.” .    .    . ¶ Critically, Congress’s delegation in the AIA for the adjudication of patentability in IPRs is not a delegation of authority to issue adjudicative decisions interpreting statutory provisions of the AIA. .  .   . ¶  Notably absent from the AIA, accordingly, is any congressional authorization, for either the Director or the Board, to undertake statutory interpretation through POP opinions. Thus, just as we give no deference to non-precedential Board decisions, we see no reason to afford deference to POP opinions.

The Court then went on to distinguish rulemaking practices as compared to traditional notice-and-comment rulemaking.  (Perhaps the agency will align some of the Federal Register practices, and opportunities for public comment to have this issue directly considered in a future appeal).

In any event, POP decisions, whether accorded deference or not, are a significant value to practitioners for at least providing consistency in practices until a given issue can be reviewed by the Federal Circuit. As such, I would not expect the POP to simply fold up shop.