Target Corp. v. Destination Maternity Corp.

In a case with more twists that a Game of Thrones plot, an unexpected dissent issued from an order of the Patent Trial and Appeal Board (PTAB or Board) granting the patent owner’s requested cancelation of the challenged claims and terminating of the inter partes review (IPR). Target Corp. v. Destination Maternity Corp., Case IPR2014-00508 (PTAB, May 8, 2015) (Green, APJ) (Fitzpatrick, APJ, dissenting-in-part).

The procedural backdrop of this case is that after filing an initial IPR petition in 2013, Target filed a second IPR petition after the one-year bar under 35 U.S.C. § 315(b) had run, based on the filing of an infringement action by Destination Maternity in 2012. The second petition, however, was filed within one month of the Board’s institution of the first IPR proceeding and was accompanied by a Motion for Joinder with that earlier proceeding. In response to the Board’s concern with timing and potential effect on the existing schedule, the petitioner filed a Motion to Limit the Petition to simplify the issues presented and thereby facilitate joinder and minimize the burden on the patent owner. The petitioner’s new grounds focused on a foreign publication, which the petitioner contended was known to the patent owner but was uncovered by petitioner after the first IPR petition was filed and after the one-year bar of § 315(b) had run, because it had been withheld by the patent owner in the underlying litigation until a month after the first IPR petition was filed.

In initially denying joinder, the majority (of an expanded panel of five judges) construed the controlling statute, as preventing joinder, reasoning that because Target was already a party to the earlier-filed IPR proceeding, it could not be joined to that proceeding. The denial of joinder resulted in dismissal of the second petition as time-barred.

However, a twice-expanded panel, now seven judges, granted the petitioner’s rehearing request, stating that the initial denial of joinder was based on an “erroneously narrow interpretation” of the joinder statute. According to the majority, the joinder statute allows the director to join “any person who properly files a petition under § 311 [i.e., the statue authorizing inter partes review].” Since § 311 only excludes the patent owner from filing an IPR petition, the majority reasoned that Congress had only excluded the patent owner and not a petitioner in an already instituted review proceeding.

The dissent in the decision on institution, joinder and rehearing—which constituted the members of the original three-member panel—argued that majority’s decision essentially rewrote two subsections of § 315; read past the most relevant provision of the Congressional Final Committee Report of the America Invents Act; misinterpreted an “ambiguous” Congressional statement by Senator Kyl; relied on non-binding prior Board decisions; and relied on the Board’s rules and the Office Patent Trial and Practice Guide instead of the binding federal statute. The dissent further argued that the majority read § 315(c) as if it granted discretion for the Board to act in any way not expressly prohibited by the statute, rather than only in ways that are stated expressly in the statute.

Practice Note: While the expanded panel of the Board has seemingly resolved the joinder issue in this case, the stage may have been set for the Federal Circuit to weigh in on the statutory interpretation issue.