Achates Reference Publishing, Inc. v. Apple, Inc.

Addressing a decision by the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB or Board) to not institute inter partes review IPR proceedings, the U.S. Court of Appeals for the Federal Circuit concluded that Board’s decision was not appealable, even though the Board’s assessment of issues leading to the decision were examined during the proceedings and in the Board’s final written decision. Achates Reference Publishing, Inc. v. Apple, Inc., Case No. 14-1788 (Fed. Cir., Sept. 30, 2013) (Linn, J.).

A decision by the Board whether to institute an IPR is final and non-appealable. An IPR may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner, a real party in interest or a privy of the petitioner is served with a complaint alleging infringement of the patent. A number of factors are relevant to determining whether a party is a real party in interest or in privy with another party, including whether the non-party exercised or could have exercised control over a party’s participation in a proceeding or is responsible for funding and directing the proceeding.

Achates sued multiple defendants for infringing the patent-at-issue and then one year later joined Apple as another defendant. Apple initiated the patent challenge based on multiple petitions for IPR, and Achates argued that Apple’s petitions were time-barred because of Apple’s relationship with its co-defendants via a software development kit (SDK) agreement, which requires software developers to indemnify Apple from infringement claims.

The Board found that Apple’s petitions were not time-barred and initiated IPR proceedings, finding that Achates provided no proof the co-defendants ever signed the SDK agreement and, in any event, the indemnification provision in the agreement did not give developers the right to intervene or control Apple’s defense in patent litigation, and Apple’s co-defendants had distinct interests in the litigation. Achates continued to argue the petitions were time-barred during the merits phase of the proceedings. The Board denied Achates’ discovery request for information relevant to the issue, finding the evidence and arguments proffered by Achates amounted to a mere allegation and speculation. The findings were again discussed in the Board’s final written decision (FWD). Achates appealed.

The Federal Circuit affirmed the Board, concluding that simply because the Board considered the time-bar in its FWD does not suddenly resurrect the issue for review. Rather, the Board is always entitled to reconsider its own opinions. A final decision on the merits and a decision to institute IPR are distinct actions and do not become the same merely because both are discussed at the same stage of the process, i.e., in the FWD. As the Court explained, the time bar is a part of the procedure for seeking IPR, but does not go to the Board’s authority to invalidate. This stands in contrast to determinations by the Board that form a part of the Board’s basis for institution as well as a “defining characteristic” of the Board’s ultimate authority to invalidate a patent—e.g., whether a challenged patent qualifies as part of the covered business method patent.

Citing Cuozzo Speed Technologies (IP Update, Vol. 18, No. 8), the Court concluded it was prohibited from reviewing the Board’s assessment of whether Apple’s petitions were time-barred, and the Board’s denial of related discovery requests, even if the issues were reconsidered during the merits phase and restated in the FWD.

Practice Note: The Board’s assessment of issues solely pertinent to initiation of an IPR is not reviewable.