Issue Joinder within Statute, Matter of Agency Discretion 

At the outset of this year, I explained how Target Corp. v. Destination Maternity Corp (IPR2014-00508) was one of five Patent Trial & Appeal Board (PTAB) decisions that changed post-grant trial practice in 2014. Target was notable because it was a significant departure from previous PTAB practice. That is, up until Target, a same petitioner was able to join a first-filed petition with a later filed, second petition (i.e., "issue joinder). The Target decision found issue joinder outside of the statutory authority granted by 35 U.S.C. § 315(c). cf. Microsoft Corp. v. Proxyconn, Inc., (IPR2013-00109, Feb. 25, 2013)

In Target, as in Microsoft, the petitioner filed a second petition outside of their 12-month window to attack a claim that was excluded from the Trial Order of an earlier, timely filed petition (argued as being necessitated by the patentee's failure to provide requested materials in litigation discovery). Since joinder is a codified exception to the 12-month window, absent issue joinder, the claim could not be attacked with a second "stand-alone" petition. The Target majority denied issue joinder back on the basis that § 315(c) is directed solely to joinder of parties

A Request for Rehearing was filed in November of 2014 challenging the Target Decision. Today, the PTAB issued a second expanded panel decision reversing the 2014 decision. 

In a 4-3 Decision on Rehearing (here), the majority explains that, relative to the language of 315(c) :

If the legislature meant to exclude joining the same petitioner to an instituted inter partes review, it is unclear why it used the word “any” in the statute, such that “any person” who properly files a petition may be joined. Congress could have specified “any non-party” instead of “any person.” An interpretation that requires us to read “any party” as excluding a same petitioner, in essence, reads the word “any” out of the statute and ignores the statutory language of § 311(a).

The majority goes on to disagree that the statute is "unambiguous" (as argued by the dissent), arguing there is at least some ambiguity that justifies review of the legislative history. 

It is significant that a primary purpose of the AIA was to “limit unnecessary and counterproductive litigation costs.”    .     .     .The rules “shall be construed so as to ensure the just, speedy, and inexpensive resolution of every proceeding.” See also Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,758 (Aug. 14, 2012) (stating the same). Thus, even if some claims of the ’563 patent were to be found unpatentable in IPR2013-00531, by removing the discretion to join claim 21, as well as the new challenges presented in the instant proceeding, the case would necessarily have to go back to the district court for a separate determination as to those claims and challenges not at issue in IPR2013-00531. That could result in a waste of judicial resources, increase the litigation costs to both parties, and be contrary to the purpose of ensuring a “just, speedy, and inexpensive resolution.”

 On the dissent side, the statute is found to be unambiguous.

The majority reads § 315(c) as if it grants discretion for the Board to act in any way not expressly prohibited by the statute. By contrast, we interpret § 315(c) to grant discretion for the Board to act only in ways that are stated expressly in the statute.      .       .        . The statute does not refer to the joining of a petition or new patentability challenges presented therein. Rather, it refers to the joining of a petitioner (i.e., “any person who properly files a petition”). Further, it refers to the joining of that petitioner “as a party to [the instituted] inter partes review.” Because Target is already a party to the proceeding in IPR2013-00531, Target cannot be joined to IPR2013-00531.

Both sides of the statutory construction debate are well developed and articulated. Setting aside that legal debate, from where I sit, the ultimate outcome is most aligned with the needs of the public and the goals of the AIA statutes. 

(climbing on my soap box)

The reason for excluding claims from an IPR petition is often the result of patentee gamesmanship, more often than not non-practicing entities (NPEs). For example, a complaint is filed alleging infringement of claims 1-10. After the 12 month IPR window has passed, and the IPR for claims 1-10 timely filed, the NPE files an amended complaint adding claims 11-12. When the motion to stay pending IPR is argued, the patentee emphasizes that claims 11-12 are not part of the IPR. In other words, there is no reason to "stay" as trial will be necessary for claims 11-12 regardless of the IPR outcome. Congress certainly would not draft a statute with the intention of facilitating this kind of chicanery. Issue joinder is a strong control against the proliferation of this kind of abusive behavior.

As the majority points out, in more questionable cases of joinder, agency discretion can protect patentees from harassment on an as-needed basis. 

I am heartened to see the PTAB give the debate the proper treatment it deserved. Should Congress disagree with this construction of their statute, with patent reform front and center this spring, we will know soon enough.