Takeaway: If parties to a settlement agreement wish to prevent filing of inter partes review petitions following the dismissal of their District Court actions, they may do so by including explicit prohibitions on such filings.

In its Decision, the Board found that Petitioner had established a reasonable likelihood that it would prevail with respect to each of the challenged claims (i.e., claims 12-19, 32, 34, 46, and 48) of the ‘554 patent. Accordingly, the Board instituted the requested inter partesreview for each of these claims.

The ‘554 patent is directed to “a system and method for managing dynamic Web page generation requests, and providing Web pages in response to those requests.” Petitioner’s asserted grounds of unpatenability were: anticipation of claims 12-17, 32, 34, 46, and 48 under 35 U.S.C. § 102 in view of SWEB 95; obviousness of claims 12-19, 32, 34, 46, and 48 under 35 U.S.C. § 103 in view of SWEB 95; obviousness of claims 14, 15, 18, and 19 under 35 U.S.C. § 103 in view of SWEB 95 and Leaf (which was alleged to be prior art under 35 U.S.C. 102(e)); and obviousness of claim 17 under 35 U.S.C. § 103 in view of SWEB 95 and Bradley (which was alleged to be prior art under 35 U.S.C. 102(a)).

Petitioner had submitted a Declaration of Mr. Daniel Andresen, a co-author of SWEB 95, asserting that this reference was publicly available as of September 1995. Such a publication date would qualify that SWEB 95 is prior art under 35 U.S.C. 102(a).

Although Petitioner had offered proposed constructions for thirteen claim terms, the Board indicated that only two terms – “Web server” and “page server” – would be construed at this time. Although the District Court in the copending patent infringement litigation had interpreted “Web server” as requiring that the software or machine must both receive Web page requests and return Web pages in response to such requests, the Board agreed with Petitioner that the recited ”Web server” need not be interpreted such that it must return a Web page. In related fashion, whereas the District Court in the copending litigation construed the term “page server” to mean “page-generating software that generates a dynamic Web page,” the Board in the instant proceeding agreed with Petitioner that the proposed construction for this term should be “software, or a machine having software, that locates or generates a Web page.”

The Board went on to address the asserted grounds of unpatentability. As for anticipation based on SWEB 95, Patent Owner had argued that rather than disclosing both Web servers and distinguishable page servers, SWEB 95 merely disclosed a plurality of servers each of which Petitioner had alleged function both as a Web server and a page server. The Board agreed with Petitioner on this point, finding that neither the language of the claims in question, nor the Board’s constructions of “Web server” or “page server,” requires that a server perform the same role for all incoming requests. As for the grounds based on obviousness, the Board found that Petitioner’s assertions with respect to these were reasonable as well.

Petitioner had also argued that the Petition was barred by the statutory bars of 35 U.S.C. § 315(a)(1) and (b). With respect to 35 U.S.C. § 315(a)(1), Petitioner had filed a declaratory judgment action in the District of Delaware for invalidity of the ‘554 patent. As recognized by the Board, “[n]ormally, the filing of a declaratory judgment action challenging the validity of the patent bars a Petitioner from later seeking review of the patent in an inter partesreview proceeding.” With respect to 35 U.S.C. § 315(b), Patent Owner had sued Petitioner in the Eastern District of Texas for infringement of the ‘554 patent in the Eastern District of Texas, and as noted by the Board, “an inter partes review petition must be filed within one year of the petitioner being served with a complaint alleging infringement of a patent.”

The Board then noted that “[a]bsent other facts, under either of these provisions the present Petition would be barred, as it was filed on December 23, 2014, after the declaratory judgment action was filed and over a year after the infringement complaint was served.” Nonetheless, the Board went on to note that because the parties had settled both cases, causing both the declaratory judgment action and the infringement action to be voluntarily dismissed without prejudice, such actions did not give rise to statutory bars under 35 U.S.C. §§ 315(a)(1) or (b).

Patent Owner then “[attempted] to distinguish the present case from the previous ones addressed by the Board, because the Dismissal Agreement between the parties contains various provisions that give ‘on-going legal effect’ to the dismissed actions” and that “[t]his allegedly ‘reflects the parties’ express intention to recognize the existence and continuing import of the Previous Actions—even after the agreed-to dismissals ‘without prejudice.’” But the Board disagreed, finding that even if it accepted Patent Owner’s assertion that the parties intended to give ongoing legal effect to the dismissed actions, a voluntary dismissal without prejudice still renders the prior action a nullity. According to the Board, “[t]he fact that the parties to that action may, between themselves, contractually agree to terms that would never have been agreed to absent the action’s existence, does not change the de jure legal effect of the dismissal.” Moreover, the Board noted that “[i]f parties to a settlement agreement wish to prevent filing of inter partes review petitions following the dismissal of their District Court actions, they may do so by including explicit prohibitions on such filings.”

Petitioner had argued that under 35 U.S.C. § 325(d), the Board should deny the Petition because the main reference relied upon for Petitioner’s unpatentability grounds – SWEB 95 – was cited to the USPTO during prosecution and during the course of a previous ex parte reexamination proceeding for the ‘554 patent. The Board elected not to deny the Petition, however, after considering “several factors in determining whether to deny institution on the basis of 35 U.S.C. § 325(d), including the following.”

One, the Board noted that “the presentation of SWEB 96 was during the prosecution of a child patent application, not the application that matured into the ‘554 patent, and therefore it has less relevance to the challenged claims.” Two, the Board noted that “while SWEB 95 was listed on a lengthy Information Disclosure Statement initialed by the Examiner, the reference was not applied against the claims and there is no evidence that the Examiner considered the particular disclosures cited by Microsoft in the Petition.” Three, the Board noted that “the ex parte nature of the reexaminations differs from the adversarial nature of an inter partes review.” Thus, although the Board recognized “that SWEB 95 (and the related SWEB 96) were previously presented to the Office, on these facts [it declined] to deny the Petition on the basis of 35 U.S.C. § 325(d).”

Microsoft Corporation v. Parallel Networks Licensing, LLC, IPR2015-00483

Paper 10: Decision Granting Institution of Inter Partes Review

Dated: July 15, 2015

Patent: 5,894,554

Before: Kevin F. Turner, Jeremy M. Plenzler, and Christopher L. Crumbley

Written by: Crumbley Related Proceedings: Parallel Networks Licensing LLC v. Microsoft Corp., Civ. No. 1:13-cv-2073; IPR2015-00484; IPR2015-00485; and IPR2015-00486