What the PTAB Precedent Panel Said in Its First Decision

by Michael Hawkins and Stuart Nelson

On March 13, 2019, the Patent Trial and Appeal Board issued a precedential decision in Proppant Express Investments LLC v. Oren Technologies LLC, holding that 35 U.S.C. 315(c) does not provide per se prohibitions against same-party joinder and joinder of new issues, but instead "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."[1]

The precedential decision emphasized, however, that the board should exercise its discretion to authorize same-party joinder/new issue joinder "only in limited circumstances namely, where fairness requires it and to avoid undue prejudice to a party."[2] Unlike the board's earlier precedential decision in General Plastic Industrial Co. Ltd. v. Canon Kabushiki Kaisha, which addressed the board's discretion under 314(a) to deny institution of "follow-on" petitions,[3] the Proppant Express precedential decision repeatedly explained that discretion under 315(c) is "limited" or a "narrow exercise" to elevate fairness over purported gamesmanship by party.[4]

The procedural posture of the Proppant Express decision and its relationship to an earlier "expanded panel" decision in 2015 shed light on why this case was the subject of the U.S. Patent and Trademark Office director's first use of the Precedential Opinion Panel.

In the institution decision of the Proppant Express case, the original panel denied institution of the petitioner's second (follow-on) petition against the challenged patent. The majority opinion of the original panel held that 315(c) provides a per se prohibition against same-party joinder and against joinder of new issues, and a third judge concurred in the result (denying institution) but expressly disagreed with "the reasoning articulated by the majority."[5]

The original decision acknowledged that its holding was contrary to an "expanded panel" decision in Target Corp. v. Destination Maternity Corp., which was a 4-3 split decision holding that 315(c) imposes no such per se prohibition against same-party joinder.[6] Indeed, the majority opinion of the original panel in Proppant Express expressly incorporated the reasoning of "the dissent entered in Target Corp."[7]

The concurring opinion, however, rejected this reasoning as being inconsistent with earlier positions stated by the USPTO, and instead noted that the board has discretion to deny the request for joinder because the petitioner was using its follow-on petition here to "merely correct mistakes" identified by the board's earlier decision on the first petition.[8] The petitioner filed a request for rehearing to address the perceived legal errors in the majority opinion regarding 315(c).[9]

Given the conflict between the Target Corp. decision and the Proppant Express decision regarding the proper interpretation of 315(c), the board determined that further review by the Precedential Opinion Panel composed of USPTO Director Andrei Iancu, Commissioner Drew Hirshfeld, and Chief Administrative Patent Judge Scott Boalick was necessary to resolve three questions:

1. Under 35 U.S.C. 315(c) may a petitioner be joined to a proceeding in which it is already a party?
2. Does 35 U.S.C. 315(c) permit joinder of new issues into an existing proceeding?
3. Does the existence of a time bar under 35 U.S.C. 315(b), or any other relevant facts, have any impact on the first two questions?[10]

The order authorized the petitioner and patent owner to submit additional briefing, and additionally authorized amicus briefs.[11]

Just over three months later, the Precedential Opinion Panel issued its decision rejecting the per se prohibition set forth in the original decision.[12] The precedential decision maintained the original result (denying institution) because, in circumstances where the otherwise time-barred second petition was filed to merely "correct the error" from the petitioner's first petition, the board should exercise its discretion under 315(c) to deny the petitioner's request for joinder.[13] The reasoning in the Proppant Express precedential decision was similar to that of the concurrence in the original decision denying institution.

Regarding the first question of "same-party joinder," the decision analyzed the plain statutory text of 315(c) and relationship to the text of 311.[14] The Precedential Opinion Panel concluded that the use of the phrase "any person" in 315(c) was an "expansive phrase" that provided the board with discretion to "join every person who properly files a petition that warrants institution."[15]

Also, the Precedential Opinion Panel concluded that 315(c) must be "read in context with 311(a)" because 315(c) expressly refers to "any person who properly files a petition under section 311" and 311(a) identifies the authorized filer as "a person who is not the owner of a patent."[16] In this context, the decision explained that the scope of "any person" in 315(c) should include any person except the patent owner a broad scope that would encompass a petitioner seeking to be joined to a proceeding in which it is already a party.

Also, the Precedential Opinion Panel rejected the reasoning that 315(c) impose a "per se prohibition" against same-party joinder because such a restriction would "allow for gamesmanship."[17] In one example, the precedential decision noted the potential scenario of a district court plaintiff waiting "to alter or add late-asserted patent claims in an attempt to wait out the one-year bar" gamesmanship that would be otherwise rewarded by a per se prohibition against same-party joinder.[18]

Regarding the second question of "issue joinder," the decision again analyzed the plain statutory text of 315(c) and its relationship to the text of 311. In particular, 311(b) specifically identifies that a petition can identify grounds "raised under section 102 and 103 and only on the basis of prior art consisting of patents or printed publications," but otherwise does not impose limits on the issues to be raised in a petition.[19] Because 315(c) expressly identifies a "properly file[d] petition under section 311," the decision concluded that Congress provided the PTAB with discretion under 315(c) to join a petition that raises "any ground under 102 or 103 of the basis of patents or printed publications."[20] Additionally, the Precedential Opinion Panel concluded that the statutory text of 314(a) (another section that is expressly referenced in the text of 315(c)) and the legislative history were consistent with its conclusion here regarding issue joinder.[21]

Lastly, regarding the third question concerning relevant factors that impact the board's discretion under 315(c), the Proppant Express decision explained that the existence of a time bar is "one of several factors that may be considered."[22] The Precedential Opinion Panel emphasized (again) that when an otherwise time-barred petitioner requests same-party joinder and/or issue joinder, the board should exercise this discretion "only in limited circumstances where fairness requires it and to avoid undue prejudice to a party."[23] Under this standard, the precedential decision noted a number of factors that would influence whether the board should exercise its discretion to authorize same-party joinder or joinder of new issues:

• "[T]he existence of a time bar" for the petition accompanying the request for joinder;[24]
• "[A]ctions taken by a patent owners in a co-pending litigation;"[25]
• Whether the petition accompanying the request for joinder "merely corrects [] mistakes or omissions" identified by the board in a petitioner's earlier inter partes review proceeding;[26]
• "The conduct of the parties and attempts to game the system;"[27]
• "[T]he stage and schedule of an existing inter partes review;"[28]
• "[C]onsideration of the non-exclusive factors set out in General Plastic," which would support the board's discretion to deny institution of the follow-on petition under 314(a);[29] and
• "Events in other proceedings related to the patent at issue."[30]

In this case, the precedential decision concluded that there were no factors indicating that the board should exercise its discretion to grant the request for same-party joinder. Instead, it was a case where the petition acknowledged that the follow-on petition was filed merely "to correct the error for claim 4" as identified by the board in an earlier IPR proceeding.[31] This was not enough, and the petitioner's request for same-party joinder was denied, thereby resulting in denial of institution because the follow-on petition was time-barred.[32]

Going forward, practitioners can consider several lessons gleaned from this precedential decision.

First, 315(c) provides discretion for the board to authorize same-party joinder and/or joinder of new issues, but the precedential decision repeatedly describes it as a "narrow" discretion a modifier that is noticeably absent from the board's precedential decision in General Plastics addressing a different form of board discretion under 314(a).[33] As such, practitioners can expect that the board's exercise of discretion under the Proppant Express precedent (to authorize same-party joinder or joinder of new issues) will likely be reserved and more closely tethered to the facts/examples set forth in the Proppant Express decision.

Still, Proppant Express continues the trend of the board avoiding bright line rules and per se prohibitions. This allows the board flexibility to address complex situations that have yet to arise and to achieve results that the board considers just. But this trend creates an increased level of uncertainty for both petitioners and patent owners. Despite the guidance offered by Proppant Express, parties will often be unable to predict how the board will decide each motion for joinder in cases where reasonable minds could disagree on whether a scenario leads to undue prejudice versus a fair test of patent validity.

Second, the Proppant Express decision explained that the board "will exercise this discretion [under 315(c)] only in limited circumstances namely, where fairness requires it and to avoid undue prejudice to a party."[34] One common thread that runs through this test is the board's goal to avoid prejudicial "gamesmanship" on either side or a party's "attempt to game the system."[35] Here, parties on both sides should be aware of the examples of perceived "attempts to game the system" set forth in the Proppant Express decision.

For instance, if a petitioner suffers from a patent owner in a concurrent district court proceeding adding late-asserted patent claims (which were not the subject of petitioner's earlier IPR petition) after the one-year bar, the petitioner must demonstrate these circumstances in its motion for joinder accompanying its second IPR petition.

On the other side, if a patent owner is subjected to a follow-on IPR petition accompanied by a motion for joinder (because the follow-on petition is otherwise time-barred), the patent owner should oppose the motion for joinder by detailing the specific instances in which the follow-on petition is "merely correcting" errors or omissions identified in petitioner's earlier IPR case. Importantly, the patent owner in those circumstances should not only oppose the motion for joinder under the precedent set forth in Proppant Express, but the preliminary response should separately provide arguments under General Plastic precedent addressing the discretionary denial of such follow-on petitions.

Third, although this precedential decision is undoubtedly important to time-barred petitioners requesting same-party joinder and/or issue joinder under 315(c), the Proppant Express decision does not address the most common form of joinder under 315(c) namely, an entirely new party seeking joinder by filing a "copycat" petition based on an earlier IPR case.[36] In such circumstances, the petition that accompanies the motion for joinder is normally not considered to be seeking joinder of new issues, and it is not being filed by a petitioner that is already a party to the earlier IPR proceeding.[37] Indeed, even under the narrower view of 315(c) expressed in the original institution decision in Proppant Express (which adopted "per se prohibitions" against same-party joinder/new issue joinder), such "copycat" petitions/motions for joinder would have been often permissible under 315(c).

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[1] Proppant Express Investments, LLC et al. v. Oren Technologies, LLC , IPR2018-00914, Paper 38 at pp. 4, 10-11, 19 (PTAB March 13, 2019) (Precedential).

[2] Id.

[3] General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 at pp. 17-19 (PTAB September 6, 2017) (Precedential).

[4] Proppant Express, Paper 38 at pp. 4, 16, 19.

[5] Proppant Express, Paper 21 at pp. 4-6 (Judge Weatherly writing for the majority) and at pp. 8-9 (Judge Cherry, concurring).

[6] Proppant Express, Paper 21 at p. 4 (citing to Target Corp. v. Destination Maternity Corp., IPR2014-00508, Paper 28 (PTAB February 12, 2015)).

[7] Id. Interestingly, the Judge who authored the original decision in Proppant Express was part of the expanded panel in the Target Corp. case and joined the dissenting opinion in that case. The original decision in Proppant Express reasoned that the earlier Target Corp. decision was non-precedential and that circumstances had changed due to a subsequent Federal Circuit decision in a different case in which a concurring opinion raised doubts as to whether 315(c) permitted joinder of new issues. Proppant Express, Paper 21 at p. 5 (citing to the concurrence in Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. Matal , 868 F.3d 1013, 1020 (Fed. Cir. 2017)).

[8] Proppant Express, Paper 21 at pp. 9-11. According to the concurring opinion, the fact that the petitioner was seeking joinder of an otherwise time-barred IPR petition "merely to correct mistakes in a prior petition" was a significant factor that weighed against the Board exercising its discretion to grant the request for joinder. Id. Additionally, the concurring opinion also concluded that institution should be denied based on the Board's exercise of discretion under 314(a) and the General Plastics factors without any need to hold that 315(c) provides a per se prohibition against same party joinder and joinder of new issues. Id. at pp. 11-12.

[9] Proppant Express, Paper 22 at p. 1.

[10] Proppant Express, Paper 24 at p. 2.

[11] Id. at pp. 3-4. Disclosure: The authors' law firm represented one party that filed an amicus brief.

[12] Proppant Express, Paper 38 at pp. 10-11 and 18.

[13] Id. at pp. 16 and 19-20.

[14] Id. at pp. 5-7.

[15] Id. at pp. 5-6.

[16] Id. at p. 6.

[17] Id. at pp. 10-11.

[18] Id. at p. 11.

[19] Id. at pp. 11-12.

[20] Id.

[21] Id. at pp. 12-13.

[22] Id. at p. 16.

[23] Id. at p. 19; see also id. at 16 ("exercise this discretion only in limited circumstances" and that it should be a "narrow exercise of discretion").

[24] Id. at p. 16.

[25] Id. at pp. 16 and 19 (expressly identifying the patent owner action of "the late addition of newly asserted claims" in a litigation as a factor that weighs in favor of exercising discretion to authorize joinder).

[26] Id. at pp. 16 and 19.

[27] Id. at p. 19.

[28] Id.

[29] Id.

[30] Id.

[31] Id. at p. 20 ("Petitioner acknowledges that it filed the Petition and Motion for Joinder in this case in order to correct the error for claim 4," so "Petitioner's own conduct created the need for it to request joinder").

[32] Id. at pp. 20-21.

[33] Id. at pp. 4, 16, and 19.

[34] Id. at p. 19.

[35] Id. at pp. 10-11 ("gamesmanship") and 18-19 ("game the system").

[36] See, e.g., HTC Corp. et al. v. Cellular Communications Equipment, LLC , IPR2017-00982, Paper 8 at pp. 4-6 (PTAB June 22, 2017).

[37] See id.

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The opinions expressed are those of the authors and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.