PTAB’s Interpretation of 35 USC 315(b) Continues to Stand: Dismissal Without Prejudice Effectively Nullifies the One Year Bar to Bring an IPRMarch 30, 2016

The USPTO’s Patent Trial and Appeal Board’s holding that the voluntary dismissal of a lawsuit, without prejudice, effectively nullifies the service of the complaint for purposes of triggering the one year bar in 35 U.S.C. § 315(b) to petition for the institution of an inter partes review (IPR) stands in Shaw Indus. Grp. v. Automated Creel Sys. after the Federal Circuit maintains that it does not have jurisdiction to review the PTAB’s decision to institute an IPR.

Automated Creel sued Shaw Industries in February 2012 for patent infringement and subsequently dismissed the suit voluntarily without prejudice. Within one year of service of the complaint Shaw Industries filed a petition of an IPR seeking invalidation of all claims in the patent. The PTAB instituted an IPR one all of the claims except claim 4. Shaw then filed another petition for an IPR directed at claim 4. This petition was filed later than one year after service of the complaint in the now-dismissed patent infringement lawsuit. The PTAB decided to institute the IPR on claim 4.

Both IPRs proceeded separately. Ultimately, the PTAB consolidated them and issued one final written decision invalidating a number of the claims including claim 4. Automated Creel appealed the PTAB’s interpretation of § 315(b) that resulted in the decision to institute the IPR invalidating claim 4. Specifically, Automated Creel argued that the IPR should have been barred by § 315(b) as it was brought later than one year after service of the complaint. § 315(b) states, "An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner . . . is served with a complaint alleging infringement of the patent."

The PTAB had justified instituting the IPR on claim 4 stating, "consistently [we] ha[ve] interpreted the effect of dismissals without prejudice as leaving the parties as though the action had never been brought." Thus, the PTAB concluded that the voluntary dismissal without prejudice "nullifie[d] the effect of the service of the complaint." The Federal Circuit reiterated that it "lack[s] jurisdiction to review this aspect of the Board’s decision." Thus, the PTAB’s interpretation stands for the time being. The Federal Circuit did note that this issue may be affecting by the second question before the Supreme Court inCuozzo Speed Techs., LLC v. Lee. The second question before the Supreme Court is "Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable."

The Federal Circuit’s opinion is available here.

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