The answer is ‘yes.’ But why should we care?

“Inter Partes Review” or “IPR” is a recent process by which a person infringing a patent can challenge the patent before a panel of USPTO employees.  The USPTO employees are members of the Patent Trial and Appeal Board (PTAB).  The person challenging the patent will present prior art (prior patents, articles, treatises, etc.) to the PTAB and the PTAB will determine whether the patent claims fail the novelty or obviousness tests based on the prior art.  If the PTAB panel determines that any claim is not novel or is obvious, then the claim is invalid and unenforceable.

We should care what the PTAB does because its panels have a history of murdering patents – lots of patents.  So many, in fact, that in 2013 then-Chief Judge Randall Rader of the Federal Circuit Court of Appeals referred to the PTAB panels as patent ‘death squads.’   The willingness of PTAB panels to kill patents was not lost on infringers and IPR is now a fixture of patent litigation.  If a patent infringer can initiate IPR, then he or she will do so, secure in the knowledge that some or all of the claims of the patent are likely to be declared invalid.

IPR has a major limitation – the infringer must file a petition for IPR within one year of the date that the infringer is sued in court for infringement.  If the infringer fails to request IPR, the infringer can still challenge the patent in court.

Which brings us to the case of Nidec Motor v Zhongshan Broad Ocean Motor.  Nidec Motor sued Broad Ocean for infringement.  Within the one-year deadline, Broad Ocean petitioned for Inter Partes Review (IPR) before the USPTO.  One of the grounds of the Broad Ocean petition was a translation of a Japanese publication.  Broad Ocean failed to attest to the accuracy of the translation.  The PTAB, initiated IPR on other grounds, but did not initiate review for the Japanese publication because the certification of the accuracy of the translation was missing.

Broad Ocean then filed a second petition for IPR after the one-year deadline.  The second petition included the missing affidavit of the accuracy of the Japanese translation.  Broad Ocean also asked the PTAB to join the second IPR to the first IPR.

A three-person PTAB panel considered and denied the request two to one, finding that the second petition was too late and thus time-barred.

Here’s where the manipulation by the USPTO comes in.  Broad Ocean requested rehearing of the denial.  The PTAB added two more persons to the three-person panel, apparently stacking the panel to change the result.  The expanded panel did change the result, three to two.  On very sketchy legal grounds, the expanded panel reversed the initial panel and concluded that the second petition was joined to the first petition.  Broad Ocean was able to argue that the patent was invalid based on the Japanese publication.

Now for the rub – decisions by the USPTO on whether to initiate IPR proceedings are not reviewable on appeal.  Regardless of how sketchy the legal argument, the PTAB decision to allow the late filing to add additional grounds cannot be challenged.

The now five-person panel found that all of the challenged claims were invalid both under the Japanese reference and under the other grounds.

On appeal, the Federal Circuit agreed that the challenged claims were invalid on the other grounds and concluded that it did not have to decide the issue relating to the Japanese reference.  In a concurring opinion, two Federal Circuit Court judges severely criticized the PTAB’s action in stacking the panel and in making tortured interpretations of the statute.  We can anticipate that in a closer case the Federal Circuit may act to reel in the excesses of the PTAB.

That is, if Inter Partes Review survives at all.  The existence of IPR is being challenged in the Supreme Court, and the Supreme Court has accepted the case.  The argument is that patent rights are private property rights and that the Federal government can only extinguish private property rights by action of a Federal judge in a Federal Court.  The PTAB is a branch of the USPTO, an executive branch agency, and is not a Federal court and its administrative judges are not Federal judges.

— Robert Yarbrough, Esq.