November 20, 2014

IPR Petition Time-Barred Even Where First Lawsuit “Dismissed” and Folded Into Later Lawsuit

By Matthew L. Cutler, Principal

The PTAB has been presented, of late, several cases that call upon the Board to consider whether a complaint served on a defendant is sufficient to trigger the a time-bar pursuant to 35 U.S.C. § 315(b). For example, as discussed HERE, a complaint that is served, but then later dismissed without prejudice, does not trigger the § 315(b) time bar. In eBay, Inc. v. Advanced Auctions LLC, IPR2014-00806, the Board addressed a factual situation in which a first lawsuit is later folded into a second lawsuit, purportedly because of a defect in the patent assignment raised an issue of whether standing was appropriate. The Board determined that there was no evidence that the assignment was defective and, as such, Patent Owner had standing to file and serve the first complaint. Even though that first complaint was later “dismissed” and folded into a second lawsuit, such an occurrence does not negate service of the first complaint.

On February 13, 2013, Petitioner was served with a first complaint for infringement, resulting in a first district court action. Thereafter, Patent Owner executed an assignment of the patent rights and, on July 11, 2013, Petitioner was served with a second complaint for infringement, resulting in a second district court action.  On May 23, 2014, more than one year after the first complaint was served, but within one year from when the second complaint was served, Petitioner filed the Petition at issue. On July 14, 2014, the court granted a motion to dismiss the first litigation, and effectively folded that action into the second action, allowing work from the first action to carry over to the second action.  Decision at 3. Because the IPR Petition was filed more than one year after service of the first complaint, if service of the first complaint was effective, such service would result in a time-bar of the instant petition under 35 U.S.C. § 315(b).  Id. at 4.

Petitioner argued that Patent Owner did not have rights in the ‘000 patent as of the filing and service of the first action as a result of a late and defective assignment. As such, per Petitioner, Patent Owner lacked standing to assert the subject patent, the first action had no legal effect, and the time-bar of 35 U.S.C. § 315(b) did not apply.

The Board disagreed, finding that Petitioner failed to identify any specific defects in the assignment documents or provide further explanation why the assignments were defective. Id. at 5. As proof that the assignment was defective, Petitioner relied solely on the fact that Patent Owner executed a second assignment after Petitioner had raised the standing issue in the first action. Patent Owner responded that the second assignment was initiated in response to an unrelated case and further that the second assignment expressly stated the belief that the first assignments were valid.  Id. at 6.

With Petitioner pointing out no specific defects in the assignment and the Board finding none, the Board rejected Petitioner’s argument that Patent Owner lacked standing. The Board agreed with Patent Owner, stating that the mere existence of a second assignment was not enough to convince the Board that the first assignment was defective.  Id. at 6. Accordingly, the Board found that Patent Owner did have standing in the first action, service was effectuated, and the instant Petition was time-barred. Further, despite the fact that the first action was “dismissed” as part of a procedural move to fold it into the second action, because the work from the first action carried over to the second action, this situation is not akin to a dismissal without prejudice, wherein the parties were left in the same legal position as if the underlying complaint had never been served. Order at 6-7. Thus, with the complaint in the first action served more than a year prior to the filing date of the instant petition, the Board denied the petition as time-barred under 35 U.S.C. § 315(b).