A Federal Circuit panel may toss so-called “issue joinder” from inter partes review proceedings after hearing oral arguments last month in Nidec Motor Corporation v. Zhongshan Broad Ocean Company. Issue joinder allows the same party to raise new issues in separate proceedings and then join them.The joinder provision of the AIA has proven contentious since the creation of inter partes reviews. (See our previous post on joinder here). The statute reads:
If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314. 35 U.S.C. § 315(c) (emphasis added).
Initial PTAB interpretations of the phrase “may join as a party” frequently reached conflicting results. Some panels found that both party joinder (the joining of one party to another) and issue joinder (the joining of a new issue raised by the same party) are permissible under § 315(c). See, e.g., Ariosa Diagnostics v. Isis Innovation Ltd., Case IPR2012-00022 (PTAB Sept. 2, 2014) (Paper 66); Samsung Elecs. Co. v. Virgina Innovation Scis., Inc., Case IPR2014-00557 (PTAB June 13, 2014) (Paper 10); Microsoft Corp. v. Proxyconn, Inc., Case IPR2013-00109 (PTAB Feb. 25, 2013) (Paper 15). However, other panels held that “may join as a party” indicated that the statute only allows party joinder. See, e.g., Medtronic Inc. v. Troy R. Norred, M.D., Case IPR2014-00823 (PTAB Dec. 8, 2014) (Paper 12).
The PTAB sought to clarify the ambiguity by issuing a seven-member expanded panel decision in Target Corporation v. Destination Maternity Corporation. Case No. IPR2014-00508 (PTAB Feb. 12, 2015) (Paper 28). In that decision, the panel emphasized that “the decision to grant joinder is discretionary,” and then allowed a motion for issue joinder.
The Nidec case recently heard at the Federal Circuit illustrates why joinder is such a contentious issue. As shown in the facts below, interpreting § 315(c) to permit issue joinder – as the PTAB has done consistently for more than two years – creates a potential loophole that allows petitioners to correct defective petitions and/or bring in new arguments into a proceeding.
Nidec sued Broad Ocean for infringement of U.S. Patent No. 7,626,349 – directed to HVAC technology – in September 2013. Broad Ocean filed a first petition for inter partes review in July 2014 that challenged eight claims of the patent. Broad Ocean proposed two grounds: (1) that the challenged claims were anticipated by a Japanese Patent Publication; and (2) that the challenged claims were obvious over two other references. The panel reviewing the petition issued an institution decision in January 2015 that denied institution of the first ground because Broad Ocean failed to provide an affidavit attesting to the accuracy of the translation of the Japanese Patent Publication (see 37 C.F.R. § 42.63(b)). The panel instituted trial on the second ground.
Just one month later, in February 2015, Broad Ocean filed a second petition. This petition challenged the same eight claims and proposed the same ground as the first petition: that the challenged claims were anticipated by the Japanese Patent Publication. Broad Ocean included an affidavit of translation with this second petition. Since the second petition was filed after the one-year statutory bar of § 315(b), it could not be instituted unless it was joined with the first proceeding.
In July 2015, the panel reviewing the second petition refused to allow issue joinder and therefore denied institution. However, the PTAB authorized an expanded panel to rehear the second petition, and this expanded panel followed the logic of Target in allowing issue joinder and instituting trial. Broad Ocean had thus been able to correct its deficient first petition by filing a subsequent petition with the proper affidavit and joining the two petitions.
The panel reached a final written decision finding that the challenged claims were invalid as anticipated by the Japanese Patent Publication and as obvious in view of the other references. Nidec appealed to the Federal Circuit, and specifically challenged the joinder of the two proceedings under § 315(c).
Reports from oral arguments in Nidec indicate that the Federal Circuit raised concerns about due process and public policy implications of allowing issue joinder during inter partes reviews. In particular, the panel appeared to question the wisdom of allowing a petitioner to correct a defective petition after the one-year statutory bar of § 315(b).