United States: PTAB To Purchasers: "Caveat Emptor"

Esselte AB v. DYMO B.V.B.A.

In a decision to institute inter partes review (IPR) in four separate but related matters, the Patent Trial and Appeal Board (PTAB or Board) found that the patent owner failed to provide sufficient support for its contention that the Board is authorized to consider assignor estoppel under 35 U.S.C. §§ 314, 316 when deciding institution decisions. Esselte AB v. DYMO B.V.B.A., Case Nos. IPR2015-00766, IPR2015-00771, IPR2015-00779, IPR2015-00781 (PTAB, Aug. 28, 2015) (Parvis, APJ).

The challenged technology relates generally to printing devices and methods used to print an image on a tape. In its initial analysis, the PTAB found that the petitioner had demonstrated a reasonable likelihood of prevailing in showing the unpatentability of the challenged claims. However, the real "meat" of the decision to institute came in the Board's examination of assignor estoppel.

In 2005, the petitioner entered into a stock purchase agreement (SPA) that sold off three of its companies, including the patent owner. As part of the SPA, the various intellectual properties owned by the companies were assigned and transferred, including patents covering the challenged technologies. The patent owner argued that as a result of the SPA, the petitioner was barred from seeking an IPR. Further, the patent owner claimed that the doctrine of assignor estoppel barred the IPR, based on the petitioner's transfer of patents rights for value.

The petitioner contended that the doctrine of assignor estoppel does not apply to an IPR proceeding, citing prior Board decisions finding that 35 U.S.C. § 311(a) presents "a clear expression of Congress's broad grant of the ability to challenge the patentability of patents through inter partes review." The patent owner countered by explaining that § 314 indicates that petitioners that are barred by assignor estoppel from challenging a patent's validity logically do not have a reasonable likelihood to prevail.

The Board found that assignor estoppel does not apply in IPRs. Specifically, the PTAB noted that the patent owner's position "assumes [the PTAB is] authorized to consider assignor estoppel, without sufficiently explaining the basis of that assumption." The Board pointed approvingly to prior PTAB decisions finding that Congress will expressly provide for the application of equitable defenses when it so desires. To date, Congress has provided no such direction.

The Board then turned to the patent owner's argument that § 316 obliges the PTO's director to consider the effect of any proscribed regulations "on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter." The Board rejected the patent owner's reasoning, noting that the patent owner failed to specify which regulations of the director it contended would pertain "to recognizing and applying contractual bars and assignor estoppel to inter partes review proceedings."

After disposing of the patent owner's assignor estoppel arguments, the Board determined that the petitioner had demonstrated a reasonable likelihood that several challenged claims were unpatentable and thus instituted inter partes review.

Practice Note: The Board's decision allows for the possibility that a company or individual can sell a patent and then turn around and challenge its patentability in an IPR.

PTAB To Purchasers: "Caveat Emptor"

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