United States: Delayed Payment Proves Fatal For Cultec's PTAB Challenge

Under 35 U.S.C. § 315(b), a petition for inter partes review (IPR) may not be filed more than one year after the date on which the petitioner was served with a patent infringement complaint. Thus, a petition must meet all of the filing requirements of 37 C.F.R. 42.106 prior to the one year bar to be considered for institution.

An IPR petition under 37 C.F.R. 42.106 must: (1) include all required content as outlined in section 42.104; (2) be effectively served on the patent owner; and (3) be accompanied by the institution fee. If a petition fails to meet all of these requirements, no filing date will be accorded until the deficiencies are corrected. If such a failure is not remedied before the § 315(b) one-year bar kicks in, the petitioner may lose all chances for a PTAB challenge.

This was the case in Cultec, Inc. v. StormTech LLC (IPR2017-00526). After missing the filing deadline by one day due to alleged "technical difficulties" when paying the institution fee, Cultec was statutorily barred from pursuing an IPR.

On January 5, 2016, Cultec was served with a complaint alleging that its plastic stormwater chambers infringed plaintiff StormTech's patent. Pursuant to 35 U.S.C. § 315(b), Cultech had until midnight on January 5, 2017 to petition for an IPR to challenge the validity of the asserted patent. On the day of the deadline, Cultec filed and served the petition, but was unable to pay its $25,600 fee on time (standard $23,000 IPR fee, plus $2,600 in excess claim fees) because of "difficulties with the PTAB E2E System." Cultec managed to pay the fee the next day, and was awarded a filing date of January 6, 2017—one day outside of its one-year window to file.

All was not yet lost, however. Under 37 C.F.R. 42.5, the PTAB has discretion to change the filing date of petitions if such a change would "secure the just, speedy, and inexpensive resolution of [the] proceeding." The PTAB has used this power multiple times to accord new filing dates, such as in 2Wire, Inc. v. TQ Delta LLC (IPR2015-00239). There, counsel pressed the "submit" button after midnight when filing its client's IPR petition. The PTAB, however, granted the petitioner's motion to correct the filing date because all three filing requirements were met. In particular, the PTABdetermined that all documents were timely uploaded and served and that the fees were paid.

Hoping to receive a similar decision to that in 2Wire, Cultec moved to accord a filing date of January 5, 2017, citing technical difficulties with the payment system as the reason for missing the deadline. As the moving party, Cultec had the burden of proof under 37 C.F.R. 42.20(c) to establish that it was entitled to the requested relief. The PTAB found that Cultec failed to meet that burden.

In reaching its decision, the PTAB outlined Cultec's several unsuccessful attempts to pay its fee between 7:00 p.m. and midnight on January 5th. The first payment attempt was by credit card at 7:10 p.m., and was denied because the order exceeded the "United States Department of the Treasury's credit card daily limit of $24,999.99." The receipt for the first attempt stated in bold: "Your Payment Has Not Been Cleared for AIA Review IPR2017-00526! Please call system administrator with any questions[.]" However, on the second page of the receipt, the payment status was listed as "in process," which Cultec thought meant the payment would nonetheless be accepted. The PTAB found this thought unreasonable because of the explicit warnings given.

Cultec then checked on the status of the payment four hours later at 11:00 p.m.—a wait that the PTAB found unreasonable in itself in light of the uncertainty of the earlier payment status. Cultec made attempts to pay the fee again—two by deposit account, each of which were rejected due to "insufficient funds," and two by a personal debit card, both of which failed because the card authorization was declined.

The PTAB found that these unsuccessful payment attempts demonstrated a lack of understanding of proper payment processes, a lack of understanding of personal account balances, and an unreasonable lack of diligence in checking payment statuses. More importantly, Cultec did not provide any proper evidence that PTO's payment system had technical difficulties—the very assertion they had the burden to prove. As such, Cultec's motion was denied and its IPR petition was time-barred.

It is evident that the PTAB is unsympathetic to parties who miss deadlines due to last minute filings. In denying Cultec's motion, the PTAB cited Teva Pharm. USA, Inc. v. MonoSol Rx, LLC, (IPR2016-00281) where the petition was uploaded and served on December 3, 2015, but the payment was not completed until 12:09 a.m. the next day because of alleged "technical issues" with the PTAB's e-filing system. Similar to Cultec's issues, the petitioner's delayed payments in Teva resulted from a credit card transaction that exceeded the daily limit, the use of an invalid credit card account, and the use of a deposit account with insufficient funds. In denying the petitioner's request to change the filing date of the petitions to December 3, 2015, the PTAB concluded that "[a]ny prejudice to Petitioner was created by Petitioner's own delay," and "had Petitioner not [waited until the last minute], any alleged delays caused by 'technical issues' would have been moot."

Takeaway

In light of these PTAB decisions, petitioners with concurrent litigation should be mindful of the one year bar, and leave ample time to deal with unexpected issues that may arise upon filing. Those that fail to do so will most likely meet the same fate as the petitioners in Teva and Cultec, and be time-barred from pursuing PTAB challenges.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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