United States: Expanded PTO Panels And Improper Joinder: The Federal Circuit Fires A Warning Shot

The Federal Circuit's decision in Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co., (Fed. Cir. No. 16-2321), expresses a growing discomfort with the Patent Office's practice of joinder and expanded panels.

Procedural History

The procedural history, though somewhat complicated, is critical for understanding the case.

On September 25, 2013, Broad Ocean was sued for infringing U.S. Patent 7,626,349 (the "'349 patent"). Broad Ocean filed a first IPR petition on July 28, 2014, arguing that certain claims of the '349 patent were obvious over a combination of two references, Bessler and Kocybik, and, separately, that these claims were also anticipated by a third reference, Hideji. The Board instituted the IPR based on the Bessler/Kocybik combination, but refused to institute the IPR based on Hideji, because Broad Ocean had not filed a proper affidavit with the translation of Hideji. Broad Ocean then filed a second IPR petition on February 20, 2015, again based on Hideji, but this time with the proper affidavit.

Standing on its own, the second IPR petition was untimely, because the petition was filed more than one year after the date on which the petitioner was served with a complaint alleging infringement of the patent. See 35 U.S.C. § 315(b). Broad Ocean asserted that the one-year time limit did not bar its petition, however, because it was seeking to join itself under 35 U.S.C. § 315(c) to the previously instituted IPR.

In a split decision, a three-judge PTAB panel rejected the second petition as time barred. The panel recognized that "[d]ifferent panels of the Board have reached different conclusions whether the exception to the time bar applies when a party requests joinder of issues to a proceeding to which it is already a party." Zhongshan Broad Ocean Motor Co. v. Nidec Moter Corp., IPR2015-00762 at 12 (Paper 12, July 20, 2015). The majority (ALJs Boucher and Wood) held "that only a person who is not already a party to an instituted inter partes review can be joined to the proceeding." Id. at 12-13. One judge dissented on this point.

Broad Ocean then requested rehearing and the Patent Office expanded the panel to five judges. In a 3-2 decision the five-judge panel allowed joinder and instituted the IPR based on Hideji. ALJs Boucher and Wood (the original majority in the three-judge panel) dissented.

In its final written decision, the Board concluded that the '349 patent was obvious over Bessler and Kocybik and, separately, was anticipated by Hideji.

The Federal Circuit Decision

Nidec appealed to the Federal Circuit. The panel of Judges Dyk, Reyna, and Wallach affirmed in a per curiam decision. Because the panel agreed that the claims were obvious over Bessler and Kocybik, the propriety of even considering Hideji was moot.

Nonetheless, Judges Dyk and Wallace wrote in concurrence questioning the Patent Office's position on joinder and expanded panels. As to joinder, they declared that it was "unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding." The concurrence also "question[ed] whether the practice of expanding panels where the PTO is dissatisfied with a panel's earlier decision is the appropriate mechanism of achieving the desired uniformity."

Perhaps, in a case where these questions are dispositive, the Federal Circuit will opine on the Patent Office's practices of joinder and expanded panels. Potential roadblocks are 35 U.S.C. §§ 314(d) and 324(e), each of which provide (the first for IPRs and the second for PGRs) that the Director's determination "whether to institute . . . review under this section shall be final and nonappealable." Since the joinder issue relates to the determination to institute—and, in this case, so does the use of a five-judge panel—the Federal Circuit may not have jurisdiction to review these determinations. The Federal Circuit en banc is considering the contours of the non-reviewability provisions in Wi-Fi One, LLC v. Broadcom Corp. (Fed. Cir. No. 15-1944, argued May 4, 2017). The outcome of that case may well affect the Federal Circuit's ability to review decisions such as these.


The main takeaways here are: (1) patentees should consider challenging the Patent Office's authority to use joinder to consider issues that are raised in otherwise time-barred petitions and (2) parties should consider challenging whether the Patent Office can use expanded panels to overrule a three-judge-panel decision. This case also highlights the importance of properly preparing IPR petitions in the first place. If Broad Ocean had included the proper affidavit with its initial IPR petition, the whole issue would never have arisen.

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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