The PTAB recently designated a decision interpreting 35 U.S.C. § 315(a)(1) as precedential. Cisco Systems Inc. v. Chrimar Systems, Inc. (IPR2018-01511, Paper No. 11) addresses the 35 U.S.C. § 315(a)(1) bar in light of the Federal Circuit's interpretation of 35 U.S.C. § 315(b)(1) from Click-to-Call. The Board concluded that because Cisco filed a civil action against Chrimar challenging the validity of a claim before the date on which the Petition was filed, the Petition must be denied, and no inter partes review (IPR) instituted. This decision illustrates the importance for a party accused of infringement to develop its overarching case strategy—including a decision on whether to file an IPR—soon after a patent is asserted against it, and certainly before taking any action in district court.
Under 35 U.S.C. § 315(a)(1), an IPR "may not be instituted if, before the date on which the petition for such review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent." Cisco argued that § 315(a)(1) does not bar institution of an IPR in its case because it voluntarily dismissed its previous civil action without prejudice. The Board disagreed. First, the Board noted that § 315(a)(1) does not include an exception for a civil action that is dismissed without prejudice. Citing Click-to-Call, the Board contrasted § 315(a)(1) with § 315(b), which includes an exception to the time bar for a joinder request.
The Board also considered the ordinary meaning of the terms "file" and "civil action," and concluded that the phrase "filed a civil action" encompasses a civil action that was dismissed without prejudice. That is, the § 315(a)(1) time bar is implicated when the civil action is filed, regardless of subsequent events. Cisco argued that the term "civil action" in § 315(a)(1) requires substantive litigation. The Board disagreed, finding that the term "civil action" cannot be separated from the term "filed" to require substantive litigation. Rather, the phrase "filed a civil action" only requires commencement of the action.
Cisco pointed to legislative history to demonstrate that the "purpose of § 315(a)(1) is coordination of IPR with litigation" and "to prevent a challenger from getting two bites at the invalidity apple." However, the Board found that these comments instead indicate that "§ 315(a)(1) only requires a petitioner to 'seek[]' a declaratory judgment, not to substantively litigate the civil action." Cisco additionally argued that the purpose of a dismissal without prejudice "is to preserve, rather than eliminate, the ability of the plaintiff to sue the defendant again on the same claim," and that, despite the finding in Click-to-Call regarding § 315(b), this anti-preclusion principle applies to § 315(a)(1). The Board did not find this persuasive, noting that Cisco was not barred from filing another civil action challenging validity.
The Cisco Systems decision clearly indicates that there will be no exceptions to the time bar of § 315(a)(1). Parties accused of infringement would be well-advised to carefully consider the IPR implications of filing a civil action early in the process of developing a patent invalidation strategy.
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