Facebook and USPTO to Federal Circuit: Click-to-Call Bars the Appeal of PTAB Joinder Decisions

June 12, 2020

In March 2020, the Federal Circuit ruled in Facebook v. Windy City Innovations that the Patent Trial and Appeal Board (PTAB) may not “join” an entity to another inter partes review (IPR) proceeding in which it is already a party (i.e., “same-party joinder”) or “join” new issues “material to patentability, such as new claims or new grounds” to an existing IPR (“issue joinder”). However, in May, the court ordered the parties and the US government (in its capacity as an amicus) to file briefs addressing the impact of the US Supreme Court’s intervening decision in Thryv v. Click-to-Call, which held that decisions applying the one-year statutory time bar (which, in part, imposes a one-year window to file an IPR for district court defendants) may not be appealed. All three briefs have now been filed, with Facebook and the USPTO both arguing that joinder decisions fall under the Supreme Court’s Cuozzo Speed Technologies v. Lee decision, thereby insulating them from review—the same rationale used by the Supreme Court in Click-to-Call.

The practice of same-party joinder addressed in Windy City has long served as a “safety valve” for companies subject to parallel district court litigation. In cases where defendants do not learn of the specific claims asserted against them until past the one-year statutory time bar—after which it would no longer be possible to file an IPR targeting those claims—such defendants have been able to file an initial IPR in the first year challenging some claims from the patent-in-suit and then another once they learn what the actual asserted claims are, seeking joinder to the first petition.

The Federal Circuit ruled in Windy City that the Board lacked the authority to grant same-party joinder or issue joinder, agreeing with appellant Windy City Innovations, LLC that the “clear and unambiguous text” of 35 USC Section 315(c)—the statutory provision governing joinder—“does not authorize same-party joinder, and does not authorize the joinder of new issues”, noting that the parties had proceeded through the appellate process as if the Board had joined Facebook as a party to an earlier IPR to which it was already a party. Subsection (c), according to the court, does not authorize such an action: “It would be an extraordinary usage of the term ‘join as a party’ to refer to persons who were already parties . . . We are not aware of any legal context in which a person is permitted to join ‘as a party’ to a proceeding in which it is already a party”. In so ruling, the Federal Circuit rejected the Board’s reasoning and contrary result, based on the use of “any person” in Subsection (c) above, in Proppant Express Investments, LLC v. Oren Technologies, LLC, a decision subsequently designated as precedential. (See here for a full analysis of the Windy City decision.) Facebook filed a petition for en banc and panel rehearing of the Windy City decision on April 17.

Three days later, a Supreme Court majority issued its decision in Click-to-Call, holding that because the IPR statutory time bar establishes a key threshold for the PTAB’s decision to institute trial, it falls within the Court’s 2016 opinion in Cuozzo, which blocked the appeal of institution decisions and any matters “closely tied to” institution (which is governed by Section 314(d)). Here, the majority held that “Section 315(b)’s time limitation is integral to, indeed a condition on, institution” and “sets forth a circumstance in which ‘[a]n inter partes review may not be instituted’”. Since Section 315(b) “expressly governs institution and nothing more”, a ruling that a petition is time-barred amounts to “a contention that the agency should have refused ‘to institute an inter partes review’”, and so—as in Cuozzo—the presumption favoring judicial review is overcome. (A full analysis of Click-to-Call can be found here.)

On April 30, the Federal Circuit invited the parties and the US government to brief the impact of Click-to-Call on Windy City after Facebook submitted a citation of supplemental authority citing that decision. All three briefs were filed on June 10.

Facebook’s Brief

Facebook argues that Click-to-Call “confirms that this Court lacks jurisdiction over Windy City’s cross-appeal challenging the Board’s institution and joinder decisions”. The company asserts that Section 315(c), like the statute governing the time bar (Section 315(b)), is also “closely tied to” the PTAB’s institution decision, since “[b]y its terms, the joinder provision only comes into play at institution, vesting the Board with ‘discretion’ to ‘join as a party to [an existing IPR] any person who properly files a petition under section 311 that that the Director . . . determines warrants the institution of an inter partes review under section 314’” (citing Section 315(c)).

Any argument that the PTAB should not have instituted trial under this standard amounts to “‘an ordinary dispute about the application of’ an institution-related statute”, argues Facebook, which is protected from appellate review under Click-to-Call. Further confirming that a joinder decision is “integral to, indeed a condition on, institution”, continued the company, is the fact that the one-year time limit imposed in Section 315(b) does not apply to requests for joinder. Arguments by Windy City that the PTAB erred by joining Facebook’s “follow-on petitions” boil down to contentions “that the follow-on IPRs should not have been instituted at all” (emphasis in original), implicating Section 314(d)’s prohibition on appeals of institution decisions. This statutory reading, concluded Facebook, is supported by Click-to-Call’s characterization of the underlying purpose and design of the America Invents Act (AIA), under which the Supreme Court described appeals of institution decisions as “wasting the resources spent resolving patentability” and risking “leaving bad patents enforceable”.

The USPTO’s Brief

The USPTO’s brief echoed many of Facebook’s arguments, including its assertion that joinder decisions under Section 315(c) are insulated from appellate review as matters “integral to, indeed a condition on, institution”. The Patent Office again highlighted Section 315(b)’s language stating that the provision does not apply to joinder decisions as underscoring joinder’s relation to institution: “Because the time limitation of the first sentence of section 315(b) applies only to ‘institut[ion]’ of IPR, there would be no need for Congress to provide an exception to that limitation for ‘joinder under subsection (c)’ unless Congress envisioned that joinder would entail institution of inter partes review proceedings”.

This is further underscored, the USPTO argued, by the typical circumstances under which joinder is sought: while the PTAB could deny a motion for joinder but grant an accompanying IPR petition within the time bar without foreclosing the IPR altogether, motions for joinder are typically filed outside that one-year period, in which case “the IPR petition is entirely dependent on the fate of the joinder motion”. “In this circumstance, a judicial challenge to the joinder decision necessarily operates as a challenge to the USPTO’s decision to institute inter partes review, and vacating the joinder decision would have the necessary effect of vacating the institution determination.”

Furthermore, the USPTO argued, “[t]he USPTO’s joinder authority under section 315(c) rests directly on the institution provisions of the AIA”, as a decision granting joinder depends on a determination that the corresponding IPR petition “warrants the institution of an inter partes review under section 314”—and the grant of a joinder motion is necessarily accompanied by the institution of that petition. Section 315(c) is “integral to, indeed a condition on, institution” for reasons quite similar to the provisions considered in Click-to-Call and Cuozzo. The USPTO supported these conclusions with a similar read of the policy behind the AIA as in Facebook’s brief.

Windy City’s Brief

Cross-appellant Windy City pushed back on those arguments in its own brief, framing the core issue as whether the PTAB exceeded its statutory authority under Section 315(c) by granting same-party joinder for Facebook—arguing that “a challenge to an agency action outside the scope of its statutory authority is precisely the type of issue that is judicially reviewable, even after” Click-to-Call. Rather than Cuozzo, Windy City argued that a more apposite holding was the Supreme Court’s decision in SAS Institute, in which the Court rejected the argument that “Cuozzo ‘foreclos[ed] judicial review of any legal question bearing on the institution of inter partes review—including whether the statute permits his ‘partial institution’ practice,’ because such an interpretation ‘overreads both the statute and our precedent’”. The petitioner in that case, asserted Windy City, was not challenging the decision to institute trial, but rather the USPTO Director’s authority to do so for less than the full set of petitioned claims.

Additionally, Windy City challenged the notion that Section 314(b) was “closely tied to” institution, instead characterizing joinder under that statute as a “separate procedural process” that merely “relates to the already-instituted proceeding, and specifically to the ‘manner in which the agency’s review [of the already-instituted IPR] ‘proceeds’ once instituted’―not to the institution of new claims or standalone petitions under [Section] 314” (emphasis in original, citation omitted).

What Comes Next

Facebook’s petition for en banc and panel rehearing of Windy City remains pending, and the Federal Circuit has yet to issue its mandate. It is not yet clear what impact the three supplemental briefs addressing Click-to-Call will have on the court’s decision with respect to Facebook’s petition. However, should Windy City’s original holding survive further appellate scrutiny, the effect could be a significant increase in leverage for NPEs that hold larger patent portfolios with many claims, as it may become less practical for some defendants to challenge those assets before the PTAB.