In Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. LTD., 2016-2321 (Fed. Cir. August 22, 2017)(designated precedential), the Federal Circuit upheld the PTAB’s finding that a patent directed to an HVAC system was invalid. However, a concurring opinion criticized the PTAB’s joinder practice and use of expanded panels, indicating that such practices are likely to be scrutinized in future Federal Circuit decisions.
I. PTAB Procedural History
The present case involves U.S. Patent No. 7,626,349 (“’349 patent”) owned by Nidec Motor Corporation (“Nidec”). The ’349 patent is directed to HVAC systems that provide quieter operation of motors due to improved motor control by applying continuous oscillations in applied voltage to motor coil windings. Slip op. at 2-3. Broad Ocean filed an IPR petition (“first petition”) challenging claims 1-3, 8, 9, 12, 16, and 19 of the ’349 patent as obvious over U.S. Patent No. 5,410,230 (“Bessler”) and a doctoral thesis to Peter Franz Kocybik (“Kocybik”). Broad Ocean also presented another ground asserting that the same challenged claims are anticipated by Japanese Patent Publication 2003-348885 (“Hideji”). The Board instituted review on the ground of obviousness over Bessler and Kocybik, but did not institute on the ground of anticipation by Hideji, holding that Broad Ocean failed to provide a declaration regarding the accuracy of the translation required for foreign references. Id. at 3 (citing 37 C.F.R. § 42.63(b)).
In view of the Board’s denial of the ground for anticipation, Broad Ocean subsequently filed a second IPR petition (“second petition”) asserting the same challenged claims as anticipated by Hideji with the required declaration. The second petition was accompanied by a motion under 35 U.S.C. § 315(c) to join the second petition with the first petition. A panel of three Administrate Patent Judges (“APJs”) declined to institute review of the second petition, holding that since the second petition was filed more than one year since Broad Ocean had been served with a complaint alleging infringement of the ’349 patent, the second petition was time barred under 35 U.S.C. § 315(b), and the exception to the time bar for requests for joinder (i.e., 35 U.S.C. §§ 315(b), (c)) “did not apply here because … the joinder provision does not permit a party to join issues to a proceeding to which it is already a party.” Id. at 4 (emphasis added).
Broad Ocean subsequently filed a request for rehearing, which was granted by an expanded panel of five APJs formed by the Acting Chief Judge acting on behalf of the PTO Director. Slip concurring op. at 4. The expanded panel overturned the previous panel’s decision holding that “§ 315(c) permits the joinder of any person who properly files a petition,” and therefore “encompasses both party joinder and issue joinder, and as such, permits joinder of issues, including new grounds of unpatentability, presented in the petition that accompanies the request for joinder.” Slip op. 4-5 (emphasis added). The expanded panel instituted the second petition and granted Broad Ocean’s request to join the second petition with the previously instituted IPR. The expanded panel eventually issued a final written decision finding the challenged claims unpatentable under 35 U.S.C. § 103 over the combination of Bessler and Kocybik, and also finding the challenged claims unpatentable under 35 U.S.C. § 102 over Hideji. Id. at 5.
II. Majority Opinion
Nidec appealed the Board’s conclusions regarding the finding of invalidity of the challenged claims of the ’394 patent, as well as the Board’s joinder decision and use of an expanded panel. The majority opinion, upholding the Board’s decision of invalidity of the challenged claims over the combination of Bessler and Kocybik, declined to rule on whether the Board’s joinder determination was proper, noting that the Federal Circuit’s decision on obviousness, which was raised in the first petition, was not affected by the Board’s joinder determination. Slip op. at 6. Furthermore, based on this ruling, the majority opinion did not address (i) the PTO Director’s and Broad Ocean’s arguments that the Board’s joinder decision is non-appealable in view of the bar on judicial review of institution decisions according to 35 U.S.C. § 314(d), or (ii) Nidec’s arguments that the use of expanded panels violates due process. Id.
III. Concurring Opinion
Judge Dyk and Judge Wallach provided a concurring opinion agreeing with the majority decision to uphold the PTAB’s finding of invalidity. However, the concurring opinion expressed concern regarding the Board’s joinder determination and the use of expanded panels.
Regarding the Board’s joinder determination, the concurring opinion rejected the notion that the term “any person” in § 315(c) permits issue based joinder allowing a petitioner to join new issues presented in a petition with a previously filed petition. Instead, the concurring opinion noted that requests for joinder were “plainly designed to apply where time-barred Party A seeks to join an existing IPR timely commenced by Party B when this would not introduce any new patentability issues.” Slip concurring op. at 3. Moreover, the concurring opinion noted 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, whether the petitioner seeking to add new issues is the same party that brought the timely proceeding …, or the petitioner is a new party.” Id. (emphasis added).
The concurring opinion further expressed concern regarding the expanded panel in this case, which overturned the Board’s original denial of joinder. While the concurring opinion acknowledged that expanded panels may be important for achieving uniformity in PTAB decisions, the concurring opinion “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.” Id. at 4.
IV. Future Implications
Notably, the concurring opinion is non-precedential and non-binding on the PTAB. As such, the PTAB’s current practice of issue based joinder under § 315(c) remains in effect. However, future petitioners should proceed with caution when relying on the joinder provisions under § 315(c), as the concurring opinion indicates that the PTAB’s practice of issue based joinder may be scrutinized by the Federal Circuit, provided that the Federal Circuit rules that joinder determinations are appealable. (See Slip. concurring op. at 4)(noting that “as with the joinder issue, we need not resolve this issue here … [, nor] need we address the predicate issue of appealability.”).
At a minimum, the concurring opinion demonstrates the importance for petitioners to present all pertinent issues and evidence in the petition, or at least file petitions early enough to permit the filing of one or more subsequent petitions, in response to an unfavorable institution decision, before the one year time bar lapses. For example, if a petitioner files an IPR petition within four months of being served a complaint alleging patent infringement, the petitioner will likely receive an institution decision around ten months from being served the complaint, and thus, has approximately two more months to file a subsequent IPR petition, if necessary, before the one year time bar lapses. Therefore, by filing an IPR petition during the early stages of litigation, petitioners may be able to avoid the need to join a petition filed after the one year bar date with an earlier timely filed petition.
The concurring opinion also indicates that the PTAB practice of expanding panels may come under further scrutiny. Particularly, the concurring opinion took exception to the PTAB Chief Judge acting on behalf of the PTO Director to expand the panel, thereby leaving open the question regarding whether additional judges were selected to overturn the prior panel’s decision. (See Slip concurring op. at 4)(questioning whether expanded panels were “the appropriate mechanism of achieving the desired uniformity,” while reiterating Nidec’s argument that the judges for the expanded panel “were chosen with some expectation that they would vote to set aside the earlier panel decision.”). Accordingly, the concurring opinion may encourage further appeals of decisions by expanded panels that overturn a prior panel’s decision, especially where the PTO Director is involved in forming the expanded panel.