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PTAB to Apple: No Third or Fourth Bite at the Apple

In inter partes proceeding Apple Inc. v. Rensselaer Polytechnic Institute et al., IPR2014-00320, Petitioner Apple sought a second request for rehearing, before an expanded panel of the PTAB, on the Board’s decision not to institute an inter partes review of RPI’s U.S. Patent No. 7,177,798 (“the ‘778 Patent”). The Board held that Apple’s request was unauthorized and therefore ordered it expunged from the record of the proceeding.

On January 3, 2014, Apple initially filed its IPR petition seeking invalidity of the ‘798 Patent based three pieces of prior art that Apple alleged anticipated and/or rendered obvious certain claims of the ‘798 Patent. On April 17, 2014, RPI filed its preliminary response asserting that the Board should deny the petition just as it denied Apple’s first petition for inter partes review of the ‘798 Patent. In its preliminary response, RPI asserted that the Board already considered (and rejected) the same grounds and prior art that Apple now relies on in the second petition. Accordingly, RPI argued that the second petition should be denied because “[t]he Board denied the first petition [which included the same prior art asserted in the second petition] as to all challenged claims because Apple failed to establish that it would prevail in showing that even a single claim of the ‘798 Patent is unpatentable.”

RPI also argued that Apple was time barred under § 315(b) because the “Petition was filed more than one year after Apple was served with a complaint alleging infringement of the ‘798 Patent.” Specifically, RPI refuted Apple’s claim that the first lawsuit was a nullity because it was dismissed without prejudice and therefore did not start the one-year clock running under § 315(b):

Apple was served with a complaint alleging infringement of the ‘798 Patent on October 23, 2012 (“Dynamic I,” filed October 19, 2012). Dynamic I was dismissed under the “consolidation” provision of Rule 42 of the Federal Rules of Civil Procedure through a court-ordered coordination of two related cases: Dynamic I, filed by Dynamic Advances LLC, the exclusive licensee of the ‘798 Patent, and Dynamic ll, jointly filed by Dynamic Advances and Rensselaer Polytechnic Institute (“RPI”). Through the Rule 42 order, the entirety of Dynamic I’s nine months of litigation–and the parties’ postures in that litigation–was incorporated into Dynamic II. Because of this court-ordered incorporation, the parties in Dynamic II are encumbered by the proceedings of Dynamic I–they did not resume their pre-Dynamic I positions when Dynamic I was dismissed. And Apple cannot establish the grounds for avoiding the one-year statutory bar through its joinder motion because there is no IPR proceeding for Apple to join.

In its decision declining to institute Apple’s first IPR petition, the Board agreed with RPI and distinguished between dismissals without prejudice under Rule 41(a) and those relating to consolidation of cases under Rule 42, which the Board viewed as analogous to a conditional dismissal:

As pointed out by Patent Owner, in Macauto the infringement suit against the petitioner was dismissed voluntarily without prejudice, under Fed. R. Civ. P. 41(a), pursuant to a joint stipulation. Macauto, slip op. at 14-15 (PTAB 2013) (Paper 18). The Macauto decision noted that the United States Court of Appeals for the Federal Circuit has interpreted consistently the effect of voluntary dismissals without prejudice under Fed. R. Civ. P. 41(a) as leaving the parties as though the action had never been brought. Id. at 15-16 (quoting Graves v. Principi, 294 F.3d 1350, 1356 (Fed. Cir. 2002); Bonneville Associates, Ltd. Partnership v. Baram, 165 F.3d 1360, 1364 (Fed. Cir. 1999) (Bonneville)). With respect to the co-pending litigation here, however, although the United States District Court for the Northern District of New York ordered that the voluntary dismissal of Dynamic I was without prejudice, the Court did so as part of a consolidation of Dynamic I and Dynamic II pursuant to Fed. R. Civ. P. 42. Prelim. Resp. 6; Ex. 1022, 2. Macauto, we note, relied on cases interpreting Fed. R. Civ. P. 41(a), not Fed. R. Civ. P. 42.

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We find informative a case from the Third Circuit that recognized, similar to Bonneville, that a “statute of limitations is not tolled by the filing of a complaint subsequently dismissed without prejudice,” as “the original complaint is treated as if it never existed.” Cardio-Medical Assocs. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 77 (3d Cir.1983) (Cardio-Medical). Nonetheless, Cardio-Medical recognized an exception where the limitations period is tolled by the filing of a complaint, which is later dismissed without prejudice, if the order of dismissal grants leave to amend within a time certain. See id. The rationale for this exception is that “[a]n order merely dismissing a complaint without prejudice could result in a significant period of delay prior to the bringing of a new action.” Brennan v. Kulick, 407 F.3d 603, 607 (3d Cir.2005). But with a conditional dismissal, “[t]he conditions specified in the order prevent a plaintiff from indefinitely extending the limitations period.” Id.

The Board also relied on a PTAB decision regarding the effect of filing an amended complaint, which the Board again viewed as analogous to a dismissal of a first case when consolidated with a later case:

We also find informative another panel’s decision holding that the filing of an amended complaint does not render the original complaint a nullity. Loral Space & Communications, Inc. v. ViaSat, Inc., IPR2014-00236 (PTAB 2014) (Paper 7) (“An amended complaint is just that-a complaint that has been amended. The original complaint has been amended, and has not gone away in the same sense as a complaint dismissed without prejudice.”). Again, here, Dynamic I immediately continued as a consolidated case, similar, in effect, to an amended case.

On July 8, 2014, Apple filed a request for rehearing of the Board’s decision not to institute inter partes review of the’798 patent. Apple argued that “the stipulated voluntary dismissal of the first action was without prejudice pursuant to Rule 41(a)(1)(A)(ii), which is the only authority in the Federal Rules that permits the parties to voluntarily dismiss an action without a court order.” On July 31, the Board rejected Apple’s argument and denied Apple’s request:

The Decision states that a voluntary dismissal without prejudice as part of a consolidation, which immediately continues the cause of action, will not be treated as a nullity in this case. Decision 6-7. That is so, because it is not the same as a voluntary dismissal without prejudice, in which the cause of action is not immediately continued. Id. The Decision notes this is particularly so when the stipulation of dismissal indicates that the first cause of action “proceed[s]” into the second cause of action including the discovery and legal positions taken by the parties in the first action. Id. The Decision, therefore, does not rest on the Federal Rule of Civil Procedure under which the cause of action was dismissed. In other words, whether or not the dismissal could occur under Fed. R. Civ. P. 42 would not change the result of the Decision.

The Board also rejected Apple’s argument that “[t]he Board’s decision to treat the ‘consolidation’ of the pleadings in the two actions as a continuation of the voluntarily dismissed, first action is unsupported by any legal authority.” Paper 14 at 4-5 (citing cases).

Following the denial of its request for rehearing, Apple filed the instant request for a second rehearing. Apple argued that “a second rehearing by an expanded panel is authorized because Rule 42.5(a) authorizes the Board to take action in a proceeding ‘in any situation not specifically covered by this part…'” The Board denied Apple’s second request for rehearing (its third attempt to initiate the second IPR and fourth attempt to initiate an IPR on the ‘798 Patent) because Apple’s “second request for rehearing by an expanded panel is improper because the rehearing requested allowed under 42.71(d) has been filed and denied.” The Board also rejected Apple’s contention that the request was proper because it was request to rehear, by an expanded panel, the decision denying the first rehearing:

Petitioner also appears to argue that its request is a request to rehear, by an expanded panel, the decision to deny the first rehearing. This is an argument of form over substance. Petitioner’s request is in fact a request for rehearing of the decision to institute trial as evidenced by the fact that the relief requested is the institution of trial. Finally, even if the second rehearing request was allowable under Rule 42.71(d), it is untimely and filed without first seeking authorization from the Board. The deadline for filing a request for rehearing is “[w]ithin 30 days of the entry of . . . a decision not to institute trial.” 37 C.F.R. § 42.71(d)(2).

There are several take-aways from this proceeding: first, for the purposes of the one-year statute of limitations under Section 315(b), the consolidation of an earlier filed case into a later filed case will not reset the time, i.e., the clock will continue to run from the first filed action; second, the Board appears skeptical regarding whether a second request for rehearing by an expanded panel is allowed, at least where the relief sought in the second rehearing request is the same as sought in the first, rehearing request; and third, even if the rules permit a second rehearing, it must be filed within the 30 day period under Rule 42.71(d)(2).

Apple Inc. v. Rensselaer Polytechnic Institute et al., IPR2014-00320, Paper 18 (Moore, A.P.J.).

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. The authors represent inventors, patent owners and technology companies in patent licensing and litigation in U.S. District Courts and in the United States Patent and Trademark Office, including numerous IPRs currently pending before the PTAB. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Greg Cordrey at 949.623.7236 or