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PTAB – Ford is not barred from challenging a patent on a hybrid vehicle based on the unproven assertion that it breached an agreement not to challenge the patent

In Ford Motor Company v. Paice LLC & The Abell Foundation, Inc., Ford filed a petition seeking inter partes review of U.S. Patent No. 8,214,097 relating to a hybrid vehicle having, among other things, both an internal combustion engine and an electric motor. IPR2014-00570. On September 30, 2014, the Board instituted a trial on the ‘097 patent, finding that Ford’s petition demonstrated that there was a reasonable likelihood that it would prevail in showing unpatentability of claims 30-33, 35, 36 and 39 of the ‘097 patent. The Board denied review (on both anticipation and obviousness grounds) as to claim 38, which requires that the battery supply power to the electric motor “at a peak of at least 500 volts under peak load conditions.”

In reaching its decision to institute a trial, the Board rejected Paice’s argument that Ford is barred or estopped under 37 C.F.R. ยง 42.104(a) from requesting an inter partes review due to an alleged breach of an arbitration agreement between the parties. “According to Paice, the arbitration agreement includes ‘unambiguous terms’ that purportedly limit Ford’s ability to ‘challenge the claims of the ‘097 patent.'” Paice argues that Ford is in breach of those terms and therefore failed to demonstrate that it had the requisite standing to file the instant petition.

In rejecting Paice’s argument, the Board explained that the standing issue raised by Paice was outside the purview of the Board’s statutory authority under the America Invents Act:

The purported “standing” argument raised by Paice, however, relates to a disputed contractual matter that falls outside the purview of our authority under the Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011). Indeed, the question of whether Ford has breached the arbitration agreement by requesting inter partes review of the ‘097 patent is currently the subject of a preliminary injunction motion filed by Paice in the co-pending district court action, and yet to be decided. Prelim. Resp. 12 n.4. As such, we reject Paice’s attempt to frame this unresolved breach-of-contract issue as a standing issue ripe for our review. Based on the current record, Paice has not demonstrated that Ford is barred or estopped from challenging the ‘097 patent.

The Board’s decision makes clear that it does not intend to resolve issues outside its statutory authority even if such issues could affect a party’s ability to file a petition for inter partes review. The Board left unaddressed whether a finding by the district court that Ford did, in fact, breach an agreement not to challenge the validity of the patent in an IPR would have any effect on the instituted inter partes review. It also leaves patent owners in the unenviable position of having to prove a breach of such a provision before the Board apparently will consider what, if any, effect the provision will have on a petitioner’s standing.

Ford Motor Company v. Paice LLC & The Abell Foundation, Inc., Case IPR2014-00570 (PTAB Sept. 30, 2014) (Paper 10) (DeFranco, 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