By: Daniel Sloan, Kevin McCarthy, and Matt Johnson –
The PTAB recently denied Bestway (USA), Inc.’s (“Petitioner”) request for PGR of U.S. Pat. No. 11,959,512 B2 (“the ’512 patent”) but declined to enter adverse judgment against Intex Marketing, Ltd. (“Patent Owner”) for statutorily disclaiming all Challenged Claims.
The ’512 patent is part of a patent family claiming a frame assembly for a “frame pool.” Bestway, PGR2024-00036, Paper 2 at 10-11 (P.T.A.B. June 15, 2024) (“Petition”); Paper 6 at 3-4 (P.T.A.B. Aug. 21, 2024) (“Reply”). A prior art “frame pool” appears here, followed by an image of the ’512 patent’s frame assembly:
U.S. Pat. No. 3,225,362.
’512 Patent, Figs. 1, 2.
Under Rule 42.73(b), “[a]ctions construed to be a request for adverse judgment include (1) [d]isclaimer of the involved application or patent” or a “(2) [c]ancellation or disclaimer of a claim such that the party has no remaining claim in the trial.” 37 C.F.R. § 42.73(b).
In response to the Petition, Patent Owner statutorily disclaimed all Challenged Claims. In its Preliminary Response, Patent Owner relied on its statutory disclaimer to argue against institution, but urged the PTAB to not construe the disclaimer as a request for adverse judgment. See id., Paper 5 at 5 (P.T.A.B. Aug. 8, 2024) (citing Exh. 2001).
In a PTAB-authorized Reply, Petitioner agreed that post-grant review should not be instituted, but argued that the PTAB should enter adverse judgement, notwithstanding Patent Owner’s request to the contrary. See id., Paper 6 at 1-2 (P.T.A.B. Aug. 21, 2024) (“Reply”). Petitioner noted that the ’512 patent family includes other issued patents and pending continuation applications and argued that Patent Owner’s request stemmed from a desire to avoid the estoppel provision of Rule 42.73(d) (which would prevent Patent Owner from obtaining or enforcing claims patentably indistinct from the ’512 patent claims). Reply at 1-2. Petitioner argued (1) that the PTAB had discretion to enter adverse judgment, and (2) that Patent Owner’s “long history of sending harassing cease-and-desist letters” alleging infringement against Petitioner for related patents warranted such discretion in this case, especially given Petitioner’s “significant expense” in filing its Petition “to curtail the continued harassment.” Reply at 2-4.
In its Decision, the PTAB noted that the parties agreed that when patent owners cancel claims prior to institution, the PTAB has discretion on whether to enter adverse judgment. Decision at 3. It was also undisputed that (1) Patent Owner had sent a letter claiming certain of Petitioner’s products infringed three related patents but had not filed a lawsuit against Petitioner regarding those patents, and (2) Patent Owner had never asserted or threatened to assert any claim of the ’512 patent against Petitioner. Decision at 6.
The PTAB ultimately agreed with Patent Owner, finding that Petitioner’s “significant expense” in preparing and filing its Petition was not sufficient reason to enter adverse judgment against Patent Owner. Decision at 7. The PTAB also noted that there was no reason under 35 U.S.C. § 315 that Petitioner would be barred from filing an IPR against any related patents referenced in Patent Owner’s letter, or any subsequently issued patents with claims substantially similar to the Challenged Claims. Id. Further—and despite Petitioner’s arguments to the contrary—the PTAB concluded efficient administration of the PTAB weighed against entering adverse judgment. The PTAB reasoned that such an action would discourage other similarly-situated patent owners from filing disclaimers prior to institution where appropriate and would instead encourage patent owners to litigate every AIA trial proceeding through to Final Written Decision. Decision at 8. Thus, the PTAB denied institution and declined to enter adverse judgment. Id.
Takeaways:
At a minimum, the PTAB has discretion over whether statutory disclaimer constitutes adverse judgment before institution. Moreover, a disclaimer filed before institution is viewed favorably by the PTAB, as it conserves administrative/judicial resources. Thus, the timing of a statutory disclaimer is important. Further, a petitioner’s “significant expense” during preparation and filing of a petition is part of its litigation strategy. It is not, standing alone, a sufficient reason to enter adverse judgment against a patent owner—especially where the patent owner has not filed suit against petitioner or otherwise alleged infringement of the Challenged Claims.
Matthew Johnson
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