Director Says Not Filing Mandatory Notices and POPR Does Not Justify Adverse Judgment

by | Aug 22, 2024 | Preliminary Responses, PTAB News, Time Limits

By Evan Tassis and Matt Johnson –

In a sua sponte Director Review, USPTO Director Vidal vacated an adverse judgement against Patent Owner for Patent Owner’s failure to submit a mandatory notice of information or file a preliminary response to a Petition within the required timeframe.  Shenzhen Xinzexing E-commerce Co. Ltd. v. Shenzhen Carku Technology Co. Ltd., IPR2024-00222.  Director Vidal deemed the PTAB’s adverse judgment was “premature.”

On November 21, 2023, Shenzhen Xinzexing E-commerce Co., Ltd. (“Petitioner”) filed a Petition requesting inter partes review of U.S. Patent No. 9,643,506 (“the ’506 patent”) covering a portable backup charger. The Petition included a Certificate of Service indicating that the Petition, Power of Attorney, and all supporting exhibits were served on Shenzhen Carku Technology Co., Ltd. (“Patent Owner”) at the correspondence address of record for the ’506 patent.  On November 29, 2023, the PTAB issued a Notice that indicated that Patent Owner may file a preliminary response to the Petition no later than three months from the date of the Notice and advised Patent Owner of the requirement to submit mandatory notice information under 37 C.F.R. § 42.8(a)(2) within 21 days of service of the petition.  Patent Owner did neither.

In its decision to enter an adverse judgment, the PTAB explained that Patent Owner did not file mandatory notices despite obligations to do so under 37 C.F.R. § 42.8(b).  The PTAB noted that on April 18, 2024, it emailed the attorney of record listed on the ’506 patent, as well as the attorney listed in the Petition’s certificate of service, but received no response.

On May 21, 2024, before the statutory due date for the PTAB to determine whether to institute trial, the PTAB entered an adverse judgment sua sponte against Patent Owner as to the challenge claims.  The PTAB explained that “[a]ctions construed to be a request for adverse judgment include . . . [a]bandonment of the contest.”  37 C.F.R. § 42.73(b)(4).  Two weeks later, on July 8, 2024, Patent Owner filed Mandatory Notices and a Power of Attorney.

In the Director’s sua sponte decision, Director Vidal disagreed with the PTAB.  Director Vidal did not consider Patent Owner’s failure to timely file mandatory notice information or respond to the PTAB’s emails to have been an unequivocal abandonment of the contest with respect to the proceeding.

First, Director Vidal explained that while the PTAB’s April 18, 2024 email stated that the “[n]otices are well past due,” neither that email nor the earlier Notice sufficiently articulated that failure to file mandatory notices as required under 37 C.F.R. § 42.8 may be considered abandonment of the contest and result in adverse judgment against Patent Owner.

Second, Director Vidal deemed the PTAB’s entry of adverse judgment was “premature” given (1) the statutory due date to determine whether to institute the trial had not yet arrived and (2) the unique circumstances of events concerning Patent Owner’s litigation counsel.  Director Vidal explained that Patent Owner’s litigation counsel filed a Motion for Leave to Withdraw in a copending district court litigation on June 6, 2024, after the Board’s entry of adverse judgment, stating that (1) the Patent Owner instructed counsel at least as early as March 19, 2024, to stop work on copending district court litigation, (2) that Patent Owner instructed counsel not to handle the present inter partes review proceeding, and (3) that counsel had been informed that Patent Owner was seeking new counsel to represent it at least in the district court litigation.  Given these additional circumstances, Director Vidal vacated the PTAB’s adverse judgement and remanded the proceeding.

Takeaway:  While the unique circumstances of the current proceeding resulted in vacatur of the adverse judgment, parties are reminded to comply with the statutory requirements to submit a mandatory notice of information and file a preliminary response (or express waiver) within the required timeframe to avoid a potential adverse judgment of abandonment of contest.

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Matthew Johnson

Partner at Jones Day
Matt Johnson is one of the Firm's primary contacts on practice before the PTAB. Currently co-chairing the Firm's PTAB subpractice and involved in proceedings at the Board since the first day of their availability in September 2012, Matt regularly represents clients as both petitioners and patent owners at the Board. He further works as an advocate for clients in appeals from Board proceedings at the Federal Circuit.