Fed. Cir. Directs Dismissal of Ex Parte Reexam

By Jennifer Chheda –

On September 29, 2021, the Federal Circuit in In re: Vivint, Inc. (Fed. Cir. 2021) held that 35 U.S.C. § 325(d) applies to both inter partes review (IPR) petitions and requests for ex parte reexamination.  Accordingly, the Federal Circuit found that “the Patent Office, when applying § 325(d), cannot deny institution of [an] IPR based on abusive filing practices [and] then grant a nearly identical reexamination request that is even more abusive.”  However, the Federal Circuit explicitly stated that it was “not holding that the Director may never launch a reexamination even when a particular challenger has engaged in improper serial filing.”

Background:

Vivint sued Alarm.com in 2015 for allegedly infringing four patents, including U.S. Patent No. 6,717,513 (the “’513 Patent”).  During the district court litigation, Alarm.com filed a number of IPR petitions, including three IPR petitions challenging the validity of claims in the ’513 Patent.  Two of those three IPR petitions were denied institution for failing to make a threshold showing that Alarm.com had a reasonable likelihood that it would prevail on at least one challenged claim.  The third IPR petition (the “’091 petition”) was denied institution because Alarm.com had “used the prior Board decisions as a roadmap to correct past deficiencies” and “allowing similar, serial challenges to the same patent, by the same petitioner, risks harassment of patent owners and frustration of Congress’s intent in enacting the Leahy-Smith America Invents Act.”  Subsequently, Alarm.com filed a request for ex parte reexamination of all of the claims of the ’513 Patent.  The request included four questions of patentability for review, two of which came from the ’091 petition.  The other two questions of patentability replaced a reference cited in the ‘091 petition, which had been addressed in related IPRs, with another reference.  The U.S. Patent and Trademark Office (“USPTO”) ordered ex parte reexamination of all of the claims of the ’513 in response to Alarm.com’s request.

Vivint filed a petition under 37 C.F.R. § 1.181 (“Rule 181 petition”) with the USPTO requesting that the ex parte reexamination be dismissed because: (1) the USPTO has the authority to deny reexamination under 35 U.S.C. § 325(d); (2) the factors the USPTO considers in exercising discretion under 35 U.S.C. § 325(d) favored dismissal; and (3) the USPTO could not deny institution of an IPR petition based on abusive filing practices and then “grant reexamination on essentially the same facts.”  The USPTO dismissed Vivint’s petition, holding that any Rule 181 petition must be filed before reexamination is ordered, and that the USPTO had no authority to consider petitions after ordering reexamination.  In response, Vivint filed a second Rule 181 petition, arguing that it would have been impossible to file the petition before the order for reexamination was granted, and that even if the USPTO lacks authority to terminate a reexamination, it had authority to do so under the Administrative Procedure Act (“APA”).  The USPTO denied Vivint’s second petition and stated that Vivint could have sought a waiver of the rules requiring filing of the Rule 181 petition before reexamination was ordered.  In addition, the USPTO explained that granting ex parte reexamination was not inconsistent with denying the ’091 petition, and the USPTO distinguished the statutory frameworks for making decisions regarding an IPR petition and a request for ex parte reexamination.  All of the claims of the ’513 Patent were ultimately found to be unpatentable by the Patent Trial and Appeal Board (“PTAB”).  Vivint appealed the PTAB’s decision to the Federal Circuit.

Federal Circuit Holding:

Vivint argued on appeal that: (1) the request for reexamination did not present a new question of patentability; and (2) the USPTO abused its discretion and acted arbitrarily and capriciously by ordering reexamination and refusing to terminate it.  With respect to the first argument, the Federal Circuit disagreed with Vivint and found that the request for reexamination raised substantial new questions of patentability.  Although 35 U.S.C. § 303(a) does not define or provide examples of questions that qualify as new, the Federal Circuit found that the broader statutory context clarifies that a question of patentability is new until it has been considered and decided on the merits.  The Federal Circuit stated that the discretion provided by 35 U.S.C. § 325(d) for instituting a proceeding because “the same or substantially the same prior art of  arguments were previously presented to the Office” “would be meaningless if a question was not new simply because it had been previously presented to the Patent Office.”  In addition, the Federal Circuit pointed out that, although not binding, the Manual of Patent Examining Procedure (“MPEP”) supports its conclusion.  The Federal Circuit found that the four questions in the request for ex parte reexamination were each new under 35 U.S.C. § 303(a) because: (1) the ’091 petition did not raise two of the four questions; and (2) the USPTO never considered or decided the questions of patentability raised in the ’091 petition.

With respect to Vivint’s second argument, the Federal Circuit held that the USPTO “abused its discretion and acted arbitrarily and capriciously by ordering reexamination, and thereafter, refusing to terminate the proceeding.”  The Federal Circuit rejected the government’s argument that decisions under 35 U.S.C. § 325(d) are not reviewable and stated that such decisions are reviewable under the APA.  The Federal Circuit found that in light of the ’091 petition decision denying institution (the “’091 decision”), which relied on 35 U.S.C. § 325(d), the order granted ex parte reexamination was arbitrary and capricious.  According to the Federal Circuit, the ’091 decision focused on Alarm.com’s abusive filing practices and that Alarm.com continued to engage in abusive filing practices in its request for ex parte reexamination.  In particular, the Federal Circuit stated that Alarm.com “copied, word-for-word, two grounds from the ’091 petition” and “the portions it did not copy, Alarm.com ‘used prior Board decisions as a roadmap to correct past deficiencies.’”  In addition, the Federal Circuit stated that it did not find anything in the statutes or regulations preventing the USPTO from reconsidering its decision ordering ex parte reexamination in response to the Rule 181 petitions.  As noted above, the Federal Circuit found that 35 U.S.C. § 325(d) applied to both IPR petitions and requests for ex parte reexamination, but noted that its holding is narrow.  The Federal Circuit stated they are not “holding that the Director may never launch a reexamination even when a particular challenger has engaged in improper serial filing.  In this case, the Federal Circuit stated that the Director “did not invoke his ‘own initiative’ authority” and “he did not set forth a reasoned basis for exercising his § 325(d) discretion to launch the ex parte reexamination.”  The Federal Circuit vacated the PTAB decision and remanded with instructions for the Patent Office to dismiss the ex parte reexamination.

Takeaways:

When filing a request for ex parte reexamination of a third party’s patent after a decision denying institution of an IPR for the same patent, consideration should be given to addressing why questions of patentability raised in the request are not the same or substantially the same prior art or arguments previously were presented to the USPTO in the IPR, and providing a compelling story regarding why ex parte reexamination is appropriate despite the PTAB previously exercising its discretion to deny under § 325(d).