Institution Denied: Pending Federal Circuit Appeal Warrants Denial of IPR

By: Marc S. Blackman

The PTAB recently exercised its discretion to deny institution of an IPR proceeding because a potentially dispositive claim construction issue was pending before the Federal Circuit.  Comtech Mobile Datacom Corp v. Vehicle IP, LLC, Case IPR2018-00531, Paper 9 (PTAB July 20, 2018).

U.S. Patent No. 5,987,377 (“the ‘377 Patent”), which was the subject of IPR2018-00531, relates to a vehicle navigation system that determines the expected arrival time of a vehicle.  The system includes a dispatch unit that is remotely located from the vehicle.  The dispatch unit generates destination information for the vehicle, while a mobile unit on the vehicle calculates the expected arrival time.

In 2009, Vehicle IP, LLC asserted the ‘377 Patent in the Delaware District Court against AT&T and others.  The Court construed the claims and granted summary judgment of non-infringement.  On appeal, the Federal Circuit vacated the grant of summary judgment finding the District Court erred in construing certain claim terms.  On remand, the District Court further construed the claim term “dispatch.”  Based on the Court’s construction, the parties stipulated to a judgment of non-infringement.  Vehicle IP appealed the judgment, contesting the construction of “dispatch.”  That appeal is currently pending.

During the pendency of the appeal, Comtech Mobile Datacom Corporation (“Comtech”), which was not a party to the District Court action, filed a petition for inter partes review challenging the ‘377 Patent.  In its petition, Comtech argued that the PTAB should adopt the construction of “dispatch” proposed by Vehicle IP in the District Court, not the construction adopted by the Court.

In its institution decision, the PTAB acknowledged that the construction of “dispatch” potentially would be dispositive.  As that issue was currently pending before the Federal Circuit – the PTAB’s reviewing Court – the PTAB stated that instituting trial “would not be an efficient use of the Board’s resources.”  That was particularly true here because the ‘377 Patent had expired and the PTAB would have been required to apply the same claim construction standard as applied in district court litigation.  The Board reiterated that the America Invents Act was established to create a more efficient and streamlined patent system that limits unnecessary and counterproductive litigation costs.  Even though Comtech was not a party to the underlying litigation, the PTAB stated that as the litigation involving the ‘377 Patent has been ongoing since 2009, and is on its second trip to the Federal Circuit, inter partes review would not afford a cost-effective alternative to litigation.  The Board concluded that the fact that the claim construction issue was pending before the Federal Circuit and that it was potentially dispositive “strongly warrant[s]” against institution.

In denying institution, the PTAB also noted that Comtech would not be significantly prejudiced because it had not been sued for infringement of the ‘377 Patent.  Consequently, the time bar of 35 U.S.C. § 315(b) had not been implicated and Comtech would have an opportunity to refile a petition after the Federal Circuit resolved the claim construction issue.

Takeaway

Petitioners and Patent Owners should consider how to address parallel proceedings in their Petition and Patent Owner Preliminary Response.  A Petitioner may want to explain why the IPR proceeding would be efficient and cost-effective despite parallel proceedings.  If the time bar of 35 U.S.C. § 315(b) has been implicated, a Petitioner may want to explain the prejudice that would result from a denial of institution.  Patent Owners, on the other hand, should consider explaining why the IPR proceeding would be inefficient in view of other proceedings.