Effect of Dismissed Litigation on IPRs

Effect of Dismissed Litigation on IPRs

Peter-SiddowayBy Peter Siddoway –

Last week, an article posted here summarized the PTAB’s decision not to institute a trial in St. Jude Med. v. Volcano Corp., IPR2013-00258.  This decision also highlighted an issue that has arisen in several inter partes review (IPR) decisions: whether a previously-filed litigation will serve as a bar to the institution of an IPR trial.  In St. Jude and other IPRs, the Board’s decision turned on whether the related litigation had been dismissed without prejudice or with prejudice.

Under the Board’s current precedent, the dismissal of a civil action without prejudice “nullifies the effect” of the service of a complaint; thus Section 315(b) will not apply and a trial may be instituted.  Conversely, a dismissal with prejudice will not purge the service of a complaint and an IPR trial cannot be instituted.

The issue arises under 35 U.S.C. § 315(b), which states that “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner . . . is served with a complaint alleging infringement of the patent.” 

In Macauto U.S.A. v. BOS GmbH & Co., IPR2012-00004, the patent owner alleged that the petitioner was served with a complaint on May 13, 2011, but did not file its petition until December 26, 2012, and thus was barred by § 315(b).  Id., Paper 18, p. 14-16.  The Board disagreed, noting “that this infringement suit against Macauto Taiwan was voluntarily dismissed without prejudice . . . pursuant to a joint stipulation.  The Federal Circuit has consistently interpreted the effect of such dismissals as leaving the parties as though the action had never been brought.  [Citations omitted]  Accordingly, the dismissal of the earlier action against Macauto Taiwan nullifies the effect of the alleged service of the complaint on Petitioner.”  Id.

Attempting to rely on Macauto, the petitioner in Universal Remote Control, Inc. v. Universal Elecs., Inc., IPR2013-00168, argued that the dismissal of a related litigation commenced in 2002 should exempt its petition from § 315(b).  The Board noted that the dismissal of this litigation was with prejudice, which is an adjudication on the merits for purposes of res judicata, and on this basis declined to institute an IPR trial.

The Board maintained this distinction between cases dismissed with and without prejudice in the recent St. Jude decision.  The petitioner argued that its petition should be exempted from § 315(b), similar to the Board’s holding in Macauto: “St. Jude argues . . . that Volcano’s dismissal with prejudice of the ’994 patent infringement claims ‘purged’ the cause of action, and thereby made § 315(b) inapplicable.  We disagree.  Service of a complaint alleging infringement triggers applicability of § 315(b), even if that complaint is later dismissed with prejudice.  . . .  The petition is, therefore, barred.”  IPR2013-00258, Paper 29.

The IPR papers for this case are all available through the Patent Review Processing System (PRPS).  In addition, Law360 also published an article on Tuesday discussing the PTAB’s St. Jude decision, available here (subscription required).