November 14, 2016

PTAB Held Court of Claims Proceeding Didn't Trigger One-Year Bar for Filing Petitions for Inter Partes Review


On Monday, November 7, the Patent Trial and Appeal Board (PTAB) issued its most recent opinion construing the applicability of the one-year time bar of 35 U.S.C. § 315(b), specifically as it applies to parties who are served as nominal defendants in a proceeding against the Government. The case, AM General LLC v. UUSI, LLC, ventured into the realm of Government contracting and 28 U.S.C. § 1498 proceedings.

Legal Background

28 U.S.C. § 1498(a) immunizes Government contractors from patent infringement suits when their infringing activities are performed with the authorization and consent of the Government. In this context, patentees may not avail themselves of the full set of remedies otherwise available under 35 U.S.C. § 271, which provides a cause of action in tort against patent infringement. Rather, under § 1498, a patentee's sole remedy for such infringement by Government contractors is a suit against the United States—not the contractor who conducted the infringing activity—in the Court of Federal Claims for "reasonable and entire compensation." Section 1498 further provides that the patentee cannot seek profits lost as a result of the infringement, nor can it seek injunctive relief to stop continuing infringing activities. From the patentee's perspective, § 1498 is a significant limitation of its infringement remedies in the context of Government contracting.

The PTAB's decision in AM General further restricts the rights of patentees seeking relief for infringement by Government contractors. Under 35 U.S.C. § 315, an alleged infringer who has been sued in a civil proceeding may file a petition with the PTAB seeking inter partes review of the patent in suit. However, this right is time-limited; Section 315(b) provides that "an inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent."

The question in AM General was whether this one-year bar applied to the alleged infringer, where such alleged infringer was not the defendant, but a nominal third-party defendant. In short, the PTAB held that neither a complaint served on the Government in accordance with § 1498, nor a Rule 14 summons served on the third-party defendant in accordance with the Rules of the U.S. Court of Federal Claims, were sufficient to trigger § 315(b)'s one-year period with respect to the Government contractor third-party defendant. Instead, the third-party defendant was found to have standing to petition for inter partes review of the patents in suit, even though the inter partes review petition was filed more than one year after both the Government and the third-party defendant had been served.

Case Summary

In April 2012, UUSI, LLC and Oldnar Corporation (Plaintiffs) filed a complaint against the Government in the Court of Federal Claims under § 1498.1 Plaintiffs alleged that the use and manufacture of certain engine start devices for Humvees by AM General LLC and GHSP Inc., on behalf of the Government, infringed various UUSI patents.2

Soon after the initial complaint was filed, the Government moved to join AM General and GHSP as interested parties. In their agreements with the Government, AM General and GHSP had agreed to indemnify the Government for certain third-party patent infringement claims. Ultimately, both parties were joined as third-party defendants.

In May 2016, more than four years after the initial complaint was filed, AM General filed petitions seeking inter partes review of four of the UUSI patents at issue, arguing that certain claims would have been obvious at the time of the invention and were therefore invalid.3 On November 7, 2016, the PTAB granted AM General's petition and instituted inter partes review.

One-Year Bar to Filing a Petition for Inter Partes Review

UUSI filed a Preliminary Response to AM General's petition, arguing that AM General had no standing to file an inter partes review petition because its petition was not timely under § 315(b).4 More specifically, UUSI claimed that the filing and subsequent service of three documents triggered the one-year bar under § 315(b):

  1. the April 2012 service on the Government with a complaint filed in the Court of Federal Claims alleging patent infringement;
  2. the September 2012 service on AM General, as an interested party to the proceedings, with a summons, along with a copy of the complaint against the Government; and/or
  3. the March 2014 service on both the Government and AM General with an amended complaint.5

The PTAB disagreed. It held that, in this case, the Government was not a privy of AM General, and as a result, service on the Government of the complaint alleging infringement did not trigger, as to AM General, the one-year time limit set forth in § 315(b).6

The PTAB relied on several factors to reach this conclusion, including:

  • that AM General would not have a "full and fair" opportunity to litigate the invalidity issues before the Court of Federal Claims because it lacked any rights to appeal the court's final judgment;
  • that AM General did not and could not exercise control over the matter before the Court of Federal Claims; and
  • that the Government was not controlling nor "bankrolling" the inter partes review proceeding before the PTAB.7

In addition, the PTAB held that service on AM General of the summons similarly did not trigger the one-year bar because service of the summons was not service of "a complaint alleging infringement of the patent" within the meaning of § 315(b).8 The PTAB cited legislative history and case law precedent to emphasize that § 315(b) was directed to defendants in the underlying matter (in this case, the suit against the Government before the Court of Federal Claims), and was not intended to apply to third parties that were no more than "nominal defendant[s] in the action."9 The PTAB added that, despite AM General's indemnity obligation to the Government, no claim before the Court of Federal Claims was directed against AM General, rendering AM General a "nominal defendant" and therefore outside the reach of the one-year bar in § 315(b).10

Finally, the PTAB concluded that the service on AM General with an amended complaint also failed to trigger the one-year bar based on the same principles and reasoning as the other two services.11

Conclusions and Practice Tips

This PTAB decision represents yet another instance of the trend evident in the PTAB's recent jurisprudence generally construing the time-bar provision of § 315(b) in a manner that favors, rather than restricts, institution of inter partes review proceedings. Going forward, patentees bringing infringement suits in the Court of Federal Claims should evaluate the potential for nominal third-party defendants to petition for inter partes review—even long after the initial complaints have been filed and served. Conversely, Government contractors brought into Court of Federal Claims infringement proceedings should analyze if—and when—their best interests are served by seeking inter partes review.

  1. Complaint, UUSI, LLC v. United States, 10 Fed. Cl. 604 (2013) (No. 12-216C).

  2. Id. at 1-2, UUSI, LLC, 10 Fed. Cl. 604.

  3. AM General, No. IPR2016-01049, at 11.

  4. Id. at 3.

  5. Id.

  6. Id. at 5.

  7. Id. at 5-6.

  8. Id. at 6.

  9. Id. at 7 (emphasis in original).

  10. Id. at 8.

  11. Id.

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