The Impact of the Federal Circuit’s Decision in Facebook v. Windy City on PTAB Practice: No Same Party or Issue Joinder and No Deference to POP Decisions on Statutory Interpretation

On Wednesday March 18, 2020, the Federal Circuit held that the first decision released by Director Iancu and the USPTO Precedential Opinion Panel (“POP”), in Proppant Express Investments, LLC v. Oren Techs., LLC,was incorrect. The Federal Circuit found that, contrary to the Proppant POP decision, the clear and unambiguous meaning of the joinder statute, § 315(c), “does not authorize same-party joinder, and also does not authorize joinder of new issues, including issues that would otherwise be time-barred.” Slip op. 39. Furthermore, the Federal Circuit panel issued additional views explaining that no deference is to be given to the USPTO’s statutory interpretation in POP decisions. Additional Views, slip op. 15.

No Same Party or Issue Joinder

Windy City filed a patent infringement complaint against Facebook in district court. On the one-year anniversary of being served with that complaint, and before Windy City had identified the claims it was asserting in the district court action, Facebook filed petitions for inter partes review (“IPR”) challenging some of Windy City’s claims. The IPRs were instituted. Several months later, Windy City identified the claims it was asserting in district court. Facebook then filed two additional IPR petitions with motions for joinder to the already instituted IPRs. The Board instituted Facebook’s new IPRs, granted the motions for joinder, and found in a Final Written Decision that some of the challenged claims—including some claims challenged only in the later IPR petitions—were unpatentable. The parties cross-appealed.

35 U.S.C. 315(c) allows the Director, in his discretion, “to join as a party [to an instituted IPR] any person.” On appeal, Windy City argued that 315(c) does not allow a party to be “joined” to a proceeding where it was already a party and does not allow new issues to be added to an existing IPR through joinder, particularly issues that would be time-barred otherwise.

The Federal Circuit agreed, ruling that the unambiguous text of 315(c) does not authorize same-party or new issue joinder. By allowing Facebook to join its later IPR proceedings with the earlier one, the Board had essentially authorized the joining of two proceedings, not the joining of a party to a proceeding. The Federal Circuit held that this same-party joinder was prohibited by the clear text of 315(c), which allows the Director to join a person “as a party.” The Court noted its disagreement with the POP’s decision in ProppantExpress Investments, LLC v. Oren Techs., LLC, IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019), explaining that the POP decision turned on the Board’s incorrect interpretation of the phrase “any person.” The Court held that while “any person” has an expansive meaning, its range is limited by the ordinary legal meaning of “person,” which would not allow for a party to join a proceeding in which it is already a party. The Federal Circuit thus disagreed with Proppant and held that 315(c) does not authorize new-party joinder.

315(c) also does not authorize the joinder of new issues, the Federal Circuit held. On appeal, Facebook argued that the statute does not expressly prohibit new-issue joinder. The Court held that, despite lacking an express prohibition, the language of 315(c) was not ambiguous. A person may join as a party to an already-instituted IPR, the Court explained, the scope of which is confined to the claims and grounds challenged in the original petition. In other words, a party joined to an IPR under 315(c) cannot bring new issues, claims, or grounds that were not already raised in the original IPR.

Facebook argued on appeal that an interpretation of 315(c) prohibiting joinder of new issues would run counter to the AIA’s goal of providing “quick and cost-effective alternatives to” district court litigation. The Federal Circuit offered alternatives for parties, like Facebook, who faced an unspecified subset of over 800 possible asserted claims at the IPR time-bar deadline. Those parties may file petitions challenging all of the hundreds of claims as a protective measure, the Court suggested, or simply challenge any or all claims in the district court instead of an IPR. In any event, the Court reasoned, public policy concerns cannot create statutory ambiguity, and the text of 315(c) is clear: a party joined to an IPR under that section cannot raise new issues.

No Deference to POP Decisions on Statutory Interpretation

After oral argument, the Federal Circuit invited the Director to file a brief expressing his views on “what, if any, deference should be afforded to decisions of a Patent Trial and Appeal Board Precedential Opinion Panel (‘POP’).” Additional Views, slip op. 5. Because the majority opinion found the statutory text to be clear and unambiguous, it did not address what level of deference would be owed to the USPTO’s own interpretation of 315(c) if the statute were ambiguous. Chief Judge Prost and Judges Plager and O’Malley (the same judges on the majority panel) therefore wrote separately to provide additional views on the deference issue. On appeal, Facebook argued that POP decisions are entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). The government’s brief advocated for either Chevron or Skidmore deference.

The panel disagreed, explaining that even if the statutory language was ambiguous, no deference should be due to the USPTO’s interpretation of 315(c) in the POP decision. Additional Views, slip op. 15. The Judges noted that deference can only be applied to an agency’s implementation of a statutory provision when “Congress delegated authority to the agency generally to make rules carrying the force of law,” and “the agency interpretation claiming deference was promulgated in the exercise of that authority.” United States v. Mead Corp., 533 U.S. 218, 226–27 (2001). The AIA granted authority to the USPTO Director to promulgate regulations that govern the conduct of IPRs, including joinder under section 315(c). The Director’s authority does not extend to interpreting statutory provisions through adjudicatory POP opinions, so those opinions are entitled to no deference according to the panel’s views.

The panel rejected the government’s argument that POP opinions are analogous to notice-and-comment rulemaking that is within the Director’s statutory mandate. Instead, the panel noted that the announcement that a POP will be convened is not published in the Federal Register and POP decisions themselves are also not published in the Federal Register, preventing any formal notice-and-comment process. Additional Views, slip op. 12-13. In other words, the POP procedure differs from traditional notice-and-comment rulemaking that might support deference to the agency.

The case is Facebook, Inc. v. Windy City Innovations, LLC, Nos. 2018-1400, -1401, -1402, -1403, -1537, -1540, -1541 (Fed. Cir. Mar. 18, 2020).