Takeaway: Under 35 U.S.C. § 315(b), 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.

In its Decision, the Board denied institution of inter partes review because the Petition was not filed within the time limit set forth in 35 U.S.C. § 315(b).  The Petition was filed on May 23, 2014, challenging claims 1-39 of the ’044 patent.  The Board found that earlier service of a complaint in a related action had not been nullified and, therefore, resulted in a time-bar against the Petition.

One of the Patent Owners, SMR, had asserted the ’044 patent in a first infringement suit in the U.S. District Court for the Central District of California against Petitioner and other defendants on April 19, 2012. Shared Medical Resources LLC v. Histologics, LLC, case number 8:12-cv-00612.  The date of service for Petitioner was not clearly set forth in the court records, but it was undisputed that Petitioner was served on a date “soon after” the complaint was filed.

Petitioner moved to dismiss the first lawsuit, arguing that Patent Owner SMR did not have standing to bring the suit without the co-owner of the ’044 patent, namely, the other Patent Owner CDx.  SMR responded that CDx had not joined the suit because it “was subject to an automatic stay in bankruptcy.”  The California District Court granted Petitioner’s motion, dismissed the first lawsuit “without prejudice,” and stayed the action pending the outcome of CDx’s bankruptcy proceeding.

Patent Owners SMR and CDx then jointly filed a second lawsuit asserting the ’044 patent, this time in the U.S. District Court for the Southern District of New York.  Petitioner was served with the second complaint on May 24, 2013.  Petitioner, in response, requested dismissal of the New York action or transfer to the U.S. District Court for the Central District of California.

Patent Owner CDx thereafter emerged from bankruptcy, which prompted Petitioner to file declaratory judgment counterclaims in the California action.  The California District Court then lifted the stay of the California action, making the California action an “active case” again.  The California District Court did not ever refer to a “dismissal” of the California action in reactivating the California action.

The New York District Court transferred the New York action to the U.S. District Court for the Central District of California on October 25, 2013, resulting in a “new” case entitled CDx Diagnostics, Inc. & Shared Medical Resources, LLC v. Histologics LLC, case no 2:13-cv-07909.  The California District Court consolidated the first California action with the transferred California action, and dismissed the first California action, on February 11, 2014.

Analyzing the facts under 35 U.S.C. § 315(b), the Board first took note of Petitioner’s argument that the Petition was filed “not more than one year after the date [Petitioner] was served with a ‘non-jurisdictionally-deficient’ complaint alleging infringement of the ’044 patent.”  According to Petitioner, service of the complaint in the first California action was nullified because the first California action was dismissed without prejudice; therefore, it did not trigger the time bar under 35 U.S.C. § 315(b).  Patent Owners argued in contrast that rather than being dismissed, the first California action was consolidated into the second California action which, according to Patent Owners, remains a “viable and active case.”

The Board adopted Patent Owners’ position.  Specifically, the Board ruled that the first California action bars this inter partes review proceeding.  As pointed out by the Board, Petitioner was served with the first complaint more than one year before the filing date of the Petition, and Petitioner remains a party to the litigation resulting from that complaint.  Moreover, both the allegation of patent infringement as well as Petitioner’s counterclaims filed in the first California action were consolidated into the second California action.  Thus, the parties are not left in the same legal position as if the first California action had never been filed, because despite the dismissal of the first California action, Petitioner “remains answerable to the U.S. District Court for the Central District of California for the allegations made in that complaint.”  Accordingly, the dismissal of the first California action did not render service of the complaint in that action a nullity.

AOL, Inc. and Cloudera, Inc. v. Coho Licensing LLC, IPR2014-00771
Paper 10: Decision Denying Institution of Inter Partes Review
Date: November 20, 2014
Patent 8,024,395 B1
Before: Linda M. Gaudette, William A. Capp, and Miriam L. Quinn
Written by: Quinn
Dissent-in-Part: Capp