In an institution decision by the Patent Trial and Appeal Board (Board), the Board made it clear that a prior declaratory judgment action filed by the petitioner, if voluntarily dismissed without prejudice, does not bar a subsequent inter partes review (IPR) proceeding.  However, even though IPR was instituted, the Board granted review of a just a single claim (out of multiple challenged claims) and only on one ground (out of multiple grounds proffered by the petitioner).  Clio USA, Inc. v. The Procter and Gamble Company, Case IPR2013-00438 (PTAB, Jan. 9, 2014) (Kamholz, APJ.).

P&G filed a civil action asserting that Clio infringed its patent, which relates to an oral care delivery system in which a flexible strip is coated with an oral care substance such as a gel containing hydrogen peroxide or sodium fluoride for application to teeth or gums. Clio sought declaratory judgment that the patent was invalid.  Prior to filing a petition for IPR of the patent, the declaratory judgment action was dismissed voluntarily by Clio and without prejudice.

In its patent owner’s preliminary response to the IPR petition, P&G argued that the petition was ineligible for IPR consideration because of the prior declaratory judgment action brought by Clio.  According to P&G, the controlling statue, 35 U.S.C. § 315(a)(1), is clear and unconditional in that it proscribes an IPR “if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of the patent.” P&G argued the statutory language admitted no exceptions or qualification and prevents any IPR petition (by Clio) of the subject patent.  P&G argued that Congress intended to place limits on IPR to prevent its use for harassment or delay. P&G also argued that § 315(a) was designed to force the challenger to choose between a declaratory judgment action and IPR, and that once a challenger choose the former, the latter was no longer available.

The Board noted that P&G’s argument ignored relevant case law, including that of the Supreme Court, under which federal courts treat a civil action that is voluntarily dismissed without prejudice as something that de jure never existed. When an action is voluntarily dismissed without prejudice, the parties are free to litigate the matter in a subsequent action, as though the dismissed action had never existed.  The Board agreed with P&G’s description of Congress’s intent behind the language of § 315(a), but clarified that “[w]hen a court permits the challenger to dismiss the declaratory judgment action voluntarily and without prejudice, the petition effectively unmakes the choice” of choosing declaratory judgment over IPR, “because the action is considered never to have existed.”

After finding the subject patent-eligible for IPR, the Board addressed the proffered grounds of review, finding all but one deficient.  The Board underscored that Clio’s proffered grounds of invalidity, based on inherent disclosure and obviousness over a number of cited references, were based on bare contentions that the cited references disclosed or made obvious a particular claimed structural stiffness, without any supporting evidence or arguments.