Patent Trial and Appeal Board's decision in Macauto U.S.A. provides clarity on some inter partes review requirements


Written by: Dorothy Whelan and Karl Renner

Macauto U.S.A. v. BOS GmbH & KG, slip op. IPR2012-00004 (PTAB Jan. 24, 2013)

The PTAB's decision in Macauto U.S.A. v. BOS GmbH & KG is significant for at least two reasons. First, the PTAB clarified the eligibility requirements for inter partes review set forth in 35 U.S.C. § 315(b), holding that a suit filed by a patent owner against a petitioner and then dismissed voluntarily without prejudice did not trigger the one year time period for filing an inter partes review petition. Second, the PTAB clarified the standards for satisfying the reasonable likelihood of success standard required for instituting an inter partes review.

35 U.S.C. § 315(b) requires a petitioner to file a petition for inter partes review within one year of being served with a complaint for patent infringement:

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 Macauto, the petitioner filed a petition for inter partes review more than one year after the patent owner had sued the petitioner's parent company in the Northern District of Illinois for infringement of the patent that was the subject of the inter partes review petition.[1] The patent owner subsequently voluntarily dismissed the action without prejudice.[2] Later, the patent owner sued the petitioner for infringement of the patent in the Western District of New York. The petitioner filed its petition for inter partes review within one year of being served with a complaint in the second suit.[3]

The patent owner sought to have the inter partes review dismissed, arguing that the petition was barred under 35 U.S.C. § 315(b) because it was filed more than one year after service of the complaint in the Illinois suit.[4] The PTAB rejected the patent owner's argument on two independent grounds.

First, the PTAB held that voluntary dismissal of the Illinois suit without prejudice nullified the effect of service by treating the suit as though it had never been brought:

[T]he Board notes that the infringement suit against Macauto Taiwan was voluntarily dismissed without prejudice under Fed.R.Civ.P. 41(a), pursuant to a joint stipulation. EX2016. The Federal Circuit has consistently interpreted the effect of such dismissals as leaving the parties as though the action had never been brought …. Accordingly, the dismissal of the earlier action against Macauto Taiwan nullifies the effect of the alleged service of the complaint on Petitioner.[5]

Second, the PTAB held that the patent owner failed to establish a service date in the Illinois suit. Fed.R.Civ.P. 4(d)(4) requires that waiver or proof of service be filed in order to establish a service date. Because the patent owner failed to demonstrate that the waiver or proof of service had ever been filed, there was no "service date" for purposes of 35 U.S.C. § 315(b) that would have started the one year clock.[6]

The PTAB declined to address whether the petitioner's parent, who was the subject of the Illinois suit, was a real party in interest or in privity with the petitioner. [7]

The PTAB also clarified the reasonable likelihood of success standard, suggesting a divergence between this standard and the substantial new question of patentability standard that it used to govern institution of ex parte and inter partes reexamination. The inter partes review petition in Macauto was based upon multiple references, three of which had formed the basis of an ex parte reexamination that the petitioner had previously filed against the same patent.[8] In the ex parte reexamination, the USPTO's Central Reexamination Unit (CRU) confirmed the patentability of all claims over the same three references that were used as a basis for challenging the patent in the inter partes review.[9] Seeking a different result through inter partes review, the petitioner argued that during the ex parte reexamination, the CRU panel of examiners gave undue weight to two declarations in confirming patentability of the claims.[10] The petitioner did not offer any expert declarations to support its arguments.[11]

In evaluating whether the petitioner was reasonably likely to succeed, and thus whether to grant the petition for inter partes review, the PTAB conducted an independent review of the ex parte examination record, and agreed with the petitioner that the CRU examiners had improperly relied upon declarations in confirming patentability (emphasis added):

We have reviewed the declarations and agree with Petitioner that they should not have been given determinative weight by the Examiner. Turning first to the Hicks declaration, we disagree with the conclusion that Knowles is not relevant art to the '€˜291 patent …. We conclude that Knowles is analogous art because it is directed to a similar problem of retracting the wheels of a piece of luggage to make it more compact for storage.

We further disagree with the Hicks analysis in that it attacks references individually when the rejection was based on the combination …. Finally, we disagree with the Hicks approach of hypothesizing that a "complete redesign" of Cherng (a rationale that was adopted in part by the Examiner) would be required to add retractable wheels ….

The Zimmerman Declaration, which purports to demonstrate commercial success, is unpersuasive chiefly for its failure to establish a nexus between the alleged "value" to car makers or the commercial sales and the claimed invention.

* * *

In summary, we are not required by statute to reject a Petition based upon the fact that certain arguments or art were previously considered by the Office, and after reviewing the reexamination, we decline to do so in this case. See 35 U.S.C. § 325(d) (quoted supra). The record before us is not the same as that previously before the Office, and we are in any event not persuaded by the declarations previously submitted in the reexamination that apparently determined the outcome.[12]

The PTAB went on to scrutinize the petitioner's arguments for unpatentability and ultimately granted the petition on some, but not all, of the grounds that the petitioner proposed. The grounds included one of the three references considered during the prior ex parte proceeding.[13]

The PTAB's willingness to conduct a thorough de novo analysis of prior Patent Office proceedings, and to reach its own conclusions as to the correctness of the decisions reached in those proceedings, speaks volumes about the PTAB's view of its role. It also reveals an important practical difference between the reasonable likelihood of success standard governing institution of inter partes review and the substantial new question of patentability standard governing institution of ex parte reexamination. Although the latter could be based upon previously considered references, it compelled challengers to produce evidence showing a new technological teaching or showing the references in a new light. The emphasis was on the "newness" of the grounds. Examiners did not evaluate the prior record to determine whether or not the correct decision had been reached on the merits because those were not new questions. Moreover, under the substantial new question standard, a request that failed to include new evidence in support of its positions, such as new expert declarations, was likely to be denied.

The Macauto decision may present additional opportunities for challenging validity in the Patent Office, particularly on the basis of references that the Office had previously considered. Yet, despite the PTAB's willingness to reevaluate an existing record, petitioners seeking to challenge a patent on grounds that the USPTO earlier considered and distinguished would be well-advised to include additional supporting evidence, e.g., in the form of expert declarations with their petition for inter partes review. The rules limit a petitioner's ability to enter supplemental evidence after filing the petition, amplifying the risk to petitioners who file without such evidence. More than ever before, inter partes review requires a well-supported petition that anticipates patent owner counterarguments at the outset to maximize the chances of having the PTAB grant the petition and ultimately sustain the challenge.


[1] Macauto, slip op. at 8.

[2] Id.

[3] Id.

[4] Id. at 14-15.

[5] Id. at 15-16.

[6] Id. at 16.

[7] Id.

[8] Id. at 17.

[9] Id.

[10] Id.

[11] Id. at 19.

[12] Id. at 17-19.

[13] See id. at 19-26.