Ex Parte Reexamination Not Allowed After Failed IPR Challenge

By on October 14, 2021
Posted In Patents

The US Court of Appeals for the Federal Circuit found that ex parte reexamination was unavailable to a challenger who repeatedly tried and failed to raise the same arguments for the same patent in a prior inter partes review (IPR) proceeding. In re: Vivint, Inc., Case No. 20-1992 (Fed. Cir. Sept. 29, 2021) (Moore, C.J.)

Vivint sued Alarm.com in 2015 for infringement of several patents. In response, Alarm requested that the Patent Trial & Appeal Board (PTAB) institute “a litany of post-issuance review proceedings,” including three separate IPR petitions directed to one of the patents. The PTAB refused to institute two of the petitions because Alarm failed show to a reasonable likelihood that it would prevail on at least one challenged claim and also refused to institute the third petition because it represented an example of “undesirable, incremental petitioning.” According to the PTAB, Alarm had “used prior Board decisions as a roadmap to correct past deficiencies” and allowing such “similar, serial challenges to the same patent” by the same challenger risked, not only harassment of patent owners, but also frustration of congressional intent behind the America Invents Act (AIA).

More than a year later, Alarm filed a request for ex parte reexamination of the patent—a request that used repackaged versions of arguments from its unsuccessful IPR petition. Despite the striking similarity between Alarm’s prior and current arguments, including two out of the four original IPR patentability questions being copied verbatim from the failed petition into the ex parte reexamination request, the PTAB found the petition raised substantial new questions of patentability and ordered reexamination. Vivint responded by seeking dismissal of the ex parte reexamination under 37 C.F.R. § 1.181, arguing that the PTAB has the authority under 35 U.S.C § 325(d) to deny the ex parte reexamination request because that statute applies to ex parte reexaminations and IPRs with “equal force.” The PTAB rejected Vivint’s request, stating that any § 1.181 petition raising a § 325(d) challenge must be filed before reexamination is ordered.

Vivint filed a second § 1.181 petition seeking reconsideration of the § 325(d) issue, arguing that it would have been impossible for Vivint to file the § 1.181 petition before ex parte reexamination was ordered. Vivint also argued that even if the PTAB lacked general authority to terminate the reexamination, it could exercise such authority under the Administrative Procedure Act (APA). Vivint also asserted that the PTAB “acted arbitrarily and capriciously by applying the same law to the same facts and reaching a different conclusion.” The PTAB rejected Vivint’s arguments and denied its second petition, finding that Vivint could have sought a waiver of the rules having to do with the required prior-to-ex parte timing of a § 1.181 petition vis-à-vis institution of ex parte reexamination. The PTAB also noted that ex parte reexamination was not inconsistent with denying the initial IPR. Ultimately, after an examiner issued a final rejection for all claims of the patent, Vivint appealed to the PTAB. The PTAB affirmed and Vivint appealed to the Federal Circuit.

On appeal, the Federal Circuit explained that when an ex parte reexamination request presents a substantial new question of patentability, the US Patent & Trademark Office (PTO) “may . . . reject the . . . request because the same or substantially the same prior art or arguments previously were presented to” it. The Court agreed with Vivint’s argument that the PTAB abused its discretion and acted arbitrarily and capriciously by ordering reexamination and, thereafter, refusing to terminate it. The Court stated that abuse of discretion by an agency is a decision that, “(1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law; (3) rests on clearly erroneous fact findings; or (4) involves a record that contains no evidence on which the [agency] could rationally base its decision.” Additionally, a capricious and arbitrary decision “fails to articulate a rational connection between the facts found and the choice made.”

The Federal Circuit found that the PTAB’s § 325(d) determination was infected by the legal error of narrowly interpreting its authority to reconsider orders granting reexamination. The Court stated that, in light of the failed IPR, it was “arbitrary and capricious” for the PTAB to order reexamination over § 325(d) or, at minimum, refuse to terminate reexamination once Vivint requested it do so. The Court explained that the PTAB’s authority to reconsider its decision ordering ex parte reexamination is inherent in its ability to decide matters of reexamination in the first place. The Court stated that this same principle has been applied in the case of IPR petitions, where the Court held that the PTAB has the authority to reconsider IPR institution decisions. The Court also found that the PTAB’s second denial of Vivint’s § 1.181 petition was infected with the same type of legal error.

Thus, the Federal Circuit summarized that after the originally denied IPR at issue, it was unreasonable for the PTO to order ex parte reexamination and, once ordered, to refuse to terminate it. The Court also found that § 325(d) applies to IPR petitions as well as requests for ex parte reexamination. Thus, when applying § 325(d), the PTAB cannot deny institution of IPR based on abusive filing practices and then grant a nearly identical reexamination request. The Court explained that “nothing short of termination of the reexamination would be appropriate,” and therefore vacated and remanded with instructions to dismiss the proceeding.

Practice Note: As demonstrated by this case, making the same or nearly the same arguments in multiple patent challenges is likely to be futile. Practitioners and patent challengers are well-advised to always put their strongest, most thorough arguments forward each time and avoid duplicating arguments between IPR and ex parte reexamination petitions.

Paul Devinsky
Paul Devinsky advises clients on patent, trademark and trademark litigation and counseling, as well as copyright counseling. He is also active in intellectual property (IP) licensing, transactions and due diligence, as well as post-issuance US Patent and Trademark Office (USPTO) proceedings such as reissues and inter partes review, covered business method patent review and post grant review, and appellate (Federal Circuit) advocacy. Read Paul Devinsky's full bio.