IP UPDATE
Exploring the latest in intellectual property law
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Exploring the latest in intellectual property law
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Due Diligence Deficit Sinks Fraud Claims in Trademark Battle

by | Aug 22, 2024 |

The US Court of Appeals for the Second Circuit affirmed the dismissal of an independent action asserting “fraud on the court” based on the finding that the alleged fraud on the US Patent & Trademark Office (PTO) should have been uncovered by the exercise of due diligence in a prior action. Marco Destin Inc. v. Levy et al., Case No. 23-1330 (2d Cir. Aug. 8, 2024) (Jacobs, Sack, Sullivan, JJ.)

In 2007, L&L Wings filed a lawsuit against Marco Destin and related entities (collectively, Marco Destin) in the District Court for the Southern District of New York, asserting claims of breach of contract and trademark infringement related to Marco Destin’s unauthorized use of L&L’s unregistered trademark WINGS on beach apparel. Although L&L and Marco Destin entered into an allegedly valid temporary licensing agreement in 1998, L&L alleged that Marco Destin continued to use the mark after the agreement expired in 2006. Post-discovery, L&L revealed a recent trademark registration for the WINGS mark, causing L&L and Marco Destin to enter a stipulated order of settlement and dismissal in 2011. Marco Destin paid L&L $3.5 million, ceased using the WINGS mark, and agreed to never bring an action based on the WINGS mark or the 1998 temporary licensing agreement.

More than a decade later, Marco Destin sued L&L again in the Southern District of New York for “fraud on the court” and “fraud” and demanded vacatur, sanctions and damages due to key facts revealed in a separate unrelated Eastern District of North Carolina action. In relevant part, it was discovered that L&L was not the owner of the WINGS mark. Rather, an entity named Shepard Morrow owned the WINGS mark and licensed it to L&L for a brief period in the 1990s. L&L stopped paying the required licensing fees to Shepard Morrow and improperly licensed the unregistered WINGS mark to other entities (including Marco Destin). As a result, the Eastern District of North Carolina granted sanctions against L&L for failing to disclose Shepard Morrow’s trademark registration and license agreement, and L&L’s WINGS mark registration was cancelled as a consequence of L&L’s false representations to the PTO. L&L moved to dismiss Marco Destin’s New York complaint pursuant to FRCP 12(b)(6). The district court granted the motion to dismiss, concluding that the “fraud on the court” claim was an independent action for relief from a judgment under Rule 60(d)(3) and Marco Destin had a reasonable opportunity to discover L&L’s false representations during the initial litigation. Marco Destin appealed.

The Second Circuit affirmed, reviewing the dismissal of an independent action for fraud on the court under FRCP 60(d)(3) for abuse of discretion. A party challenging a judgment may file either a timely motion within a fixed time window – one year under FRCP 60(b)(3) – or an independent action any time after that pursuant to FRCP 60(d)(3). Independent actions require a more demanding showing of fraud (such as fraud on the court itself) than a timely motion, and generally claimants seeking equitable relief through independent [...]

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Not Just a Blip: Section 101 as Affirmative Defense

by | Aug 15, 2024 |

On appeal from a motion to dismiss based on subject matter eligibility, the US Court of Appeals for the Federal Circuit held that a district court appropriately analyzed certain claims as representative claims and that the claims were directed to an abstract idea and did not recite an inventive concept. Mobile Acuity, Ltd. v. Blippar Ltd., Case No. 22-2216 (Fed. Cir. Aug. 6, 2024) (Lourie, Bryson, Stark, JJ.)

Mobile Acuity sued Blippar for infringement of claims from two patents directed to software for accessing stored information with a captured image. Mobile Acuity’s operative second amended complaint asserted that Blippar infringed “at least Claims 9, 11, and 16” of one patent and “Claims 9, 11, and 16” of the other. Blippar asserted that claim 9 of each patent was “representative of the entire claim set in each respective Asserted Patent” and that the patents were invalid under 35 U.S.C. § 101. The district court granted Blippar’s motion and subsequently denied Mobile Acuity’s motion to amend the judgment and for leave to file a third amended complaint.

Mobile Acuity appealed, asserting that the district court committed several errors, including the treatment of claim 9 in each asserted patent as a representative claim and the holding that the asserted patents were invalid as claiming ineligible subject matter.

Mobile Acuity first argued that the district court erred in holding that a challenge under § 101 is not an affirmative defense. The Federal Circuit agreed that an eligibility challenge on § 101 grounds is an affirmative defense but found that the district court simply misspoke when it stated during oral argument “[w]e are not talking about an affirmative defense.” However, the Federal Circuit concluded that the “error in word choice was harmless because the district court applied the correct legal standard for evaluating an affirmative defense at the motion to dismiss stage.”

In support of its denied motion to amend, Mobile Acuity argued that “the district court required it to ‘anticipate [the] defendant’s affirmative defense in its complaint.’” The Federal Circuit rebuffed this argument, concluding that the district court did not grant the motion to dismiss on the grounds that Mobile Acuity failed to address patentable subject matter in its complaints but correctly dismissed based on an affirmative defense that “clearly appears on the face of the pleading.” The Court stated that “as we have repeatedly recognized, it is possible and proper to determine patent eligibility under 35 U.S.C. § 101 on a Rule 12(b)(6) motion.”

On the merits, the Federal Circuit first determined that the district court did not merely treat claim 9 of each of the asserted patents as representative of all claims. The Federal Circuit explained that “the court did more, separately analyzing all six claims Mobile Acuity specifically identified in the operative complaint,” as well as two additional claims. The Federal Circuit also agreed with the district court that the six claims were representative “of all claims of the two Asserted Patents.”

As to the merits of the motion to dismiss, [...]

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NO FAKES Act Would Create Individual Property Right to Control Digital Replicas

by | Aug 8, 2024 |

On July 31, 2024, a bipartisan group of US senators introduced the Nurture Originals, Foster Art, and Keep Entertainment Safe (NO FAKES) Act of 2024 to protect the voice and visual likeness rights of individuals from unauthorized use in the form of digital replicas, including digital replicas created by generative artificial intelligence (AI). The bill was introduced by Senators Chris Coons (D-DE), Marsha Blackburn (R-TN), Amy Klobuchar (D-MN) and Thom Tillis (R-NC) and follows a discussion draft released in October 2023. The press release from Senator Coons’ office makes note of the many organizations that support the proposed legislation and includes quotes from representatives of SAG-AFTRA, the Recording Industry Association of America, the Motion Picture Association, OpenAI, IBM and Creative Artists Agency.

Designed to protect all individuals (not just celebrities), the bill defines a digital replica as a newly created, computer-generated, highly realistic electronic representation that is readily identifiable as the voice or visual likeness of an individual and that is embodied in a sound recording, image, audiovisual work or transmission in which the actual individual did not perform or appear, or a version of such work in which the fundamental character of the performance or appearance has been materially altered. The bill would grant each individual or right holder the right to authorize the use of their voice or visual likeness in a digital replica, which the bill states is a property right. The bill also would establish the characteristics, requirements and duration of the license rights that can be granted in a digital replica. The right to authorize the use of an individual’s voice or visual likeness in a digital replica would not expire upon the death of the individual and would be transferable and licensable (subject to certain time limitations on the post-mortem right and registration requirements with the Register of Copyrights).

The bill would create a civil cause of action for a rights holder against any person that produces or makes available to the public an unauthorized digital replica and would provide for injunctive relief, actual or statutory damages, punitive damages and attorneys’ fees. There would be a limitations period, however, and any civil action would have to be commenced no later than three years after the date on which a rights holder discovered – or with due diligence should have discovered – the violation at issue. The bill provides certain exceptions and safe harbors for the production or use of digital replicas in news, public affairs, sports, documentaries, commentary, criticism, scholarship, satire or parody, or for online services that remove or disable access to unauthorized digital replicas upon receiving a notification from the rights holder.

The bill would preempt any cause of action under state law for the protection of voice and visual likeness rights in connection with a digital replica in an expressive work, except for certain existing state statutes or common law or state statutes regulating sexually explicit or election-related digital replicas.

On August 5, 2024, the US Patent & Trademark Office hosted [...]

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Unified Front: No Forfeiture by Failing to Raise Argument in Request for Rehearing

by | Aug 8, 2024 |

Addressing forfeiture of issues on appeal and sufficiency of the asserted prior art, the US Court of Appeals for the Federal Circuit upheld a Patent Trial & Appeal Board obviousness finding, explaining that a party does not waive arguments on appeal by failing to include them in a request for rehearing. Voice Tech Corp. v. Unified Patents, LLC, Case No. 22-2163 (Fed. Cir. Aug. 1, 2024) (Lourie, Chen, Cunningham, JJ.)

Unified Patents petitioned for inter partes review (IPR) of a Voice Tech patent that purported to improve upon the prior art by allowing a single mobile device to access and control various native applications and functions on a computer. Unified alleged that the challenged claims were unpatentable as obvious over three prior art references. The Board agreed and found that all of the challenged claims were unpatentable. Voice Tech appealed.

Voice Tech argued that Unified’s petition failed to identify any disclosure in the prior art that taught the “mobile device interface” claim limitation in the challenged claims because Unified’s claim analysis failed to expressly mention a “mobile device interface.” The Board dismissed this argument, finding that Unified properly mapped its analysis of other patent claims to the “mobile device interface” claim recitation and presented a sufficient argument regarding obviousness. The Federal Circuit agreed that one of the prior art references taught a “mobile device interface.” The Court found that the Board did not rely on a new theory not found in the IPR petition, but instead had mapped the “mobile device interface” limitations to the prior art because the petition itself raised the theory.

Voice Tech also argued that the Board had failed to properly interpret certain claim terms. Unified countered that Voice Tech forfeited the claim construction arguments because they were not included in Voice Tech’s request for rehearing to the Board. The Federal Circuit disagreed, finding that a party’s choice to not re-raise an argument in a request for rehearing will not, by itself, forfeit the argument for review on appeal. The Court found that since Voice Tech had raised the claim construction arguments to the Board in its patent owner’s response, it had not forfeited those arguments on appeal.

The Federal Circuit also addressed Unified’s argument that Voice Tech’s proposed claim constructions would not change the outcome of the patentability analysis given the Board’s findings that the prior art disclosed the claim terms. The Court agreed with Unified, finding that it only needed to construe claim terms as necessary to resolve the controversy. The Court found that because Voice Tech’s responsive arguments were conclusory and failed to address how Voice Tech would be prejudiced by the Board’s adopted claim construction, the Federal Circuit did not need to consider Voice Tech’s claim construction arguments.

Finally, the Federal Circuit addressed Voice Tech’s arguments that the Board erred in finding that the prior art taught certain claim limitations and that Unified’s obviousness analysis was based on hindsight bias. The Court upheld the Board’s obviousness determinations as to all challenged claims, [...]

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Private Sale Means Public Fail

by | Aug 8, 2024 | ,

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board decision that a private sale of a product embodying the claimed invention did not qualify as a “public disclosure” under 35 U.S.C. § 102(b)(2)(B). Sanho Corp. v. Kaijet Technology Int’l Ltd, Inc., Case No. 23-1336 (Fed. Cir. July 31, 2024) (Dyk, Clevenger, Stoll, JJ.)

Sanho owns a patent directed to a port extension apparatus designed to enhance connectivity of end-user devices (such as laptops) with other devices (such as printers). Kaijet petitioned for inter partes review (IPR) challenging certain claims of Sanho’s patent, arguing that the claims were obvious based on a prior art reference. The Board found that the patent claims were invalid because of the prior art reference’s earlier effective filing date. Sanho argued that a prior sale of its HyperDrive device by the inventor of the patent should disqualify the reference as prior art. However, the Board determined that Sanho failed to demonstrate a public disclosure of the HyperDrive sale before the prior art reference’s effective filing date. Thus, the patent was invalidated. Sanho appealed.

The Federal Circuit affirmed, explaining that the America Invents Act (AIA) redefined prior art, shifting from a first-to-invent to a first-inventor-to-file system. Under the AIA, prior art includes patents and applications filed before the patent’s effective filing date subject to exceptions for public disclosures by the inventor. Sanho argued that the HyperDrive sale fell into this exception.

The Federal Circuit dismissed Sanho’s argument that the phrase “publicly disclosed” in § 102(b)(2)(B) should encompass all types of disclosures described in § 102(a)(1), including private sales. The crux of the issue was whether placing an invention “on sale” was tantamount to a “public disclosure” under § 102(b)(2)(B). The statute states that a disclosure is not prior art if the subject matter was publicly disclosed by the inventor before the effective filing date of the prior art. Sanho argued that “publicly disclosed” includes any disclosure, even private sales. The Court disagreed, explaining that the statute’s use of “publicly” implies a narrower scope than just “disclosed.” The Court noted that the purpose of this exception is to protect inventors who make their inventions available to the public before another’s patent filing.

The Federal Circuit also relied on legislative history in support of the conclusion that “public disclosure” in § 102(b)(2)(B) means the invention must be made available to the public. Sanho argued that as long as there are no confidentiality requirements, all disclosures, even private sales, should constitute public disclosures. Again, the Court rejected that argument, noting that the statute differentiates between “publicly disclosed” and general “disclosures,” implying different meanings.

The Federal Circuit determined that § 102(b)(2)(B) protects inventors who publicly disclose their inventions from subsequent disclosures by others, ensuring that prior public disclosure by the inventor prevents a third party’s disclosure from becoming prior art. This provision aims to encourage inventors to share their innovations with the public.

Practice Note: For a disclosure to qualify as “public” under the [...]

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PTAB MTA Pilot Program to the Rescue

by | Aug 1, 2024 |

On review of a final written decision from the Patent Trial & Appeal Board in an inter partes review (IPR), the US Court of Appeals for the Federal Circuit found that all challenged claims were obvious but left open the possibility of the patent owner amending the claims under the Motion to Amend (MTA) Pilot Program. ZyXEL Communications Corp. v. UNM Rainforest Innovations, Case Nos. 22-2220; -2250 (Fed. Cir. July 22, 2024) (Dyk, Prost, Stark, JJ.)

ZyXEL Communications petitioned for IPR challenging claims 1 – 4, 6, 7 and 8 of a patent owned by UNM Rainforest Innovation (UNMRI). The patent relates to methods for constructing frame structures in communication systems using orthogonal frequency-division multiple access (OFDMA) technologies. The patent describes a method for constructing a frame structure with two sections, each of which is configured for a different communication system, where the second communication system is used to support high mobility users (i.e., faster moving users).

Before the Board, ZyXEL argued that claims 1 – 4, 6 and 7 were unpatentable in light of two prior art references (Talukdar and Li), and that claim 8 was unpatentable in light of Talukdar and another prior art reference (Nystrom). During the Board proceedings, UNMRI filed a contingent motion to amend if any of the challenged claims were found to be unpatentable. As part of its motion, UNMRI requested preliminary guidance from the Board pursuant to the Board’s MTA Pilot Program. In its opposition to UNMRI’s motion to amend, ZyXEL argued that UNMRI’s amended claims lacked written description support, and in its preliminary guidance, the Board agreed. UNMRI attempted to file a revised motion to amend, but the Board rejected the revised motion and instead permitted UNMRI to file a reply in support of its original motion. It also allowed ZyXEL to file a sur-reply. The Board determined that claims 1 – 4, 6 and 7 were unpatentable, but that claim 8 was not. The Board also granted UNMRI’s motion to amend and determined that the new claims were nonobvious over the prior art of record. Both sides appealed.

With respect to the Board’s decision on the obviousness of claims 1 – 4, 6 and 7, the Federal Circuit found that substantial evidence supported the ruling. UNMRI’s primary argument was that a person of skill in the art (POSA) would not have been motivated to combine Talukdar and Li, but the Court credited the Board’s reliance on ZyXEL’s expert, who demonstrated sufficient motivation to combine the two references.

The Federal Circuit reversed the Board’s finding that claim 8 had not been shown to be obvious, however. The Court noted that while the Nystrom reference may not explicitly state the benefit of the missing limitations, “a prior art reference does not need to explicitly articulate or express why its teachings are beneficial so long as its teachings are beneficial and a POSA would recognize that their application was beneficial.”

Regarding UNMRI’s motion to amend, ZyXEL argued that the Board erred in granting the [...]

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UK Court of Appeal Increases FRAND Rate, Applies It Outside Limitations Period

by | Aug 1, 2024 | ,

The UK Court of Appeal found that the UK High Court of Justice applied flawed reasoning in setting a global fair, reasonable and non-discriminatory (FRAND) royalty rate for a patent portfolio essential to 3G, 4G and 5G cellular technologies. Interdigital Tech Corp. et al. v. Lenovo Group Limited, Case Nos. CA-2023-001489; -001492 (July 12, 2024) (Arnold, Nugee, Birss, LJ.) The Court of Appeal not only concluded that a higher rate was appropriate but applied the rate to sales prior to the limitations period.

In March 2023, the High Court issued its decision in InterDigital v. Lenovo, concluding that Lenovo should pay InterDigital a FRAND rate of $0.175 per cellular unit for a worldwide license to InterDigital’s portfolio. The High Court also found that Lenovo should pay the FRAND rate for all previous unlicensed sales, even if those sales occurred before the statutory damages limitation period. The High Court calculated that the $0.175 rate yielded a lump sum payment from Lenovo to InterDigital of $138.7 million for sales from 2007 to the end of 2023. The High Court’s FRAND rate determination was closer to Lenovo’s offered rate of $0.16 per unit than to InterDigital’s demand of $0.498 per unit. Both parties appealed.

Lenovo argued that the High Court wrongly found that Lenovo should pay a royalty for sales made outside of the six-year limitation period. The Court of Appeal disagreed, finding that the statute of limitations period has no role to “play in a determination of FRAND terms between (necessarily) a willing licensor and a willing licensee.” The Court of Appeal explained that a willing licensor would not “refuse to pay whatever license fees were eventually determined to [be] applicable” to products outside the limitations period and would not be considered willing if it refused. The Court of Appeal concluded that a willing licensee would not try to benefit from delay in agreeing FRAND terms or payment of FRAND royalties and, therefore, would pay with respect to all past units. From a policy perspective, the Court of Appeal noted that there should not be an incentive for the licensee to delay negotiations to minimize the amount it should be required to pay.

InterDigital challenged the per unit rate set by the High Court, including the rate derived from one of the comparable licenses and the adjustments made to reflect Lenovo’s position vis-à-vis the licensee. The Court of Appeal found that the High Court’s rate determination was internally inconsistent because it found that InterDigital had been forced to heavily discount past sales and this aspect was not FRAND while also declining to make any correction to the blended rate that had been derived from the license to account for non-FRAND factors. The Court of Appeal also found that the High Court did not properly justify rejecting InterDigital’s allocation of the lump sum paid by the licensee between past sales and future sales, which would have led to a higher rate.

The Court of Appeal conducted a detailed review of the [...]

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Preliminary Injunction Upheld in Cancer Relapse Detection Case

by | Jul 25, 2024 |

The US Court of Appeals for the Federal Circuit affirmed the grant of a preliminary injunction (PI) in the biopharmaceutical space, concluding that the plaintiff satisfied the requirements for injunctive relief, including likelihood of success on the merits. The injunction included “carve outs” for patients requiring access to the affected cancer detection kits. Natera, Inc. v. NeoGenomics Laboratories, Inc. Case No. 24-1324 (Fed. Cir. July 12, 2024) (Moore, CJ; Taranto, Chen, JJ.)

Natera and NeoGenomics are both research-focused healthcare companies manufacturing products used for early detection of cancer relapse. Natera and NeoGenomics both offer products designed to identify circulating tumor DNA (ctDNA) within the bloodstream to assess the efficacy of cancer treatment and the risk of recurrence. NeoGenomics’s product is named RaDaR.

Natera owns two patents, one claiming methods for amplifying targeted genetic material, such as cfDNA, while reducing amplification of non-targeted genetic material, and the other claiming methods for detecting variations in genetic material indicative of disease or disease recurrence, such as ctDNA. Natera sued NeoGenomics, alleging that RaDaR infringed both of Natera’s patents, and moved for a PI. The district court granted the PI, finding that Natera satisfied the requirements for injunctive relief, including likelihood of success on the merits as set forth in Purdue Pharma v. Boehringer Ingelheim (Fed. Cir. 2001). The injunction barred NeoGenomics from making, using, selling, offering for sale, marketing, distributing or supplying RaDaR, with certain carve outs for patients already using RaDaR and for finalized or in-process research projects, studies and clinical trials.

To show a likelihood of success on the merits, Natera had to show that it would likely prove infringement and that its infringement claim would likely withstand challenges to the validity and enforceability of the patents. On appeal, NeoGenomics argued that the district court did not properly evaluate the likelihood of success on the merits factor because it failed to resolve a claim construction dispute and instead applied an erroneous construction.

The Federal Circuit noted that NeoGenomics first raised the erroneous claim construction issue in its motion to stay the PI pending appeal, and that neither party raised a claim construction dispute during the PI briefing. The Court therefore concluded that the district court did not abuse its discretion by not engaging in explicit claim construction before evaluating likelihood of infringement. The Federal Circuit also found that the district court did not err by implicitly construing the claims because Natera presented evidence suggesting that RaDaR’s multi-cycle polymerase chain reaction (PCR) process likely practiced the tagging and amplifying steps of the relevant claims.

NeoGenomics also argued that the district court applied an incorrect legal standard in evaluating NeoGenomics’s obviousness challenge, asserting that “mere ‘vulnerability’” of the patent to an invalidity challenge sufficed to defeat a PI. The Federal Circuit explained that the correct analysis addresses whether the patentee has shown that it is more likely than not to prevail over an invalidity challenge. The Court explained that it was not sufficient to merely allege that the individual elements of the claimed [...]

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Credibility at Issue? Court May Compel Party Representative to Appear In Person

by | Jul 25, 2024 |

Addressing for the first time whether a district court can compel a witness to appear in person for testimony involving fraud on the court, the US Court of Appeals for the Federal Circuit affirmed the district court’s determination that it could require an in-person appearance of the sole corporate representative to make a credibility determination. Backertop Licensing LLC v. Canary Connect, Inc., Case Nos. 23-2367; -2368; 24-1016; -1017 (Fed. Cir. July 16, 2024) (Prost, Hughes, Stoll, JJ.)

During an underlying litigation, the US District Court for the District of Delaware identified potential party and attorney misconduct in dozens of patent cases related to IP Edge and Mavexar, a patent monetization firm and an affiliated consulting firm, respectively. The district court found that IP Edge and Mavexar appeared to have created LLCs, recruited individuals to serve as the sole owners, assigned patents to the LLCs for “little or no consideration,” and recorded the complete assignment of patent rights without disclosing that IP Edge and Mavexar retained significant rights to the royalties and to any settlement proceeds resulting from litigation of the assigned patents. The LLCs then filed lawsuits asserting the rights of their assigned patents without reporting the significant rights retained by IP Edge and Mavexar.

The district court conducted an evidentiary hearing to “gather more information about its concerns” over potential professional misconduct violations and real parties in interest not being identified. One of the parties was Backertop Licensing LLC and its sole owner, Lori LaPray. The district court ordered the production of documents related to the potential fraud on the court and a declaration identifying “any and all assets owned by Backertop.” Shortly thereafter, Backertop filed a joint stipulation of dismissal, and two attorneys for Backertop sought to withdraw from their representation. The district court’s investigation continued, however, and Backertop’s “allegedly responsive production” contained documents, several of which “had clearly missing attachments or cover letters.”

Left unsatisfied with the production, the district court ordered LaPray to appear in person for a hearing to “assess her credibility.” Citing preexisting travel plans, a busy work schedule and childcare obligations, LaPray notified the court that she was unable to attend the hearing as scheduled and requested to appear telephonically instead. The district court moved the hearing date to accommodate LaPray’s travel schedule but required in-person appearance because “[c]redibility assessments are difficult to make over the phone.” Backertop argued, for the first time, in its motion for reconsideration that the court’s order was precluded under the Federal Rule of Civil Procedure 45 geographic limit. The district court rejected the argument because Rule 45 does not limit the court’s inherent power to order parties to appear sua sponte. After failing to appear at the rescheduling hearing and the show cause hearing, the district court held LaPray in civil contempt and imposed a $200 per day fine until she appeared in person in court. Backertop and LaPray appealed.

The Federal Circuit concluded that Rule 45’s geographic limit only applies to a party or attorney’s efforts [...]

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From Oops to Encore: The Board’s Premature Adverse Judgment

by | Jul 25, 2024 |

The Director of the US Patent & Trademark Office (PTO) overturned the Patent Trial & Appeal Board’s premature adverse judgment against a patent owner and remanded an inter partes review (IPR) proceeding based on the fact that the patent owner had initially instructed its counsel to cease work on the IPR while seeking new representation for related district court litigation, which contributed to the procedural delays. Shenzhen Xinzexing E-commerce Co., Ltd. v. Shenzhen Carku Technology Co., Ltd., IPR2024-00222 (PTO-Ofc. of Dir. July 10, 2024) (Vidal, PTO Dir.)

Shenzhen Xinzexing E-commerce Co. filed a petition for an IPR to challenge certain claims of a patent owned by Shenzhen Carku Technology Co. (Patent Owner). The petition and associated documents for the IPR were properly served on the Patent Owner at the address of record. The Board issued a notice on November 29, 2023, allowing the Patent Owner three months to file a preliminary response and requiring mandatory notice information to be submitted within 21 days. The Patent Owner did not comply with either obligation.

Following the Patent Owner’s failure to submit the required notices and response, the Board issued a sua sponte adverse judgment on May 21, 2024, interpreting the lack of response as abandonment of the IPR contest. However, on July 8, 2024, the Patent Owner filed the necessary notices and appointed new counsel, indicating that the previous counsel had been instructed to withdraw from the case and that new representation was being arranged.

The Director sua sponte overturned the Board’s adverse judgment, finding that it was premature. The Board’s communications did not clearly indicate that noncompliance with the notice requirements would result in adverse judgment. Given that the Patent Owner had shown efforts to rectify the situation by appointing new counsel and filing the required documents, the director vacated the adverse judgment and remanded the case for the Board to determine whether the petition showed a reasonable likelihood that any of the challenged patent claims were unpatentable.

Practice Note: This decision highlights the necessity of adhering to procedural deadlines and ensuring that consequences for noncompliance are clearly communicated. The Board’s failure to provide explicit notice of abandonment of the contest contributed to the premature adverse judgment, reinforcing the importance of clear procedural guidance.



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