By: John Marlott

The AIA prohibits institution of a post-grant proceeding when the petitioner previously “filed a civil action challenging the validity of a claim of the patent.”  35 U.S.C. § 315(a)(1).  PGR petitions (including CBM petitions) are subject to the same statutory bar.  See 35 U.S.C. § 325(a)(1).

The statutory bar applies when the petitioner has “filed a civil action” challenging the validity of one or more patent claims, but the bar does not apply to invalidity counterclaims:  “A counterclaim challenging the validity of a claim of a patent does not constitute a civil action challenging the validity of a claim of a patent for purposes of this subsection.”  35 U.S.C. §§ 315(a)(3), 325(a)(3).

In a common scenario, a patent owner sues for infringement in district court.  The accused infringer then responds to the district court complaint by asserting declaratory judgment counterclaims for both invalidity and noninfringement.  The accused infringer is not barred from later filing an IPR or PGR petition in this situation because it has challenged the validity of the patent via a counterclaim, not via the filing of “a civil action.”

But what if the accused infringer files first in district court, via a declaratory judgment action against the patent owner?  Is the accused infringer barred from later pursuing an IPR or PGR petition?  Answer:  It depends.

If the accused infringer’s district court complaint seeks a declaratory judgment of invalidity, then the AIA statutory bar will necessarily preclude institution of a later-filed IPR or PGR petition.  §§ 315(a)(1), 325(a)(1).  If the accused infringer confines its district court complaint to a claim for a declaratory judgment of noninfringement, however, then the accused infringer has not “filed a civil action challenging the validity of a claim of the patent”—and the accused infringer remains free to file an IPR or PGR petition at the PTAB.

Moreover, the accused infringer may still have an opportunity to seek a declaratory judgment of invalidity in the district court action.  Assuming the patent owner responds to the accused infringer’s declaratory judgment complaint with an affirmative counterclaim asserting infringement, then the accused infringer can reply to that infringement assertion by seeking a declaratory judgment of invalidity—and that counterclaim-in-reply, according to a recent PTAB decision, will not bar an IPR or PGR petition.

In Canfield Scientific, Inc. v. Melanoscan, LLC, IPR2017-02125, Paper No. 15 (Mar. 30, 2018), the petitioner had filed a complaint in district court seeking a declaration of noninfringement.  The patent owner responded with a counterclaim for infringement.  The petitioner then replied to the infringement counterclaim by seeking a declaratory judgment of invalidity and, three months later, filed an IPR petition challenging the patent at the PTAB.  The patent owner urged the PTAB to deny the IPR petition as barred under § 315(a)(1), contending that the petitioner’s request for a declaratory judgment of invalidity was not a true “counterclaim,” but was instead an amendment of the declaratory judgment complaint—meaning that the petitioner had, in effect, “filed a civil action challenging the validity” of the patent.

The PTAB ruled that a petitioner’s invalidity counterclaim in this procedural situation “meets the literal terms” of a “counterclaim” under § 315(a)(3), and therefore a petition is not barred by § 315(a)(1).  IPR2017-02125, Paper No. 15 at p. 4.  The PTAB rejected the patent owner’s policy arguments that “Congress intended subsection 315(a)(3) only to protect a defendant or ‘accused infringer who has been sued and is asserting invalidity in a counterclaim,’” and that “Congress would not have intended a result that would allow an accused infringer to avoid having to decide between challenging validity in court, or filing a petition seeking inter partes review” since it would “frustrate[e] one of the goals of these proceedings as being an alternative to district court proceedings.”  Id. at pp. 6-7.  While acknowledging that the patent owner’s “assertions, as a policy matter, have some merit,” the PTAB concluded that these “policy considerations do not override the unambiguous statutory language.”  Id. at p. 7.

Take-away: A party threatened with a suit for patent infringement may wish to file a preemptive declaratory judgment action against the patent owner for various strategic reasons, e.g., to secure a more favorable venue.  If the accused infringer’s DJ complaint is limited to a request for a declaration of noninfringement, the statutory bar on institution of a post-grant proceeding is not triggered, so the accused infringer remains free to later file an IPR or PGR petition challenging the validity of the patent.  And if the patent owner asserts a counterclaim for infringement in the DJ action, the accused infringer can potentially have its cake and eat it too—the accused infringer can assert a counterclaim seeking a declaration of invalidity in the district court, without jeopardizing its ability to later challenge the patent in a PTAB post-grant proceeding.

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John Marlott brings 25 years of intellectual property law experience to his role as lead counsel in IP disputes for Jones Day clients. He focuses on high-stakes district court patent litigation, post-grant patent proceedings before the USPTO Patent Trial & Appeal Board (PTAB), and appeals to the U.S. Court of Appeals for the Federal Circuit.