By: Kenny Luchesi disclaimer

A few weeks ago, we posted an article discussing the Federal Circuit’s decision in Arthrex, Inc. v. Smith & Nephew, Inc., 880 F.3d 1345 (Fed. Cir. 2018).  (see Disclaimer Before Institution May Not Avoid Adverse Judgment Estoppel).  In Arthrex, the Federal Circuit affirmed the PTAB’s decision to enter an adverse judgment against a patentee, even though the patentee had properly disclaimed all of the challenged claims prior to institution, and had specifically requested that the Board not enter an adverse judgment.  In reaching that decision, the court relied primarily on the plain language of 37 C.F.R. § 42.73(b), which states that the “disclaimer of a claim such that the party has no remaining claim in the trial” may be construed to be a request for adverse judgment.

Recently, however, the PTAB made clear that it will not blindly apply § 42.73(b), but rather will  take into account other factors, such as the prejudice to the patentee and the diligence of the petitioner.  In Commvault Systems, Inc. v. RealTime Data, LLC, CBM2017-00061, the Patent Owner disclaimed certain challenged claims (although not all of them) prior to filing its preliminary response, and prior to an institution decision.  For the remaining challenged claims, the Board ultimately denied institution finding that they did not qualify as a covered business method.

Relying on Arthrex, the petitioner then sought entry of an adverse judgment under § 42.73(b).  The Board declined to enter an adverse judgment, however, because Commvault had waited too long to make the request, and had not explained the delay.  Specifically, the Board noted that Commvault’s request “comes almost four months after Patent Owner’s preliminary response describing the statutory disclaimer” and “almost a month after our decision on institution and three weeks after the decision in Arthrex.”  The Board explained that the “consequence of this timing is that Patent Owner did not have notice that petitioner would be requesting adverse judgment until just before the time for a rehearing request on the decision denying institution had lapsed” and that “[t]his prejudice to Patent Owner outweighs petitioner’s stated interest in preventing alleged gamesmanship.”

There was an additional question at issue here, which was whether § 42.73(b) even applied.  Although there were no claims remaining for trial after the institution decision, there were at the time of the disclaimer, as the Patent Owner did not disclaim all of the challenged claims.  The Board did not address this issue, however, because it found that adverse judgment was inappropriate based solely on the petitioner’s delay in requesting it.

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Kenny Luchesi is a trial lawyer with more than 14 years of experience both as a product development engineer and as an attorney litigating complex intellectual property matters.