Federal Circuit Slams USPTO for Granting Ex Parte Reexam to Serial IPR Filer

By Eileen McDermott
September 29, 2021

“Section 325(d) applies to both IPR petitions and requests for ex parte reexamination. Thus, the Patent Office, when applying § 325(d), cannot deny institution of IPR based on abusive filing practices then grant a nearly identical reexamination request that is even more abusive.” – CAFC

Broken gavelThe U.S. Court of Appeals for the Federal Circuit (CAFC) ruled today in a precedential opinion that Alarm.com, which was denied institution on three inter partes review (IPR) petitions it filed against patents owned by Vivint, Inc., could not simply “repackage” arguments raised in its IPR petition to challenge the same patent via ex parte reexamination. The opinion was authored by Chief Judge Moore.

In so ruling, the CAFC said that it was “arbitrary and capricious” and an abuse of discretion for the U.S. Patent and Trademark Office (USPTO) to grant the reexamination request after it had denied the IPR under 35 U.S.C. § 325(d).

Serial Petitioner

The appeal relates to Vivint’s U.S. Patent No. 6,717,513, which was the subject of three of the 14 IPRs Alarm.com filed with the Patent Trial and Appeal Board (PTAB) following Vivint’s 2015 suit against it for patent infringement. The PTAB denied institution on several grounds, and in particular denied one of the petitions on the basis that it was “an example of ‘undesirable, incremental petitioning.’” The denial reasoned that “allowing similar, serial challenges to the same patent, by the same petitioner, risks harassment of patent owners and frustration of Congress’s intent in enacting the Leahy-Smith America Invents Act,” and invoked the PTAB’s discretion to discourage such petitioning by denying institution.

However, Alarm.com returned to the USPTO more than one year later to request ex parte reexamination of all claims of the ‘513 patent. Two of the four questions of patentability it presented came directly from one of the denied IPR petitions, and in many respects “copied, almost word for word,” that petition. For the other questions, Alarm.com addressed arguments made by the PTAB in its denials of the IPRs by replacing an old reference with a new one, and the USPTO ultimately ordered reexamination for all claims of the patent, since it found that Alarm.com had “raised substantial new questions of patentability.”

In response, Vivint petitioned the Office under 37 C.F.R. § 1.181 seeking dismissal, and arguing that Section 325(d) applies equally to ex parte reexamination and should be exercised. “In Vivint’s view, the Patent Office could not decline to institute IPR based on abusive filing practices, yet grant reexamination on essentially the same facts,” explained the CAFC. The USPTO rejected the petition, explaining that it did not have authority to consider petitions filed after reexamination was ordered. When Vivint argued it could not have filed a petition prior to reexamination being ordered, the Office said Vivint could have requested waiver of the rules and also rejected Vivint’s argument that it had authority to terminate the reexamination under the Administrative Procedures Act (APA). The USPTO said the two proceedings (IPR and ex parte reexamination) are different and that “even if the IPR was denied based solely on § 325(d) considerations, the differences between ex parte reexamination and IPR could justify such an outcome.” An examiner ultimately rejected all claims of the ‘513 patent and the PTAB affirmed.

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A Legal Error

In its discussion of the case, the CAFC agreed that Alarm.com’s ex parte reexamination request did raise substantial new questions of patentability, but that the Office still should have rejected it. “Even when an ex parte reexamination request presents a substantial new question of patentability, the Patent Office ‘may . . . reject the . . . request because the same or substantially the same prior art or arguments previously were presented to” it. 35 U.S.C. § 325(d),’” explained the court.  The CAFC disagreed with the government’s argument that Section 325(d) decisions are not reviewable based on the statute’s “permissive language” and reviewed the USPTO’s decision under the APA, in summary, finding that:

Here, we must set aside the Patent Office’s § 325(d) determination. A legal error—the Patent Office’s narrow interpretation of its authority to reconsider orders granting reexamination—infected that determination. And, in light of the ’091 Decision, it was arbitrary and capricious for the Patent Office to order reexamination over § 325(d), or, at minimum, refuse to terminate reexamination once Vivint requested it do so.

The court disagreed with the USPTO’s assessment of its own authority, explaining that the Office does have authority to reconsider its decision ordering ex parte reexamination under Section 325(d). Citing Tokyo Kikai Seisakusho, Ltd. v. United States, 529 F.3d 1352, 1360 (Fed. Cir. 2008), the CAFC said that “[t]he power to reconsider is inherent in the power to decide”—a principle the court has applied to hold that the USPTO has authority to reconsider IPR institution decisions. “And we likewise see nothing in the statutes or regulations preventing the Patent Office from reconsidering a decision ordering ex parte reexamination,” said the court. Thus, the Office abused its discretion in denying Vivint’s petitions to dismiss the ex parte reexamination.

No Difference Here

While the court explained that its ruling is “narrow” and “limited”, and that there may still be some cases in which the public interest makes it appropriate to grant a reexamination, even when the petitioner has engaged in abusive practices, it ultimately rejected the government’s arguments about the differences between IPR and reexamination:

Section 325(d) applies to both IPR petitions and requests for ex parte reexamination. Thus, the Patent Office, when applying § 325(d), cannot deny institution of IPR based on abusive filing practices then grant a nearly identical reexamination request that is even more abusive. We see no difference between the IPR and ex parte reexamination processes that would justify such conduct and nothing short of termination of the reexamination would be appropriate.

The CAFC further held that It would be a waste of time and resources to vacate the decision so that the USPTO could independently exercise its authority properly, since “[i]t would be arbitrary and capricious for the Patent Office to do anything on remand other than terminate the reexamination.” Thus, the court remanded with instructions for the Office to dismiss the ex parte reexamination

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The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments. Join the discussion.

  1. J. Doerre September 29, 2021 2:55 pm

    The interesting question: will the Acting Director initiate reexamination “[o]n his own initiative” under 35 U.S.C. § 303? Seems unlikely that he will, but the Court seems to suggest that he could. If the Office believes that the patent is invalid, are there any good reasons why he should not?

  2. Mr 259 September 29, 2021 4:58 pm

    Well alright.

  3. B September 30, 2021 4:18 pm

    @ J Doerre “The interesting question: will the Acting Director initiate reexamination “[o]n his own initiative” under 35 U.S.C. § 303?”

    I was thinking the exact same thing — and my reading of § 303 is that the Director can do anything he wants — and it doesn’t take even a shadow of a splinter of possible justification to prop up the Director’s discretion.

  4. Joseph Weiss September 30, 2021 6:08 pm

    Thank You Eileen! Great Work!

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