Statutory Time Bar Applies to Privity RPI Relationships Arising After IPR Petition Filing
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`LAWFLASH
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`STATUTORY TIME BAR
`APPLIES TO PRIVITY AND RPI
`RELATIONSHIPS ARISING
`AFTER FILING OF IPR
`PETITION
`
`June 27, 2019
`
`The Federal Circuit Court of Appeals recently held that
`the Section 315(b) time -bar analysis must assess
`privity and real -party -in- interest relationships that
`arise after the filing of an inter partes review petition;
`companies should take this ruling into account when
`considering a merger or other agreement that would
`result in such a relationship.
`
`The US Court of Appeals for the Federal Circuit recently held that
`privity and real -party -in- interest (RPI) relationships arising after
`filing, but before institution, of an inter partes review (IPR) petition
`should be considered for determining the statutory time bar under 35
`USC § 315(b). The provision provides that "[a]n inter partes review
`may not be instituted if the petition requesting the proceeding is filed
`more than 1 year after the date on which the petitioner, real party in
`interest, or privity of the petitioner is served with a complaint alleging
`infringement of the patent."
`
`On June 13, the Federal Circuit applied the one -year time -bar
`provision to a petitioner that had announced its merger with a
`defendant in the district court litigation before filing the IPR petition,
`even though the merger had not closed at the time the IPR was filed.
`The time -bar provision, Section 315(b) of the America Invents Act,
`requires the Patent Trial and Appeal Board (Board) to deny
`institution of an IPR even if the petition otherwise complies with
`Section 312(a)(3). The Federal Circuit's holding makes clear that the
`Section 315(b) time -bar analysis requires assessing privity and RPI
`relationships not only at the time of filing, but also leading up to the
`institution decision.
`
`THE DECISION
`
`On November 4, 2009, Power Integrations International Inc. filed a
`complaint against Fairchild Semiconductor Corporation and Fairchild
`(Taiwan) Corporation (collectively, Fairchild) in the Northern District
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`AUTHORS AND CONTACTS
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`HANG ZHENG
`ASSOCIATE
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`Statutory Time Bar Applies to Privity RPI Relationships Arising After IPR Petition Filing
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`of California, alleging infringement of several patents, including US
`Patent No. 6,212,079 (the '079 Patent). See F Morgan Lewis
`v. Fairchild Semiconductor Intl, Inc., et. al., CANU- 3- 09 -cv- 05235,
`Dkt. l (N.D. Cal. 2009). Fairchild was served with the complaint two
`days later. In March 2014, a jury found Fairchild liable for infringing
`the '079 Patent and awarded Power Integrations $105 million in
`damages.L11.
`
`After the jury trial, Fairchild announced that it had entered into a
`merger agreement with ON Semiconductor (ON). In March 2016,
`while the merger was pending, ON filed an IPR petition challenging
`the '079 Patent1-2l and other IPR petitions invalidating several other
`Power Integration patents 131. Although the merger was disclosed in
`the IPR proceedings, the IPR petitions were all filed before the merger
`was finalized.
`
`The Board determined that the IPR was not time barred under
`Section 315(b) because there was insufficient evidence to show
`Fairchild had any control over the IPR at the time when the petition
`was filed.141 The board also denied Power Integrations' request for
`additional discovery regarding the relationship between ON and
`Fairchild, reasoning that "Patent Owner has expressed no more than
`a suspicion (mere speculation) that such evidence exists and would
`be uncovered by additional discovery ". Id. The Board found the '079
`Patent and other Power Integrations patents unpatentable in the final
`written decisions of the IPRs. Id.
`
`On appeal, the Federal Circuit vacated the Board's final written
`decision and concluded that "the § 315(b) time -bar can be 'decided
`fully and finally at the institution stage. "' fa]. In holding so, the Federal
`Circuit further stated that "privity and RPI relationships arising after
`filing but before institution may time -bar institution under § 315(b)."
`161 Section 315(b) provides:
`(b) Patent Owner's Action. -An inter partes review may not be
`instituted if the petition requesting the proceeding is filed more
`than 1 year after the date on which the petitioner, real party in
`interest, or privy of the petitioner is served with a complaint
`alleging infringement of the patent. The time limitation set forth
`in the preceding sentence shall not apply to a request for joinder
`under subsection (c).171
`
`The Federal Circuit agreed with Power Integrations' interpretation
`that Section 315(b) requires assessment of privity and RPI
`relationships arising after filing, but before institution, because the
`language of the statute precludes institution, not filing. "Section 315
`(b) is the gatekeeper to deny institution of petitions from time barred
`petitioners, their real parties in interest, and their privies." 181
`According to the Federal Circuit, the "is filed" phrase in Section 315
`(b) only marks the end of the one -year window from the RPI's
`complaint service date. Although the merger was closed only four
`days before the institution of the IPR, the IPR was nevertheless time
`barred.
`
`The Federal Circuit further reasoned that since the petitioner is under
`a continuing obligation to identify all PRIs in an IPR proceeding, a
`"time of filing" rule for assessing the time bar of Section 315(b) would
`make little sense in light of the ongoing obligation for updating the
`PRIs.
`
`In addition, the Federal Circuit also rejected ON's arguments that
`Power Integrations is precluded from challenging the Section 315(b)
`time -bar decision by the Board because Power Integrations did not
`appeal the same decision from another IPR case. Although, in this
`case, the Federal Circuit agreed that the Board's Section 315(b)
`decision in the other nonappealed IPR case was essential to the final
`determination in that case, and also that ON has established the
`
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`Statutory Time Bar Applies to Privity RPI Relationships Arising After IPR Petition Filing
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`requirements of issue preclusion, the lack -of- incentive -to- litigate
`exception applies in this case. Power Integrati Morgan Lewis
`appeal other IPR decisions because there was no intringement tinding
`associated with the asserted patents in that IPR.
`
`FUTURE IMPLICATIONS
`
`The Federal Circuit's decision in Power Integrations emphasizes the
`dilemmas companies may face when they enter into a merger
`agreement. Companies may not rely on the IPR petition filing date as
`the time to determine whether any privity or PRI relationships exist,
`but instead need to constantly assess privy and RPI relationships up
`until the institution of the IPR. Companies should take into account
`the implications of this finding when planning a merger or any other
`corporate agreement that would give rise to a privity or RPI
`relationship.
`
`CONTACTS
`
`If you have any questions or would like more information on the
`issues discussed in this LawFlash, please contact the authors, Dion
`M. Bregman (Silicon Valley), Hang Zheng (Washington, DC), and
`Ehsun Forghany (Silicon Valley), or any of the following lawyers from
`Morgan Lewis's post -grant proceedings team:
`
`Boston
`Joshua M. Dalton
`
`Century City
`Andrew V. Devkar
`
`Chicago
`Hersh Mehta
`Sanjay K. Murthy
`Jason C. White
`
`Houston
`C. Erik Hawes
`Rick L. Rambo
`
`Philadelphia
`Louis W. Beardell, Jr.
`
`San Francisco
`Brent A. Hawkins
`
`Silicon Valley
`Andrew J. Gray IV
`Michael J. Lyons
`
`Washington, DC
`Robert W. Busby
`Jeffrey G. Killian, Ph.D.
`Robert Smyth, Ph.D.
`
`Lu See generally Power Integrations, Inc. v. Fairchild Semiconductor
`Intl, Inc., et. al., , CAND- 3 -09 -cv -05235 (N.D. Cal.).
`
`L21 See generally ON Semiconductor Corp. v. Power Integrations,
`Inc., No. IPR2016 -00809 (P.T.A.B.).
`
`Lai See generally ON Semiconductor Corp. v. Power Integrations,
`Inc., Nos. IPR2016- 01589, IPR2016 -00995 and IPR2016 -01597
`(P.T.A.B.).
`
`141 See generally ON Semiconductor Corp. v. Power Integrations,
`Inc., No. IPR2016 -00809 (P.T.A.B.).
`
`https: / /www.morganlewis.com /pubs /statutory- time -bar -applies -to- privity -rpi- relationships - ... 8/1/2019
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`Statutory Time Bar Applies to Privity RPI Relationships Arising After IPR Petition Filing
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`151 See Power Integrations, Inc. v. Semiconductor Components
`Indus., LLC, DBA ON Semiconductor, No. 201 Morgan Lewis
`13, 2019) (citing Wi -Fi One, LLC y. Broadcom Corp., 878 I-.3d 1364,
`1372 -73 (Fed. Cir. 2018) (emphasis added)).
`
`161 See generally Power Integrations, Inc. v. Semiconductor
`Components Indus., LLC, DBA ON Semiconductor, No. 2018 -1607
`(Fed. Cir. June 13, 2019).
`
`j7], 35 U.S.C. § 315(b).
`
`181 See Power Integrations, Inc. v. Semiconductor Components
`Indus., LLC, DBA ON Semiconductor, No. 2018 -1607 (Fed. Cir. June
`13, 2019) (citing Applications in Internet Time, LLC v. RPX Corp., 897
`F.3d 1336, 1365 (Fed. Cir. 2018) (Reyna, J., concurring), cert. denied,
`139 S. Ct. 1366 (2019)).
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