Intellectual Property > IP Newsflash > PTAB Institutes IPR Despite Petitioner’s Prior Invalidity Challenge in Declaratory Judgment Action, Citing “Unambiguous Language” of 35 U.S.C. § 315
11 Apr '18

On August 1, 2016, Canfield Scientific, Inc. filed a civil action in the District of New Jersey against Melanoscan, LLC, seeking a declaratory judgment of non-infringement of U.S. Patent No. 7,359,748 (“the ’748 Patent”). In response, Melanoscan asserted multiple claims of the ’748 Patent in a counterclaim for infringement. In reply, on June 30, 2017, Canfield filed an “Answer and Counterclaim,” in which it sought to invalidate the asserted claims. Nearly three months later, on September 21, 2017, Canfield additionally filed a petition for inter partes review (IPR) with the Patent Trial and Appeal Board (“the Board”) challenging the validity of the same claims. Before reaching the merits, the Board addressed whether institution of Canfield’s IPR was barred under 35 U.S.C. § 315—which governs the relationship of IPRs to other proceedings or actions—due to Canfield’s prior invalidity challenge in its declaratory judgment action.

IPRs related to an “Infringer’s Civil Action” are governed by 35 U.S.C. § 315(a). Under § 315(a)(1), “[a]n inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.”  But § 315(a)(3) clarifies that “[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.”  In a typical scenario, the Board must deny institution when a petitioner has filed an earlier declaratory judgment action seeking invalidity. Here, however, Canfield did not seek an invalidity declaration until its “Answer and Counterclaim” in reply to Melanoscan’s infringement counterclaim. The question for the Board, therefore, was whether this invalidity challenge was truly a “counterclaim” under § 315(a)(3), or whether it was a “civil action” under § 315(a)(1). The Board held that it was a counterclaim, and the Petition was not barred.

In reaching this conclusion, the Board relied on the express language of the statute. In particular, the Board explained that “the language of 35 U.S.C. § 315(a)(3) . . . uses the term ‘counterclaim’” and “affirmatively states that a ‘counterclaim’ for invalidity filed by an accused infringer does not constitute the filing of a civil action asserting invalidity.”  And because the statute does not distinguish “counterclaims-in-reply”—i.e., counterclaims by plaintiffs—from “ordinary” counterclaims, the Board rejected Melanoscan’s argument that § 315(a)(3) relates only to “a claim made by a defendant against a plaintiff.”

The Board also rejected Melanoscan’s argument that § 315(a)(3) relates only to an “accused infringer who has been sued and is asserting invalidity in a counterclaim” because all sub-parts under § 315(a) “relate to, by explicit language, ‘[i]nfringer’s civil action.’”  The Board cited the structure of the statute, which explicitly addresses “[p]atent owner’s action” in § 315(b) for further support. In sum, the Board concluded that “counterclaim” in § 315(a)(3) relates to counterclaims in actions brought by the infringer, as was the case here.

Before proceeding to the merits, the Board acknowledged that, as a policy matter, “interpreting the statute in this manner . . . effectively allow[s] a Petitioner to initiate a civil action concerning a patent, but also later file a petition seeking inter partes review, frustrating one of the goals of these proceedings as being an alternate to district court proceedings.”  Nonetheless, “Congress has spoken,” and these “policy considerations do not override the unambiguous statutory language.”

Canfield Scientific, Inc. v. Melanoscan, LLC, IPR2017-02125, Paper No. 15 (PTAB Mar. 30, 2018)