Even when petitioners enter into and finalize mergers, they are not immune from the effects of the time bar. The IPR petitioner in Commscope, Inc. v. TQ Delta, LLC unsuccessfully attempted to dodge the time bar by arguing that the merging party originally served with a patent infringement complaint was "not a real party in interest" because it merged into another real party in interest and "no longer exist[ed]." Commscope, Inc. v. TQ Delta, LLC, IPR2022-00352, 2022 Pat. App. LEXIS 4313, Paper 13 at *7-8 (PTAB Aug. 19, 2022).

The Board declined this argument because the merging party was maintained as a defendant in a related case, and also clarified that the one-year statutory period for filing a petition triggered by service of a patent infringement complaint against a real party in interest does not "restart[]" if the petitioner "subsequently is served with a later complaint alleging" patent infringement. Id. at *13.

It does not appear that the Board has directly addressed the issue where a statutorily barred party transfers substantially all assets to a third party and whether the transfer would establish "privity" to thereby impose the bar. However, the Federal Circuit hinted in Power Integrations, Inc. v. Semiconductor Components Indus., LLC, that it would favor imposition in such a situation.

"Common law preclusion cases suggest that preclusion can apply based on privity arising after a complaint is filed. 'Courts have repeatedly found privity where, after a suit begins, a nonparty acquires assets of a defendant-infringer.'" Power Integrations, Inc. v. Semiconductor Components Indus., LLC, 926 F.3d 1306, 1315-16 (Fed. Cir. 2019) (citing Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1583 (Fed. Cir. 1986).

Historically, courts and parties alike have interpreted § 315(b) to indicate that, if a merger or other relevant legal relationship between the petitioner and a real party in interest or privy occurs before the petitioner files the IPR petition, § 315(b) bars institution of the proceeding. See VMware, Inc., v. Good Tech. Software, Inc., IPR2015-00027, at *2 (PTAB Mar. 6, 2015) ("Petitioner … does not identify any language in the statute … to support the argument that privity under § 315(b) is determined only at the time of service of the complaint alleging infringement of the challenged patent."); see also Arris Grp., Inc. v. Tq Delta, LLC, IPR2016-00430, (PTAB July 1, 2016) (citing Synopsys, Inc. v. Mentor Graphics Corp., Case IPR2012–00042, slip op. at 12 (PTAB February 22, 2014) (Paper 60)) ("Accordingly, § 315(b) is concerned with privity relationships up until the time a petition is filed.").

The Federal Circuit clarified the time for application of the statutory bar in 2019 through Power Integrations, where the court found that a merger finalized after filing but before institution barred the requested IPR proceeding under § 315(b). In Power Integrations, the petitioner, Semiconductor Components Industries, LLC ("ON Semiconductor"), finalized a merger agreement with Fairchild Semiconductor Corporation and Fairchild (Taiwan) Corporation ("Fairchild") four days before the PTAB instituted ON Semiconductor's IPR against Power Integrations, Inc.

While the Board proceeded with institution over Power Integrations, Inc.'s arguments asserting time bar preclusion, the Federal Circuit disagreed. The court recognized that Fairchild had been served with a complaint alleging patent infringement in 2009, almost seven years prior to institution, and rejected ON Semiconductor's arguments that the "§ 315(b) time-bar should be assessed only at filing[.]" Power Integrations, 926 F.3d at 1314.

The Federal Circuit leaned on § 315(b)'s plain meaning, congressional intent to "adopt common law [preclusion] principles," and the statute's purpose "as demonstrated by its language[]" to find that "the statute specifically precludes institution, not filing. … [The Board] denies institution. It does not reject the petitioner's filing." Id. at 1313-16.

Without modifying its interpretation of § 315(b) from Power Integrations, the Federal Circuit rejected a time bar challenge in AcousticTech., Inc. v. Itron Networked Sols., Inc., 949 F.3d 1366 (Fed. Cir. 2020), because Acoustic Tech., Inc. ("Acoustic") failed to present the argument to the Board during the IPR. In doing so, the court indicated that the time bar challenge was "not immune from waiver" and that the court "retain[s] case-by-case discretion over whether to apply waiver." Id. at 1372.

In a recent IPR, a petitioner, relying on Acoustic, argued that a settlement agreement's provision constituted a waiver of the patent owner's § 315 defenses. Perfectvision Mfg., Inc. v. PPC Broadband, Inc., IPR2022-01523, 2023 Pat. App. LEXIS 740, Paper 14 at *12. (PTAB Feb. 24, 2023). The Board declined to resolve the issue of whether a "patent owner could waive a section 315(b) time bar in an agreement with another party" because the petitioner did "not identify any provision … that includes such a waiver[.]" Id.

"Under the 2012 Settlement Agreement, '[Petitioner] promises not to challenge the validity of any claim of the '416 Patent in the U.S. Patent and Trademark Office or otherwise by way of a reexamination or other similar procedure,' but this promise 'does not apply if [Patent Owner] commences any action against [Petitioner] alleging infringement of the '416 Patent.' … The language of the section identified by Petitioner states that Petitioner 'promises' not to pursue certain actions challenging the '416 patent, but does not proscribe Patent Owner's actions. In short, nothing in the cited section of the 2012 Settlement Agreement references any limitation on Patent Owner's actions, including what arguments Patent Owner may or may not raise (e.g., reliance on the section 315(b) time bar) in response to action taken by Petitioner (e.g., the filing of a petition for inter partes review)." Id. at *12-14.

Looking ahead, this issue of first impression may present interesting challenges for parties seeking to resolve disputes through settlement while keeping open options for IPR proceedings.

This article reflects only the present personal considerations, opinions, and/or views of the authors, which should not be attributed to any of the authors' current or prior law firm(s) or former or present clients.