Medtronic, Inc. v. Lee

• Decision Date: 21 January 2016
• Docket Number: Case No. 1:1–15–cv–946
• Parties: Medtronic, Inc., Plaintiff, v. Michelle Lee, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

151 F.Supp.3d 665

118 U.S.P.Q.2d 1569

Medtronic, Inc., Plaintiff,

v.Michelle Lee, Defendant.

Case No. 1:1–15–cv–946

United States District Court, E.D. Virginia, Alexandria Division.

Signed January 21, 2016

Gregory Hayes Lantier, Thomas Charles Kost, Wilmer Cutler Pickering

Hale & Dorr LLP, Washington, DC, for Plaintiff.

Dennis Carl Barghaan, Jr., United States Attorney's Office, Alexandria, VA, for Defendant.

MEMORANDUM OPINION & ORDER

Gerald Bruce Lee

, United States District Judge

THIS MATTER is before the Court on Defendant Michelle Lee's Motion to Dismiss for Lack of Subject–Matter Jurisdiction (Doc. 11) and Motion to Dismiss Count IV for Failure to State a Claim (Doc. 12). This case arises from the Patent and Trademark Board's (“PTAB”) decision to terminate an inter partes review of United States Patent Numbers 7,769,605 (“the '605 patent”)

and 7,870,249 (“the '249 patent”).

Plaintiff brings this action to appeal the PTAB's decision, asserting that the Administrative Procedure Act (“APA”) grants this Court jurisdiction to review Plaintiff's appeal. Defendant, in response, brings this Motion to Dismiss for Lack of Subject–Matter Jurisdiction, asserting primarily that § 314(d) of the recently enacted America Invents Act (“AIA”), precludes judicial review of the PTAB's decision. This case turns on the interpretation of the AIA and how it intersects with the APA.

There are four issues before the Court. The first issue is whether Congress, through the AIA, precluded APA judicial review of PTAB determinations of “whether to institute” inter partes review proceedings over previously issued patents. This Court holds that, through the express language and intricate scheme of the AIA, Congress has precluded judicial review of PTAB determinations of “whether to institute” inter partes review of previously issued patents.

The second issue is whether the PTAB's decision to terminate an already-instituted inter partes review, constitutes a decision on “whether to institute” inter partes review, and is thus final and nonappealable. This Court holds that the PTAB's decision to terminate a previously instituted review proceeding constitutes a decision of “whether to institute” inter partes review because the decision to terminate nevertheless requires the PTAB make a determination of whether an inter partes review. Thus, when the PTAB makes a determination of whether to institute inter partes review—whether at the outset of a request for inter partes review or after having previously instituted the inter partes review—this constitutes a decision on “whether to institute” inter partes review for the purposes of the AIA and therefore is final and nonappealable.

The third issue is whether Plaintiff's position, as statutorily precluded from appealing to the Federal Circuit and having no alternative remedy for judicial review of the PTAB's decision to terminate inter partes review, is sufficient to confer jurisdiction on this Court under the APA. The Court holds that, though the APA confers a general cause of action to obtain judicial review of an agency action when no other adequate remedy exists, this allocation applies only when a statutory provision does not explicitly preclude such judicial review. Here, because the AIA explicitly precludes judicial review of PTAB determinations of “whether to institute” inter partes review through express language, its revised statutory scheme, and recent case law, the APA does not grant this Court with jurisdiction to review Plaintiff's appeal of the PTAB's decision.

Finally, the fourth issue is whether Plaintiff's challenge to the PTAB's standard for determining what constitutes a Real Party in Interest or the PTAB's application of that standard, is different from a challenge of the PTAB's decision on whether to institute inter partes review, and therefore permits this Court jurisdiction to review Plaintiff's appeal. The Court holds that the AIA's preclusive language governing the PTAB's decision on whether to institute inter partes review applies to the decision as whole, including the PTAB standard and its application; again, precluding this Court from exercising jurisdiction over Plaintiff's claim.

I. BACKGROUND

This case began as a patent infringement dispute between Cardiocom, LLC (“Cardiocom”)—Plaintiff's subsidiary—and Robert Bosch Healthcare Systems, Inc. (“Bosch”) regarding the '605

and '249 patents. (Doc. 13, Mem. in Supp. of Def. Mtn. to Dismiss for Lack of Juris. at 8–9). On April 26, 2013, Bosch filed a complaint in the United States District Court for the Eastern District of Texas against Cardiocom, asserting that Cardiocom had infringed six of Bosch's patents, including the '605 and '249 patents. Id. at 9. While this action was pending, Cardiocom sought to have the United States Patent and Trademark Office (“USPTO”) conduct an administrative review of the patents Bosch alleged Cardiocom had infringed. Id. In July 2013, Cardiocom filed its first petition requesting that the USPTO institute inter partes review of the '605 and '249 patents. Id. at 10. However, one month later in August 2013, Medtronic, Inc., the Plaintiff in this action, purchased Cardiocom, making Cardiocom its wholly-owned subsidiary. Id

.

On December 30, 2013, while its inter partes review petitions were still pending, Cardiocom attempted to add Plaintiff Medtronic as a Real Party in Interest (“RPI”) to its proceeding. (Doc. 13–1, Exhibit A, Cardiocom's Notice of Real Party in Interest). However, on January 16, 2014, the Patent and Trademark Board (“PTAB”) determined not to institute inter partes review of the '605

and '249 patents. (Doc. 13–1, Exhibit B, USPTO's Decision Denying Institution of Inter Partes Review). In spite of this, in March and April 2014, Plaintiff, without its subsidiary Cardiocom, filed new petitions seeking institution of inter partes review of the very same patents. (Doc. 13–1, Exhibit C, Medtronic's Petition for Inter Partes Review at 1). Plaintiff was listed as the only RPI in the new petitions. Id. In response, Bosch opposed the institution of inter partes review and argued that Cardiocom was also an RPI and as such, should have been included in Plaintiff's petition. (Doc. 13–1, Exhibit D, Patent Owner's Mtn. for Addt'l Discovery from Pet. Medtronic, Inc. at 1).

Nevertheless, in a decision issued on September 11, 2014, the PTAB decided to institute inter partes review of the '605

and '249 patents. (Doc. 13 at 10). With respect to the RPI issue, the PTAB concluded that Bosch had not provided a sufficient factual basis upon which to conclude, based on the current record, that Cardiocom was an RPI to Plaintiff's petition for inter partes reviews of the '605 and '249 patents. Id. at 9. Thus, the inter partes review proceedings continued. Id. at 10. In spite of this, Bosch filed a motion with the PTAB requesting the ability to obtain further discovery from Plaintiff regarding the RPI issue. (Doc. 13–1, Exhibit D). The PTAB agreed, “in the interest of justice.” Id. at 4. After Plaintiff provided discovery, Bosch moved the PTAB to rescind its decision to institute inter partes proceedings and terminate the pending review proceedings. (Doc. 13–1, Exhibit F, Patent Owner's Mtn. to Terminate).

Drawing on the proceedings in the U.S. District Court for the Northern District of California, Bosch asserted that Cardiocom, while arguing that the district court should stay the pending litigation, labeled itself as the RPI, by stating that it was the party that had requested inter partes review of the '605

and '249 patents. Memo in Supp. of Def. Mtn. to Dismiss at 9. Bosch additionally argued that Cardiocom's payment and control of the inter partes review petitions, submitted by Plaintiff, further demonstrated that Cardiocom is a RPI to Plainitff's petitions and as such, should have been included in Plaintiff's petitions for inter partes review. Id. at 5–8.

The parties fully briefed the issue of whether Cardiocom was an RPI to Plaintiffs petitions, and on March 16, 2015, the PTAB determined that Cardiocom was an RPI to the proceeding and as such, should have been named in Plaintiff's petition as a RPI. (Compl., Ex. 1 PTAB's Decision on Patent Owner's Motion to Terminate). Specifically, the PTAB noted that when Plaintiff filed its petitions for the institution of inter partes review, its only interest in a finding of unpatentability “came solely from its ownership of Cardiocom.” Id. at 10. The PTAB also cited the fact that Cardiocom, prior to its ownership by Plaintiff, had filed petitions for inter partes review on the same patents. Id. at 11–12. Additionally, the PTAB noted that Cardiocom had informed the Northern District of California that it “believed itself to be an RPI for purposes of” those inter partes review proceedings. Id. at 12. In light of this, the PTAB terminated Plaintiff's pending inter partes review proceedings of the '605

and '249 patents. Id. at 9.

Plaintiff then brought this case, appealing the PTAB's decision to terminate the instituted inter partes proceedings. (Doc. 1). In response, Defendant brings this Motion to Dismiss for Lack of Subject–Matter Jurisdiction. (Doc. 11). Defendant's motion rests primarily on the interpretation of the Congress's latest statute detailing the PTAB's decision to reexamine issued patents. See Doc. 13. Specifically, Defendant's Motion to Dismiss for Lack of Subject–Matter Jurisdiction turns on the interpretation of § 314(d) of the recently enacted America Invents Act (“AIA”), its language precluding judicial review of certain PTAB decisions, and its intersection with the APA.

The Leahy–Smith America Invents Act

In 2011, Congress sought to, for the third time, alter the statutory scheme of patent reexaminations to provide a more streamlined process. See H.R. Rpt. 112–98, at 45 (2011). This new process was meant to allow the PTAB to fully resolve petitions for patent reexamination, resulting in fewer cases in the district courts. Id. To do so, Congress created...