Jones Day
In an sua sponte director review, USPTO Director Vidal annulled a negative judgement against Patent Owner because Patent Owner failed to submit a mandatory information notice or file a preliminarily response to a petition within the required timeline. Shenzhen Xinzexing E-commerce Co. Ltd. v. Shenzhen Carku Technology Co. Ltd., IPR2024-00222. Director Vidal deemed the PTAB’s adverse judgment was “premature.”
On November 21, 2023, Shenzhen Xinzexing E-commerce Co., Ltd. (“Petitioner”) filed a Petition requesting inter partes review of U.S. Patent No. The ‘506 Patent is a portable backup charger. The Petition contained a Certificate of service indicating that all exhibits, including the Petition and Power of Attorney, were served to Shenzhen Carku Technology Co. Ltd. (“Patent Owner”), at the correspondence address of the ‘506 Patent. The PTAB published a Notice on November 29, 2023 that stated that Patent Owner could file a preliminary reply to the Petition within three months of the date of Notice. It also advised Patent Owner that they must submit mandatory notice information as per 37 C.F.R. SS 42.8(a),(2) within 21 days after service of the petition. Patent Owner did neither.
In deciding to enter a negative judgment, the PTAB explained Patent Owner failed to file mandatory notices despite being required to do so by 37 C.F.R. SS 42.8 (b). The PTAB noted on April 18, 2024 that it emailed both the attorney of record listed on ‘506 Patent, as well as an attorney listed in the Petition’s certificate of service but received no reply. The PTAB explained “
ctions construed as a request for an adverse judgment include. . . “37 C.F.R. SS 42.73 (b)(4). Director Vidal disagreed in his sua sponte ruling with the PTAB. Director Vidal did not consider Patent Owner’s failure to timely file mandatory notice information or respond to the PTAB’s emails to have been an unequivocal abandonment of the contest with respect to the proceeding.[a]First, Director Vidal explained that while the PTAB’s April 18, 2024 email stated that the “[a]otices are well past due,” neither that email nor the earlier Notice sufficiently articulated that failure to file mandatory notices as required under 37 C.F.R. SS 42.8 may be considered abandonment of the contest and result in adverse judgment against Patent Owner.
Second, Director Vidal deemed the PTAB’s entry of adverse judgment was “premature” given (1) the statutory due date to determine whether to institute the trial had not yet arrived and (2) the unique circumstances of events concerning Patent Owner’s litigation counsel. Director Vidal explained Patent Owner’s litigation attorney filed a Motion for Leave To Withdraw on June 6, 2024 after the Board’s adverse judgment. He stated that (1) Patent Owner had instructed its litigation counsel to stop working on the copending litigation in district court, (2) Patent Owner had instructed counsel not handle the current inter partes review proceeding and (3) counsel was informed that Patent Owner would be seeking new counsel in the district litigation. Given these additional circumstances, Director Vidal vacated the PTAB’s adverse judgement and remanded the proceeding.
Takeaway[n]: While the unique circumstances of the current proceeding resulted in vacatur of the adverse judgment, parties are reminded to comply with the statutory requirements to submit a mandatory notice of information and file a preliminary response (or express waiver) within the required timeframe to avoid a potential adverse judgment of abandonment of contest.
