Federal Circuit in Mayne Pharma: Reasonable Mistake Identifying a Real-Party-In-Interest Does Not Doom IPR Petition

The Federal Circuit last week upheld a PTAB final written decision invalidating Mayne Pharma’s U.S. Patent 6,881,745 over its objection that the petition for inter partes review (IPR) filed by Merck Sharpe & Dohme (MSD) was fatally defective for having omitted parent corporation Merck & Co., Inc. as a real-party-in-interest. Mayne Pharma Int’l v. Merck Sharp & Dohme, Case No. 2018-1593 (Fed. Cir. June 21, 2019).

Because Merck would have had to add its parent as an RPI in the proceeding after the one-year time bar had lapsed, Mayne argued the error was not correctable. The Federal Circuit rejected this view, holding that the Board has authority to make corrections to a petition that are “in the interest of justice.” This decision suggests that form will not be elevated over substance in addressing the one-year IPR time bar of Section 315(b).

District Court and PTAB

On June 12, 2015, Mayne Pharma served MSD and its affiliates, Merck & Co., Inc. and N.V. Organon, with a complaint for infringement of U.S. Pat. 6,881,745. Mayne Pharma Int’l v. Merck & Co., Case No. 1:15-cv-00438-LPS (D. Del.). The lawsuit alleged that Merck’s orange book listed product Noxafil® infringed the composition claims of the ‘745 patent. MSD fired back with a petition for inter partes review of the ‘745 patent on June 11, 2016, one day before the one-year bar of 35 U.S.C. § 315(b) took effect. The judge in the Delaware litigation stayed the case in view of the IPR.

MSD’s petition for IPR sought to invalidate Mayne’s patent based on several prior art references. As to real-party-in-interest, the petition simply stated that “Merck is the real-party-in-interest.” Aside from including a copy of the complaint naming the entities as an exhibit, the petition nowhere mentioned MSD’s parent corporation Merck & Co., Inc., or the other subsidiary named in the corresponding litigation, N.V. Organon. Mayne challenged the designation of RPI in its patent owner preliminary response, and throughout the proceeding, based on MSD’s failure to list its parent, Merck & Co., Inc. as an RPI. The Board, however, permitted MSD to add its parent company as an RPI during the proceeding.

Taking the Fight to the CAFC

On appeal to the Federal Circuit, Mayne argued that the Board erred in correcting the RPI designation because the correction came after the one-year time bar of Section 315(b) had lapsed. Mayne contended that the statute’s requirement that one list “all” RPIs in the petition meant that correcting the RPI listing would require resetting the filing date of the petition. Of course, this would have resulted in the entire petition being time-barred under Section 315(b). Mayne contended that only mechanism for correction of a petition for IPR was limited to correction of typographical and clerical errors.

MSD countered that the Board’s decision to correct RPI was not appealable, but if appealable, the Board was within its discretion to allow correction of IPR. The USPTO intervened in the case to support MSD’s argument of non-appealability. MSD argued that both purposes of the RPI doctrine would be satisfied through correction. Namely, the Board was able to identify conflicts, and Merck & Co, Inc. agreed to be bound by the results of the proceeding.

Here, MSD could have properly added its parent corporation at the time of in the initial petition. That was not the case in Applications in Internet Time v. RPX, 897 F.3d 1336 (Fed. Cir. 2018). There, the dispute centered on whether a time-barred party, Salesforce.com, was in fact an RPI in a petition for IPR filed by RPX corporation. The patent owner contended that RPX was a “proxy” for its customer Salesforce.com. If Salesforce.com had been named as an RPI in the petition, the whole proceeding would have been time-barred since Salesforce.com had been sued for patent infringement more than one year before the IPR petition was filed.

Because the petition could have been filed with MSD’s parent corporation listed as a real party in interest, the court during oral argument focused on whether Mayne Pharma was prejudiced at all by the correction:

Court: you got noticed that it was filed within a year, by somebody who had been sued. What’s the prejudice of adding the other person?

Mayne’s Counsel: well the prejudice, the prejudice arose from the omission. And the prejudice from the omission was we had to spend a lot of time and resources fighting this battle. We got a lot of resistance, we had to go through discovery.

Court: Maybe that’s because you wasted your time.

Mayne’s Counsel: And resources.

Court: Yes, Yes. But maybe that was just bad judgment. Because all it was updating with the name of the thing, obviously, parent company, not a different party.

The court found that the Board had authority to correct the named RPI under its late action rule, which states: “A late action will be excused on a showing of good cause or upon a Board decision that consideration on the merits would be in the interest of justice.” 37 C.F.R. § 42.5(c)(3). The court noted that MSD and its parent agreed to be bound by the estoppel effects flowing from the proceeding, and the Board was properly apprised of conflicts so there was no harm in adding them to the proceeding.

Takeaway

The takeaway is that the Federal Circuit is not going to throw out an IPR based on a mere technicality. The provisions governing RPI and institution of IPRs are going to be interpreted in a practical way:

“[U]nwinding the proceedings based on a strict view of the real-party-in-interest disclosure requirement would be at odds with the PTO policy . . . to secure the just, speedy, and inexpensive resolution of every proceeding.”

Slip op at 12.

While this decision provides relief for petitioners who make mistakes on identifying a real-party-in-interest, caution is still warranted.

The Board retains authority to decide the RPI question going forward and may require re-filing a petition where a party does not meet the interest of justice standard. The Board has signaled that it will entertain updates to RPI in its precedential decision, Lumentum Holdings v. Capella Photonics, IPR2015-00739 (PTAB Mar. 4, 2016). However, the Board has thrown out IPR petitions for failure to name all RPIs. Gowan v. Aceto, IPR 2015-01016 (PTAB Oct. 2, 2015). Given the non-appealability of decisions denying institution, petitioners should still use caution to ensure all RPIs are named in their petition for IPR.