Bennett Regulator Guards, Inc. v. Atlanta Gas Light Company ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
BENNETT REGULATOR GUARDS, INC.,
Appellant
v.
ATLANTA GAS LIGHT CO.,
Cross-Appellant
______________________
2017-1555, 2017-1626
______________________
Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in
No. IPR2015-00826.
______________________
Decided: September 28, 2018
______________________
WAYNE D. PORTER, JR., Law Offices of Wayne D.
Porter, Jr., Independence, OH, argued for appellant.
DARYL L. JOSEFFER, King & Spalding, LLP, Washing-
ton, DC, argued for cross-appellant. Represented by
RUSSELL E. BLYTHE, HOLMES J. HAWKINS, III, Atlanta, GA.
______________________
Before LOURIE, CLEVENGER, and STOLL, Circuit Judges.
STOLL, Circuit Judge.
2 BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO.
Years after Bennett Regulator Guards, Inc. first sued
Atlanta Gas Light Co. for infringing its U.S. Patent
No. 5,810,029, the Patent Trial and Appeal Board insti-
tuted Atlanta Gas’s inter partes review (IPR), held all
challenged claims of Bennett’s ’029 patent unpatentable,
and then sanctioned Atlanta Gas. Bennett appeals,
arguing that 35 U.S.C. § 315(b) barred institution, that its
claims should have survived, and that the Board should
have imposed greater sanctions. Atlanta Gas cross-
appeals, seeking to overturn the sanctions.
Because the Board exceeded its authority and contra-
vened § 315(b)’s time bar when it instituted Atlanta Gas’s
petition, we vacate its final written decision. And because
the Board has not yet quantified its sanction, we decline
to consider the nonfinal sanctions order and instead
remand to the Board.
BACKGROUND
Bennett, the assignee of the ’029 patent, served Atlan-
ta Gas with a complaint alleging infringement on July 18,
2012. Atlanta Gas moved to dismiss. Ultimately, the
district court granted that motion and dismissed Ben-
nett’s complaint without prejudice. See Bennett Regulator
Guards, Inc. v. MRC Glob. Inc., No. 4:12-cv-1040,
2013 WL 3365193, at *5 (N.D. Ohio July 3, 2013).
On February 27, 2015, Atlanta Gas filed the IPR that
underlies this appeal. Bennett protested, arguing that
§ 315(b), which prohibits institution “if the petition re-
questing the proceeding is filed more than 1 year after the
date on which the petitioner . . . is served with a com-
plaint alleging infringement of the patent,” barred the
Board from instituting review. The Board disagreed. It
acknowledged that Bennett had served a complaint
alleging infringement on Atlanta Gas, but it held that the
district court’s without-prejudice dismissal of that com-
plaint nullified service. Atlanta Gas Light Co. v. Bennett
Regulator Guards, Inc., IPR2015-00826, 2015 WL
BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO. 3
5159438, at *5, *7–8 (P.T.A.B. Sept. 1, 2015). Having
found that § 315(b) permitted it to proceed, the Board
instituted review of all claims. Id. at *15–16. Bennett
defended the ’029 patent, but in its final written decision
the Board confirmed that § 315(b) did not bar the petition
and held every claim of the ’029 patent unpatentable.
Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc.,
IPR2015-00826, 2016 WL 8969209, at *1, *6 (P.T.A.B.
Aug. 19, 2016) (“Final Written Decision”); see J.A. 85–86
(denying subsequent motion for reconsideration).
In an unusual turn of events, an additional issue
emerged after the Board issued its decision. The America
Invents Act requires petitioners to identify all real parties
in interest in their petitions, see 35 U.S.C. § 312(a)(2), and
Board regulations require petitioners to update that
information within 21 days of any change, see 37 C.F.R.
§ 42.8(a)(3). Late in the IPR, but before the Board’s final
written decision, Atlanta Gas’s parent company, AGL
Resources Inc., merged with another company and then
changed its name. See J.A. 86–88. Though Atlanta Gas
had listed AGL Resources as a real party in interest in its
petition, Atlanta Gas did not notify the Board of the
merger or the name change, and the Board did not know
of the changes when it issued its final decision. See
J.A. 88–94. Shortly after receiving the final written
decision, Bennett notified the Board of Atlanta Gas’s
changed corporate parentage and sought sanctions for
Atlanta Gas’s nondisclosure. See J.A. 81–83, 88–94.
The merger created new Board conflicts, and one
member of the three-judge panel recused himself after
learning of it. See J.A. 85 n.1, 93. A reconstituted panel
then considered Bennett’s sanctions motion. Though it
declined to terminate the IPR as Bennett requested, the
Board authorized Bennett to move for the “costs and fees”
it had incurred between the date of the final written
decision and the Board’s grant of sanctions. See J.A. 88–
93. The Board has not ruled on Bennett’s motion for costs
4 BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO.
and fees, and the parties continue to dispute the exact
amount Atlanta Gas owes.
Bennett appeals. It contends that § 315(b) barred this
IPR, and that even if the Board possessed the power to
consider Atlanta Gas’s petition, the Board substantively
erred in its claim construction and unpatentability find-
ings. Bennett also argues that the Board abused its
discretion by awarding only monetary sanctions for Atlan-
ta Gas’s failure to update its real-party-in-interest infor-
mation. In its cross-appeal, Atlanta Gas counters that the
Board erred by awarding any sanction at all.
DISCUSSION
A party dissatisfied with the Board’s final written de-
cision may appeal to this court. See 35 U.S.C. § 319; see
also 28 U.S.C. § 1295(a)(4)(A). Though statute immunizes
the Board’s preliminary decision to institute IPR from
review, see 35 U.S.C. § 314(d), we review the Board’s
jurisdiction, and we have authority to review its compli-
ance with § 315(b). See Wi-Fi One, LLC v. Broadcom
Corp., 878 F.3d 1364, 1374 (Fed. Cir. 2018) (en banc)
(“[Section] 315 . . . is not subject to § 314(d)’s bar on
judicial review.”).
We review the Board’s legal conclusions de novo and
its fact findings for substantial evidence. See, e.g., PPC
Broadband, Inc. v. Corning Optical Commc’ns RF, LLC,
815 F.3d 734, 739 (Fed. Cir. 2016). We review the Board’s
award of sanctions for abuse of discretion. Cf. Midwestern
Pet Foods, Inc. v. Societe des Produits Nestle S.A.,
685 F.3d 1046, 1051 (Fed. Cir. 2012) (applying abuse of
discretion standard to Trademark Trial and Appeal
Board’s sanctions); Woods v. Tsuchiya, 754 F.2d 1571,
1582 (Fed. Cir. 1985) (noting that award of sanctions falls
within Board of Interference’s discretion).
BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO. 5
I
Bennett launches a multi-front attack on the Board’s
final written decision. It challenges the Board’s jurisdic-
tion to institute review, at least ten of the Board’s claim
constructions, the Board’s findings regarding the teach-
ings of the prior art and Atlanta Gas’s anticipation
ground, and the Board’s consideration of the Graham
factors in its obviousness determination. Because we
agree that 35 U.S.C. § 315(b) barred the Board’s review in
this case, we vacate the Board’s final written decision and
remand with instructions to dismiss this IPR without
reaching Bennett’s additional arguments.
Section 315(b) prohibits the Board from instituting an
IPR based on a petition “filed more than 1 year after the
date on which the petitioner . . . is served with a com-
plaint alleging infringement.” § 315(b). We recently held
that serving a complaint alleging infringement—an act
unchanged by the complaint’s subsequent success or
failure—unambiguously implicates § 315(b)’s time bar.
See Click-to-Call Techs., LP v. Ingenio, Inc., 899 F.3d
1321, 1329–32 (Fed. Cir. 2018). The statute endorses no
exceptions for dismissed complaints, and we therefore
held that the Board exceeded its authority when it insti-
tuted IPR over a year after service of a complaint later
voluntarily dismissed without prejudice. Id. at 1328 n.3
(en banc).
This case differs from Click-to-Call only in that Ben-
nett’s complaint was involuntarily dismissed without
prejudice. We identify no reason to distinguish Click-to-
Call on that basis. 1 The statutory language clearly ex-
1 Indeed, the Board relied on its now-overturned
decision in Click-to-Call to decide Bennett’s time-bar
challenge. See Final Written Decision, 2016 WL 8969209,
at *5.
6 BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO.
presses that service of a complaint starts § 315(b)’s clock.
See id. at 1330–31, 1336. Just as the statute includes no
exception for a voluntarily dismissed complaint, it in-
cludes no exception for an involuntarily dismissed com-
plaint.
Bennett undisputedly served Atlanta Gas with a com-
plaint asserting the ’029 patent on July 18, 2012. See
Appellant’s Br. 57–58; Cross-Appellant’s Br. 9. Sec-
tion 315 permits a petitioner to seek IPR for a year after
such service, but Atlanta Gas filed its IPR petition on
February 27, 2015, J.A. 118, more than eighteen months
after the statutory time limit. The Board lacked authori-
ty to institute review. Accordingly, we vacate the Board’s
final written decision, and we remand for the Board to
dismiss the IPR.
II
We next address the parties’ challenges to the Board’s
sanctions order. Bennett asserts that the Board properly
awarded monetary sanctions but erred by failing to ter-
minate the IPR, see Appellant’s Br. 27–35, while Atlanta
Gas urges that the Board erred by awarding sanctions at
all, see Cross-Appellant’s Br. 70–86. Although the Board
lacked authority to institute the IPR, its sanction award
might nevertheless stand. Cf. Willy v. Coastal Corp.,
503 U.S. 131, 132 (1992) (holding federal district courts
may impose Rule 11 sanctions even “in a case in which
the district court is later determined to be without sub-
ject-matter jurisdiction”). We do not resolve that ques-
tion, however, because we lack jurisdiction to review the
Board’s unquantified, and thus non-final, order.
We have exclusive jurisdiction to review the Board’s
final decisions. See 28 U.S.C. § 1295(a)(4)(A). But our
jurisdiction extends only to final decisions. See In re
Arunachalam, 824 F.3d 987, 988 (Fed. Cir. 2016) (reading
§ 1295(a)(4) “to incorporate a finality requirement” (quot-
ing Loughlin v. Ling, 684 F.3d 1289, 1292 (Fed. Cir.
BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO. 7
2012))). Because the Board has not yet quantified its
sanctions award, the award remains nonfinal and unap-
pealable. See Special Devices, Inc. v. OEA, Inc., 269 F.3d
1340, 1343 (Fed. Cir. 2001) (holding unquantified award
of attorney fees is not a final decision); View Eng’g, Inc. v.
Robotic Vision Sys., Inc., 115 F.3d 962, 964 (Fed. Cir.
1997) (“[A] district court decision imposing Rule 11 sanc-
tions is not final, and hence not appealable, until the
amount of the sanction has been decided . . . .”).
In rare cases, we exercise pendent jurisdiction to de-
cide an issue not otherwise subject to review. We extend
pendent jurisdiction only reluctantly, and only to issues
“inextricably intertwined” with or necessary to resolution
of issues already before the court. See Swint v. Chambers
Cty. Comm’n, 514 U.S. 35, 51 (1995) (providing standard
for exercise of pendent jurisdiction). “[T]he circuits,
including this one, are in general agreement that an
unquantified award . . . does not usually warrant the
exercise of pendent jurisdiction,” and we hold the exercise
of pendent jurisdiction is not warranted here. Orenshteyn
v. Citrix Sys., Inc., 691 F.3d 1356, 1360 (Fed. Cir. 2012).
The parties’ time-bar and merits disputes ask whether
§ 315(b) prohibits this IPR and whether the art identified
by Atlanta Gas anticipates or renders obvious Bennett’s
properly construed claims. In contrast, the parties’ chal-
lenges to the Board’s sanctions order implicate the
Board’s power to issue sanctions and to accept late filings,
37 C.F.R. §§ 42.5, 42.12, and ask us to examine whether
the Board erred by identifying Atlanta Gas’s parent
company as a real party in interest under 35 U.S.C.
§ 312(a)(2) and 37 C.F.R. § 42.8(b)(1). As in Orenshteyn,
“the finding of invalidity and the sanctions in the present
case have different legal bases requiring different legal
analyses.” 691 F.3d at 1360.
Atlanta Gas suggested at oral argument that the
Board’s denial of Bennett’s requested remedy—
termination—was a final decision subject to appeal, and
8 BENNETT REGULATOR GUARDS, INC. v. ATLANTA GAS LIGHT CO.
that we should exercise pendent jurisdiction over the
Board’s related decision to award a monetary sanction,
even though the amount of that sanction remains unde-
termined. See Oral Arg. at 15:20–16:55,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
17-1555.mp3. We disagree. Atlanta Gas’s formulation
requires us to arbitrarily divide the Board’s sanctions
order into two decisions—one relating to termination and
one relating to a monetary award. We instead treat the
Board’s order as a single decision addressing Bennett’s
entire motion for sanctions, which requested both termi-
nation and compensatory sanctions. See J.A. 318. This
comports with the Board’s discussion, see J.A. 92–93, and
preserves judicial resources by confining all sanctions
issues to a single appeal.
Accordingly, we decline to exercise pendent jurisdic-
tion over the Board’s sanctions order, and we remand to
the Board. On remand, the Board may, at its discretion,
further consider its order given the outcome of this ap-
peal. But until the Board quantifies any sanctions, we
will not review its decision granting them.
CONCLUSION
For the foregoing reasons, we vacate the Board’s final
written decision, and we remand for the Board to quantify
any sanctions and dismiss this IPR.
VACATED AND REMANDED
COSTS
No costs.