Zerify Inc (ZRFY)

[ShortTornado]

would this apply in our case?


The IPR Is Barred Under 35 U.S.C. §315(a) and 37 C.F.R. §42.101

By statute, an IPR may not be instituted if the petitioner (or real party-in-interest) has already filed an action requesting a declaratory judgment of invalidity in a court.[34] This statutory provision has no grace period — if a declaratory judgment of invalidity was filed any time before the date of filing the IPR petition, the PTAB cannot institute an IPR. According to 35 U.S.C. §315(a)(3), a counterclaim of invalidity in an infringement action does not meet §315(a)(1).[35] Similarly, an action for noninfringement does not fall within the prohibition of §315(a)(1).[36]

35 U.S.C. §315(a)(2) describes what happens if a civil action requesting a declaratory judgment of invalidity is filed on or after the IPR petition is filed. There is no statutory prohibition of institution of the IPR in that case. 37 C.F.R. §42.101 mirrors the language of 35 U.S.C. §315(a)(1).

The PTAB has found that a declaratory judgment action dismissed without prejudice does not trigger the statutory bar under 35 U.S.C. §315(a).[37] A declaratory judgment action dismissed with prejudice, however, likely does trigger §315(a).[38]

According to two institution decisions, the filing of a Paragraph IV certification under Hatch-Waxman does not qualify under §315(a) or present a bar to an IPR.[39] Arguably, this resulted from an oversight in the drafting of the AIA, where no parties thought through the potential use of IPR during ongoing Hatch-Waxman dispute litigation. Notably, Congress is currently considering potential legislative and administrative remedies to the oversight, and nothing binding prevents future panels or administrations from recognizing the statutory conflict.