United States: Supreme Court To Review Policy Of Partial Institution Of Inter Partes Reviews

The Supreme Court recently granted certiorari¹ and will review Patent Trial and Appeal Board (PTAB) practice involving instituting review on fewer than all patent claims challenged in an inter partes review (IPR)² petition. Typically, petitioners challenge multiple claims on multiple grounds, and the PTAB often decides to institute review of a subset of the challenged claims. At issue before the Court is interpretation of a provision of the America Invents Act³ (AIA) that directs the PTAB, in an IPR, to "issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner." On appeal, the Court will determine whether the PTAB's practice of instituting review on fewer than all patent claims challenged is appropriate, in view of the AIA.

SAS Institute Inc. v. Lee originated from an IPR petition that challenged all 16 claims of Complementsoft LLC's US Patent No. 7,110,936. The PTAB instituted review on claims 1 and 3–10, denying review of claim 2. The PTAB ultimately issued a final written decision finding claims 1, 3, and 5–10 unpatentable, and claim 4 not unpatentable. SAS did not challenge the PTAB's decision to partially institute review until a request for rehearing of the final written decision, which the PTAB denied. On appeal, the Court of Appeals for the Federal Circuit, following Synopsys, Inc. v. Mentor Graphics Corp.⁴, held,

"Section 318(a) only requires the Board to address claims as to which review was granted." Id. at 1316–17. We found it significant that § 318(a) describes "claims challenged by the petitioner," whereas the institution decision statutory subsection, 35 U.S.C. § 314, describes "claims challenged in the petition." We reasoned that the differing language implies a distinction between the two subsections such that § 318(a) does not foreclose the claim-by-claim approach the Board adopted there and in this case. Further, we upheld the validity of a PTO-promulgated regulation authorizing the claim-by-claim approach. Id. at 1316 (validating 37 C.F.R. § 42.108, which "authorize[s] the review to proceed on all or some of the challenged claims").⁵

Judge Pauline Newman dissented, addressing several concerns, including: (1) allowing the PTAB to "pick and choose" claims to review increases litigation because estoppel will not apply to the unadjudicated claims; (2) the majority's holding "improperly immunizes" the PTAB's nonappealable, preliminary patentability findings; and (3) the holding makes the decision on institution "a short-cut to final judgment."⁶ SAS then petitioned for certiorari, largely relying on Judge Newman's arguments.

In response, the Patent Office makes two basic arguments. First, 35 USC  Sec. 314(d) states that the PTAB's decisions on institution are "final and nonappealable." Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2139 (2016). Second, the Patent Office's interpretation of the statute is correct, or at least deserving of deference as reasonable under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

However the Supreme Court decides the case, the result will likely be a mixed bag for both patent owners and petitioners. For petitioners, expanded final written decisions will also expand estoppel to attach to all challenged claims. Patent owners could benefit from expanded estoppel; however, petitioners may be able to persuade the Board through the course of a trial that claims that would previously not have been reviewed are in fact unpatentable. In addition, courts will be more likely to stay litigation if all claims at issue in litigation are undergoing review by the PTAB.

This decision may reach farther than the particular question at hand. For instance, the Court of Appeals for the Federal Circuit is currently considering, en banc, whether certain other issues from decisions on institution are appealable. Wi-Fi One v. Broadcom, appeal no. 15-1944 (2017). The Supreme Court's decision in SAS may affect the outcome of Wi-Fi One, and any other case involving appeal of decisions on institution.

Those involved in IPR and similar proceedings should consider how SAS might affect their case. If you are involved in an IPR, and the Board decided or decides to institute on fewer than all claims, then you can consider challenging the Board's decision to not institute on some claims. Patent owners may want to appeal a partial institution if they feel strongly that the petitioner's analysis was deficient, so that estoppel would apply to the petitioner for all challenged claims. Petitioners should consider whether the PTAB's rationale for denying institution was incorrect; if so, it should consider appealing the denial of the non-instituted claims.

Dentons' IPR team will gladly assist you in analyzing your particular situation and crafting an appropriate strategy that accounts for the potential outcomes of SAS, as well as other recent developments in this rapidly evolving area.

Footnotes

1 Supreme Court docket no. 16-969.

2 This issue also applies to other Patent Office trials, i.e., post-grant reviews (PGRs) and proceedings for covered business methods (CBMs).

3 35 U.S.C. § 318(a).

4 814 F.3d 1309 (Fed. Cir. 2016) (J. Newman dissenting).

4 Note that the Federal Circuit also remanded the PTAB's finding that claim 4 was not unpatentable.

6 Pet. for certiorari, pp. 7–8.

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