Guest Post: PTAB Partial Institution of IPR and CBM Review Violates the AIA– But There Is a Simple Fix

Guest Post by Timothy K. Wilson, Senior IP Counsel, and John S. Sieman, Patent Counsel, SAS Institute Inc.

In the provisions of the America Invents Act (AIA) governing inter partes review (IPR), post-grant reviews (PGR), and transitional covered business method review (CBM), Congress provided the Patent Trial and Appeal Board (PTAB) with a binary choice: to either institute or not institute a review of the challenged claims, i.e., the claims identified by the petition.  Rather than pursue one of these two options, however, the PTO took a different path in its implementation of the AIA, permitting the PTAB to select only some challenged claims for review.  The excluded claims receive no further review and the final written decision does not address the patentability of those claims.  Worse, because a decision whether to institute a review is not subject to appeal, this practice (which we refer to as “partial institution”) strips petitioners of their statutory appeal right as to the excluded claims.  The PTAB has already followed the partial institution practice for dozens of IPR and CBM trials.  There is, however, a simple fix for future reviews.

The binary nature of the decision whether to institute review arises from the plain language of the statute, which includes section 314 entitled “Institution of inter partes review”:

(a) Threshold.— The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.

(b) Timing.— The Director shall determine whether to institute an inter partes review under this chapter pursuant to a petition filed under section 311 within 3 months after—

(1) receiving a preliminary response to the petition under section 313; or

(2) if no such preliminary response is filed, the last date on which such response may be filed.

(c) Notice.— The Director shall notify the petitioner and patent owner, in writing, of the Director’s determination under subsection (a), and shall make such notice available to the public as soon as is practicable. Such notice shall include the date on which the review shall commence.

(d) No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

35 U.S.C. § 314 (emphasis added).

Under the AIA, petitioners choose which claims of a patent to include in a petition.  The statute refers to these as the “challenged” claims.  35 U.S.C. § 312(a)(3) (requiring an IPR  petition to “identif[y], in writing and with particularity, each claim challenged”); 35 U.S.C. § 314(a) [fn1] (referring to “claims challenged in the petition”).

The PTAB may institute an IPR if “there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.”  35 U.S.C. § 314(a).  Because the determination “whether to institute” the IPR is a preliminary decision, the statute makes it “final and nonappealable.”  35 U.S.C. § 314(d).  Congress chose to make appeals available only at the conclusion of the IPR proceeding, after the PTAB issues a final written decision.  35 U.S.C. § 319 (permitting “[a] party dissatisfied with the final written decision [to] appeal the decision pursuant to sections 141 through 144”); 35 U.S.C. § 141 (permitting “[a] party to an inter partes review … who is dissatisfied with the final written decision … [t]o] appeal the Board’s decision only to the United States Court of Appeals for the Federal Circuit”).

The statute further requires the PTAB to issue a final written decision “with respect to the patentability of any patent claim challenged by the petitioner.”  35 U.S.C. § 318(a) (emphasis added).  The set of “claim[s] challenged by the petitioner” depends on which claims the petitioner includes in the petition, not on a later decision by the PTAB.  The statutory language leaves little doubt the final written decision—the appealable one—must address the patentability of every claim challenged in the petition.

This is not how the PTAB has implemented IPR and CBM.  For example, in the very first IPR, the PTAB reviewed a petition that challenged claims 1-20 of a patent, instituted review only on three claims, and did not address the patentability of the other 17 challenged claims in the final written decision.  Garmin Int’l Inc. v. Cuozzo Speed Techs. LLC, Case IPR2012-00001, paper 59, pp. 2, 49  (Final Written Decision of Nov. 13, 2013).   Even the PTO’s regulations that govern IPR trials contradict the statute. These regulations permit the PTAB to “authorize [inter partes] review to proceed on all or some of the challenged claims” 37 C.F.R. § 42.108(a).  Because the regulations violate the statute, the PTO exceeded its authority in promulgating them, opening up the PTO to a potential challenge under the Administrative Procedures Act.

While the PTAB’s practice of partial institution may help complete trials within the required one-year period, the practice violates the statute and strips petitioners of a statutory appeal right as to excluded claims.  In addition, the problems arising from partial institution of IPR and CBM review will spill over into litigation, as excluded claims return to district courts, presumably without estoppel.  35 U.S.C. § 318(e)(2) (limiting estoppel in civil actions to “an inter partes review of a claim in a patent under this chapter that results in a final written decision”).  Partial institution also complicates decisions on whether to stay a litigation pending the PTO proceeding.  And even if a court does stay a an infringement suit to let the PTAB resolve the petitioner’s arguments, the court may later need to review the same arguments as to the non-instituted claims, and may reach a different or even inconsistent result.

Fortunately, the PTAB can address this problem without impairing its ability to quickly resolve cases.  Even under current partial institution practice, decisions whether to institute review already address all challenged claims, identifying some claims that are likely invalid and other claims for which the petitioner has not met its burden.  If the PTAB instituted on all challenged claims as it should, that would allow the parties to decide how much of the existing page and time limits to use on each challenged claim.  These limits would still prevent trials from ballooning out of control.  PTAB judges can continue to focus their efforts on the claims identified as likely unpatentable.  And by the end of the trial, if the PTAB judges have not changed their opinions that some claims should survive, they would only need to carry the analysis about those claims forward from the institution decision into the final written decision.  By instituting review of all challenged claims and including patentability analysis of all challenged claims in the final written decision, the PTAB would restore the right to appeal the final written decision as to all challenged claims.


[fn 1] Citations provided here are for IPR proceedings; the parallel sections governing CBMs and PGRs contain similar language.

20 thoughts on “Guest Post: PTAB Partial Institution of IPR and CBM Review Violates the AIA– But There Is a Simple Fix

  1. ” … as excluded claims return to district courts, presumably without estoppel.”

    Given the broad and non-appealable instituting scope the AIA has granted the PTAB, I would argue that the opposite of this contention is the case.

    The fact that the PTAB made a conscious decision to not institute a reexam on particular claims means that estoppel has in fact attached to such “excluded” claims.

    “Partial institution” is a misnomer.

    Full and complete institution has taken place; regardless of which claims the PTAB has decided to take up.

    1. Steve, think about this. Non institution on independent claim 5. Trial on claim 1. Petitioner wins. Is he estopped on 5 given that he cannot appeal?

      I think not.

    2. I think 315(e) makes it pretty clear that estoppel would not apply. For estoppel you need a written decision under 318 with regard a claim. A claim for which IPR is not instituted would not be part of the final written decision of 318.

    3. Ned — In your example, I believe he is estopped on 5; since the decision to not institute means that the PTAB has — after considering all of petitioner’s arguments and evidence — decided that petitioner has not met their threshold burden for a trial on this claim.

      The decision to not institute on claim 5 … is nonetheless still a decision.

      No appeal. Estoppel attaches.

      DeMarVa — Respectfully disagree. A decision to not institute a trial … is nonetheless part of the final written decision … without the PTAB having to explicitly explain why they didn’t institute a trial on that claim.

      1. Steve, but you neglect that the institution decision is not appealable. Discuss this in the context of due process.

        1. (and throw in the wrinkle that the non-appealable executive action immediately impacts one of the sticks in the bundle of a duly granted personal property right…)

      2. Ned — Because the petitioner has elected to submit to the PTAB for adjudication, knowing full well the opportunities — and risks — of doing so, there is no due process problem.

        They understand (or should, anyway), and agree to accept, the consequences of taking this route — this process — of attempting invalidation.

        If you go into the process knowing full well that you’ll have no right to appeal the PTAB’s institution decision (including that estoppel will attach even to non-instituted claims), you don’t have anything to complain about. Take (or keep) your fight to the courts.

        anon — My apology, I’m not getting your point, since I’m showing why a patent owner is entitled to defend/keep his claims.

        1. Steve,

          You raise a valid point as to why due process may not be a concern for the entity electing to engage in the process.

          But that is not the only perspective – the only one with rights – involved.

          My point is from the other person (or entity) involved in the process who does not have the choice of not engaging: the patent holder.

          The point is not directly related to the distinct topic of this thread (and I have posted on this previously), but nonetheless exists as a due process concern.

          In short, at the (non-appealable) moment that the Executive Agency decides to proceed, the patent owner has immediately lost a stick in his bundle of rights: the status of the patent being presumed valid. That loss of a freestanding right is a taking by the executive branch with no right of appeal.

          As I explained previously, whether or not the claims are later vindicated – and that later different decision being appealable is an altogether a different and distinct issue of the taking of the status of the patent being presumed valid.

          This is an item related to the portion of law that was wiped out (Ned’s scire facies [sp?]).

          This is NOT to say that the government is forbidden to engage in a taking – but it is to say that any such taking does implicate the due process clause of the constitution. Government is permitted to take – but protections are accorded to such takings, and those protections appear not to be present.

          I would also add that this perhaps seemingly minor constitutional issue may carry a massive penalty. Akin to the “iceberg” analogy in that the tip of the iceberg does not correspond to the size of the item, I have in the past noted that ANY constitutional infirmity with the AIA may well risk the ENTIRE AIA being thrown out. Parallel to the “iceberg” analogy is the Titanic-designed-without-proper-below-sea-level-bulkheads analogy. The AIA has a major problem in that a separability clause was rejected as an amendment during that law’s journey through Congress. Congress chose to make the AIA an all-or-nothing bet.

          If this portion of the AIA produces a constitutional hole below the waterline of the Titanic, the entire ship goes down.

  2. Meh compared to the obamacare “implementation” these be small taters of executive power gone wild.

  3. The statute further requires the PTAB to issue a final written decision “with respect to the patentability of any patent claim challenged by the petitioner.” 35 U.S.C. § 318(a) (emphasis added). … The statutory language leaves little doubt the final written decision—the appealable one—must address the patentability of every claim challenged in the petition.

    Hmmm… The statute says that the final written decision is to address any patent claim challenged by the petitioner. You say that means every claim challenged in the petition, but I don’t see that this necessarily follows. Why must/should the PTAB perform a full review for claims where the PTO has already found that the petitioner’s arguments, standing alone don’t make it likely that the petitioner will prevail?

    1. Agreed. The PTO’s construction of its statute is reasonable.

      Petitioners do not have rights. An IPR is discretionary. They not have a right to institute, and they are statutorily barred from an appeal.

      They are not “harmed” in any legal way by a non institution decision. They will face no estoppel from claims not subject to the IPR.

      That said, I think a petitioner denied based solely on 315 should have a right to appeal that decision, as such a decision is not truly discretionary, but a legal decision. Thus, if the PTO would have instituted but for 315, the petitioner IS harmed because he is being denied a now legal right.

    2. But your interpretation of “any” mean that the PTAB doesn’t even have to include all of the claims that the PTAB selected for review. They could just randomly pick some of the claims and ignore others.

      I think the original article is correct–here, “any” means “every.”

      Look at it this way, if a statute were to states “the XYZ agency shall respond within 30 days to any properly filed petition,” that would not mean that the agency can simply pick one of several petitions to respond to within 30 days. Rather, in this context, “any” means “all.”

      1. But your interpretation of “any” mean that the PTAB doesn’t even have to include all of the claims that the PTAB selected for review. They could just randomly pick some of the claims and ignore others.

        Yes. But so what? The review is discretionary for the PTO. Look at 314(a) – it says that the PTO may not initiate an IPR unless there is a likelihood of success on one claim, but it does not require the PTO to initiate the IPR. Given that the PTO has enormous discretion to institute the proceedings in the first place, it doesn’t make any sense to tell them that they must review every issue the petitioner raises, especially once they’ve already determined (based on the petitioner’s arguments standing alone) that those issues aren’t going anywhere.

        Look at it this way, if a statute were to states “the XYZ agency shall respond within 30 days to any properly filed petition,” that would not mean that the agency can simply pick one of several petitions to respond to within 30 days. Rather, in this context, “any” means “all.”

        Context matters. Here you are proposing a completely different context and then arguing that this provides that “in this context, ‘any’ means ‘all.’” I agree with you that “any” can sometimes mean “all.”

        1. I agree with Dan, context matters. The threshold to institute, i.e. whether there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition, would be rendered meaningless if the PTAB was required to institute trial on every claim challenged by the petitioner. Suppose only one claim posed a reasonable likelihood of success at being challenged, but the petitioner still challenged all. Why should the PTAB be required to institute review over frivolous claims. It opens the door for abusive tactics if the PTAB cannot limit what claims are reviewed during the trial.

          Further, the authors mention that timeliness of the IPR is one reason to exclude claims, but do not mention that is expressly demanded by the AIA. It demands that the any regulation promulgated to conduct IPRs must consider “the ability of the Office to timely complete proceedings instituted under this chapter.” See 35 U.S.C. § 316(b). Excluding frivolous challenges to the patentability of claims would directly further the purpose in meeting that 1-year deadline from the decision to institute to the final written decision.

          Finally, § 318(a) does not demand what claims should be reviewed during the trial. It demands what the board must include in its final written decision. The Board does not have to institute trial on every claim challenged because statements of patentability are required for any claim challenged by the petitioner. Instead, the Board merely needs to say in the final decision that those claims challenged and excluded from review had no reasonable likelihood of being found unpatentable based on the evidence presented in the petition.

    3. Same question. What language in the statute specifically requires an IPR TRIAL to be instituted on every claim challenged in the requestors petition? The IPR is a two step system. The IPR written decision that insufficient evidence was provided to continue to challenge in a full IPR trial some of those claims IS a final decision in the IPR as to those claims. By statute it cannot even be appealed.

      1. Paul,

        Assume that the Board did this: Orders trial on claim 1, not on claims 2-20 — the latter because the petition did not show a widget. During trial, the petitioner moves to introduce new evidence — showing a widget — in an attempt to prove claims 2-20 invalid as well.

        Would this be proper?

        The question would arise, why wasn’t this evidence available when the petition was filed?

        Motion denied.

        Estoppel on all 20 claims? I would hope not.

      2. It’s a final decision, but not a final written decision to which estoppel attaches. Only the final written decision under 318 results in estoppel. A decision not to institute an IPR does not reach the estoppel provisions.

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