A Rose by Any Other Name – or – It’s not Wrong it’s just Different

by Dennis Crouch

The bench was an active inquisitor in the Thryv v. Click-to-Call oral arguments held Dec. 9, 2020 before the U.S. Supreme Court.  This is the third post-AIA Supreme Court case focusing on the no-appeal provision of 35 U.8.C. § 314(d) (“determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable”).   [TRANSCRIPT]

Oral arguments focused on two major issues: (1) the extent that SAS limited Cuozzo; and (2) the importance of the time-bar since there are alternative fora for judging patentability and the patent is invalid anyway.

The first point — SAS limiting Cuozzo: In SAS (2018), Justice Gorsuch explained the holding in Cuozzo (2018) as follows:

Cuozzo concluded that § 314(d) precludes judicial review only of the Director’s “initial determination” under § 314(a) that “there is a ‘reasonable likelihood’ that the claims are unpatentable on the grounds asserted.

SAS. To be clear, if the no-appeal statute’s sole function is to block appeal of the reasonable-likelihood decision, then the decision is foreclosed in favor of the patentee (allowing appeal of the time-bar question).  However, as I suggested in a prior essay, I believe that Justice Gorsuch SAS opinion overstated Cuozzo’s holding. I suspect this was an intentional shading of Cuozzo made possible because of 5-4 split.  A smaller majority allows for a more extreme opinion.

This issue was ripe for discussion in the oral arguments with Thryv’s counsel Adam Charnes attempting to explain that Gorsuch’s SAS statement isn’t “wrong” per se, it just isn’t complete.  Charnes would obviously rather not require overturning of the Supreme Court’s most recent case on the subject in order to win.

JUSTICE GINSBURG: What do you do with the sentence in this Court’s SAS decision that says 314(d) precludes judicial review only of the Board’s initial determination under 314(a) that there is a reasonable likelihood that the claims are unpatentable?

MR. CHARNES: We think that that’s not a complete description of Cuozzo . . . .

JUSTICE GINSBURG: So you think that that was just a wrong sentence?

MR. CHARNES: I wouldn’t say it was wrong. . . . What I’d say is that the Court had no need to describe Cuozzo more broadly … because that was not the factual circumstance of SAS. …

JUSTICE KAVANAUGH: I think you are saying “it’s wrong,” to pick up on Justice Ginsburg’s question, at least the use of the word “only.”

MR. CHARNES: I think it’s not a complete description. I think that’s not the only basis that this Court explained in Cuozzo. I think that’s — that’s a fair point.

Justice Kavanaugh is the only new member of the court since SAS and his vote is likely critical to the outcome in this case. However, the most likely swing vote is Chief Justice Roberts.

The Gov’t attorney, supporting Thryv in its no-appeal argument and agreed that the SAS statement is wrong.

MR. ELLIS: (Representing the U.S. Gov’t and supporting the no-appeal argument)I do think that sentence is wrong, and I think it’s incomplete. . . . Cuozzo concluded more than that. And I think, if you look at the decision, you’ll see that.

The wrongness of Justice Gorsuch’s statement is potentially twofold: (1) it is clearly an unduly narrow statement of the holding in Cuozzo; and (2) it might also be an incorrect interpretation of the statute.  For me, this raises the interesting esoteric question about precedent and primary sources.  What is the precedential and stare decisis role of the Supreme Court’s (mis)description of its prior precedent.  Is the (mis)description now the leading precedent, or is it merely a secondary source helpful in interpreting the original decision.

Mr. Geyser has the easier case on these points — arguing that the patentee clearly wins under SAS, and should also win under Cuozzo.

MR. GEYSER: (Arguing for the patentee) We’re simply reading 314(d) to say exactly what this Court in SAS said it meant, which is it is limited to only the initial patentability threshold in 314(a).

My friend from the government now concedes that they think that [SAS] was wrong. I don’t believe they’ve asked this Court to overturn SAS. We don’t think that the Court was wrong.

JUSTICE KAGAN: Well, it’s not a question of overturning. It’s just — I think what they were saying is that SAS dealt with one issue in which it was unnecessary to recite Cuozzo’s full test, but Cuozzo has a broader test than SAS quoted.

MR. GEYSER: Well, to be very clear, I think that we win under Cuozzo as well, but I don’t think that the reasoning in that statement, which is a very plain statement in SAS, can be limited in that way.

[The “only” language in SAS] is an absolute part of the core holding of the case in rejecting what the government eventually framed as their primary submission in SAS.

The substantive issue on appeal in Thryv was the PTO’s interpretation of the time bar in § 315(b).  Although a lawsuit had been filed and served, the PTAB found that the time-bar was not triggered because that lawsuit had been dismissed without prejudice.  On appeal, the Federal Circuit found that the PTAB had misinterpreted the statute — holding that dismissal does not annul the time-bar.

The Patent Challenger and Government both argue that the a time-bar decision by the PTAB is not appealable. Justice Gorsuch pushed that question in an extreme example, and Charnes held his ground on no appeal:

JUSTICE GORSUCH: Let’s just hypothesize that someone has tried to undo this patent four times or maybe even more in a court of law, failed for various reasons every single time, and then comes to the director of patents, who has a political mission, perhaps, to kill patents, let’s just say. And it is clearly time-barred under the statute. Let’s just hypothesize that. And yet, the director goes ahead and does it anyway. Under your submission to the Court, I believe you’re saying that is a shenanigan this Court cannot review.

MR. CHARNES: It is correct that our submission is that’s not reviewable. The time bar is not reviewable.

JUSTICE GORSUCH: All right. The hypothesis, there’s no good faith, okay? The director of patent has a political desire for whatever reason to destroy this patent and many others. . . . In your circumstance, you’re telling the Court there’s no review of that decision, I believe, or maybe it’s not a shenanigan even in your — your view perhaps.

MR. CHARNES: Well, I think there is
— there is no review under — under 314(d). It may be that it’s an appropriate case for mandamus relief if the circumstances are as egregious as you suggest in your hypothetical. . . .

JUSTICE GORSUCH: So we’re going to just channel all these cases to mandamus? Is that — is that the upshot of your position?

MR. CHARNES: No, because mandamus is a rare relief. I mean, it would only be reserved for really egregious circumstances like your hypothetical.

JUSTICE GORSUCH: If the institution decision is not reviewable at all, how would it be mandamus-able? . . .

Mr. Ellis from the SG’s office added his two-cents with an argument along the lines of “you shouldn’t care about privacy if you have nothing to hide.”  In this case, his argument was that we shouldn’t worry since “you’re going to get review, judicial review of the patentability” question.

MR. ELLIS: What was open for review was that patentability analysis. Now Respondent opted not to challenge that patentability analysis. But, if it had merit, that would be judicially reviewable and then the patent wouldn’t be canceled.

This discussion takes us to the second general topic for discussion — is the time-bar a big deal.  In Cuozzo and in oral arguments here, the justices appeared reluctant to bar appeals of important issues such as due process violations and statutes of limitations.

CHIEF JUSTICE ROBERTS: Well, but, I mean, I don’t think it’s what we were fighting over at Yorktown. I mean, it’s just a question of whether — (Laughter.)

CHIEF JUSTICE ROBERTS: — as you said, the ultimate question, the ultimate issue that affects the property rights in a patent, it’s going to be reached. It’s just a question of whether you use one procedure or another. . . .

CHIEF JUSTICE ROBERTS: As I understand [Mr. Charnes] answer, at least part of it is more or less that this is small potatoes. It’s just about timing for — for the institution of the matter and that the basic issue of the patent validity is something you’re going to get to. You have a number of avenues to get to it.

The basic idea here is that even if the petition is time-barred, patentability could be raised in an ex parte reexamination or in a district court declaratory judgment challenge, or by a separate petitioner who was not time-barred:

CHIEF JUSTICE ROBERTS: [speaking about ex parte reexam] Well, it’s different, I’ll give you that, but, I mean, it’s focused on the same ultimate question. . . .

JUSTICE KAGAN: But if it’s not with
this Petitioner, it can be another Petitioner. . . And, indeed, even when a petitioner drops out under this statute, the Board can keep the proceeding going without the petitioner. So the fact that it is this Petitioner seems utterly unimportant under this statute.

Justice Ginsburg appeared to recognize that the time-bar is important:

JUSTICE GINSBURG: In Cuozzo, it was a particularity requirement, and that was described as a minor statutory technicality. But, here, we’re not dealing with a minor statutory technicality; we’re dealing with a time bar.

Justice Gorsuch provided a softball for the patentee’s counsel to answer:

JUSTICE GORSUCH: Well, I guess the question, though, that we’re struggling with is so what’s the big deal? If you’re stuck going to ex parte review anyway, why should we care? What’s your answer to that?

MR. GEYSER: … because inter partes review is a very different process than ex parte reexamination.

JUSTICE GORSUCH: Spell that out. Spell that out. Why?

MR. GEYSER: It’s because instead of having an opportunity for a single response, truncated discovery, you’re in an adversarial proceeding. You’re before a panel of three PTAB judges who might give you an hour oral hearing.

You get a long, iterative process with a talented patent examiner who can say this is what I think is wrong, and then you have lots of opportunities to show them exactly why
that concern is unfounded.

And, again, the PTAB is reversed a fourth of the time. It’s not like this process … is perfect or without error. . . .

JUSTICE KAGAN: It just doesn’t seem as though this petitioner makes all that much difference.

MR. GEYSER: Well, Congress felt otherwise in this heavily negotiated process that produced 315(b) as a fundamental safeguard for patents.

JUSTICE GORSUCH:  Why does it matter whether it’s one petitioner or another petitioner?

MR. GEYSER: To make sure that you don’t have someone gaming the system . . .

MR. GEYSER: And [Congress] understood that this [time-bar] is a significant protection for patent owners. And it’s a significant way to divide the authority between the courts on the one hand and the agency on the other.

There is a more detailed statutory interpretation question here — The no-appeal provision is directed to institution determinations “under this section” — i.e., Section 314, and the time-bar is found under Section 315 of the Code.  Under this “chapter”

JUSTICE KAVANAUGH: But “under this chapter” is used in the same provision [314(b)]. If we had “under this chapter” here [in 314(d)], that would solve your problem.

The petitioners here do a nice job of overcoming that argument and so I don’t see it as the basis for the decision, although the court may throw it in as an ancillary matter.

In the end, the case comes down to a strong presumption that agency decisions are subject to appeal in Federal Court. And, the question is whether congress did enough in the statute to overcome that presumption in this case.  Patentee’s counsel (who is aware of many cases) ended his arguments with an appeal to precedent and history:

MR. GEYSER:I would submit that I’m not aware of any case that this Court has ever decided that would find Article III review cut off entirely based on language as indirect as this.

We can look for a decision in this case in the Spring of 2020.  I am expecting a split opinion with the majority affirming — holding that the no-appeal provision has no force in this particular case.

SAS Institute v. Lee: Partial Institution of Inter Partes Review

by Dennis Crouch

The Supreme Court has agreed to hear a new AIA-trials case: SAS Institute v. Lee

The inter partes review appeal focuses on the procedural question of whether the America Invents Act permits the USPTO to partially institute IPR proceedings – as it has been doing. SAS argues instead that the statute requires a full up/down vote on a petition and, if granted, the Patent Trial and Appeal Board (PTAB) must then pass final judgment on all petitioned claims:

Whether 35 U.S.C. § 318(a) … requires [the] Board to issue a final written decision as to every claim challenged by the petitioner, or whether it allows that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the U.S. Court of Appeals for the Federal Circuit held.

As I previously wrote,

The basic setup here is that SAS argues that the PTO cannot partially institute IPR proceedings since the statute requires that PTO “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” 35 U.S.C. § 318(a)

Although a somewhat sideline issue, it will likely have its biggest impact on estoppel resulting from AIA trials and, as a result, may also shift filing strategy.

AIA Trial Docs:

 

 

“Nonappealable” means Not Keeping the PTAB in Check

Biodelivery Sciences Int’l. v. Aquestive Therapuetics, Inc. (Fed. Cir. 2020)

The Federal Circuit has denied en banc rehearing in this case that focuses primarily on the ability of the appellate court to keep the PTAB in-line. In this particular case, the PTAB did not follow a prior remand order from the Federal Circuit. In particular, in a prior SAS appeal, the Federal Circuit indicated that the PTAB should hold trial on “each claim challenged.” Instead, the PTAB decided to dismiss the whole case — finding it it be “inefficient and expensive” to include the additional grounds. Judge Newman argues that such disobedience should be treated swiftly. She writes:

I write because of the significance of the balance of agency and judicial authority, and the rules of procedural law in the administrative state.

Instead of complying with the Remand Order, the PTAB withdrew all of its past actions as to these proceedings, although past actions were not the subject of the remand. . . . Nonetheless, my colleagues hold that the PTAB is not required to comply with the court’s Remand Order, and further hold that this non-compliance is not reviewable. This action raises critical issues of agency authority, judicial responsibility, and the constitutional plan.

Judge Newman dissenting from En Banc Denial.

Final and Nonappealable: construed as “may be reconsidered” and not reviewable in “at least some circumstances.”

 

Guest Post: Keys to Success of the Florida Patent Pro Bono Program

Guest Post by Jennifer McDowell, USPTO Pro Bono Program Coordinator and Courtney Caliendo, Florida Patent Pro Bono Program Manager

Florida may have been among the last states to offer Patent Pro Bono services to qualified inventors and small businesses, but it was also among the quickest to launch. The United States Patent and Trademark Office (USPTO) identified the Institute for Commercialization of Public Research (Florida Institute) as a potential statewide program coordinator in January 2015, finalized a partnership agreement in March, and Florida Patent Pro Bono (FloBonoSM) officially launched statewide with a series of activities during the first week of May.

Formed by the Florida Legislature in 2007, the Florida Institute is a nonprofit organization that supports new company and job creation based on publicly-funded research. Working collaboratively with Florida’s many universities and private research institutions, the Florida Institute helps uncover commercially viable startup company opportunities, and provides both company building support and seed funding to help them grow.  The organization maintains extensive relationships with the service provider, business, and investment communities, and as a catalyst for innovation, capital attraction and economic development the Institute is an ideal administrator of the Florida Patent Pro Bono Program.

“This Program aligns well with the Florida Institute’s mission to create new companies and jobs in industries that are driving the global economy,” said Jamie Grooms, Florida Institute Chief Executive Officer. “We are pleased to be administering this important Program for Florida inventors with the support of the USPTO, and to expand our programming in support of entrepreneurship, job growth, and innovation-based economic development across the state.”

Like entrepreneurs who know all too well the importance of time to market, the Florida Institute realized it had to design and begin delivering the Program quickly to meet the needs of Florida’s vast, diverse, and widespread innovation community who collectively submit approximately 10,000 patent applications each year to the USPTO, making it one of the leading sources of patent application filings in the nation.[1] The Florida Program expands the national Patent Pro Bono Program that started in 2011 when the U.S. Congress passed the Leahy-Smith America Invents Act (AIA), encouraging the USPTO to support intellectual property law associations across the country to establish pro bono programs that assist financially under-resourced independent inventors and small businesses. Florida’s engagement also represents the successful outcome of one of President Obama’s seven Executive Actions for the USPTO to assist innovators by expanding the pro bono programs in all 50 states and increasing accessibility to legal assistance from registered patent professionals.

Between 2011 and early 2015, 46 states had entered into partnership agreements with the USPTO. As the 47th state to come on board, Florida was tasked with developing a program quickly in order to process not only new applicants, but to also deal with a backlog of approximately 50 inventor applications received before the Patent Pro Bono Program became available in Florida. As the third most populous state in the country with nearly 20 million residents, Florida is so large it spans two time zones and includes multiple metropolitan centers as well as vast rural areas.[2] The state is ethnically diverse as well, with over 27% of its residents, over the age of 5, speaking languages other than English in Florida households.[3]  Significantly, in Fiscal Year 2014, inventors in the state of Florida ranked tenth in the country in the number of patent application filed at USPTO.[4]

In order to meet the unique challenges posed by such a large and culturally-diverse state, the Florida Institute, with support from the USPTO, worked quickly to understand best practices put into place by states that had launched earlier, and referred often to the Patent Pro Bono Program Handbook created in Minnesota by the original pilot program team and to the USPTO itself. With a keen sense of urgency, coupled with the freedom to develop a program uniquely suited to meet the needs of Florida inventors, the Florida Institute embarked on community outreach to build a statewide coalition, and took the following key steps to expedite program launch in under 90 days:

  • Identified intellectual property lawyers who would assist early on with program guideline development;
  • Developed a database of registered intellectual property lawyers and agents who would be instrumental in providing patent pro bono services;
  • Identified law school faculty and administration for guidance and preliminary formation of a Steering Committee;
  • Created and filled the Program Manager position with an attorney;
  • Established eligibility criteria;
  • Contacted numerous legal and intellectual property associations;
  • Developed necessary applications, forms, and policy documents;
  • Created a website with program information, inventor application, and patent attorney and agent volunteer information and registration forms;
  • Assessed a backlog of program inquiries;
  • Planned two launch events, one in Miami and one in Tampa Bay, to provide program information as broadly as possible; and
  • Collected and began responding to new and previously submitted applications.

Critical to the early success of the Florida Patent Pro Bono Program was the Florida Institute’s decision to hire an attorney with experience practicing in the field of intellectual property law as its Program Manager. Before joining the Florida Institute, Courtney Caliendo practiced law at a boutique intellectual property law firm based in Fort Lauderdale, Florida; and is the current Vice President of the Intellectual Property Law Association of Florida (“IPLAF”). “Ms. Caliendo’s knowledge of the intellectual property system, combined with her ties to various legal and intellectual property organizations, facilitates activities such as patent attorney outreach, document drafting, and liaising between inventors and attorneys,”  Jane Teague, Florida Institute Chief Operating Officer.

Support from intellectual property organizations such as the American Intellectual Property Law Association (AIPLA), the Intellectual Property Law Association of Florida (IPLAF), the Florida Bar Business Law Section Intellectual Property Committee and the American Bar Association (ABA) was also a key to the expedient start of the Florida program.  Working with the USPTO and the FloBonoSM team, these organizations publicized the existence of the program and the launch events.  Through the AIPLA’s IP Law Associations and the IP Law Association of Florida, the USPTO facilitated key connections with local contacts in Florida, targeting audiences in the most efficient way.  Working in synchronization with these groups enabled the program to grow rapidly the number of volunteer attorneys on its roster, so that it could deliver the much-requested services to inventors in a timely manner.

The first event, held in Miami, put the Florida Institute (literally) on Center Stage at the widely-attended eMerge Americas Conference, to announce the Program’s debut. The session featured technology and social entrepreneur Traver Kennedy, who was ranked by NetworkWorld magazine as one of the “25 Most Powerful People” in computing, and has worked on special projects with the World Intellectual Property Organization (WIPO), a division of the United Nations. eMerge Americas was attended by over 10,000 people, and provided broad exposure to print and network media outlets as well as members of the business and academic communities. The second event was held in Tampa and featured T. David Petite, a prolific inventor in the field of computer networking, and founder of the Native American Intellectual Property Enterprise Council, a non-profit organization helping Native American inventors and communities.

The FloBonoSM team conducted extensive media outreach both before and during the events, and associated press releases were posted in over 180 publications in 25 states and 35 countries worldwide. At last count, well over 2,000 people had viewed the FloBonoSM press release. Both the media outreach and the launch events succeeded in promoting the Program and resulted in increases in inquiries and applications from both inventors and patent attorneys. Since its inception, the Florida Patent Pro Bono Program has received over approximately 72 inventor applications as well as numerous inquiries from inventors and commitments from patent attorneys and agents interested in providing program support.[5]

The newly-minted USPTO-Florida Institute collaboration is now providing under-resourced inventors with improved access to the patent system, streamlining the patent application process and supporting the submission of higher quality patent applications.  By matching qualified inventors to patent professionals around the state who provide pro bono legal assistance on specific aspects of the patent process, inventors and small businesses may avoid common pit falls and errors often seen in pro se patent applications. This Program ultimately fosters the growth of Florida’s innovation economy by supporting the protection and commercialization of new technologies.

If “necessity is the mother of invention”[6] then the Patent Pro Bono Program is its greatest champion.

=====

[1] USPTO Patent Application Locating and Monitoring System 2015

[2] Census Data retrieved from: http://quickfacts.census.gov/qfd/states/12000.html  on May 20, 2015.

[3] Id.

[4] USPTO Patent Application Locating and Monitoring System 2015

[5] Data taken as of June 11, 2015.

[6] Quote attributed to Plato.

SAS Institute v. Iancu: Shifting IPR and Litigation Strategies

by Dennis Crouch

In SAS Institute, Inc. v. Iancu (2018) [16-969_f2qg], the Supreme Court issued a split 5-4 decision holding that:

When the Patent Office institutes an inter partes review, it must decide the patentability of all of the claims the petitioner has challenged.

Although quite narrow, the decision reversed the PTO’s prior interpretation of the IPR statutes and will likely impact IPR strategies both for petitioners and patentees.

Any Patent Claim Challenged: Private parties may challenge an issued patent by filing an inter partes review (IPR) petition.  The petition must specify which claims are being challenged, and explain why the challenge is likely to succeed.  Under the statutory provisions, the USPTO Director must then decide whether or not to grant the petition and institute a trial before the Patent Trial and Appeal Board (PTAB or Board).  At the conclusion of the trial, the Section 318(a) of the Patent Act indicates that the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added [during the IPR].”  35 U.S.C. §318(a). The Supreme Court decision here is tightly focused on statutory interpretation — holding that the statute requires that the PTO decide the patentability of all challenged claims (that are not dismissed).  The PTO had interpreted the statute to allow for partial-institution-decisions.

In the case before the court, SAS had challenged all 16 claims of the ComplementSoft U.S. Patent No. 7,110,936.  However, rather than instituting on all claims, the PTO only instituted review of 9 claims.  Writing for the majority, Justice Gorsuch explained:

The Director (in truth the Board acting on the Director’s behalf) . . . instituted review on only some (claims 1 and 3–10) and denied review on the rest.

Once a final judgment was issued by the PTAB (finding eight of the nine unpatentable), SAS appealed — arguing that the statute required decisions on the remaining five claims.

Now, SAS will get its opportunity. For SAS, the potential to challenge these additional claims may help the company avoid having to fight those claims in court.  In addition, the all-challenged-claims rule may also serve as a bargaining chip for the patent challenger in any settlement hearings.

Although the patent-challenger may benefit in this particular case, I expect that the overall benefit from the decision will help patentees. In particular, most non-instituted claims are ones that would likely have been confirmed as patentable.  That decision from the PTAB will lend strength to patentee claims in court and also raise estoppel problems down the road for patent challengers.

Simplifying petitions decisions: The decision here should simplify the petition institution decisions.  Following SAS, the question should simply be whether there is at least 1 challenged claim where the petitioner has presented a “reasonable likelihood” of prevailing on the merits.  35 U.S.C. 314(a).

The majority did not spend time on policy determinations — instead simply stating that the PTO should take its case to Congress.

The Director’s policy argument—that partial institution is efficient because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others—is properly addressed to Congress, not this Court.

It will be interesting to see whether new PTO Director Iancu will go to congress on this point – I expect not, unless there are clear efficiency concerns. At this point, the Office only provided the following statement:

The USPTO is carefully considering the Supreme Court’s decisions and determining their impact on various proceedings at the PTAB.

Deference: An important element of the decision for administrative law folks is the majority statements regarding Chevron deference:

[W]hether Chevron should remain is a question we may leave for another day. Even under Chevron, we owe an agency’s interpretation of the law no deference unless, after “employing traditional tools of statutory construction,” we find ourselves unable to discern Congress’s meaning.

Here, the majority found no ambiguity — and thus gave no deference to the PTO.  I expect that the 5-4 split between the justices in this case largely comes down this particular question — when should courts give deference to legal interpretations made by expert administrative agencies?  Supreme Court precedent on the issue continues to be messy, although there remains some thought that Congress will solve the problem by actually spelling out whether deference applies when it writes its statutes.

On a final issue, the PTO argued that the question before the court was effectively a challenge to the PTO petition decision — something made expressly unappealable by the Patent Act §314(d).  “Even if the statute forbids his partial institution practice, the Director suggests we lack the power to say so.”  However, the majority disagreed with the PTO Director — holding that the case here involves “exactly the sort” of “shenanigans” that serve as exceptions to the Cuozzo rule.

Writing in dissent, Justice Ginsberg, joined by the other three most liberal justices, calls Gorsuch’s reading “wooden” and lacking of any true understanding or indication of congressional intent: “Court’s opinion offers no persuasive answer to that question, and no cause to believe Congress wanted the Board to spend its time so uselessly.”

Coming back to Deference: A more thorough dissent by Justice Breyer explains his position that the statute offers enough of a gap in certainty to allow the PTO to fill-in its interpretation and be given deference for that gap-filling.

Because I believe there is such a gap and because the Patent Office’s interpretation of the ambiguous phrase is reasonable, I would conclude that the Patent Office’s interpretation is lawful.

(Breyer in dissent.) Overall, this is a set of nicely written decisions that serve as an example in the patent law field of the broader and ongoing administrative law debate over the role of administrative agencies in interpreting their governing statutes.

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.

Supreme Court Hears Appealability Appeal

by Dennis Crouch

The U.S. Supreme Court is set to hear oral arguments on Monday, December 9 in the pending IPR Appeal that is now captioned Thryv, Inc. v. Click-to-Call Technologies, LP (SCT Docket No. 18-916).   The focus of the case is statutory declaration that the PTO Director’s decision of whether to institute an IPR is “final and nonappealable.”  35 U.S.C. § 314(d).  This same issue – albeit slightly different context – was already addressed in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) and SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018).

Question Presented in Thryv: Whether 35 U.8.C. § 314(d) permits appeal of the PTAB’s decision to institute an inter partes review upon finding that§ 315(b)’s time bar did not apply.

The section 315(b) time bar prohibits institution of a petition “filed more than 1 year after the date on which the petitioner … is served with a complaint alleging infringement of the patent.”  Years ago (well before the 1-year date) the patentee Click-to-Call sued Thryv’s predecessor-in-interest for infringement and served the complaint as required under § 315(b).  That lawsuit, however, was voluntarily dismissed without prejudice.  When the defendant later filed its IPR petition, the PTAB found that the dismissal without prejudice effectively nullified the original lawsuit and, as such, did not raise the time-bar. The PTAB then invalidated the claims.  On appeal, the Federal Circuit rejected PTAB’s approach  — holding that the statute does not allow for any exception to the time-bar for cases dismissed without prejudice.  In its petition to the Supreme Court, Thryv asked the court to review both whether (1) the issue is appealable; and (2) the time-bar still applies after a dismissal without prejudice. The Supreme Court granted certiorari, but only as to question 1 – whether the issue is appealable.

The U.S. Gov’t also support’s Thryv’s position — arguing that its institution decisions should not be subject to appeal. Expected at oral arguments:

  • Adam Charnes (Kilpatrick Townsend) is representing the petitioner patent-challenger Thryv.
  • Jonathan Ellis from the Solicitor General’s office is representing the U.S. Gov’t. and splitting time with Charnes.
  • Daniel Geyser (Geyser PC) is representing the patentee Click-to-Call.

Merits Briefing:

For me, the most on-point text comes from the Supreme Court’s 2018 decision in SAS that discusses and applies the court’s prior decision in Cuozzo (2016):

At this point, only one final question remains to resolve. Even if the statute forbids his partial institution practice, the Director suggests we lack the power to say so. By way of support, he points to § 314(d) and our decision in Cuozzo. Section 314(d) says that the “determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” In Cuozzo, we held that this provision prevented courts from entertaining an argument that the Director erred in instituting an inter partes review of certain patent claims. The Director reads these authorities as foreclosing judicial review of any legal question bearing on the institution of inter partes review—including whether the statute permits his “partial institution” practice.

But this reading overreads both the statute and our precedent. As Cuozzo recognized, we begin with “the ‘strong presumption’ in favor of judicial review.” Id. To overcome that presumption, Cuozzo explained, this Court’s precedents require “clear and convincing indications” that Congress meant to foreclose review. Given the strength of this presumption and the statute’s text, Cuozzo concluded that § 314(d) precludes judicial review only of the Director’s “initial determination” under § 314(a) that “there is a ‘reasonable likelihood’ that the claims are unpatentable on the grounds asserted” and review is therefore justified. . . . In fact, Cuozzo proceeded to emphasize that § 314(d) does not “enable the agency to act outside its statutory limits.” If a party believes the Patent Office has engaged in “ ‘shenanigans’ ” by exceeding its statutory bounds, judicial review remains available consistent with the Administrative Procedure Act, which directs courts to set aside agency action “not in accordance with law” or “in excess of statutory jurisdiction, authority, or limitations.”

And that, of course, is exactly the sort of question we are called upon to decide today. SAS does not seek to challenge the Director’s conclusion that it showed a “reasonable likelihood” of success sufficient to warrant “institut [ing] an inter partes review.” 35 U.S.C. §§ 314(a), (d). No doubt SAS remains very pleased with the Director’s judgment on that score. Instead, SAS contends that the Director exceeded his statutory authority by limiting the review to fewer than all of the claims SAS challenged. And nothing in § 314(d) or Cuozzo withdraws our power to ensure that an inter partes review proceeds in accordance with the law’s demands.

SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018). The difficulty here with directly applying SAS is (1) Gorsuch overstated the holding in Cuozzo regarding the “only” thing appealable; (2) SAS was decided in a 5-4 vote with dissenters characterizing Cuozzo has holding “that the Director’s decision whether to institute review is normally not reviewable.”

Iowa Law Review Symposium guest post by Prof. Vishnubhakat: Managing the PTAB’s Legacy of Partial Institution

Guest post by Saurabh Vishnubhakat, Associate Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering.  Although Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, his arguments here should not be imputed to the USPTO or to any other organization.  This post is based on a paper for the Iowa Law Review symposium Administering Patent Law and is forthcoming in the Iowa Law Review.  The full draft is available at at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3237841.

It has now been four months since the Supreme Court decided SAS Institute v. Iancu, and it seems clear that ending partial institution will, indeed, be a significant disruption to the Patent Trial and Appeal Board’s administration of its docket.  As I noted on this blog just after the decision came down, the power of partial institution was at the heart of PTAB case management from the beginning, and the requirement of binary institution from now on raises several important questions.

In this post, I will offer some more detailed analysis of one of those issues in particular.  That issue is how the Patent Office should understand the stakes of binary institution—which is to say, fully appreciate how much work partial institution was truly doing.

The Stakes of Binary Institution

Now that the PTAB must either fully grant or fully deny each petition that comes before it, the stakes of accepting versus rejecting a case largely point toward rejecting.  The cases that were already being instituted in full or denied in full will be unaffected.  The cases that were being partially instituted, however, will not be accepted lightly.

Fully instituting such a case will necessarily bring significant obligations of deciding why arguments that the PTAB has already found likely to fail do, indeed, fail.  On top of that, the PTAB must also explain fully enough, under the Chenery doctrine, why these arguments lack merit.

Under partial institution, these unmeritorious portions of a petition could easily be dispensed with at the institution stage.  No judicial review was available—not even after final judgment, under Cuozzo—so Chenery obligations did not even come into the picture.  This is not to say the obligations of reasoned decision-making should not apply to the Patent Office at the institution stage.  (Judge Reyna’s concurring opinion in Shaw Industries, for example, made a persuasive case that mere nonappealability does not legitimize black box decisions such as denying “redundant grounds” without explanation.  Still, the panel majority in that case did not reverse the agency.)

Now that partial institution is unavailable, granting review will open the door to judicial scrutiny of the PTAB’s handling of the entire case, some or much of which will consist of arguments that the PTAB already had reason to think were not worth its time.  This change generally counsels against full institution of close cases.

On the other side of the agency’s choice is what effect a PTAB denial would have on the petitioner, for a denial would exclude meritorious arguments as well.  In general, the harm would be minimal, as denying review creates no estoppel and so does not prejudice the petitioner’s ability to make the same arguments elsewhere.  Under § 315(e), estoppel requires a final written decision under § 318(a), which applies only to a petition that has been “instituted and not dismissed.”  As most petitioners (about 70%) are district-court defendants seeking PTAB review in response to an infringement lawsuit (what my coauthors and I have termed standard petitioners), invalidity arguments in the district court will remain available.

The remaining petitioners (about 30%) who seek PTAB review preemptively would be similarly unharmed.  It is true that they may or may not have Article III standing to seek declaratory relief in the courts, standing that they would not have to show in the PTAB.  But they still remain free to refile their petitions in the PTAB itself, using the PTAB’s earlier denial of institution as a roadmap for filing a more successful petition.  Because these nonstandard petitioners have, by definition, not been charged with infringement, the one-year time bar of § 315(b) does not apply to them.

Thus, under the PTAB’s existing resource constraints, the burden of fully granting borderline petitions is generally higher, and the cost and prejudice on litigants inflicted by fully denying such petitions is relatively low, tilting on balance toward fully denying borderline petitions.  The next question is whether this analysis in the abstract has real-world relevance to the PTAB’s likely incentives.

The Scope of Partial Institution

The data strongly suggests that it does.  Partial institution was doing much more work than previously appreciated to filter out unmeritorious arguments and focus the PTAB’s resources on challenges that were reasonably likely to succeed.  The following two figures show why this has largely been overlooked.  Through April 2018, when SAS Institute was decided, the respective shares of petitions that were fully instituted (39.2%), partially instituted (25.8%), and fully denied (35.0%) suggest that partial institutions accounted for only a minor part of the agency’s workload.  Indeed, the trends of these shares over time suggest that partial institution was diminishing even before the Supreme Court abolished the practice.

But looking at petitions or cases as a whole misses the mark.  The legal grounds asserted vary from petition to petition.  An anticipation challenge generally relies on a single prior art reference rather than a combination of multiple references and so is less workload-intensive than an obviousness challenge.  The patent claims that a petition actually challenges vary as well, and the workload burdens posed by different petitions vary accordingly.  Taking these facts into account, the more granular and accurate measure of partial institution is the share of claim-ground pairs being challenged in the PTAB that were being granted, and the share that were being denied.

As the next three figures reveal, this share has been both large and persistent.  Through April 2018, the PTAB denied review of nearly half of all the claim-ground pairs that came before it in petitions.  This finding is robust across technologies.  It is also strikingly stable over time, starting at a rate of about 30% but quickly rising into the 40–50% range, where it has stayed for the past five years.  This evaluation shows that partial institution was a substantial filter on the challenges that were admitted into administrative review.

Confronted with the choice of full institution or full denial, therefore, the PTAB should think carefully about how much of a petition should present meritorious arguments before a panel is willing to take on the additional burden of adjudicating additional arguments that it already knows are likely to fail.

The PTAB’s treatment of transitional cases—where the PTAB had already made partial institutions but now had to be reevaluated under SAS Institute—is telling in this regard.  The agency’s April 26 Guidance on the Impact of SAS on AIA Trial Proceedings had stated it may issue a supplemental order to institute on all remaining challenges.  Though it did not say so, the agency also had the power, of course, to vacate its partial institution, effectively “deinstituting” the petition in full.  In an order earlier this month, the PTAB revealed an agency-wide thumb on the scale toward instituting-all rather than deinstituting-all:

If now faced with the Petition in the first instance, and understanding that we have only a “binary choice,” it may well be appropriate to deny the Petition in its entirety.  But we have been instructed that the Office SAS Guidance is to be interpreted with the weight of Office policy as precluding termination of a partially instituted proceeding in response to SAS Institute.

ESET LLC v. Finjan, Inc., IPR2017-01738, Paper No. 28 at 10 (Aug. 10, 2018).

This exercise of agency discretion for transitional cases is entirely sensible as a policy matter.  For cases where the PTAB has not only concluded that a patent is at least partly problematic but also invested resources to adjudicate those problems, terminating the proceeding would give the mistaken, but still potentially harmful, impression that the PTAB were actively abdicating its error-correction duties.

In future cases, evaluating petitions in the first instance, the PTAB would be much better positioned to balance its obligations with its resource constraints within its broad discretion over institution.

Conclusion

As I discuss further in the full paper, although the structural choices that lie ahead for the Patent Office are difficult, they are appropriate for the agency to have to make.  The policy judgments that are most rational for the Patent Office to reach in light of SAS Institute are likely to promote reasoned decision-making by the agency as well as more efficient substitution of administrative adjudication for judicial review.  These policy judgments, in turn, will also bring important questions—including the one-year time bar and the issuance of stays pending PTAB review—back to the Federal Circuit.  These questions are a valuable chance for the Federal Circuit to reconsider panel decisions that have largely been overtaken both by its own recent en banc decisions and by the Supreme Court.

The Supreme Court and IPRs – a Mixed and Messy Bag of Results

The following guest post is written by Brad D. Pedersen, Patent Practice Chair at Patterson Thuente.  It originally ran in the PT newsletter.

In Oil States, Justice Thomas authored the 7-2 majority decision affirming the constitutionality of IPR proceedings over challenges based on Article III separation of powers and the 7th Amendment Right to Trial by Jury.  Depending upon which camp you are in, this will be seen as either generally favorable (petitioners) or generally unfavorable (patent owners).

In the parallel SAS Institute decision, Justice Gorsuch authored the 5-4 majority decision strictly construing what the Patent Trial and Appeal Board must rule upon in a Final Written Decision at the end of an IPR trial. In overturning USPTO rulemaking, Justice Gorsuch held that the Board is not authorized to render so-called “partial institution” decisions. Instead, the statute is clear that the Board must address all of the claims that are being challenged by a petition in a Final Written Decision at the end of an IPR trial. Regardless of which camp you are in, this decision is a mixed and messy bag of results.

The SAS Institute decision creates immediate chaos and uncertainty for the hundreds, if not thousands, of IPR proceedings for which an IPR trial has been instituted but all appeals are not yet finalized. Will IPR cases already on appeal be remanded, en mass, by the Federal Circuit back to the Board to effectively rework each Final Written Decision?  Will parties be allowed to introduce evidence and/or arguments in pending IPR trials relative to claims for which an IPR trial was not instituted, and would this apply if pending appeals are remanded? If non-instituted claims must now be addressed in each Final Written Decision, does that effectively end the partial approach to patentee estoppels set forth in the Federal Circuit’s Shaw Industries decision (817 F.3d 1293)?

On the brighter side. the mixed and messy SAS Institute decision may be the push Congress needs to revisit the America Invents Act and address the many issues relating to fairness, procedures, claim construction, claim amendments, and burdens of proof that commentators have raised regarding IPR proceedings.

In the interim, it is likely that the USPTO will be forced to provide some type of stop-gap measure in response to the SAS Institute decision. The Office will need to promulgate rules as quickly as they can on how to deal with claims challenged in a petition that were not part of the claims for which an IPR trial was instituted. One approach to such a stop-gap solution would be to promulgate rules that no new evidence or arguments can be introduced by the parties during an IPR trial for any claims which did not meet the threshold test for institution, and that the Board will repeat the same analysis set forth in the Decision to Institute relative to such non-instituted claims as part of any Final Written Decision.  USPTO rule promulgation, however, is never a quick and clean process, so it may be at least several months before even stop-gap measures will be in place.

Together, the two decisions on IPRs handed down by the Supreme Court today forecast an active and uncertain summer in the world of IPRs.

King Spalding DQ’d from arbitrating against Former Client

A February 22, 2018 order in Merial Inc. et al. v. Abic Biological Labs. Ltd (Sup. Ct. N.Y.), here, enjoined King & Spalding from representing Abic Biological Labs (“Abic”) and Phibro Animal Health Corporation (“Phibro”) in an ICC arbitration where Abic and Phibro were adverse to Merial Societe Par Actions Simplifiee (“Merial SAS”), which was a former K&S client.

The evidence appears to have shown that K&S had represented Merial SAS, and related entities, from 1998 to at least 2011 concerning transactions and litigation in the animal health and vaccine space.   K&S had also for many years represented Phibro and related entities in the animal health and vaccine space.

Merial SAS was acquired by Boehringer Ingelheim GmBH (“Boehringer”) in 2017, and K&S had represented an affiliate of Boehringer until December 2017. In the summer of 2017, Merial and Boehringer became cross-wise, and until then, none of the Merial parties knew that K&S had been representing Phibro.

In the summer of 2017, K&S wrote a letter to the person that it had often interacted with, the head of prosecution and litigation at Merial SAS (Dr. Jarecki-Black), explaining that K&S was representing Abic and Phibro in a licensing dispute they had with Merial SAS (and other entities).  Dr. Jarecki-Black responded by asserting that K&S’ representation presented a conflict of interest and demanding that K&S withdraw.  A few weeks later, the firm refused, explaining in a letter that it had represented different corporate entities in the matters Dr. Jarecki-Black pointed to, the matters were in all events unrelated to the ICC licensing dispute, and no K&S lawyer who was working against Merial SAS in the ICC matter had represented it previously.  In response, Merial SAS reiterated its positions, and its letter also made a new (and very odd) argument: because the license in dispute included a New York choice of law clause, a California lawyer from K&S who was representing Phibro was engaged in the unauthorized practice of law.  In its final letter, K&S reiterated that there was no substantial relationship between its work for and the work against Merial SAS, and made short shrift of the odd argument about the unauthorized practice of law.

It seems the parties could not agree on who was right, and instead Merial SAS filed suit in New York seeking an injunction to prevent K&S from being adverse to it (and Boehringer, and affiliated entities) in the ICC.

The court enjoined K&S.  What struck me as quite concerning was that there was no overlap between patents or licenses K&S had worked on for Merial SAS and those in the ICC arbitration.  Instead, the court noted that K&S “clearly knows a great deal about how the Merial entities approach issues relating to patents and licenses in the animal health and animal vaccine space.”  The trial court emphasized that Merial SAS had relied on “a highly credentialed ethicist, Roy D. Simon” and noted that, although the decision was for the court to make, “King & Spalding offered no expert testimony to rebut Mr. Simon’s expert opinion.”  The court then noted that “a reasonable lawyer like Mr. Simon came to the conclusion that King & Spalding’s multiple representations of [Merial SAS entities] on issues meaningful to the limited number of players in teh animal health and animal vaccine space would materially advance Abic and Phibro’s interests vis-a-vis Merial,” particular because Dr. Jarecki-Black “will play an integral role in Merial’s defense” in the arbitration.

There are several things of note. First, it is unusual for actual injunctions to be sought (rather than disqualification), and usually injunctions are litigated quite differently from motions to disqualify, but K&S appeared to litigated this as a basic disqualification motion.  Second, from the opinion, at least, the injunction was granted based upon what is called “playbook” information — knowing how a client litigates or otherwise behaves, not actual specific confidential information — which is also atypical in some jurisdictions.  Third, and from afar, this was not correctly decided, which underscores the point that whenever a firm is faced with a disqualification motion, it should consider the need for expert testimony (and Professor Simon is a highly credentialed ethicist; I don’t think he knows much about patents or licensing), and the need to show — although it’s the other side’s burden — there is no real risk of misuse of confidential information.

Is Termination a form of Institution (and thus Non-Appealable)

BioDelivery Sciences International, Inc. v. Aquestive Therapeutics, Inc., fka MonoSol RX, LLC, No. 19-1381 (Supreme Court 2020)

This case is procedural and it focuses – once again – on the unique two-step, two-decision-maker divide by Congress for inter partes review (IPR) proceeding.

  1. Step 1 – Institution: The USPTO Director decides whether to grant an IPR petition and “institute” proceedings.  This decision is “final and nonappealable.”
  2. Step 2 – Trial: Once the IPR is instituted, the PTAB takes-charge and moves the case to a final decision.

As the USPTO planned-out how to actually implement the proceedings, the Director at the time (Kappos) recognized that he didn’t want to personally decide all of the IPR decisions and also recognized that the USPTO petitions office was (is) not operating at peak efficiency (except for the automatically granted petitions). So, the the rules delegated the Director’s authority for instituting IPRs to the PTAB judges.  This effectively rewrote the proceedings as follows:

  1. Step 1: The USPTO Director PTAB decides whether to grant an IPR petition and “institute” proceedings.  This decision is “final and nonappealable.”
  2. Step 2: Once the IPR is instituted the PTAB then takes-charge and moves the case to a final decision.

Delegation of institution authority results in some amount of confusion about whether a given decision by the PTAB is associated with a non-appealable institutional decision or instead an appealable final judgment in the case.

BioDelivery began at the PTAB with three IPR petitions against Aquestive’s US8765167. This was pre-SAS, and the USPTO partially instituted the proceedings.  On appeal, the Federal Circuit vacated the final written decision on SAS grounds — holding that the USPTO cannot partially institute an IPR.  The partial-institution clearly falls on the side of step-1 nonappealable institution decision, but the Supreme Court created a limited exception in this situation.  See SAS Institute v. Iancu, 138 S. Ct. 1348 (2018) as limited by Thryv, Inc. v. Click-to-Call Techns., LP, 140 S. Ct. 1367 (2020).  You can read that original 2018 BioDelivery opinion here BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 898 F.3d 1205 (Fed. Cir. 2018).

In SAS, the Supreme Court held that at institution stage the Director must either (1) institute the proceeding as to all challenged claims or (2) deny the petition all together. Federal Circuit then extended SAS to also require that any final written decision address every ground for challenge (not just every claim). PGS Geophysical AS v. Iancu, 891 F.3d 1354 (Fed. Cir. 2018).

On remand, the PTAB decided it was faced with the question of whether to (1) proceed with a final decision on all grounds raised or (2) drop the whole case. It chose the latter–terminating all three IPR petitions.

The patent challenger then appealed again and the Federal Circuit had to figure out whether the termination of proceedings was more like an institution decision or a final written decision.  The court decided the former and held that the termination was final and nonappealable.  BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 935 F.3d 1362 (Fed. Cir. 2019) (opinion by Judge Reyna, dissent by Judge Newman); en banc petition denied at BioDelivery Scis. Intl., Inc. v. Aquestive Therapeutics, Inc., 946 F.3d 1382 (Fed. Cir. 2020) (dissent by Judge Newman).

Now comes the petition for writ of certiorari — arguing that “termination” should not be considered an institution decision. Questions presented:

1. Does the Judiciary have authority to review a Patent Office decision refusing to implement its mandate and this Court’s precedent?

2. May a petitioner appeal a decision terminating an instituted IPR, despite the decision being mislabeled as a nonappealable decision?

[BioDelivery Petition]

Although the situation is muddled by the PTAB/Director delegation, the basic question is whether ‘termination’ of an [improperly] instituted IPR is a furtherance of the institution process given to the discretion of the Director or is it instead a role given by statute directly to the PTAB.  The statute does discuss termination following settlement, but not in the particular context of this case.

The situation also reminds me of the recent essay by Brian Fry and Maybell Romero, The Right to Unmarry: A Proposal,  https://ssrn.com/abstract=3566944.

= = = =

I have included Fig. 1 from the challenged patent above. The claims are directed to an “oral film” that melts-in-your-mouth for drug delivery.  The film includes an “anti-tacking agent” such as vegetable oil or wax.

Respecting Foreign Judgments and $79 million for clicking “I agree”

by Dennis Crouch

An interesting new petition before the Supreme Court focuses on international licensing and copyright issues.  What happens when foreign courts give less weight to contracts and copyrights than would a US court? World Programming Ltd. v. SAS Institute, Supreme Court Docket No. 17-1459 (2018). [petition][docket]

Agreeing not to Reverse Engineer, then Reverse Engineering: WPL, a UK software company purchased a copy of SAS’s popular software and began to study its functionality (all in the UK).  As part of the process, WPL clicked “I agree” on the SAS clickwrap licenses. Those licenses included a prohibition on reverse engineering and also limited the software use to “non-production purposes.”  According to the petition, however, “under U.K. and E.U. law, such observation and study is lawful, and contractual terms restricting such acts are null and void. . . .While  WPL was required to agree to that license before installing the SAS System, it also knew that E.U. and U.K. law permitted use of software for observation, study, and testing regardless of contrary contractual restrictions.” Consider Council Directive 2001/29/EEC, ¶ 50, 2001 O.J. (L 167/10) (EC); Council Directive 91/250/EEC, art. 5(3), 1991 O.J. (L 122/42) (EC); Copyright, Designs and Patents Act 1988, c. 48, §§ 50BA(1), 296A(1)(c) (U.K.).

When SAS later sued, the High Court of Justice sided with WPL — rejecting SAS Institute’s copyright infringement claim (functionality of software not protected) and breach of contract claim (contract cannot bar lawful right of study). Thu U.K. Court of Appeal affirmed — finding the contract provision “invalid to the extent that it prohibits the observation, study or testing of the functioning of the program in order to determine the ideas and principles underlying it” and that the software functionality “does not count as a form of [copyrightable] expression.”

After losing in the UK, SAS brought its lawsuit to the USA and won on the same contract claim that was a loser in the UK (but lost on the copyright claim).  The US lawsuit also included a fraudulent inducement and unfair trade practices under N.C. UDTPA.  A jury found WPL liable — although WPL was barred from presenting any evidence regarding its reliance upon the UK and EU safe harbors.  Damages $80 million.

In this process, the district court refused to give any preclusive effect to the UK judgment.

On appeal, the Fourth Circuit held that the UK judgment was properly denied preclusive effect since it was contrary to North Carolina policy.  “North Carolina courts [are] more protective of the sanctity of contracts” than are UK or EU courts.

On the copyright claim, the 4th Circuit declined to resolve the copyright question — finding it moot.  Here, SAS received all of its sought-for damages from its other claims and the 4th Circuit ruled that it could not prove grounds for injunctive relief.  “Thus, the legal resolution of the copyright question would have no effect on the relief afforded the parties” and therefore the issue is moot. “Absent a practical effect on the outcome of this case, the copyright claim is moot.” SAS Inst., Inc. v. World Programming Ltd., 874 F.3d 370 (4th Cir. 2017).

Now, in its petition, WPL asks two questions:

  1. Whether federal or state law governs the respect that must be accorded to the judgment of a foreign court in diversity cases.
  2. Whether a district court’s decision on the merits of a claim becomes moot, and must be vacated, if the court of appeals determines that the plaintiff has not proven entitlement to the only remaining relief sought in connection with that claim.

In its argument, WPL reaches back to Hilton v. Guyot, 159 U.S. 113 (1895) where the Supreme Court spelled-out its jurisprudence for respecting foreign judgments.  Basically – foreign judgments must be respected by U.S. courts “unless they contravene basic principles of decency and morality.”  The difficulty here, though is how a Federal Court should operate when sitting in diversity and weighing the differences between a foreign judgment and the law of a US state’s law.  Basically – state law is regularly “less respectful of foreign judgments.”

Under SAS, the PTO must Institute as to All Separate Challenge Grounds Against All Claims

Back in 2016, Adidas petitioned the USPTO Director to institute inter partes review (IPR) proceedings against two of Nike’s patents. U.S. Patent Nos. 7,814,598 and 8,266,749. Acting on behalf of the Director, the PTAB instituted review of all challenged claims. The caveat – Although Adidas had raised two different grounds for challenging the claims, the USPTO instituted only on ground 1.

Here, the invention basically has three steps: (1) knitting fabric in a cylindrical form and then (2) cutting out a shoe-upper pattern from the fabric; and (3) incorporating the cut-out into a shoe. Grounds 1 and 2 were obviousness challenges with overlapping prior art citations: Ground 1 (Reed and Nishida) and Ground 2 (Castello, Fujiwara, and Nishida). In its final determination – focused just on Ground 1 – the PTAB sided with the patentee Nike and held that Adidas had not met its burden of proving obviousness.

On appeal, Adidas argued that the case should be remanded under SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). Although SAS focused on institution of all challenged claims – Adidas argues here that the case stands for the proposition that an IPR petition may only be granted/denied as a whole – if is granted, it must be granted as a whole, including all grounds for challenging all claims. Further, Adidas argues for remand because the PTAB has changed its own rules and now institutes review on all challenges raised in a petition. See Guidance on the Impact of SAS on AIA Trial Proceedings (Apr. 26, 2018).

The Federal Circuit has now sided with Adidas – ordering remand to consider all grounds raised by the petition as required by SAS. [Read the Decision: AdidasNike]

The appellate court writes:

The [Supreme] Court explained in SAS that in establishing inter partes review, Congress set forth “a process in which it’s the petitioner, not the Director, who gets to define the contours of the proceeding.” The Court held that if the Director institutes review proceedings, the review must proceed “in accordance with or in conformance to the petition,” a “petition describing ‘each claim challenged’ and ‘the grounds on which the challenge to each claim is based,'” (quoting 35 U.S.C. § 312(a)(3)). “Nothing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design.” The [Supreme] Court found that “the petitioner’s petition, not the Director’s discretion, is supposed to guide the life of the litigation,” and “that the petitioner’s contentions, not the Director’s discretion, define the scope of the litigation all the way from institution through to conclusion.”

Nike argued that Adidas had also waived its right to present the alternative grounds by failing to raise the issue before the Board. On appeal, the Federal Circuit found “waiver inapplicable” in this case because the request on appeal was filed as “a prompt remand request due to the significant change in the law.”

= = = =

Looking back at the institution decision and reasons for denial on Ground 2, the PTAB explained that the petition “fail[ed] to identify ‘with particularity’ the grounds and evidence that form the underlying basis for Petitioner’s patentability challenge. For instance, with respect to claim 1, the claim chart offered to point out where the features of the claim are present in the prior art spans four pages and constitutes bulk citation to portions of Castello, Fujiwara, and Nishida. See Pet. 34–37. Such an approach does not provide meaningful “particularity” sufficient for the panel to ascertain where, specifically, Petitioner identifies the limitations of the claim in the prior art.”

Waiving the SAS Right to Trial on All Challenged Claims

Although non-precedential, Valmont Indus. v. Lindsay Corp (Fed. Cir. 2018) appears to be the first post-SAS Federal Circuit opinion involving a partially-initiated inter partes review (IPR) proceeding.

In its IPR petition, Lindsay challenged all 18 claims of Valmont’s U.S. Patent No. 7,003,357.  The PTAB instituted, but only to claims 1-15 and 17-18 — the case against Claim 16 was not strong enough.   In its final decision, the PTAB found the claims obvious except for claim 11 and, of course claim 16 (whose validity was not tried).

Meanwhile, in SAS, the Supreme Court ruled that the PTO cannot partially-institute its AIA trials, but rather, it must either hold trial on all the challenged claims or none of the challenged claims.

[The statute] directs that “[i]f an inter partes review is instituted and not dismissed under this chapter, the [Board] shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner . . . .” §318(a) (emphasis added). This directive is both mandatory and comprehensive. The word “shall” generally imposes a nondiscretionary duty. . . . SAS is entitled to a final written decision addressing all of the claims it has challenged.

One open question following SAS is what-to-do with all the cases that have been partially instituted . . . Here, neither party filed any post-SAS briefing and the court consequently ignored the issue — holding that the PTAB erred on claim 11 and instead that all of the tried claims should be cancelled.

Because the decision here is non-precedential and sub silento, it is difficult to discern much meaning — but one conclusion is that the right to trial and written decision on all challenged claims is a waivable right. In SAS, the court referred particularly to the right as an “entitlement” held by the petitioner — and most entitlements are waivable.  The setup raises several questions – most notably (1) does the patentee also hold the entitlement and (2) may the petitioner “waive” the all-challenged-claims right within the petition itself?

As an alternative theory — I dug into some of the documents and found that the aformentioned unjudged Claim 16 was later challenged in an ex parte reexamination and Valmont calncelled the claim in that proceeding. At that point, it is probably appropriate to say that it is no longer a “claim” subject to challenge.

USPTO Rule Making: Codify SAS, Eliminate Presumption in Favor of Petitioner

By David Hricik, Mercer Law School

The USPTO is seeking comments on amending certain PTAB Rules of Practice. While it proposes many amendments, two seem key: one for instituting on all challenged claims and grounds (to conform with SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018)) and the other to eliminate the presumption at institution favoring the petition as to testimonial evidence.  Comments will be accepted through June 26, and the notice is available here.

As to the first major proposal, as amended the PTAB will institute an IPR, PGR, or CBM proceeding on all claims and all grounds if preponderant evidence in the petition shows at least one claim is unpatentable.  The Office explained in part:

In light of SAS, the Office provided guidance that, if the Board institutes a trial under 35 U.S.C. 314 or 324, the Board will institute on all claims and all grounds included in a petition of an IPR, PGR, or CBM. To implement this practice in the regulation, the first proposed change would amend the rules of practice for instituting an IPR, PGR, or CBM to require institution on all challenged claims (and all of the grounds) presented in a petition or on none. Under the amended rule, in all pending IPR, PGR, and CBM proceedings before the Office, the Board would either institute review on all of the challenged claims and grounds of unpatentability presented in the petition or deny the petition.

As to the second, the USPTO spent a lot more ink explaining it, writing in part:

In April 2016, after receiving comments from the public and carefully reviewing them, the Office promulgated a rule to allow new testimonial evidence to be submitted with a patent owner’s preliminary response. Amendments to Rules of Practice for Trials Before the Patent Trial and Appeal Board, 81 FR 18750 (April 1, 2016). The Office also amended the rules to provide a presumption in favor of the petitioner for a genuine issue of material fact created by such testimonial evidence solely for purposes of deciding whether to institute an IPR, PGR, or CBM review. Id. at 18755–57.

Stakeholder feedback received in party and amicus briefing as part of the Precedential Opinion Panel (POP) review in Hulu, LLC v. Sound View Innovations, LLC, Case IPR2018–01039, Paper 15 (PTAB Apr. 3, 2019) (granting POP review), indicated that the rule has caused some confusion at the institution stage for AIA proceedings. For example, certain stakeholders have indicated that the presumption in favor of the petitioner for genuine issues of material fact created by patent owner testimonial evidence also creates a presumption in favor of the petitioner for questions relating to whether a document is a printed publication. Additionally, the Office has concerns that the presumption in favor of the petitioner may be viewed as discouraging patent owners from filing testimonial evidence with their preliminary responses, as some patent owners believe that such testimony will not be given any weight at the time of institution.

Section 314(a) of 35 U.S.C. provides that ‘‘[t]he Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition. . . and any response . . . 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.’’ 35 U.S.C. 314(a). Thus, the statute provides that a petitioner is required to present evidence and arguments sufficient to show that it is reasonably likely that it will prevail in showing the unpatentability of the challenged claims. Hulu, LLC v. Sound View Innovations LLC, Case IPR2018– 01039, Paper 29 at 12–13 (PTAB Dec. 20, 2019) (citing 35 U.S.C. 312(a)(3), 314(a)). For a post-grant review proceeding, the standard for institution is whether it is ‘‘more likely than not’’ that the petitioner would prevail at trial. See 35 U.S.C. 324(a). In determining whether the information presented in the petition meets the standard for institution, the PTAB considers the totality of the evidence currently in the record. See Hulu, Paper 29 at 3, 19.

In this notice of proposed rulemaking, the Office proposes to amend the rules of practice to eliminate the presumption in favor of the petitioner for a genuine issue of material fact created by testimonial evidence submitted with a patent owner’s preliminary response when deciding whether to institute an IPR, PGR, or CBM review. Thus, consistent with the statutory framework, any testimonial evidence submitted with a patent owner’s preliminary response will be taken into account as part of the totality of the evidence.

Interestingly, the Office specifically asked for input as to implementation, stating  “the Office may apply any rule changes, if adopted, to all pending IPR, PGR, and CBM proceedings in which a patent owner’s preliminary response is filed on or after the effective date.”

Shenanigans, Time Bars, and Federal Circuit Oversight

Guest post by Saurabh Vishnubhakat, Associate Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering.  Although Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, his arguments here should not be imputed to the USPTO or to any other organization. Prof. Vishnubhakat was counsel of record for the amicus brief by patent and administrative law professors in this case.

***

In its en banc decision in Wi-Fi One, LLC v. Broadcom Corp, the Federal Circuit held that applications of the one-year time bar for inter partes review are, indeed, subject to judicial review in light of the Supreme Court’s 2016 decision in Cuozzo Speed Techs. v. Lee.  The en banc decision, authored by Judge Reyna and joined by eight others, overrules the panel opinion in Achates Reference Publ’g, Inc. v. Apple Inc.  The panel in Achates had held that decisions about institution are unreviewable even where the time bar may have been applied incorrectly.

In a previous post discussing the oral argument, I noted three important issues that the court appeared to be considering: the balance of power between the PTAB and the district courts, the balance of supervisory power between the USPTO Director and the Federal Circuit, and the agency’s obligations of reasoned decision-making.  The en banc outcome focuses largely on the first of these issues.

The PTAB-District Court Balance of Power

In fact, the issue of court-agency power allocation was central to the whole case.  The one-year time bar of 35 U.S.C. § 315(b) forbids inter partes review if the petition is filed more than one year after the petitioner (or its privy or real party in interest) is served with a district court complaint for infringement.  Thus, the time bar forces a substitutionary choice: leave the court within a year and come to the PTAB, or do not come to the PTAB at all.  This boundary-policing function makes the one-year time bar qualitatively different from other provisions that also bear on the institution phase, such as the pleading requirements at issue in Cuozzo.

The APA Baseline

From looking to Cuozzo, much of the initial debate surrounding this case was over what constituted a “shenanigan.”  The Court in Cuozzo had held that routine determinations that are closely tied to institution are unreviewable under 35 U.S.C. § 314(d), but assured that other determinations may remain reviewable.  These include appeals based on constitutional arguments, on less closely related statutes, on interpretive issues whose scope and impact extend beyond merely the institution statute, or on agency actions that are plainly ultra vires.  These were shenanigans that the Court in Cuozzo did not purport to protect from judicial scrutiny.

Wi-Fi One, however, argued persistently (and sensibly) that the inquiry did not begin with Cuozzo’s exceptions.  As the en banc majority here agreed, the baseline should still be a presumed availability of judicial review under the Administrative Procedure Act.  That presumption was overcome in Cuozzo, but Broadcom here would have to overcome it anew and had not done so.

This jurisprudential point is an important reminder that each new argument for unreviewability must start from the same APA baseline.

Relatedness to Institution

In this case, the argument for unreviewability failed first because the one-year time bar are not closely related to institution—certainly less closely related than the requirements for a petition, including the particularity requirement at issue in Cuozzo.  In construing the nonappealability provision of § 314(d), the Court in Cuozzo had emphasized that what is immune from appeal is institution “under this section,” i.e., section 314.  The standard for institution is a reasonable likelihood of success on at least one claim in the patent.  The pleading requirements at issue in Cuozzo came from § 312 but were related to institution “under this section” because those requirements directly shaped how the likelihood of success would be evaluated for § 314 purposes.  The Director has discretion in this regard, as § 314(a) makes reasonable likelihood of success a necessary condition but not a sufficient one:

The Director may not authorize an inter partes review to be instituted unless . . .

The one-year time bar is different.  It is unrelated to institution “under this section” because it has nothing to do with the necessary reasonable likelihood of a petition’s eventual success.  Put another way, even a petition that is otherwise certain to succeed must be denied if it comes after the time bar.  As a result, though requirements such as pleading and particularity may be folded into the Director’s § 314 discretion to evaluate reasonable likelihood of success, the time bar cannot.  The time bar has no analytical connection to evaluating whether a petition is reasonably likely to succeed for § 314(a) purposes.  Therefore, the time bar is not unreviewable for § 314(d) purposes.

Scope and Impact

The argument for unreviewability also failed because the one-year time bar reaches, in terms of the “scope and impact” that Cuozzo described, well beyond merely “this section,” i.e., well beyond § 314’s institution decision.  The key to this inquiry is the substitution of the agency for district courts as a decision-maker on patent validity.  For a boundary-policing statute such as § 315(b), the scope and impact are broad and far-reaching.  The time bar is part of a larger set of structural provisions (also including, for example, court-agency estoppel) that strike an interbranch balance of power.  As a result, proper enforcement and supervision of the time bar is a concern not solely for the agency, but also for the Article III courts that compete with the agency.  As the en banc majority explained:

The timely filing of a petition under § 315(b) is a condition precedent to the Director’s authority to act.  It sets limits on the Director’s statutory authority to institute, balancing various public interests.  And like § 315 as a whole, [the one-year time bar] governs the relation of IPRs to other proceedings or actions, including actions taken in district court.

Judge O’Malley’s Concurrence

Judge O’Malley joined the en banc majority but also wrote separately to advance a simpler line of reasoning.  Her concurring opinion distinguishes between two authorities.  One is “the Director’s authority to exercise discretion when reviewing the adequacy of a petition to institute an inter partes review.”  The other is the Director’s “authority to undertake such a review in the first instance.”  Cuozzo implicates the former and so is unreviewable.  By contrast, the present case and others like it implicate the latter, and so the Federal Circuit “sitting in its proper role as an appellate court, should review those determinations.”  The goal of such an appellate review should be “to give effect to the congressionally imposed statutory limitations on the PTO’s authority to institute IPRs.”

Interestingly, where the en banc majority opinion emphasized the court-agency allocation of power in deciding patent validity, Judge O’Malley pointed to the agency-legislature allocation of power.  It is Congress that delegated to the Patent Office the power of substantive decision-making about patentability and its incidents.  But it is also Congress that crafted a fairly bright-line time bar and instructed the Patent Office simply to apply it.  For the Director to exercise discretion on the latter, with no judicial oversight, would be inappropriate:

Congress is well versed in establishing statutory time bars.  Congressional discretion should control the application of such time bars, not that of the Director of the PTO.  I do not see the need to say more.

The Dissent’s Case for Unreviewability

The case also drew a dissent from Judge Hughes joined by Judges Lourie, Bryson and Dyk.  In the dissent’s view, the language of § 314(d) is expansive: determinations whether to institute are nonappealable.  On this view, the majority’s reading is unjustifiably narrow because it limits the prohibition on judicial review to the § 314 criteria for institution, i.e., the reasonable-likelihood-of-success standard.  The majority reads out of the statute other determinations that occur at the institution phase, including application of the one-year time bar.  The dissent took a strong textualist approach, admonishing that “[o]ur inquiry should start and end with the words of the statute.”

In support of this textualist view, and in reading Cuozzo, the dissent disagreed about the relatedness of the time bar to institution.  The timeliness of a petition is closely related to the institution decision because what is unreviewable is broadly the decision “whether to institute.”  Compare, for example, the nonappealability statute for ex parte reexamination, which provides that “[a] determination by the Director . . . that no substantial new question of patentability has been raised will be final and nonappealable.”  The decision to proceed is nonappealable, but the decision to refrain is not.  For AIA reviews, the unreviewability of the decision does not depend on its outcome.  This suggests that the unreviewability of the decision should also not depend on its origins.  Institutions should be unreviewable where they are based on timeliness or any other input just as if they were based on the petition’s likelihood of success.

In support of its argument about relatedness, the dissent also pointed to the dissent in Cuozzo itself.  Justice Alito, joined by Justice Sotomayor, had criticized the broad reach of the Cuozzo majority’s opinion by arguing that the time bar was closely tied to institution and that their reviewability might rise and fall together.  The Cuozzo majority opinion, meanwhile, did not rebut this criticism.  The en banc dissent in this case took Justice Alito’s argument and the majority opinion’s silence as a sign of consensus that the time bar was, indeed, “closely related” to institution for Cuozzo purposes:

Moreover, although Justice Alito disagreed with the ultimate result in Cuozzo, even he recognized that “the petition’s timeliness, no less than the particularity of its allegations, is “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate . . . review,” and the Court says that such questions are unreviewable.

This issue was also a line of questioning during en banc oral argument—raised by Judge Chen, who ultimately joined the en banc majority.  The answer that I had suggested in my recap of that oral argument was that Justice Alito’s argument about the one-year bar should be seen as hortatory, intended first to build a majority and later, when the case was lost, to cabin the impact of the majority’s reasoning.  In other words, the dissent did not merely read the majority’s logic broadly but read it broadly as a reason to reject that logic.  Indeed, Wi-Fi answered Judge Chen along just these lines by discussing what the Cuozzo dissent was trying to accomplish—limiting nonappealability to a prohibition of interlocutory review—not merely what the dissent said.

Notably the en banc dissent in this case did not address the scope and impact of the one-year time bar, though that was a separate self-imposed limitation on the logic of Cuozzo.  The interbranch balance of power and the substitution between the Patent Office and the Article III courts, which figured prominently in Judge Reyna’s majority opinion, were absent from the dissent.

The Way Forward

Looking ahead, it is possible that Broadcom will seek review in the Supreme Court.  Following Cuozzo itself and the partial institution/reviewability controversy in SAS Institute v. Matal (and assuming the entire PTAB system is not invalidated in Oil States Energy Services v. Greene’s Energy Group), a grant of certiorari in this case would be a third foray by the Court into the specific issue of Federal Circuit review despite § 314.  The en banc dissent has laid out a reasonable roadmap toward a petition for certiorari.  It expressly and repeatedly argues that the en banc majority is inconsistent with Cuozzo.  It characterizes the en banc outcome as an effort “[t]o sidestep this binding precedent.”  And it points to the colloquy between Cuozzo’s own majority and dissent to suggest consensus on the issue now in dispute.  Taken together, these arguments invite further Supreme Court clarification.

However, whereas the facts of Cuozzo made a reasonable case for unreviewability—evaluating the requirements of the petition is, after all, part and parcel of determining the petition’s likelihood of success—the facts of Wi-Fi One v. Broadcom suggest a clearer case for the opposite conclusion, especially in light of the scope and impact of the time bar.  If the Supreme Court found reviewability in SAS Institute and saw it as a closer case than Wi-Fi One, then there would be little need for further clarification and little reason to grant certiorari in Wi-Fi One.  Conversely, if the outcome in SAS Institute were unreviewability, the result would be two Supreme Court decisions denying judicial review and one en banc Federal Circuit decision affording review.  This, too, may be ample guidance in the Court’s view, leaving little reason for certiorari in Wi-Fi One.  A middle-ground may come in the form of a grant-vacate-remand (GVR) order whereby the Court would grant certiorari, vacate the Federal Circuit decision, and remand for reconsideration in light of SAS Institute.  (This was the course that AMP v. Myriad Genetics initially took nearly six years ago in light of the Court’s intervening decision in Mayo v. Prometheus, though the Federal Circuit decision vacated there was that of a panel, not of the en banc Court of Appeals.)

The decision in Wi-Fi One v. Broadcom is the first real test, following Cuozzo, of the broad view that the Patent Office has taken of its immunity from judicial review in PTAB institutions.  Going forward, it will likely be the dialogue between the Federal Circuit and the Supreme Court that defines the full contours of the agency’s discretion.

Final and Nonappealable: construed as “may be reconsidered” and not reviewable in “at least some circumstances.”

BioDelivery Scis. Int’l v. Aquestive Therapeutics, Inc. (Fed. Cir .2019)

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(d).

In 2014, BioDelivery filed three separate IPR petitions against Aquestive’s U.S. Patent 8,765,167.  The USPTO partially-instituted the proceedings (on some, but not all grounds) but then sided with the patentee — finding that the claims had not been proven unpatentable. BioDelivery then appealed to the Federal Circuit who vacated the final written decision on SAS grounds — holding that the USPTO cannot partially institute an IPR.

Back on remand, the PTAB essentially restarted the whole case at institution and eventually decided not to institute the case at all (terminating all three IPR petitions).  BioDelivery then appealed again — arguing that the appeal should have remained instituted and that the PTAB should not have reconsidered that decision.

Back on appeal, the Federal Circuit reconstituted the same panel of Judges Newman, Reyna and Lourie.

Not Final Final: In its decision, the Federal Circuit first held that the “final” aspect of an institution decision does not mean that it cannot be reconsidered.  Rather, “administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit statutory authority to do so.” Medtronic, Inc. v. Barry, 891 F.3d 1368 (Fed. Cir. 2018). Without interpreting the statutory meaning of “final,” the Board simply concluded that it does not clearly deprive the Board of its “inherent default authority.” (Note a minor problem with the decision in how it conflates statutory authority given to the Board with statutory authority given to the Director who then administrative delegated that authority to the Board).

NonAppealable: Although the “final” portion of the statute carried no weight, the court here ultimately dismissed the appeal — finding that it fell squarely within the nonappealable provision.

Congress clearly intended to bar review of institution decisions in at least some circumstances by passing the “No Appeal” provision—§ 314(d).

In Cuozzo, the Supreme Court explained that an appeal focused on the likelihood of success element of institution would be barred by the provision.  Here, the majority identifies BioDelivery’s appeal as “merely challenge the Board’s determination not to institute review, something the Board has discretion to do even upon a showing that there is a ‘reasonable likelihood of success with respect to at least 1 claim challenged’ in the petition.”

Judge Reyna wrote this order for the majority panel joined by Judge Lourie. Judge Newman wrote in dissent. Judge Newman argued that the prior appellate decision “ordered further proceedings in conformity to the Court’s ruling in SAS” and that the PTAB’s dismissal avoided that order.

= = = =

The patent here covers a dissolvable thin-film used for drug delivery (Clozabim).

Patently-O Bits & Bytes by Lawrence Higgins

Opening of Franklin Pierce Center for IP

  • UNH Law is proud to announce the official opening on September 30 & October 1 of the Franklin Pierce Center for Intellectual Property with an intellectual property works-in-progress conference featuring presentations by scholars from law schools in the Northeast and alumni of UNH Law. Chief Judge Randall Rader will serve as special guest speaker. Other guest include: Jonathan Dudas, Judge Newman, and Judge Gajarsa. [Link]

Biotech in Ottawa is Booming?

  • Ottawa Life Science Cluster currently home to over 90 companies focused on life science and biotechnology research and innovation. Also, there are over 50 other companies that have a secondary focus in life sciences and biotechnology. Leading the charge for commercialization is the Ottawa Centre for Research and Innovation (OCRI). With the increased commercialization in Ottawa, comes an increase in patent applications in Canada, the US, and beyond. [Link] [Link]

Great Patents!

  • Great Patents: Advanced Strategies For Innovative Growth Companies, is a book that aims to inform executives on how best to use patents to improve their competitiveness. The book has a total of 12 chapters and each chapter is written by an individual in the patent world. The chapters in the book are broken into two categories: Strategies and Valuation. Companies pursue patents to make money, and this book is very useful to help companies discover what they can do with their patents that they may not have previously considered. While the book is aimed at executives and the like, it is also a useful tool for law students and others. Most law students are not familiar with the business world of patents and this book gives a perspective different than what is taught in law schools.
    • About the Author: David Orange is a patent attorney in Washington, DC. He is active in the start-up space as an investor and advisor.

Patent Jobs

  • Goldberg Cohen is seeking an IP associate with 2-5 years of experience. [Link]
  • Womble Carlyle Sandridge & Rice is looking for mechanical patent attorneys with at least 3 years of experience. [Link]
  • Verenium is searching for a patent agent with a minimum of 5 years of experience. [Link]
  • Cleveland Golf/ Srixon is seeking a Sr. patent engineer with a BSME and at least 4 years of experience. [Link]
  • The Michaud-Kinney Group is looking for a legal assistant to work at their Middletown, Connecticut location. [Link]
  • Qualcomm is searching for a US patent attorney or a registered India Patent Attorney/Agent with at least 5 years of experience. [Link]
  • Qualcomm is looking for a patent counsel with 3+ years of patent prosecution experience. [Link]
  • Steptoe & Johnson is seeking associates with a minimum of 4 years of experience in patent litigation and with a technical background. [Link]
  • The Office of the Solicitor at the USPTO is searching for an experienced Patent Attorney. [Link]
  • Dynamics Inc. is seeking a patent attorney with an EE degree, to work at their Pittsburgh location. [Link]

Upcoming Events:

  • Boston University School of Law and the Kauffman Foundation will be holding a Workshop on Innovation and Patent Harmonization at Boston University School of Management on September 30-October 1. The workshop will cover the effect of harmonization in both advanced countries, such as the US, and in developing nations, with a particular focus on China. Anyone interested in attending, please RSVP to Elizabeth Aggot at eaa@bu.edu. [Link]
  • American Conference Institute's 12th Annual Maximizing Pharmaceutical Patent Life Cycles will take place in New York on October 4th-5th. The conference is one of the leading sources of information and analysis on the patent life cycle management. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • Houston Intellectual Property Law Association (HIPLA) will be holding its Annual IP Institute in Galveston, Texas October 6-8. The Institute will feature topics such as: Do's and Don'ts in IP Licensing, Due Diligence and Ethics in Acquisitions, Patent Prosecution Under the New Cases and Inducement of Patent Infringement after Global Tech Appliances v. SEB. The guest speaker will be Lord Justice Robert "Robin" Jacob, Court of Appeal of England and Wales. [Link]
  • The 17th Annual Advanced ALI-ABA Course of Study for the Corporate Counsel and the Private Practitioner: Trial of a Patent Case will be held in Chicago October 13-14. Guest speakers include: Judge James Holderman, Judge Liam O'Grady, Scott Coonan, James Leeds, and many more individuals. (Patently-O readers can get 30% off with discount code CT017POB) [Link]
  • The 4th Annual Inland Empire Intellectual Property Institute (IEPI) will be held in Spokane, Washington on October 14th. The program will cover: developments in patent prosecution, patent litigation, copyright and trademark; ethical considerations for IP attorneys; patent reform and its impact on the practicing attorney, and many more topics. Guest speakers include: David Powers, Nancy Kim, Shirley Anderson and many other individuals. [Link]
  • American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25th-October 26th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • Licensing Executives Society (LES) will be holding their annual meeting on October 16-19 at the Manchester Grand Hyatt in San Diego. Guest speakers include, Martha Ries, VP of IP Management, The Boeing Company and Barbara Dalton VP, Venture Capital, Pfizer. [Link]
  • The University of Texas at Austin will hold its 16th Annual Advanced Patent Law Institute on October 27-28. The program will cover: recent developments in claims construction and claims drafting, cost savings in litigation, inequitable conduct after Therasense, and many other topics. [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Opening of Franklin Pierce Center for IP

  • UNH Law is proud to announce the official opening on September 30 & October 1 of the Franklin Pierce Center for Intellectual Property with an intellectual property works-in-progress conference featuring presentations by scholars from law schools in the Northeast and alumni of UNH Law. Chief Judge Randall Rader will serve as special guest speaker. Other guest include: Jonathan Dudas, Judge Newman, and Judge Gajarsa. [Link]

Biotech in Ottawa is Booming?

  • Ottawa Life Science Cluster currently home to over 90 companies focused on life science and biotechnology research and innovation. Also, there are over 50 other companies that have a secondary focus in life sciences and biotechnology. Leading the charge for commercialization is the Ottawa Centre for Research and Innovation (OCRI). With the increased commercialization in Ottawa, comes an increase in patent applications in Canada, the US, and beyond. [Link] [Link]

Great Patents!

  • Great Patents: Advanced Strategies For Innovative Growth Companies, is a book that aims to inform executives on how best to use patents to improve their competitiveness. The book has a total of 12 chapters and each chapter is written by an individual in the patent world. The chapters in the book are broken into two categories: Strategies and Valuation. Companies pursue patents to make money, and this book is very useful to help companies discover what they can do with their patents that they may not have previously considered. While the book is aimed at executives and the like, it is also a useful tool for law students and others. Most law students are not familiar with the business world of patents and this book gives a perspective different than what is taught in law schools.
    • About the Author: David Orange is a patent attorney in Washington, DC. He is active in the start-up space as an investor and advisor.

Patent Jobs

  • Goldberg Cohen is seeking an IP associate with 2-5 years of experience. [Link]
  • Womble Carlyle Sandridge & Rice is looking for mechanical patent attorneys with at least 3 years of experience. [Link]
  • Verenium is searching for a patent agent with a minimum of 5 years of experience. [Link]
  • Cleveland Golf/ Srixon is seeking a Sr. patent engineer with a BSME and at least 4 years of experience. [Link]
  • The Michaud-Kinney Group is looking for a legal assistant to work at their Middletown, Connecticut location. [Link]
  • Qualcomm is searching for a US patent attorney or a registered India Patent Attorney/Agent with at least 5 years of experience. [Link]
  • Qualcomm is looking for a patent counsel with 3+ years of patent prosecution experience. [Link]
  • Steptoe & Johnson is seeking associates with a minimum of 4 years of experience in patent litigation and with a technical background. [Link]
  • The Office of the Solicitor at the USPTO is searching for an experienced Patent Attorney. [Link]
  • Dynamics Inc. is seeking a patent attorney with an EE degree, to work at their Pittsburgh location. [Link]

Upcoming Events:

  • Boston University School of Law and the Kauffman Foundation will be holding a Workshop on Innovation and Patent Harmonization at Boston University School of Management on September 30-October 1. The workshop will cover the effect of harmonization in both advanced countries, such as the US, and in developing nations, with a particular focus on China. Anyone interested in attending, please RSVP to Elizabeth Aggot at eaa@bu.edu. [Link]
  • American Conference Institute's 12th Annual Maximizing Pharmaceutical Patent Life Cycles will take place in New York on October 4th-5th. The conference is one of the leading sources of information and analysis on the patent life cycle management. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • Houston Intellectual Property Law Association (HIPLA) will be holding its Annual IP Institute in Galveston, Texas October 6-8. The Institute will feature topics such as: Do's and Don'ts in IP Licensing, Due Diligence and Ethics in Acquisitions, Patent Prosecution Under the New Cases and Inducement of Patent Infringement after Global Tech Appliances v. SEB. The guest speaker will be Lord Justice Robert "Robin" Jacob, Court of Appeal of England and Wales. [Link]
  • The 17th Annual Advanced ALI-ABA Course of Study for the Corporate Counsel and the Private Practitioner: Trial of a Patent Case will be held in Chicago October 13-14. Guest speakers include: Judge James Holderman, Judge Liam O'Grady, Scott Coonan, James Leeds, and many more individuals. (Patently-O readers can get 30% off with discount code CT017POB) [Link]
  • The 4th Annual Inland Empire Intellectual Property Institute (IEPI) will be held in Spokane, Washington on October 14th. The program will cover: developments in patent prosecution, patent litigation, copyright and trademark; ethical considerations for IP attorneys; patent reform and its impact on the practicing attorney, and many more topics. Guest speakers include: David Powers, Nancy Kim, Shirley Anderson and many other individuals. [Link]
  • American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25th-October 26th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • Licensing Executives Society (LES) will be holding their annual meeting on October 16-19 at the Manchester Grand Hyatt in San Diego. Guest speakers include, Martha Ries, VP of IP Management, The Boeing Company and Barbara Dalton VP, Venture Capital, Pfizer. [Link]
  • The University of Texas at Austin will hold its 16th Annual Advanced Patent Law Institute on October 27-28. The program will cover: recent developments in claims construction and claims drafting, cost savings in litigation, inequitable conduct after Therasense, and many other topics. [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

Patently-O Bits & Bytes by Lawrence Higgins

Opening of Franklin Pierce Center for IP

  • UNH Law is proud to announce the official opening on September 30 & October 1 of the Franklin Pierce Center for Intellectual Property with an intellectual property works-in-progress conference featuring presentations by scholars from law schools in the Northeast and alumni of UNH Law. Chief Judge Randall Rader will serve as special guest speaker. Other guest include: Jonathan Dudas, Judge Newman, and Judge Gajarsa. [Link]

Biotech in Ottawa is Booming?

  • Ottawa Life Science Cluster currently home to over 90 companies focused on life science and biotechnology research and innovation. Also, there are over 50 other companies that have a secondary focus in life sciences and biotechnology. Leading the charge for commercialization is the Ottawa Centre for Research and Innovation (OCRI). With the increased commercialization in Ottawa, comes an increase in patent applications in Canada, the US, and beyond. [Link] [Link]

Great Patents!

  • Great Patents: Advanced Strategies For Innovative Growth Companies, is a book that aims to inform executives on how best to use patents to improve their competitiveness. The book has a total of 12 chapters and each chapter is written by an individual in the patent world. The chapters in the book are broken into two categories: Strategies and Valuation. Companies pursue patents to make money, and this book is very useful to help companies discover what they can do with their patents that they may not have previously considered. While the book is aimed at executives and the like, it is also a useful tool for law students and others. Most law students are not familiar with the business world of patents and this book gives a perspective different than what is taught in law schools.
    • About the Author: David Orange is a patent attorney in Washington, DC. He is active in the start-up space as an investor and advisor.

Patent Jobs

  • Goldberg Cohen is seeking an IP associate with 2-5 years of experience. [Link]
  • Womble Carlyle Sandridge & Rice is looking for mechanical patent attorneys with at least 3 years of experience. [Link]
  • Verenium is searching for a patent agent with a minimum of 5 years of experience. [Link]
  • Cleveland Golf/ Srixon is seeking a Sr. patent engineer with a BSME and at least 4 years of experience. [Link]
  • The Michaud-Kinney Group is looking for a legal assistant to work at their Middletown, Connecticut location. [Link]
  • Qualcomm is searching for a US patent attorney or a registered India Patent Attorney/Agent with at least 5 years of experience. [Link]
  • Qualcomm is looking for a patent counsel with 3+ years of patent prosecution experience. [Link]
  • Steptoe & Johnson is seeking associates with a minimum of 4 years of experience in patent litigation and with a technical background. [Link]
  • The Office of the Solicitor at the USPTO is searching for an experienced Patent Attorney. [Link]
  • Dynamics Inc. is seeking a patent attorney with an EE degree, to work at their Pittsburgh location. [Link]

Upcoming Events:

  • Boston University School of Law and the Kauffman Foundation will be holding a Workshop on Innovation and Patent Harmonization at Boston University School of Management on September 30-October 1. The workshop will cover the effect of harmonization in both advanced countries, such as the US, and in developing nations, with a particular focus on China. Anyone interested in attending, please RSVP to Elizabeth Aggot at eaa@bu.edu. [Link]
  • American Conference Institute's 12th Annual Maximizing Pharmaceutical Patent Life Cycles will take place in New York on October 4th-5th. The conference is one of the leading sources of information and analysis on the patent life cycle management. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • C5 will be holding the 21st annual Forum on Biotech Patenting in London on October 5th-6th. The 2011 London Biotech Patenting Forum will focus on the latest legal developments affecting biotech companies and how to implement successful methods and strategies for drafting and filing patent applications in multiple jurisdictions. (Patently-O readers can save 100 pounds by using discount code PO 100) [Link]
  • Houston Intellectual Property Law Association (HIPLA) will be holding its Annual IP Institute in Galveston, Texas October 6-8. The Institute will feature topics such as: Do's and Don'ts in IP Licensing, Due Diligence and Ethics in Acquisitions, Patent Prosecution Under the New Cases and Inducement of Patent Infringement after Global Tech Appliances v. SEB. The guest speaker will be Lord Justice Robert "Robin" Jacob, Court of Appeal of England and Wales. [Link]
  • The 17th Annual Advanced ALI-ABA Course of Study for the Corporate Counsel and the Private Practitioner: Trial of a Patent Case will be held in Chicago October 13-14. Guest speakers include: Judge James Holderman, Judge Liam O'Grady, Scott Coonan, James Leeds, and many more individuals. (Patently-O readers can get 30% off with discount code CT017POB) [Link]
  • The 4th Annual Inland Empire Intellectual Property Institute (IEPI) will be held in Spokane, Washington on October 14th. The program will cover: developments in patent prosecution, patent litigation, copyright and trademark; ethical considerations for IP attorneys; patent reform and its impact on the practicing attorney, and many more topics. Guest speakers include: David Powers, Nancy Kim, Shirley Anderson and many other individuals. [Link]
  • American Conference Institute will be holding a FDA Boot Camp Device Edition conference on October 25th-October 26th in Chicago. (Patently-O readers can register with code PO 200 for a discount) [Link]
  • Licensing Executives Society (LES) will be holding their annual meeting on October 16-19 at the Manchester Grand Hyatt in San Diego. Guest speakers include, Martha Ries, VP of IP Management, The Boeing Company and Barbara Dalton VP, Venture Capital, Pfizer. [Link]
  • The University of Texas at Austin will hold its 16th Annual Advanced Patent Law Institute on October 27-28. The program will cover: recent developments in claims construction and claims drafting, cost savings in litigation, inequitable conduct after Therasense, and many other topics. [Link]
  • IPMI is holding the IP Law & Management Institute on November 6th – 8th at the Rancho Las Palmas in Palm Springs, CA. Hailed as "One of the few programs geared to experienced in-house IP Counsel", the Institute is a CLE-accredited program designed to provide time-starved Heads of IP with the Opportunity to meet and network with their peers, learn from the best practices and validate solutions and services. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.