by Dennis Crouch
Shaw Industries v Automated Creel Systems involves several interesting issues involving inter partes review proceedings.
One Year Filing Bar: The first involves the one-year deadline for inter partes review petitions following the service of a complaint to the future-petitioner. “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”
Here, the patentee ACS had filed an infringement lawsuit and served Shaw more than one year before the IPR filing. However, the parties voluntarily dismissed the lawsuit without prejudice in a joint filing. In considering the issue, the Board determined that the voluntary dismissal “nullifie[d] the effect of the alleged service of the complaint on Petitioner.” As such, the Board was free to institute the inter partes review proceeding.
On appeal the Federal Circuit followed its prior ruling Achates that the appellate court lacks jurisdiction to the Board’s decision on whether the time-bar of Section 315 applies. The panel did not support the PTO’s decision and noted that the Supreme Court’s decision in Cuozzo “may affect this court’s holding regarding the reviewability of the decision to institute in Achates.”
As an aside, a petition for writ of certiorari had been filed in Achates, that case, however, has settled. We’ll see if ACS takes the case up here.
The Non-Doctrine of Redundancy: The second issue involves the PTAB’s non-doctrine of redundancy. Shaw filed two IPR petitions and in each petition the Board implemented the IPR on one ground for each claim, but declined to implement IPR on the additional grounds because they were ‘redundant’ without further explanation of that redundancy. The redundant arguments included anticipation grounds found redundant to obviousness grounds. Oddly, the PTO has stated repeatedly in the case that “there is no redundancy doctrine.”
In the appeal, the Federal Circuit again stated that it has no authority to review the Board’s decision to institute an IPR.
In the case, Judge Reyna joined the court’s opinion but also penned a judgment “concurring specially” to reflect his “deep concern about the broader impact that the Redundancy Doctrine may have on the integrity of the patent system.” Here, the doctrine’s existence is expressly denied by those applying it. The PTO argues that it need not explain what’s happening because “the Director has complete discretion to deny institution . . . and [does] not even have to state in our institution decisions why were choosing not to go forward.” Judge Reyna responds:
The PTO’s claim to unchecked discretionary authority is unprecedented. It bases this claim on the statute that makes institution or denial of inter partes review “final and nonappealable.” See 35 U.S.C. § 314(a), (d). Regardless of appealability, administrative discretion is not and never can be “complete” because it is always bounded by the requirement that an agency act within the law and not violate constitutional safeguards. See 35 U.S.C. § 2(b)(2) (PTO “may establish regulations, not inconsistent with law”). There is good reason for this. “Expert discretion is the lifeblood of the administrative process, but unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167 (1962) (internal quotation marks omitted).
Indeed, regardless of whether the Board’s institution decisions can be appealed, the Board cannot create a black box decisionmaking process. Conclusory statements are antithetical to the requirements of the Administrative Procedures Act (“APA”), which the PTO and its Board are subject to. 35 U.S.C. § 2(b)(2)(B); see also Dickinson v. Zurko, 527 U.S. 150, 154 (1999). The APA requires “reasoned decisionmaking” for both agency rulemaking and adjudications because it “promotes sound results, and unreasoned decisionmaking the opposite.” Allentown Mack Sales & Serv., Inc. v. N.L.R.B., 522 U.S. 359, 374– 75 (1998) (citation omitted). The APA requires that Board decisions evince both its authority to render the decision and a reasoned basis for rendering that decision. Id. at 372 (“Not only must an agency’s decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational.”). The problem here is not that the Board’s reasoning is illogical or irrational; the problem is that there is no reasoning at all.
Judge Reyna pushes further by highlighting the impact of the PTO’s non-decision on the eventual estoppel issues. The PTO suggested in the case that estoppel would not attach to the non-instituted redundant grounds since they were not instituted, but that argument makes little sense to me. And, as Judge Reyna points out, “[w]hether estoppel applies, however, is not for the Board or the PTO to decide. . . . These tribunals should not have to parse cryptic statements or search out uncited [and denied] doctrines to make this determination.”
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 Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., Appeal No. 2015-1116 (Fed. Cir. March 23, 2016), on appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2013-00132, IPR2013-00584 challenging validity of U.S. Patent No. 7,806,360.
 35 U.S.C. § 315(b).
 Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015).
 Opinion authored by Judge Moore and joined by Judges Reyna and Wallach.
 Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 890 (2016).
 Quoting PTO brief and oral arguments.
 The PTO’s argument does have some logical merit. The statute creates estoppel for arguments “raised or reasonably could have [been] raised during that inter partes review.” Although the denied arguments were actually raised, there were raised during the institution proceeding and not the actual review. And, since the PTO denied institution on those grounds, the party was then prohibited from raising those grounds during the review itself.