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.
Re the conclusion here that: “Together, the two decisions on IPRs handed down by the Supreme Court today forecast an active and uncertain summer in the world of IPRs.”
First the PTAB has issued the above SAS guidance in only two days.
Secondly, only those who were miss led by the constant drumbeat of erroneous unconstitutionality assertions on Gene’s blog and comments here have any need to make any changes due to Oil States.
Thirdly, the PTAB will actually have less work in declaring IPRs since the statute only ever required looking at more than one claim for that, and the increased PTAB IPR work from having to make final decisions on more claims can be handled by a combination of statutory six month extensions and hiring more APJs.
However, those IPR petitioners who DO want all their petitioned claims finally decided, [in the unknown smaller number of pending IPRs that were not declared on all petitioned claims], may need to move fast to request that?
“Rah Rah Rah” – lookie – IPRs are wonderful and there are no infirmities that I can see (even as I clench tight my eyes, just like Justice Thomas).
(never mind actually engaging any of those Constitutional points on the merits – let’s just denigrate them for being brought up….)
To bad you don’t read and discuss the numerous specific suggestions some of us have been making for improving IPRs, instead of endless pointless personal rants and attacks and rejected theories. No tooth fairy is coming to eliminate all IPRs. Get over it.
Which specific suggestions do you think that I have not engaged upon?
I’m not the one with the tooth fairy condition. Just because the score board is broken does not mean that you shouting out “look at the score board” carries any meaning.
And my posts are not “pointless personal rants and attacks” – no matter how you want to snipe from the sidelines and mischaracterize them. My points are accurate (or did you forget already about truth being the ultimate defense to some tooth fairy whine of professional slander for someone who cannot bother to have an actual registration number (but likes to pretend that they are somehow “champions of innovators”)? I “get it” that truth hurts – and hurts you – but do not mistake that hurt for pointless personal rants and attacks. My points are very much engaged with the law and with positions on the law. Your whining otherwise does not change that.
Your admonition of “get over it: is suitably rejected.
In the famous word of Emily Litella from SNL – when it comes to the comments as to what the PTAB should/might do in response to the SAS decision, “Never Mind”.
See, follow on Post by Dennis today.
In his “Patents Post-Grant” Blog today you might want to read, Scott [one of the rare correct predictors of a 7-2 vote in Oil States] stated that: “While some will read the “narrow” holding characterization of the Oil States majority as a beacon of hope for further constitutional challenges, I don’t see that ..” “..Going forward, I don’t see much Oil States impact at the PTAB.”*
Scott primarily discusses the significant impact of SAS. Noting, inter alia, that the now required decisions on all petition-attacked claims will be a significant problem for the [approximately 85% of] patent owners who are at the PTAB due to their pending D.C. suits against Petitioners. Because, stays of their concurrent litigation were previously frequently denied defendants when the PTAB did not institute all of the claims in suit, an argument no longer available to patent owners.
*[Scott does mention the words “panel stacking.” But I would think new Director guidance could easily handle that extremely-rare-occurrence asserted due process issue with no need for any formal rule change?]
the Rah Rah remains displaced.
Panel stacking – at least the formal version – has ALWAYS been around, and always been legally sanctioned.
Panel stacking – in the non-formal version in which 37 CFR 1.2 is routinely violated – has NEVER been legally sanctioned.
It’s as if you cannot be bothered at all with anything but your cheerleading script….
As an inventor with a pending patent, I read all of this lawyer-generated blather and ask myself: what exactly is the point in getting a US Patent? If it’s worth anything, we’re going to be spending 100s of thousands of dollars (if not millions) over the lifetime of this patent. And yet, if it’s granted, all I see is paying $500 an hour to lawyers to navigate all of this nonsense (IPRs, Shaw, Cuozzo, Oil States, CAFC, franchises not property!?, and on and on and on) with the greater than 50% chance that in the end, I will have my claims invalidated or watered down to nothing. Why can’t a man just get a patent for a breakthrough idea and get on with it?
Atari-Man: Your kaching-ing is going to come to an end once us innovators get smart and leave this whole system to the lawyers, academics and lawmakers to ruminate over.
But seriously: as lawyers posting anonymously here, should I even bother? I know the guy I pay $500/hour is going to tell me to keep paying him.
I would suggest – regardless of being an attorney, and certainly NOT legal advice – get on the phone with your elected government representatives (congressmen and senators) and have THEM explain how all of their efforts have brought us to this situation and ask THEM for their recommendation.
Senator Coons and Congressman Massey are the only ones who seem to have an actual clue about IP.
The rest of them will probably bake a cake for world intellectual property day and have a flunky write a press release on how the United States is the world’s greatest innovator, without having the slightest understanding that they have effectively destroyed their intellectual property system. Sorry, I mean their intellectual franchising system.
(and again, with sadness)
Congratulations on your pending patent. Good question, one that I increasingly raise with my clients.
The whole situation is a bit insane for a small inventor trying to bring an innovation to market. Honest summary (Disclaimer: not giving legal advice, just an opinion): You pay A LOT up front, which is hard on an innovator just getting off the ground. You may get an examiner who doesn’t allow cases often, for which there is little you can do but pay more and appeal. This WILL delay your patent grant if it happens. If you get a patent (after a long delay) which is still generally going to happen if your patent is well written with claims of reasonable scope, big entities WILL initially ignore you. Big entities WILL NOT stop doing what they want just because you get a patent. In fact, they will likely never take time to analyze your patent (in absence of you bringing an EXPENSIVE lawsuit). If, upon looking at your issued patent, a company does not ignore you, they will not license your patent but will most likely challenge your patent incurring a minimum of a 1/2 million in legal fees on your side – just to keep your valid patents … valid ? Only a slight chance of a meaningful estoppel applies to these expensive challenges – so as a patent owner they give you nothing and cost a ton. Further, companies can keep attacking you indefinitely, at the 1/2 million a clip. Historical records show that they will.
In the end, I emphasize that when it comes to a “small guy” protecting his/her idea, a patent is the “only game in town”. We have trade secret, copyright, TM, etc. …. but once your idea starts to get some traction, people can reverse engineer and copy. Further, getting venture capital without patent protection is hard. Getting a product to market is hard and an honest patent attorney cannot generally help with that (except for NDAs and answering basic legal questions – the majority of questions an inventor has are business related one). In the end, if you launch a company and have some success, in most situations you WILL be copied. You have no estoppel possibility. Assuming your company’s market cap is under $10M at the time you are copied, the copier will try to starve you to death with legal fees. The best you can do is to dilute your interest in the company and get an investor to help you endure the legal expenses of being harassed by an infringe with deep pockets. If you survive it, you own a fraction of your company and still have to convince the marketplace to embrace your innovation. By the way, the media (press releases from your infringer) will call you a patent troll, and other names – there is little you can do to change this.
I believe in patents and our system. Laws change and that since it takes years to get a patent, hopefully the landscape with change by the time yours issues. I give a variant of the above to most of my clients during a new client intake.
Strangely, being upfront about the above rarely changes an inventor’s mind – they still want to secure a patent right. Inventors are AMAZING in the U.S. I wish we systemically treated them with more respect. I apologize for the current state of my profession, and wish you all the best in seeking a patent and placing your innovation into the market.
Bravo – well said (pitfalls and all).
Sage advise. If ignored by your clients, then they deserve what they get. That is a patent which has become …a means for imposing a tax on inventors whereby their wealth [intellectual property]is tranferred from the inventor to domestic and foreign corporations, governments, attorneys and other infringers thereby denying to said inventor the fruits of their labors.
Case in point. Instagram v Snapchat. The big boys will copy any better, faster, cheaper, feature that appears to show any market traction. And the big boys would be stupid not to under the current system.
Speaking of IPRs – has any court specifically addressed whether 35 USC 314 (d) is to be interpreted as:
1) [THE DETERMINATION by the Director whether to institute (an inter partes review under this section)] shall be final and nonappealable
or
2) [THE DETERMINATION by the Director whether to institute (an inter partes review) UNDER THIS SECTION] shall be final and nonappealable
i.e. has any court decided whether the “under this section” a modifier to the “inter partes review”, in which case the determination itself is “unqualified”, OR does the “under this section” a modifier of “the determination”, in which case only determinations made “under the section” i.e. made according to the requirements of the section, are nonappealable.
The distinction is somewhat important because a purported “determination” which does not comport with, for example, 314 b, arguably has not been (duly) made under all parts of the section. Such a “determination” not made in accordance with all of the section, is still arguably a “determination” defined and introduced in 314 a.
Any thoughts?
That was one of Ned’s favorite points to make, and I think that he was entirely correct. The right way to read the statute is to see “under this section” as modifying “the determination.” That is why the courts are supposed to have authority (as recent recognized by the en banc court in Wi-Fi One) to review conformity to the privity and one-year rule (i.e., determinations that are made under a different section of title 35).
Comments by others suggest that the Sup. Ct. has simply enlarged the loopholes it had ALREADY made in its prior Cuozo decision as to IPR institutions being [not entirely] “final and nonappealable.” In particular, if there are what J. Gorsuch called PTAB statutory-interpretation “shenanigans.”
But few PTAB IPR Petition preliminary institution decisions will fit into such loopholes – mere arguments as to insufficient or sufficient evidence to proceed with an IPR will still be insufficient for such premature appeals.
A LOT of the impact here goes away with patents being deemed “not property” because it was the property aspects that existed AT THE INSTITUTION DECISION POINT that were arguably a subject of takings law.
Franchise rights carry no such other Constitution protections.
Anon2,
The issue was addressed in Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015), where the court noted that “Achates also contends that § 314(d) does not limit this court’s review of the timeliness of Apple’s petition under § 315, because § 314(d) says ‘[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable’ (emphasis added).” Achates, 803 F.3d at 658.
The court found that “Achates’ reading is too crabbed and is contradicted by this court’s precedent” and that “[t]he words ‘under this section’ in § 314 modify the word ‘institute’ and proscribe review of the institution determination for whatever reason.” Id.
As Greg noted, Ned raised this point numerous times, including in his appeal in MCM Portfolio, LLC v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015). Unfortunately, Cuozzo was still pending when he filed his cert petition, and he focused on the Article III and Seventh Amendment issues in his cert petition. (As an aside, it will forever make me sad that he did not get to argue this issue at the Supreme Court.)
The Federal Circuit reconsidered this issue en banc in Wi-Fi One, LLC v. Broadcom Corp., no. 2015-1944 (Fed. Cir. 2018)(en banc). The en banc court applied the strong presumption in favor of judicial review, and noted that “if a statute is ‘reasonably susceptible’ to an interpretation allowing judicial review, we must adopt such an interpretation.” Wi-Fi One, LLC v. Broadcom Corp., no. 2015-1944, slip op. at 15 (Fed Cir. 2018)(en banc)(citing Kucana v. Holder, 558 U.S. 233, 251 (2010)).
The court noted that “§ 314(d) provides that “[t]he determination by the Director whether to institute an inter partes review _under this section_ shall be final and nonappealable” (_x_ indicating italicized text in the opinion), and indicated that “[t]he natural reading of the statute limits the reach of § 314(d) to the determination by the Director whether to institute IPR as set forth in § 314.” Wi-Fi One, no. 2015-1944, slip op. at 15.
At the time, the en banc court looked largely to Cuozzo for guidance, suggesting that it was considering “the overall statutory scheme as understood through the lens of Cuozzo’s directive to examine the statutory scheme in terms of what is ‘closely related’ to the § 314(a) determination.” Wi-Fi One, no. 2015-1944, slip op. at 18.
However, in SAS, the Supreme Court arguably characterized Cuozzo as resolving this issue much more directly, indicating that “[g]iven 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.” SAS Institute Inc. v. Iancu, no. 16-969, slip op. at 13 (2018).
JCD
You forgot one major factor:
The Supreme Court does whatever it wants – no need to accord with anything (including its own actions).
JCD
Thank you for your impressive reply. I feel like I should pay you for your time, but I hope my sincere thanks are enough!
I’m a bit torn, the “conclusion” SAS reaches re. this issue seems to make objective sense to me, although attributing it to Cuozzo… seems a wee bit of a stretch.
Too true!
It was a good question! Happy to help.
Re: “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.”
Not sure a new rule is needed, since the original IPR petition is supposed to have included art and arguments against all claims being attacked.
Also, how big a problem [to clients who would have to pay more] really is this? I.e., how many prior IPRs are there in which only part of the attacked claims had a final decision? In how many of THOSE prior IPRs does the Petitioner-client still care? Specifically, since approximately 85% of all IPRs are responses to patent suits, and approximately 95% of patent suits are settled before trial, how many such undecided claims are still being asserted against IPR petitioners by the patent owner in patent suits still pending where the main claims were already cancelled by the IPR?
Not sure a new rule is needed, since the original IPR petition is supposed to have included art and arguments against all claims being attacked.
Er, but what about the patent owners? Granted that the petitioner is supposed to have included art and arguments against all challenged claims, but the patent owner’s pre-institution response is not mandatory, and in many instances no such response will have been filed. If the the PTAB did not institute on a given set of claims, it would be vanishingly unlikely that the patent owner would have wasted valuable page limits on responding to arguments against claims that were not believed to be part of the IPR. Surely the patent owner should—now that such claims are at issue—get some opportunity to defend those claims.
Of course, Greg. IF there is now to be IPR trials of claims previously not tried, both parties will have to get due process. But not on new prior art.
But as to the rest of my comment, none of this is relevant unless the Petitioner still has a motive, and there is process for, requesting re-opening of previously concluded IPRs for un-tried claims. The SAS decision is not a REVERSAL of any prior IPR actual claim decisions.
ah – but does estoppel attach, and if so, then whether or not “reversal” becomes moot, and the petitioner WILL very much have an interest that was not there prior.
(I’d expect a cheerleader like you to have picked this up immediately)
“Together, the two decisions on IPRs handed down by the Supreme Court today forecast an active and uncertain summer in the world of IPRs.”
Translation: “Ka-ching! More $$ for us lawyers in private practice!”
(not that this is a “good thing” for innovation – as if anyone is really minding that store anymore…) – with sadness
[D]oes [SAS]effectively end the partial approach to patentee estoppels set forth in the Federal Circuit’s Shaw Industries decision (817 F.3d 1293)?
I confess that it had never occurred to me that anyone might read SAS in a way so as to call the validity of Shaw into question. On the other hand, I never thought that anyone would read Cuozzo as undermining Achates, and yet that is how the en banc CAFC read it. Here is hoping that this germ of an idea sprouts and grows. Shaw is the second worst CAFC IPR decision (Achates was the worst), and now that Achates is gone, Shaw holds pride of place. I would be delighted to see SAS begin the unworking of Shaw.
Regarding SAS’s effect on the Shaw Industries decision…
I made this point yesterday in reply to one of your comments in the SAS decision write-up article….glad to hear that both you and Dennis are looking into it.
The fact that the WiFi One CAFC panel after the CAFC en banc remand still invalidated the patents effectively ignoring the evidence of coordination which put Broadcom in privity with previous defendants probably means we haven’t see the last of this case….so the SCOTUS could elect to overrule the CAFC…but given the WiFi (en banc) decision in tandem with SAS…I don’t see how Shaw holds anymore.
As a preface, I am assuming that the PTO is going to begin taking the course of action to issue a final written decision with respect to all challenged claims as to all grounds presented in the petition. Theoretically, if the same claim is challenged under two separate grounds, the PTO could argue that a final written decision of the claim with respect to one of the two grounds still meets the requirement 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).
Assuming that the PTO begins always issuing a final written decision with respect to every challenged claim as to every ground, then it seems like Shaw’s treatment of grounds which are not instituted would become irrelevant.
Further, if IPR institution necessarily means that the PTO considers every ground presented in the petition during the IPR proceeding itself, and not just prior to institution (e.g. as evidenced by the fact that the PTO always addresses each ground in the petition in its final written decision and not just in its initiation decision), then one could argue that the petitioner reasonably could have presented additional grounds in its petition which would have been considered by the PTO during the inter partes review that was instituted.
Thus, it may be that Shaw isn’t overruled so much as it was predicated on, and was only relevant in the context of, the prior PTO practice of not considering grounds that it did not institute on “during th[e] inter partes review”. 35 U.S.C. § 315(e). If the new PTO practice is to consider during an inter partes review all grounds presented in a petition which resulted in institution, then there would seem to be a strong argument that any grounds which reasonably could have been presented in that petition would be estopped.
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