by Dennis Crouch
Thryv, Inc. v. Click-to-Call Tech (Supreme Court 2020)
In this case, the Supreme Court has sided with the PTO and Patent-Challengers — holding that the agency’s decision to hear an IPR challenge is not reviewable on appeal — even if the challenge is based upon the time-bar of §315(b). According to the court, a ruling otherwise “unwind the agency’s merits decision” and “operate to save bad patent claims.”
Read the Decision Here: https://www.supremecourt.gov/opinions/19pdf/18-916_f2ah.pdf
The statutes authorizing inter partes review proceedings (IPRs) provides the USPTO Director with substantial latitude in determining whether or not to grant initiate an IPR. One limitation is that an IPR petition must be filed within 1-year of the petitioner (or privy) being served with a complaint fo infringing the patent. 35 U.S.C. §315(b). The PTO cancelled Click-to-Call’s patent claims, but the Federal Circuit vacated that judgment after holding that the PTO should not have initated the IPR. The issue on appeal was whether a lawsuit that had been dismissed without prejudice still counted under the §315(b) time-bar. No, according to the PTO; Yes, according to the Federal Circuit.
A key problem with the Federal Circuit’s decision is the no-appeal provision also found in the statute:
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). The Federal Circuit held that the time-bar issue should be seen as an exception to the statute, the Supreme Court though has rejected that analysis.
Cuozzo: This is the Supreme Court’s second venture into analysis of the time-bar. In Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016), the court held that the no-appeal provision will preclude appellate review in cases “where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” Cuozzo expressly did not decide when you might find exceptions — “we need not, and do not, decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.'”
In Thryv, the Supreme Court found that Cuozzo governs the time-bar question — holding that the statutory time-bar is closely related to the institution decision:
Section 315(b)’s time limitation is integral to, indeed a condition on, institution. After all, §315(b) sets forth a circumstance in which “[a]n inter partes review may not be instituted.” Even Click-to-Call and the Court of Appeals recognize that §315(b) governs institution.
Majority Op. “The appeal bar, we … reiterate, is not limited to the agency’s application of §314(a).” Id. at n.6.
In its decision, the Supreme Court also puts its thumb on the policy concerns of “overpatenting” and efficiently “weed[ing] out bad patent claims.”
Allowing §315(b) appeals would tug against that objective, wasting the resources spent resolving patentability and leaving bad patents enforceable. A successful §315(b) appeal would terminate in vacatur of the agency’s decision; in lieu of enabling judicial review of patentability, vacatur would unwind the agency’s merits decision. And because a patent owner would need to appeal on §315(b) untimeliness grounds only if she could not prevail on patentability, §315(b) appeals would operate to save bad patent claims. This case illustrates the dynamic. The agency held Click-to-Call’s patent claims invalid, and Click-to-Call does not contest that holding. It resists only the agency’s institution decision, mindful that if the institution decision is reversed, then the agency’s work will be undone and the canceled patent claims resurrected.
Majority Op. Section III.C
Justice Ginsburg delivered the opinion joined in fully by Chief Justice Roberts and Justices Breyer, Kagan, and Kavanaugh. Justices Thomas and Alito joined with the decision except for the policy statements found in III.C.
Justice Gorsuch wrote in dissent and was substantially joined by Justice Sotomayor. Justice Gorsuch was not yet on the court when Cuozzo was decided, and Justice Sotomayor joined Justice Alito’s dissent to that decision. The basics of the dissent is that our Constitution does not permit a “politically guided agency” to revoke property rights without judicial review:
Today the Court takes a flawed premise—that the Constitution permits a politically guided agency to revoke an inventor’s property right in an issued patent—and bends it further, allowing the agency’s decision to stand immune from judicial review. Worse, the Court closes the courthouse not in a case where the patent owner is merely unhappy with the merits of the agency’s decision but where the owner claims the agency’s proceedings were unlawful from the start. Most remarkably, the Court denies judicial review even though the government now concedes that the patent owner is right and this entire exercise in property taking-by-bureaucracy was forbidden by law.
Id. The majority reject’s the dissent’s call for patents-as-property:
The dissent acknowledges that “Congress authorized inter partes review to encourage further scrutiny of already issued patents.” Yet the dissent, despite the Court’s decision upholding the constitutionality of such review in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U. S. ___ (2018), appears ultimately to urge that Congress lacks authority to permit second looks. Patents are property, the dissent several times repeats, and Congress has no prerogative to allow “property-taking-by-bureaucracy.” But see Oil States, 584 U. S., at ___ (slip op., at 7) (“patents are public franchises”). The second look Congress put in place is assigned to the very same bureaucracy that granted the patent in the first place. Why should that bureaucracy be trusted to give an honest count on first view, but a jaundiced one on second look?
Majority Op. at n.4.
In a portion of the dissent not signed by Justice Sotomayor, Justice Gorsuch laments that the majority decision “takes us further down the road of handing over judicial powers involving the disposition of individual rights to executive agency officials.”
So what if patents were, for centuries, regarded as a form of personal property that, like any other, could be taken only by a judgment of a court of law. So what if our separation of powers and history frown on unfettered executive power over individuals, their liberty, and their property. What the government gives, the government may take away—with or without the involvement of the independent Judiciary. Today, a majority compounds that error by abandoning a good part of what little judicial review even the AIA left behind.
Justice Gorsuch in Dissent – Part V.
Just try to imagine this Court treating other individual liberties or forms of private property this way. Major portions of this country were settled by homesteaders who moved west on the promise of land patents from the federal government. Much like an inventor seeking a patent for his invention, settlers seeking these governmental grants had to satisfy a number of conditions. But once a patent issued, the granted lands became the recipient’s private property, a vested right that could be withdrawn only in a court of law. No one thinks we would allow a bureaucracy in Washington to “cancel” a citizen’s right to his farm, and do so despite the government’s admission that it acted in violation of the very statute that gave it this supposed authority. For most of this Nation’s history it was thought an invention patent holder “holds a property in his invention by as good a title as the farmer holds his farm and flock.” Hovey v. Henry, 12 F. Cas. 603, 604 (No. 6,742) (CC Mass. 1846) (Woodbury, J., for the court). Yet now inventors hold nothing for long without executive grace. An issued patent becomes nothing more than a transfer slip from one agency window to another.