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.
- Step 1 – Institution: The USPTO Director decides whether to grant an IPR petition and “institute” proceedings. This decision is “final and nonappealable.”
- 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:
- Step 1: The
USPTO DirectorPTAB decides whether to grant an IPR petition and “institute” proceedings. This decision is “final and nonappealable.”
- 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?
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.
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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.