In Click-to-Call Technologies, LP v. Ingenio, Inc., [2015-1242] (August 16, 2018), the Federal Circuit concluded that the Board committed legal error in rendering its § 315(b) determination, and vacated the Board’s Final Written Decision and remanded with instructions to dismiss IPR2013-00312.

With respect to the § 315(b) issue, the Board acknowledged that Ingenio was served with a complaint alleging infringement of the ’836 patent on June 8, 2001.  The Board nonetheless concluded that Ingenio had not been served more than a year before the May 28, 2013, filing of the Petition because the Federal Circuit consistently has interpreted the effect of such dismissals as leaving the parties as though the action had never been brought.  The issue before the Federal Circuit was whether the Board
erred in interpreting the phrase “served with a complaint alleging infringement of [a] patent” recited in § 315(b) such that the voluntary dismissal without prejudice of the
civil action in which the complaint was served “does not trigger” the bar.

The Federal Circuit’s analysis began with the language of §315(b), noting that the plain and unambiguous language stated an IPR “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.  The Federal Circuit observed that the statute does not contain any exceptions or exemptions for complaints served in civil actions that are
subsequently dismissed, with or without prejudice. Further the statute does it contain any indication that the application of § 315(b) is subject to any subsequent act or ruling. Instead, the provision unambiguously precludes the Director from instituting an IPR if the petition seeking institution is filed more than one year after the petitioner, real party in interest, or privy of the petitioner “is served with a complaint” alleging patent infringement.  The Federal Circuit concluded: “Simply put, § 315(b)’s time bar is implicated once a party receives notice through official delivery of a complaint in a civil
action, irrespective of subsequent events.”

The Federal Circuit said that courts must avoid adding conditions to the applicability of a statute that do not appear in the provision’s text. The Federal Circuit noted that Congress specifically addressed the effect of a dismissal of an IPR petitioner’s district court action in § 315(a)(2), but did not include any similar language in § 315(b). Congress also demonstrated that it knew how to provide an exception to the time bar by
including a second sentence in the provision: “The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).” 35
U.S.C. § 315(b). Similarly, Congress could have chosen to include a variation of the phrase “unless the action in which the complaint was served was later dismissed
without prejudice,” but it did not do so. The Federal Circuit rejected the Board’s effort to graft this additional language into § 315(b).

The Federal Circuit further said that the legislative history of § 315(b) further supports the understanding that its time bar concerns only the date on which the complaint was formally served.

Considering Chevron deference, the Federal Circuit found that the text of the statute answers the question — § 315(b) clearly and unmistakably considers only the date
on which the petitioner, its privy, or a real party in interest was properly served with a complaint — there is no need to  proceed to Chevron’s second step.

The Federal Circuit rejected the Board’s interpretation of the text of § 315(b) for failing to recognize the statute was agnostic as to the “effect” of the service—i.e., what events
transpired after the defendant was served.

The Federal Circuit also rejected the Petitioner’s arguments that, because the claims of
the ’836 patent were materially changed during a subsequent ex parte reexamination, neither they nor any other entity was served with a complaint alleging infringement
of this patent more than one year before the IPR petition was filed.  The Federal Circuit pointing out that unlike reissue, reexamination does not result in the surrender of the original patent and the issuance of a new patent.

The Federal Circuit also rejected the Petitioner’s argument that some of the petitioners were not barred, noting four entities declared themselves as “the Petitioner” in their sole IPR petition, and certified that each was a “real party in interest.” The Federal Circuit said that under these circumstances, under current law, Petitioners are properly treated as an undifferentiated unit that filed an untimely petition.”

In re: Power Integrations, Inc., [2018-144, 2018-145, 2018-146, 2018-147] (August 16, 2018), the Federal Circuit denied Power Integrations, Inc. petitions for writs of mandamus, challenging . The petitions challenge the decisions of the Patent Trial and Appeal Board denying the institution of inter partes review of claims from three patents owned by Semiconductor Components Industries, LLC.

The Federal Circuit noted that the statute prohibits appeals of Board decisions not to institute, and said that Power Integrations was seeking to obtain review of the non-institution decisions through petitions for mandamus covering all four of the Board’s orders. However, a writ of mandamus is not intended to be simply an alternative means of obtaining appellate relief, particularly where relief by appeal has been specifically prohibited by Congress.  To obtain the remedy of mandamus, a party must show that its right to issuance of the writ is “clear and indisputable,” and that there are no adequate alternative legal channels through which it may obtain that relief. Moreover, “even if the first two prerequisites have been met, the issuing court, in the exercise of its discretion,
must be satisfied that the writ is appropriate under the circumstances.”

The Federal Circuit held that mandamus does not lie in this case, both because Power Integration has not shown a clear and indisputable right to issuance of the writ and because relief by way of mandamus would not be appropriate here. The statutory prohibition on appeals from decisions not to institute inter partes review cannot be sidestepped simply by styling the request for review as a petition for mandamus.

While Power Integration complained the Board did not explain itself well enough, the Federal Circuit said that Power Integration understands perfectly well what the Board did, but it regards the Board’s actions as legally and factually incorrect, and it seeks this
court’s intervention to overturn the Board’s decisions not to institute inter partes review. The Federal Circuit found what Power Integration ultimately wants is not just to be given a more complete explanation of the Board’s action, but for the Federal Circuit to review that decision on the merits.  The Federal Circuit said that the essence of Power Integration’s claim— that the Board’s analysis “is premised on an incorrect legal standard or a misapplication of that standard”—is nothing more than a challenge to the Board’s conclusion that the information presented in the petitions did not warrant review.

A disappointed petitioner cannot by-pass the statutory bar on appellate review simply by directing its challenge to asserted procedural irregularities rather than to the substance of the non-institution ruling.  This is not to say that mandamus will never lie in response to action by the agency relating to the noninstitution of inter partes review. The circumstances described by the Supreme Court in Cuozzo as illustrations of issues for which an appeal might be justified (e.g., constitutional issues, issues involving questions outside the scope of section 314(d), and actions by the agency beyond its statutory limits) would be potential candidates for mandamus review as well.  However this case involved no issues extraneous to the application of patent law principles of unpatentability based on printed publications, nor does it involve any “shenanigans” on the part of the Board that might justify appellate review or review by mandamus.

In Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., [2018-1638, 2018-1639, 2018-1640, 2018-1641, 2018-1642, 2018-1643] (July 20, 2018), the Federal Circuit affirmed the PTAB’s denial of the Tribe’s motion to terminate on the basis of sovereign immunity.

In an attempt to shelter its patents from IPR attack, Allegan assigned them to the Saint Regis Mohawk Tribe, who Allergan hoped could assert sovereign immunity to post grant challenges.

The Tribe argued that tribal sovereign immunity applies in IPR under FMC, because like the proceeding in FMC, an IPR is a contested, adjudicatory proceeding between private parties in which the petitioner, not the USPTO, defines the contours of the proceeding. Mylan argued that sovereign immunity does not apply to IPR proceedings because they are more like a traditional agency action — the Board is not adjudicating claims between parties but instead is reconsidering a grant of a government franchise. Mylan further argued that even if the Tribe
could otherwise assert sovereign immunity, its use here is an impermissible attempt to “market an exception” from the law and non-Indian companies have no legitimate interest in renting tribal immunity to circumvent the law.  Finally, Mylan argued that the assignment to the Tribe was a sham, and the Tribe waived sovereign immunity by suing on the patents.

The Federal Circuit said that an IPR is neither clearly a judicial proceeding instituted by a private party nor clearly an enforcement action brought by the federal government, noting that in Oil States the Supreme Court said IPR is “simply a reconsideration of” the
PTO’s original grant of a public franchise.

Ultimately, several factors convinced the Federal Circuit that IPR is more like an agency enforcement action than a civil suit brought by a private party, and and thus tribal immunity is not implicated. First, although the Director’s discretion in how he conducts IPR is significantly constrained, he possesses broad discretion in deciding whether
to institute review.  Although this is only one decision, it embraces the entirety of the proceeding. If the Director decides to institute, review occurs. If the Director decides not to institute, for whatever reason, there is no review. In making this decision, the Director has complete discretion to decide not to institute review. The Director bears the political responsibility of determining which cases should proceed. While he has the authority not to institute review on the merits of the petition, he could deny review for other reasons such as administrative
efficiency or based on a party’s status as a sovereign.  Therefore, if IPR proceeds on patents owned by a tribe, it is because a politically accountable, federal official has authorized the institution of
that proceeding.  In this way, IPR is more like cases in which an agency chooses whether to institute a proceeding on information supplied by a private party. According to FMC, immunity would not apply in such a proceeding.

The Federal Circuit added that the role of the parties in IPR suggests immunity does not apply in these proceedings. Once an IPR has been initiated, the Board may choose to continue review even if the petitioner chooses not to participate, which reinforces the view that IPR is an act by the agency in reconsidering its own grant of a public franchise.

The Federal Circuit also pointed out that although there are certain
similarities with the FRCP, the differences are substantial.  Further a patent owner can seek to amend its patent claims during the proceedings, an option not available in civil litigation.

Finally, while the USPTO has the authority to conduct reexamination proceedings that are more inquisitorial and less adjudicatory than IPR, this does not mean that IPR is thus necessarily a proceeding in which Congress contemplated tribal immunity to apply.  The mere existence of more inquisitorial proceedings in which immunity does not apply does not mean that immunity applies in a different type of proceeding
before the same agency.

Because it concluded that tribal sovereign immunity cannot be asserted in IPR, the Federal Circuit did not reach the parties’ other arguments.

In Adidas AG v. Nike, Inc., [2018-1180, 2018-1181] (July 2, 2018), the Federal Circuit granted Adidas’ motion to remand the appeal back to the PTAB to consider the non-instituted grounds in Adidas’ Petitions for inter partes review against Nike’s U.S. Patent Nos. 7,814,598 and  8,266,749.

The PTAB’s final written decision found that Nike’s patent were not unpatentable on the instituted grounds, but did not reach a second, non-instituted grounds.  After the Supreme Court’s decision in SAS, Adidas promptly moved to remand for the Board to consider the non-instituted ground.  The Federal Circuit agreed, as it had in several other cases, that remand was appropriate without first deciding the appeal of the claims and grounds already before it.

In Apple Inc. v. California Institute of Technology, IPR2017-00297, Paper 66, (June 29, 2018), the PTAB, en route to finding claims 19-21 of U.S. Patent No. 7,916,781 invalid, also denied the Patent Owner’s Motion for Sanctions.  Patent Owner’s Motion (Paper 40) complained that “[d][uring cross-examination of Caltech’s witnesses, Dr.
Mitzenmacher and Dr. Divsalar, Petitioner repeatedly failed to stay within the
proper scope” which “violated numerous Board rules and orders, and was an abuse of the discovery process.” The Patent Owner noted that the cross examination of Dr. Divsalar’s 16-page declaration generated over 280 pages, and a wide range of topics.  In sign of excellent witness preparation, “Dr. Divsalar reminded counsel over 100 times that questions were being directed to subject matter not discussed in his declaration.”  Patent Owner had similar, but not as extensive complaints about the cross examination of Dr. Mitzenmacher, who was Patent Owner’s primary witness and submitted four declarations.

The Board during a conference call, indicated that “a typical remedy is to give no weight to such improperly elicited testimony,” but Patent Owner correctly pointed out in its motion that without further sanctions, “future parties will not be deterred from flouting the Board’s rules when the only risk is not gaining an advantage.”

In its Final Written Decision, the Board found that sanctions were not warranted because petitioner’s attempts to elicit testimony “while inartful” did not rise to the level of sanctionable conduct because they were reasonably related to the direct testimony. Ultimately, the Board adopted a no-harm, no-foul policy, finding sanctions unwarranted because patent owner suffered no harm.

In SAS Institute Inc. v. Iancu, the Supreme Court held that the when USPTO institutes inter partes review, it must all the grounds in the Petition, and cannot choose to limit its review to only some of the grounds.

The opinion was written by Justice Gorsuch, who if he had his druthers in Oils States (issued the same day) would have thrown out inter partes review altogether.  SAS petitioned for review of ComplementSoft’s software patent, but the USPTO, relying upon 37 CFR §42.108(a) only instituted inter partes review as to some of the challenged claims.  SAS unsuccessfully argued before the Federal Circuit that 35 USC §318(a), required the Board to decide the patentability of every claim.

Justice Gorsuch found that 35 USC §318(a) “provides a ready answer.”  He points out that §318(a) directs that if 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. . ..”  He said “[t]his directive is both mandatory and comprehensive.”  After a brief analysis of the grammar, he concludes:

when §318(a) says the Board’s final written decision “shall” resolve the patentability of “any patent claim challenged by the petitioner,” it means the Board must address every claim the petitioner has challenged.

Judge Gorsuch said it would seem to be an easy case,

Where a statute’s language carries a plain meaning, the duty of an administrative agency is to follow its commands as written, not to supplant those commands with others it may prefer.

The USPTO Director’s argued that while every claim instituted must be decided, not every claim has to be instituted.  However, Justice Gorsuch dismissed this  because “partial institution” power appears nowhere in the text of §318, or anywhere else in the statute, and what can be found in the statutory text and context strongly counsels against the Director’s argument.

Justice Gorsuch examined the statutory scheme for inter partes review, noting that it it a petitioner-driven process, not a PTO drive process.  Moreover while the Director is given discretion whether to institute, nothing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design.  While §314 gives the Director discretion to institute if there is a reasonable likelihood the petitioner will prevail on at least one of the claims challenged in the petition, Judge Gorsuch explained that rather than contemplate claim-by-claim institution, this language anticipates a regime where a reasonable prospect of success on a single claim justifies review of all.

Justice Gorsuch also pointed that that §318’s requirement that the Final Written Decision address “any patent claim challenged by the petitioner.” and rejected that any grammatical discrepancy between §314’s reference to claims found in the petition, and §318’s reference to claims challenged by the petitioner, makes any difference.

Justice Gorsuch also rejected the Director’s argument for efficiency, finding each side offers plausible reasons why its approach might make for the more efficient policy, but ultimately pointing out that policy arguments are properly addressed to Congress, not the Supreme Court.

Justice Gorsuch also rejected the Director’s argument for Chevron deference, which if still valid, only applies where the Court is unable to discern’s the Congress’ meaning.  Justice Gorsuch had no uncertainty about the statutes’ “unmistakable commands.”

The final issue raised by the Director was whether partial institution was even reviewable, given the unappealability of institution decisions.  He pointed out that after Cuozzo, 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.”  Justice Gorsuch said that was precisely the sort of question before the court.

Because everything in the statute before it confirmed that SAS is entitled to a final written decision addressing all of the claims it has challenged, and nothing suggested the Court lacks the power to do so, the Supreme Court reversed the judgment of the Federal Circuit, and remanded the case for further proceedings consistent with this opinion.

Overall a banner day for the Federal Circuit — its a rare day that they bat .500 at 1 First St NE.

The Supreme Court has finally issued its opinion in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, holding that inter partes review does not violate the Constitution.  The majority opinion written by Justice Thomas states that reconsideration of the Government’s decision to grant a public franchise “falls squarely within the public rights doctrine, and Congress has “permissably reserved the the PTO’s authority to conduct that reconsideration,” and thus the PTO can do so without violating Article III of the Constitution.

The Opinion goes on to explain that the courts have long recognized that the grant of a patent is a matter involving public rights.  The Opinion notes that the determination of patentability is exercising an executive function, and need not be adjudicated in an Article III Court, and because inter partes review involves the same basic matter as the grant of a patent, it too falls on the public-rights side of the line.

Justice Thomas points out that the only difference between Inter partes review and the initial grant of a patent is that Inter partes review occurs after the issuance, but said that distinction doe snot make a difference.

On the issue of whether patents are private property, Justice Thomas agrees that they are, and are entitled to the same protection as any other property right that consists of a franchise.  Adding that as a franchise the patent can confer only the rights that the statute prescribes, and that statute provides for inter partes review.

Justice Thomas went on to dismiss the arguments based upon the historic role of courts in deciding patent matters, citing non-judicial validity determination by the the privy Council under English Law.  He also dismissed cases that appear to suggest that courts were the only authority to set a patent aside, noting that under the statutes at the time, this were true statements, but they do not address Congress’ authority to establish a different scheme.

Justice Thomas rejected the the argument that inter partes review was a judicial proceeding exercising judicial authority, noting that the Court has never adopted a “looks like” test, and stating that the fact that an agency uses court-like procedures does not necessarily mean that it is exercising judicial power.

Justice Thomas was careful to emphasize the narrowness of the holding.  He pointed out that Oil States did not challenge the retroactive application of inter partes review, nor did it raise a due process challenge. Finally, Justice Thomas cautioned that the decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.

In closing, Justice Thomas noted that the disposition of the Article III issue, disposed of the Seventh Amendment issue, and concluded that because inter partes review does not violate Article III or the Seventh Amendment, the judgment of the Court of Appeals was confirmed.

Justice Gorsuch penned an interesting dissent joined by Chief Justice Roberts, but in the end what matters is inter partes reviews don’t violate Article III. So get back to work.

authority, and need not be , and further taht teh grant is a

In Dell Inc. v. Acceleron, LLC, [2017-1101](March 19, 2018), the Federal Circuit affirmed the Board’s decision on remand not to consider Dell’s late-presented arguments, rather than giving Acceleron the opportunity to address them.

In the previous appearance of this IPR before the Federal Circuit, Acceleron persuaded the Federal Circuit that the Board had improperly relied upon late-presented arguments by Dell made for the first time during the oral argument to which Acceleron did not have the opportunity to respond.  The Federal Circuit remanded the case, and on remand the the Board decided the proper course was to ignore the arguments made by Dell because they were no and not responsive to Acceleron’s arguments.

The Federal Circuit said that the Board was obligated to dismiss Dell’s
untimely argument given that the untimely argument in this case was raised for the first time during oral argument.  Dell argued that ignoring evidence of unpatentability was against public policy because it will not improve patent quality, but the Federal Circuit found that due process and preserving the Board’s discretion outweigh any negative effects of not invalidating a patent claim, especially since other parties remained free to challenge the validity of the claims.