PublishedMay 22, 2017

SCOTUS Taking Case On Partial Institution Of IPRs

One of the biggest changes coming out of the 2011 America Invents Act (AIA) was the creation of the inter partes review (IPR) procedure, which allows people to challenge the validity of patents after they’ve issued.  Today, the Supreme Court granted certiorari to determine whether an IPR can be “instituted” on only some of the challenged claims, or whether all claims have to receive a final decision.  The case is called SAS v. Lee.

The IPR process, at a high level, has four main phases.  

IPR Timeline
IPR Timeline

First, the challenger puts together a document (the petition) explaining why they think the patent is invalid, and explaining what art they used to challenge which claims in detail.  Second, the Patent Trial and Appeal Board (PTAB) decides whether there’s a “reasonable likelihood of success” that at least one claim is invalid, and issues a “decision on institution” explaining which claims it thinks are likely invalid.  Third, there’s a limited period of time during which the patent owner and the challenger take depositions; the patent owner also responds to the PTAB’s decision to institute an IPR, and the challenger can respond to the patent owner’s comments.  Finally, the PTAB will conduct an oral hearing and then issue a final written decision on the patentability of any claims on which review was instituted.  In the third and fourth phases, the procedure focuses only on the claims that the Board decided were likely invalid.

Let’s say SAS filed a petition challenging claims 1-10 of a patent.  The key question for this case is whether the PTAB can decide only to institute an IPR on claims 1-5 and not handle claims 6-10, known as “partial institution,” or whether the PTAB has to look at all of the challenged claims.

History Lessons

The AIA has an extensive legislative history.  For the full details, I highly recommend starting with Joseph Matal’s pair of articles summarizing the Act.

But the historical key for understanding why the SAS case is important comes from a hearing held in the House Judiciary Committee back in 2005.  This hearing was convened to “explore the merits of a committee print that incorporates a number of changes to improve the quality of patents issued by the U.S. Patent and Trademark Office.” (emphasis added).  The IPR procedure isn’t primarily a litigation substitute — its purpose is to address deficiencies in patent quality at the back end, after the Patent Office has issued a patent.

Challenges to Partial Institution At The Federal Circuit

This isn’t the first time the issue of “partial institution” has been raised in court.  The issue also came up when Synopsys challenged certain claims in a Mentor Graphics patent back in 2014.  In 2016, in the Synopsys case, the Federal Circuit decided that the PTAB was allowed to only look at a subset of claims.  

The Federal Circuit looked at the language of the statute, which uses different terms to describe claims challenged in the petition versus the claims included in a final written decision.  The Federal Circuit also pointed to the benefits of a full record, since the PTAB would only have a fill briefing on the instituted claims.  Based on these factors, the Federal Circuit found the text of the statute was clear — partial institution is allowed.  In addition, the Federal Circuit noted that if the statute was ambiguous, they would defer to the PTO’s judgment, which is reflected in the IPR rules the PTO issued.

Subsequently, SAS filed an IPR challenging claims in a patent belonging to ComplementSoft.  The PTAB decided to institute an IPR on only some of the challenged claims, and invalidated all but one of the claims they instituted the IPR on.  Both SAS and ComplementSoft appealed this decision to the Federal Circuit, with SAS arguing that the PTAB should have issued a decision on all claims.

I’ll note that this appears primarily to be a strategy to revisit the decision — SAS, as challenger, wouldn’t want PTAB to issue a decision holding claims valid, so the goal of this challenge appears to be to get the PTAB’s decision overturned and get a second bite.

The Federal Circuit denied SAS’s appeal on this issue, citing to the Synopsys decision.  SAS sought en banc review from the entire Federal Circuit, and was again denied.  They filed a certiorari petition, and today the Supreme Court granted certiorari.

What Will SCOTUS Do?

As we saw in the TC Heartland decision today (more information on that case will be in my next post!), the Federal Circuit doesn’t have the best record at the Supreme Court.  Given that the Federal Circuit has said “partial institution” is okay, it seems likely that the Supreme Court will do the usual thing by overturning the Federal Circuit and requiring decisions to issue on all challenged claims.

The Supreme Court could do this in at least a couple ways.  One possibility would be requiring the PTAB to issue a final written decision on all challenged claims, whether or not an IPR was instituted on those particular claims.  Another would be requiring the PTAB to institute an IPR on all challenged claims if they think even one is likely invalid.

I don’t think either approach to overturning the Federal Circuit would be the right decision here.  Issuing decisions on claims that lack a fully developed record doesn’t serve anyone’s interests in maintaining high-quality patents.  And forcing the PTAB to develop a full record on all challenged claims would just add to the PTAB’s workload to no real benefit, bogging down the IPR process and taking away the value of IPRs as an alternative to a district court validity challenge.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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