On April 24, 2018, the Supreme Court issued its opinion in SAS Inst. Inc. v. Iancu, Director, United States Patent and Trademark Office.1 In that decision, the Court held that partial institution of Inter Partes Review (IPR) proceedings on fewer than all challenged claims by the Patent Trial and Appeal Board (PTAB) is impermissible in view of the plain text of 35 U.S.C. § 318(a).2 The Court made it clear that “the Board must address every claim the petitioner has challenged,” because “the petitioner’s petition, not the Director’s discretion, is supposed to guide the life of the litigation.”3 While the decision was clear on this point, it raises many questions regarding practical implementation. For example, what happens to the numerous pending cases that were partially instituted but have not received a final written decision? Likewise, what happens to partially instituted cases that have a final written decision but have not exhausted all appeals? Further, what impact will the decision have on future institution decisions? The below article explores how the PTAB has addressed some of these issues.
Cases Facing Partial Institution but no Final Written Decision
The USPTO was quick in its attempt to address some of these questions. On April 26, the Office issued guidance stating that, “[a]t this time, if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.”4 The Office also explained that for pending trials with partial institutions, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition.”5 This includes allowing panels to “take further action to manage the trial proceeding, including, for example, permitting additional time, briefing, discovery, and/or oral argument, depending on various circumstances and the stage of the proceeding.”6 The Office even noted “cases near the end of the 12-month statutory deadline may be extended, on a case-by-case basis, if required to afford all parties a full and fair opportunity to be heard.”7
Panels have already applied this guidance to their pending proceedings. For example, in Nevro Corp. v. Boston Sci. Neuromodulation Corp., the panel issued an order that “[p]ursuant to the holding in SAS, we modify our Decisions on Institution to institute on all of the claims and all of the grounds presented in the Petitions.”8 The panel instructed “Petitioner and Patent Owner shall meet and confer to discuss the need for additional briefing and any adjustments to the schedule. The parties shall participate in a conference call with the Board to discuss any requested additional briefing and schedule changes.”9 A review of PTAB files shows that this approach has been the standard across nearly all pending proceedings.
Panels are also heeding the USPTO’s guidance regarding the 12-month statutory deadline to issue a final written decision. In Choirock Contents Factory Co., Ltd., the panel faced a deadline to issue a final written decision on April 26, 2018.10 However, the panel explained “[i]n accordance with 37 C.F.R. § 42.100(c), the Chief Judge has determined that good cause exists to extend the one-year period for issuing a Final Written Decision here.”11
Cases with Final Written Decisions Based on Partial Institution
Not only are panels having to deal with hundreds of partially instituted pending cases, but they are also having to apply the teachings of SAS to some cases for which they have already issued final written decisions. In Kingston Tech. Co., Inc. v. Polaris Innovations Ltd., the panel addressed petitioner’s request “to file an out of time request for reconsideration seeking institution and a FWD on non-instituted claim[s].”12 The panel previously “instituted inter partes review (Paper 7) of claims 1 and 5–8 on the ground of obviousness [but] did not institute a review as to dependent claims 2–4 and did not institute on all grounds.”13 The panel issued a final written decision on February 5, 2018, but petitioner did not file a request for rehearing regarding the claims that were not instituted until May 8, 2018, after the SAS decision.14 The panel acknowledged “[t]ypically, a request for rehearing must be filed within thirty days of a final written decision” but further reasoned this “is not a typical case.”15 After holding a conference call to discuss the applicability of SAS, the panel granted petitioner’s request for rehearing and allowed the parties to submit additional briefing on the matter.16
Although it is still early, the Federal Circuit is also beginning to weigh in on the applicability of the SAS decision. In Polaris Indus. Inc. v. Arctic Cat, Inc., the Federal Circuit heard appeals by Polaris, the patent owner, from two final written decisions.17 On appeal, Polaris argued “that the Board erred because its analysis in its final written decisions conflicted with the rationale in its institution decisions.”18 Following SAS, Polaris sought to terminate the appeals and remand the IPRs to the PTAB.19 Arctic Cat, the petitioner, “argued that patent owners lack the right to request remand following SAS, and that regardless, Polaris waived its right to argue against partial institution by failing to preserve the argument.”20 However, facing this unique situation, “[t]he PTO intervened to argue that both patent owners and petitioners have the right to seek remand following SAS but that Polaris waived that right by not preserving the issue in its briefing before the Board.”21
The Federal Circuit disagreed with the petitioner and the USPTO, instead choosing to terminate the appeals and remand the cases back to the PTAB.22 The court explained “[a] patent owner has an interest in obtaining a final written decision that addresses all challenged claims and resolves all questions of patentability that might otherwise cloud the perceived validity of its patent.”23 The court further noted “that Polaris did not waive its right to seek remand by not arguing against partial institution before the Board. Precedent holds that a party does not waive an argument that arises from a significant change in law during the pendency of an appeal.”24
Practical Considerations for Future PTAB Proceedings
Moving forward, the SAS decision will raise numerous questions for the PTAB and federal courts to address. One such question is the potential impact of statutorily disclaimed claims on institution decisions post-SAS. Patent Owners have long used statutory disclaimers to defeat covered business method review eligibility by disclaiming the claims containing express financial components. The board previously determined that “[covered business method] patent review eligibility is determined based on the claims of the challenged patent as they exist at the time of the decision whether to institute, and statutorily disclaimed claims must be treated as if they never existed.”25 In Yamaha Golf Car Co. v. Club Car, LLC, the patent owner disclaimed instituted claims just three days after SAS in an attempt to terminate the proceedings and avoid institution of the previously denied claims.26 At a conference call on the matter, the parties largely focused their dispute on the timing of the retroactive application of SAS to institution decisions.27 The panel allowed the parties to submit further briefing on this issue but also ordered that they “address how SAS impacts our consideration of the statutory disclaimer filed in each case.”28
There is also considerable speculation about whether the SAS decision will result in extra, unnecessary work for the PTAB as it is forced to address weak grounds or whether it will result in the PTAB choosing to institute considerably fewer petitions. On one hand, the USPTO may have previously considered adopting an “all-or-nothing” approach to institution to increase the effectiveness of the estoppel attached to post-grant review. District courts already acknowledge the benefit of this approach as at least two recent decisions on motions to stay have emphasized how SAS will make it more likely for an IPR to result in substantial issue simplification by effectively removing the validity case from the district court case.29
However, at least some administrative patent judges recently implied that the PTAB may not be inclined to broadly institute all weak petitions. In ESET, LLC v. Finjan, Inc., Administrative Patent Judge Arpin authored a dissent from the panel’s decision to retroactively institute on all grounds and claims.30 Judge Arpin acknowledged SAS makes clear that “if we institute inter partes review and do not dismiss that review, we must address all claims challenged in the petition in any final written decision.”31 However, Judge Arpin argued “the Court does not require us to institute any inter partes review.”32 Accordingly, to conserve resources, we may see some PTAB panels denying petitions that have one or two strong grounds but are otherwise infected with weaker secondary arguments.
1 138 S. Ct. 1348, 1352 (2018).
2 Id. at 1354.
3 Id. at 1354, 1356 (emphasis in original).
4 Guidance on the impact of SAS on AIA trial proceedings, USPTO (April 24, 2018) (available at https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/trials/guidance-impact-sas-aia-trial).
8 IPR2017-01812, 2018 WL 1989667, at *1 (Apr. 26, 2018).
10 IPR2017-00030, 2018 WL 1989659, at *1 (Apr. 26, 2018).
12 IPR2016-01622, 2018 WL 2328796, at *2 (May 21, 2018).
17 No. 2017-1870, 2018 WL 2435544, at *1 (Fed. Cir. May 30, 2018).
22 Id. at *2.
23 Id. at *1.
24 Id. (citing Hormel v. Helvering, 312 U.S. 552, 558–59 (1941)).
25 Facebook, Inc. v. Skky, LLC, CBM2016-00091, Paper 12 at 11 (PTAB Sept. 28, 2017) (designated precedential).
26 IPR2017-02142, 2018 WL 2297937, at *1 (May 11, 2018).
27 Id. at *2.
29 See Nichia Corp. v. Vizio, Inc., 2018 WL 2448098 (C.D. Cal. May 21, 2018); Wi-LAN, Inc. v. LG Elecs., Inc., 2018 WL 2392161, at *3 (S.D. Cal. May 22, 2018).
30 IPR2017-01738, 2018 WL 2328884, at *2 (May 21, 2018).
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