The Supreme Court reversed the judgment of the Federal Circuit today in SAS Institute Inc. v. Iancu.  In a rare close decision in patent cases, Justice Gorsuch (joined by the Chief Justice and Justices Kennedy, Thomas, and Alito) provided a textual explication of the inter partes review (IPR) statute in deciding that the U.S. Patent and Trademark Office was compelled to render a Final Written Decision (FWD) on all claims challenged by a petitioner in its IPR petition.  This decision overruled the Patent Office's practice (by rule; 37 C.F.R. § 41.108(a)) that the Director (through the Patent Trial and Appeal Board) could institute an IPR on less than all challenged claims and then limit the FWD to only the instituted claims.

According to the majority, the decision to institute is binary (either the PTAB decides to institute or not), but once instituted, the Board must render a decision on all challenged claims.  Justice Gorsuch in his opinion set forth the relevant statutory language he believed supported the Court's opinion and the various procedures (one "inquisitorial" in nature, like ex parte reexamination, in contrast to the more adjudicatory IPR procedure).  IPRs "look[] a great deal like civil litigation," in his opinion and are governed by express provisions in the statute regarding the standards for instituting an IPR (§§ 311-314), conducting the IPR proceeding (§ 316), settlement (§ 317) and coming to a final decision on patentability (§ 318).

Justice Gorsuch's explication of the language of the statute is based on earlier instances of statutory interpretation by the Court as well as with reference to dictionaries and legal scholarship.  Important terms in the statute include the use of the word "any" in 35 U.S.C. § 318(a) (that the Office "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner") to mean "every," stating that "[t]he agency [here, the USPTO] cannot curate the claims at issue but must decide [the validity] of them all."  This interpretation is further supported by the use of the word "shall," which the opinion notes "generally imposes a nondiscretionary duty."  This language provides a "ready answer" to the question presented, the opinion stating that the language of § 318(a) is "both mandatory and comprehensive" with regard to the statutory requirement that the Board render a Final Written Decision on all claims challenged in an IPR petition.

While stating that this analysis "would seem to make this an easy case," the opinion reviews (and rejects) the Director's arguments to the contrary.  The majority finds no basis in the statute for the Director to have discretion regarding "partial institution."  Indeed, the opinion notes that, unlike in ex parte reexamination, the IPR provisions of the statute do not permit the Director to initiate an IPR sua sponte.  "From the outset, we see that Congress chose to structure a process in which it's the petitioner, not the Director, who gets to define the contours of the proceeding," says the majority.

The Court majority also sees interpretive meaning in further distinctions between IPR proceedings and ex parte reexamination.  In the latter proceedings, Congress chose "an inquisitorial approach" (analogous to ex parte examination in the first instance) and thus Congress "knew exactly how to" expressly give the Director the discretion he argues he has under the IPR provisions of the America Invents Act.  "Congress's choice to depart from the model of a closely related statute is a choice neither we nor the agency can disregard," according to the opinion, citing University of Tex. Southwestern Med. Center v. Nassar, 570 U.S. 333, 353 (2013).

Further, the Court's opinion cites the language of § 314, where that language appears to provide either that the IPR proceedings be instituted or that they are not, based on the provision that the Director must decide "whether to institute an inter partes review . . . pursuant to the petition."  Both the terms "whether" and "pursuant to the petition" have meaning to the Court majority.  "Whether" to institute an IPR implies a "yes or no" option, and "pursuant to the petition" supports the earlier-stated view that what is instituted is an IPR on the claims challenged by the petitioner.  As stated in the opinion, "[n]othing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design" (emphasis in opinion).

The majority also held that this portion of the statute, which the Director relied upon to imply discretion based on the language that the Director should institute if there is a "reasonable likelihood" that "at least 1 of the claimed challenged by the petition" is invalid, implies exactly the opposite.  For the Court majority, "[o]nce that single claim threshold is satisfied, it doesn't matter whether the petitioner is likely to prevail on additional claims"; the Director should institute the IPR on all challenged claims (emphasis in opinion).  The opinion again references the ex parte reexamination statute to show that if Congress had intended to give the Director the discretion he claims there was language available to do so.

The opinion summarily rejects the Director's reliance on his discretion under § 314 to institute an IPR to support his discretion to institute partially, once again characterizing the decision as binary.  This conclusion is supported, according to the opinion, by the language of the other provisions in the statute which reference "the petition" rather than challenged claims, the majority interpreting Congress not to have intended the Director to have discretion other than whether or not to institute an IPR against the claims the petitioner challenged.

With regard to the ambiguity purported to be in the statute due to slight differences in the language of § 314 and § 318 (which forms the basis for the dissent's position), the majority assert that they "just don't see it," characterizing it as a "slight linguistic discrepancy."  Any differences between the claims challenged in the petition and the claims available for Final Written Decision can be explained by the patentee's ability to cancel or amend claims, according to the opinion (terming it a "winnowing mechanism").  The opinion states that "[w]e need not and will not invent an atextual explanation for Congress's drafting choices when the statute's own terms supply an answer," citing U.S. v. Ron Pair Enterprises Inc., 489 U.S. 235, 240-241 (1989).

Neither are the Director's policy arguments persuasive (in contrast to the effects of these arguments on the dissenting Justices).  Even though "[e]ach side offers plausible reasons why its approach might make for the more efficient policy[,] who should win that debate isn't our call to make," because "[p]olicy arguments are properly addressed to Congress, not this Court."  And "[w]hatever its virtues or vices, Congress's prescribed policy here is clear: the petitioner in an inter partes review is entitled to a decision on all the claims it has challenged" says the Court, nicely closing the door on the basis for the dissenting Justices' contrary opinion.

Because the majority saw no ambiguity in the statutory language, deference to the agency's implementation decisions under Chevron v. Natural Resources Defense Council did not apply.  In an interesting side note (with regard to Justice Gorsuch's acknowledged antipathy to Chevron), the majority deigns to leave the continued vitality of the agency deference doctrine "for another day," merely holding that "we owe an agency's interpretation of the law no deference" if there is (as here, for these Justices) no ambiguity in the statute's mandate.

And not surprisingly, the Court rejects the Director's final argument that the question before it is one regarding the institution decision, which Congress under § 314(d) put beyond judicial review, citing Cuozzo Speed Technologies LLC v Lee (2016).  The majority reminds the Director that Cuozzo recognized a "strong presumption" of judicial review of agency decisions, and that judicial review was necessary to preclude agency "shenanigans" that would "exceed its "statutory bounds."

Justice Breyer dissented, joined by Justices Ginsberg, Sotomayor, and Kagan.  These Justices did perceive an ambiguity in the differences in language (albeit slight) between § 314 and § 318 sufficient to support both the Director's application of the statute and entitlement to Chevron deference.  To the dissenters, the statutory language is far from being as clear as the majority believes; to them, the statute is "technical, unclear and constitutes a minor procedural part of a larger administrative scheme."  The dissent expressly relies upon Chevron, characterizing it as "an interpretative technique that judges often use in such cases" where the statute contains an ambiguity (and perhaps setting the terms of a future dispute between the Justices on the question of Chevron deference).  Using this technique, the dissent finds such an ambiguity and further that the Director's interpretation of the ambiguous statutory language is reasonable (and thus the dissenting Justices would affirm).  Helpful in considering the dissenting Justices' thinking in this regard, Justice Breyer sets forth a hypothetical (as is his wont) in which a petitioner challenges sixteen claims and the Board institutes an IPR on one of them, and the uses this hypothetical as a practical guidepost for its explication of the statutory language.

The dissenting opinion performs its own brand of statutory exegesis and, unsurprisingly, finds ambiguity between reference to claims challenged in the petition and claims surviving to Final Written Decision.  These Justices perceive that the majority relies on its own statutory language that actually does not exist in the statute (specifically "'any patent claim challenged by the petitioner' in the petitioner's original petition") and for them, "[w]hich reading we give the statute [theirs or the majority's] makes a difference."  Without expressly making the point, the dissent illustrates that, if these Justices cannot agree on the meaning of the statutory language, such language is prima facie ambiguous and thus Chevron deference should attach to the Director's interpretation.

In addition, these Justices agreed with the Director's argument that interpreting the statute as the majority did would impose tremendous inefficiencies on the PTAB, requiring them to provide a FWD on claims that the petitioner had not shown had a reasonable likelihood of being invalid.  This point was emphasized in a one-paragraph, separate dissent penned by Justice Ginsberg (joined by the other dissenting Justices), who saw "no cause to believe Congress wanted the Board to spend its time so uselessly."

One practical consequence of this decision (that Justice Breyer in his dissent fully appreciates) is that it provides a route for a petitioner, unhappy that the Board refused to institute IPR on any particular claim, to appeal the FWD and thus overcome the prohibition in the statute that the institution decision is at the Director's discretion and not appealable.  This is clearly contrary to the legislative scheme (and Justice Sotomayor, one of the dissenting Justices here, at oral argument quizzed counsel aggressively on whether the entire exercise was a way to get around the Court's Cuozzo decision).  This decision also raises the possibility that the Board, rather than issue an appealable FWD on claims that do not rise to the "reasonable likelihood" standard will instead refuse to institute using language in the decision providing a roadmap for further petitions of more limited scope that it will institute.  No matter how the Board adapts its practices to avoid the outcome mandated by this decision, the majority's clear holding provides the basis for the Office and the public to petition Congress to intercede to change the statutory language to give the Director the discretion the Court majority could not find in the statute Congress enacted.

SAS Institute Inc. v. Iancu (2018)
Opinion of the Court by Justice Gorsuch, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito; dissenting opinion by Justice Ginsburg, joined by Justices Breyer, Sotomayor, and Kagan; dissenting opinion by Justice Breyer, joined by Justices Ginsburg and Sotomayor, and joined except as to Part III-A by Justice Kagan