Yesterday, in Thryv, Inc. v. Click-to-Call Technologies, LP, the Supreme Court ruled that the provisions of 35 U.S.C. § 315(b), which preclude a petitioner from filing an inter partes review petition more than one year after being served with a complaint alleging infringement, are barred from judicial review under 35 U.S.C. § 314(d). The Court's decision reversed an en banc Federal Circuit opinion that the time bar was reviewable, Wi-Fi One, LLC v. Broadcom Corp., as well as the panel decision in the case at issue below.
The case arose after a complicated history, involving U.S. Patent No. 5,818,836, directed to methods for anonymizing telephone calls. The patent had been involved in litigation in 2001 involving a predecessor in interest to parties here, but that case had been dismissed without prejudice. When Thryv filed its petition for inter partes review in 2013, Click-to-Call argued that this earlier suit precluded the Patent Trial and Appeal Board from instituting the IPR under the provisions of 35 U.S.C. § 315(b), which provides in relevant part:
§315(b) Patent Owner's Action.— An inter partes review 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 Board disagreed, instituted the IPR, and invalidated thirteen of the '836 patent claims under §§ 102 or 103. Click-to-Call appealed, and the Federal Circuit dismissed the appeal for lack of jurisdiction under § 314(d):
§314(d) No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
Click-to-Call petitioned for certiorari but in the interim the Supreme Court had decided Cuozzo Speed Technologies, LLC v. Lee and accordingly granted the petition, vacated the Federal Circuit's judgment and remanded for consideration in view of Cuozzo.
Meanwhile, the Federal Circuit decided en banc in Wi-Fi One that the § 315(b) time bar was not "closely related" to the institution decision falling within the scope of § 314(a) and thus that the Board's determination of whether an IPR was reviewable was subject to the Court's review. Accordingly, the Court granted a panel rehearing that decided that the 2001 infringement action started the one-year clock and the IPR was time-barred under § 315(b). Today's majority opinion cited the Federal Circuit dissent in Wi-Fi One by Judges Hughes, Lourie, Bryson, and Dyk, that "§314(d) conveys Congress' 'clear and unmistakable' 'intent to prohibit judicial review of the Board's [inter partes review] institution decision.'" The Court's opinion also notes in a footnote that the Federal Circuit in its now overruled en banc WiFi One opinion held that the time bar could be triggered by a compliant that was voluntarily dismissed without prejudice, but that the Court's opinion today does not reach this issue.
The Supreme Court granted certiorari to consider the issue of whether § 314(d) precluded appellate review of the time bar determination by the PTAB under § 315(b). In an opinion by Justice Ginsberg, joined by the remainder of the Court except for Justice Gorsuch who wrote a dissent in which Justice Sotomayor joined, the Court found that § 314(d) precluded appellate review of the § 315(b) time bar.
Justice Ginsberg's opinion was succinct:
The agency's application of § 315(b)'s time limit, we hold, is closely related to its decision whether to institute inter partes review and is therefore rendered nonappealable by § 314(d).
The Court's basis for this decision was the statutory language, that § 314(d) renders "final and nonappealable" the Director's decision whether to institute an inter partes review, a holding the Court attests is consistent with Cuozzo:
[O]ur interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office's decision to initiate inter partes review.
According to the majority, the time bar question is "closely tied" to the statutory provisions precluding judicial review because § 315(b) sets forth a circumstance in which "[a]n inter partes review may not be instituted." The opinion finds that "[w]e need not venture beyond Cuozzo's holding that §314(d) bars review at least of matters 'closely tied to the application and interpretation of statutes related to' the institution decision, for a §315(b) challenge easily meets that measurement." The opinion calls the time bar "integral to, indeed a condition on, institution" in support of its holding that § 314(d) bars review of PTAB decisions under § 315(b).
The majority voiced policy concerns that if a patent owner was allowed to appeal Board determinations under § 315(b), such appeals would "tug against that objective [providing an efficient mechanism for weeding out "bad patents," a term that is usually a signal on the philosophical leanings of the Court], wasting the resources spent resolving patentability and leaving bad patents enforceable." The Court foresaw that a patent owner would appeal on § 315(b) untimeliness grounds "only if she could not prevail on patentability, [and consequently] §315(b) appeals would operate to save bad patent claims." The Court also noted that its decision was consistent with the statutory scheme, which "so consistently elevat[es] resolution of patentability above a petitioner's compliance with §315(b)" because the Board's adjudication on the merits is thereby preserved.
The opinion further notes that, if Congress had wished to limit the extent of § 314(d) as patent owner and the dissent contend, it could have easily drafted the legislation to recite that the appellate review bar of § 314(d) be limited to Board determinations under § 314(a).
The opinion is also consistent with earlier decisions by the Court interpreting the statutory regime of inter partes review, including Cuozzo and SAS Institute Inc. v. Iancu. These decisions taken together strongly suggest that if Congress wants an administrative agency to have authority that cannot be challenged by a reviewing Court it needs to expressly grant that unreviewability status to the agency by statute. As a consequence of these decisions, the only challenge that may be available to a frank disregard of the § 315(b) time limit by the Board would be to raise such a challenge on due process grounds, an option that the Court left open explicitly in Oil States Energy Serv. LLC v. Greene's Energy Group LLC.
The dissent by Justice Gorsuch provides a different interpretation of the statute and would limit the scope of the § 314(d) reviewability bar to the institution decision and not bar any other provisions of the statute relating to inter partes review. In the views of the dissenting Justices:
Today the Court takes a flawed premise—that the Constitution permits a politically guided agency to revoke an inventor's property right in an issued patent—and bends it further, allowing the agency's decision to stand immune from judicial review. Worse, the Court closes the courthouse not in a case where the patent owner is merely unhappy with the merits of the agency's decision but where the owner claims the agency's proceedings were unlawful from the start. Most remarkably, the Court denies judicial review even though the government now concedes that the patent owner is right and this entire exercise in property-taking-by-bureaucracy was forbidden by law.
The dissent expresses a worry the majority's decision puts patentees as property holders at bureaucratic mercy without recourse to courts. "No matter how wrong or even purposefully evasive, the Director's assessment of a petition's timeliness is always immune from review" is the consequence of the majority decision, according to the dissent, and even without any ill intention ("[t]he Board can err") such errors are beyond the scope of judicial review (at least with regard to any issue involving institution decisions).
The dissent finds in the statutory language little textual support for the majority's construction, for example, there being nothing in § 315(b) regarding a determination by the Director such as is found in § 314. "To pretend otherwise would invite a linguistic nonsense" and "practical nonsense as well" according to Justice Gorsuch.
The dissent also reminds the majority (and us) that there is a presumption of judicial review that serves an important purpose under our law. Relying on The Federalist No. 48, the dissent reminds us what the Founders considered to be important about separation of powers and checks and balances between the three branches and the particular importance of the judiciary in giving citizens a remedy when aggrieved by decisions from the other branches. The Justices opine that it would be surprising "to think Congress might have imposed an express limit on an executive bureaucracy's authority to decide the rights of individuals, and then entrusted that agency with the sole power to enforce the limits of its own authority." The Justices are less concerned about (or convinced that) Congress's intent in establishing inter partes review proceedings to be an efficient way of ferreting out "bad patents." In their view, there is ample evidence that "Congress also included provisions to preserve the value of patents and protect the rights of patent owners."
Justice Gorsuch writes alone in the final section of the dissent, where he reiterates his view that the majority's decision "takes us further down the road of handing over judicial powers involving the disposition of individual rights to executive agency officials" which he believes began with the Court's decision in Oil States (a decision from which he also dissented). The Justice analogizes the consequences of that decision, (where the Court determined the patent right to be a public franchise and not a property right) to land grants. For those rights, "[n]o one thinks we would allow a bureaucracy in Washington to 'cancel' a citizen's right to his farm," and plainly the Justice doesn't think the bureaucracy that is the Patent Office should be doing so for patents, citing Hovey v. Henry, 12 F. Cas. 603, 604 (No. 6,742) (CC Mass. 1846), in support of patent rights being property rights akin to land grants. And the Justice is also concerned that:
The abdication of our judicial duty comes with a price. The Director of the Patent and Trademark Office is a political appointee. The AIA vests him with unreviewable authority to institute (or not) inter partes review. Nothing would prevent him, it seems, from insulating his favorite firms and industries from this process entirely. Those who are not so fortunate proceed to an administrative "trial" before a panel of agency employees that the Director also has the means to control. The AIA gives the Director the power to select which employees, and how many of them, will hear any particular inter partes challenge. It also gives him the power to decide how much they are paid. And if a panel reaches a result he doesn't like, the Director claims he may order rehearing before a new panel, of any size, and including even himself.
And moreover:
No one can doubt that this regime favors those with political clout, the powerful and the popular. But what about those who lack the resources or means to influence and maybe even capture a politically guided agency? Consider Mr. DuVal, who 25 years ago, came up with something the Patent Office agreed was novel and useful. His patent survived not only that initial review but a subsequent administrative ex parte review, a lawsuit, and the initiation of another. Yet, now, after the patent has expired, it is challenged in still another administrative proceeding and retroactively expunged by an agency that has, by its own admission, acted unlawfully. That is what happens when power is not balanced against power and executive action goes unchecked by judicial review. Rather than securing incentives to invent, the regime creates incentives to curry favor with officials in Washington.
And perhaps foreshadowing the issues the Court will grapple with in future, the Justice notes that Article III courts have abdicated their authority to the PTAB as an Article I court in cases like XY, LLC v. Trans Ova Genetics, L.C. and Fresenius USA, Inc. v. Baxter Int'l, Inc.
The dissent concludes:
Two years ago, this Court sanctioned a departure from the constitutional plan, one in which the Executive Branch assumed responsibilities long reserved to the Judiciary. In so doing, we denied inventors the right to have their claims tried before independent judges and juries. Today we compound that error, not only requiring patent owners to try their disputes before employees of a political branch, but limiting their ability to obtain judicial review when those same employees fail or refuse to comply with the law. Nothing in the statue commands this result, and nothing in the Constitution permits it.
The concerns expressed in the dissent are consistent with Justice Gorsuch's dissent in Oil States; what may be more interesting is Justice Sotomayor joining in expressing these concerns (although the Justice did not join the part of the dissenting opinion where these concerns were most strongly raised).
Thryv, Inc. v. Click-to-Call Technologies, LP (2020)
Opinion by Justice Ginsberg, joined by Chief Justice Roberts and Justices Breyer, Kagan, and Kavanaugh, joined by Justices Thomas and Alito except for Part III–C; dissenting opinion by Justice Gorsuch, joined by Justice Sotomayor as to parts I, II, III, and IV
