The question of whether the United States Court of Appeals for the Federal Circuit Court of Appeals has any right to examine a decision of the Patent Trial and Appeal Board (PTAB) to institute inter partes review or post grant review, as opposed to analyzing the outcome of that review, has been much discussed in recent years. In its decision of April 20, 2020 in Thryv v. Click-To-Call Technologies, LP, the Supreme Court of the United States (SCOTUS) has made it clear that if such a right exits, it is an extremely limited one, and does not include the right to review whether a petitioner for inter partes review has complied with the requirement to institute such proceedings within the time period set out in the statute. Subsequent decisions of the Federal Circuit Court of Appeals have addressed the impact of the SCOTUS decision on the appeal of PTAB decisions to institute review in other situations.
35 USC 314(d) states:
(d) NO APPEAL.—The determination by the Director whether to institute an inter partes review under this section shall be final and non-appealable.
Early decisions of the Federal Circuit Court of Appeals strictly applied this prohibition. However, in Cuozzo v. Lee 1 , SCOTUS held that though most decisions to institute proceedings are not subject to judicial review because “they consist of questions that are closely tied to the application and interpretation of statutes related to” the decision to review, (this bar was not absolute and appeals could be entertained), for example, if a constitutional question, such as lack of due process, was implicated or the appeal presented other questions of interpretation that reach well beyond “this section” in terms of scope and impact. Based on these possible exceptions to a rigid bar, in a 9-4 en banc decision on January 8, 2018, in Wi-Fi One LLC. v. Broadcom Corp., the Federal Circuit held that the SCOTUS decision in Cuozzo did not preclude all appeals from decisions to implement proceedings and that the language of the statute barred appeals only to decisions on implementation of review made under “this section” (35 USC 314) and so left open the possibility of judicial review of whether the timeliness requirements of the statute (which are set out in 35 USC 315) had been met. The dissent read the bar on appeals more broadly and reasoned that such a broader meaning was what Congress had intended and that SCOTUS had affirmed this in Cuozzo when it stated that whether the “Patent Office unlawfully initiated its agency review is not appealable because that is what § 314 (d) says” and that judicial review was prohibited for “questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to institute inter partes review”. In its April 20, 2020 decision in Thryv, SCOTUS in a 7-2 decision authored by Justice Ginsburg, held that the dissenters to the Federal Circuit’s decision in Wi-Fi One had been correct.
The Supreme Court Decision:
In its decision in Thryv Inc. v. Click-To- Call Technologies LP, SCOTUS held that dissenters in the Federal Circuit were correct and that there is no possibility of appeal from a decision to institute proceedings even if such proceedings were time-barred. Writing for the majority, Justice Ginsburg noted that even though there was a general presumption that agency decisions were subject to judicial review, this could be changed by statute as had been reviewed in Cuozzo v. Lee. In the present case the statutory that a request for inter partes review had to be filed within one year of the challenger, the real party in interest or a privy thereto having been served with a complaint that alleging infringement of the patent in question was, as noted by the Federal Circuit, a requirement of 35 USC 315 (b) rather than 35 USC 314. However, she did not see this as a relevant issue. The real question was:
whether a challenge based on §315(b) ranks as an appeal of the agency’s decision “to institute an inter partes review.” §314(d).
To her the answer was clear:
We 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. Section 315(b)’s time limitation is integral to, indeed a condition on institution.
Because §315(b) expressly governs institution and nothing more, a contention that a petition fails under §315(b) is a contention that the agency should have refused “to institute an inter partes review.” §314(d). A challenge to a petition’s timeliness under §315(b) thus raises “an ordinary dispute about the application of ” an institution related statute. In this case as in Cuozzo, therefore, §314(d) overcomes the presumption favoring judicial review.
She noted that a question that had been found to be non-appealable in Cuozzo was whether the challenger’s petition had indicated the claims being challenged with sufficient particularity, an issue arising under 35 USC 312 not under 35 USC 314 and so the provision barring appeals could not be limited to issues arising under 35 USC 314.
Ginsburg J saw the purpose of inter partes review to weed out bad patents efficiently and providing for appeals of the decisions to institute proceedings would run contrary to that objective. Consequently, limiting the possibility of appeal was clearly consistent with the policy objectives of the America Invents Act. If the PTAB instituted review wrongly and erred in finding that a patent was “bad”, this could be corrected by an appeal against the final decision.
Gorsuch J. dissented. He noted that even the United States Patent and Trademark Office (USPTO) now agreed that the filing of the challenge was time-barred because more than one year had elapsed from the service of an infringement complaint on a privy to the challenger. Gorsuch J had a general concern about whether the Constitution gave the right to “a politically guided agency to revoke an inventor’s property right in an issued patent”. More specifically, he agreed with the majority in the Federal Circuit that when 35 USC 314(d) said there was no appeal available for determinations under “this section”, this was confined to the substantive issues on which a determination to institute review could be undertaken and not to issues arising under other sections. The decision of the majority had the effect of forcing the patent owner to undergo a full PTAB with its attendant costs in a situation where it was agreed that the challenger lacked the right to make the challenge
Whether questions of all real parties in interest had been revealed were subject to appeal to the Federal Circuit
In ESIP Series2, LLC v. Puzhen Life USA, LLC, 2 the Federal Circuit held that the Thryv decision precluded it from considering whether the challenger had failed to identify the real party in interest when making its challenge, disclosure of real parties in interest and privies to the challenger being a requirement of the statute to enable a proper determination of whether the time limit noted above had been complied with. The Federal Circuit noted:
In view of Cuozzo and Click-to-Call, we find no principled reason why preclusion of judicial review under § 314(d) would not extend to a Board decision concerning the “real parties in interest” requirement of § 312(a)(2). ESIP’s contention that the Board failed to comply with § 312(a)(2) is “a contention that the agency should have refused to institute an inter partes review.” Indeed, ESIP expressly argues that the agency should have refused to institute inter partes review because of Puzhen’s failure to identify all “real parties in interest.” Accordingly, we hold that ESIP’s challenge to the Board’s “real parties in interest” determination “raises ‘an ordinary dispute about the application of’ an institution-related statute,” and that § 314(d) precludes our review of that determination.
Whether questions of whether joinder was proper was appealable to the Federal Circuit
On the other hand, in Facebook Inc. v Windy City Innovations LC (case 2018-1400 September 4, 2020), Facebook and the Director of the USPTO argued that this decision in Thryv deprived the Federal Circuit of the right to review PTAB decisions on joinder. The Federal Circuit disagreed. The court pointed out that 35 USC315(c) requires the Director to exercise his discretion to decide whether to “join as a party” the joinder applicant. The statute makes clear that the joinder decision is made after a determination that a petition warrants institution, thereby affecting the manner in which an IPR will proceed. Thus, the joinder decision is a separate and subsequent decision to the institution decision. As such the situation was more similar to that in S.A.S v. Iancu where the SCOTUS had held that the courts had jurisdiction to review how inter parte proceedings were carried out (and had held that the PTAB’s prior practice of instituting review of only some of the claims challenged was contrary to the language of the statute) than it was to Thryv v. Click-to Call.
Questions of whether a patent met the criteria for consideration under covered business review was appealable to the Federal Circuit
A third situation where the effect of the Thryv decision is still to be resolved is whether the Federal Circuit can review decisions of the PTAB on the question of whether a challenged patent meets the criteria for being subject to covered business review.
For a period which ended on 16 September 2020, the America Invents Act provided for Covered Business Method (CBM) Review for patents that claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”
In September 2019, in SIPCO LLC v. Emerson Electric Co the Federal Circuit disagreed with the reasoning of the PTAB that had held that the patent in question did not fall within the technological invention exception of the statute and remanded the case to the PTAB to revisit its decision as to whether the patent in question qualifies for the CBM review.
Emerson, the challenger who had sought CBM review, petitioned for certiorari asking SCOTUS to review the question of whether the Federal Circuit had the power to review decisions of the PTAB on the question of whether a patent qualified for institution of CBM review.
On June 15, 2020, SCOTUS issued an order in this case granting the petition for certiorari vacating the Federal Circuit’s decision and remanding the case “for further consideration in light of Thryv, Inc. v. Click-to-Call Technologies.”
The Thryv decision has clearly limited the power of the Federal Circuit to review PTAB decisions relating to post grant challenges to patent validity on matters other than issues of substantive law relating to patent validity and issues relating to the procedures to be followed after proceedings have been instituted. Whether one regards this as a good thing depends whether one thinks that there are too many “bad patents” and procedural hurdles to removing them should be minimized, as seems to have been Justice Ginsburg’s view, or whether one agrees with Justice Gorsuch that patent owners should not have to be put to the trouble and expense of defending against challenges if the challenger failed to meet the requirements set by Congress for having standing to make the challenge.