US Supreme Court For AIA Proceedings, All or Nothing at All

by McDermott Will & Emery
Contact

McDermott Will & Emery

In Depth

SAS Institute Inc. v. Iancu, Director of the USPTO (No. 16-969).

In a 5-4 decision, the US Supreme Court reversed a decision by the US Court of Appeals for the Federal Circuit, holding that once the Patent Trial & Appeal Board of US Patent & Trademark Office (PTAB or Board) institutes an inter partes review (IPR) proceeding, it must review each and every claim challenged in the petition. Going forward, the PTAB will no longer be permitted to engage in the practice of “partial institution,” i.e., of only some of the claims challenged in the petition. (Gorsuch, Justice, joined by Roberts, Chief Justice. and Kennedy, Thomas, and Alito, Justices.) (Ginsburg, Justice, joined by Breyer, Sotomayor, and Kagan, Justices, dissenting.) (Breyer, Justice dissenting, joined by Ginsburg, Sotomayor, and Kagan, Justices.).

This dispute arose when SAS filed a petition for IPR challenging all 16 claims of a patent owned by ComplementSoft. The Board determined that SAS only demonstrated a reasonable likelihood of success on nine of the challenged claims, thereby declining to institute an IPR on the remaining seven claims. In declining to institute on those seven claims, the Board relied on a regulation that states that the PTO director (director) “may authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim.” 37 CFR § 42.108(a). In its Final Written Decision, the Board found all but one of the instituted claims unpatentable, and was predictably silent with regard to the seven claims on which it did not institute. SAS appealed to the Federal Circuit, which (over a “vigorous” dissent by Judge Newman) upheld the regulation. IP Update, Vol. 19, No. 12.

In reversing the Federal Circuit, the Supreme Court found that § 318(a) of the American Invents Act (AIA) supplies a clear answer to the question where it states that the Board “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” The Court found this directive both mandatory and comprehensive, analogizing it to civil litigation where a plaintiff would expect to have a decision on all the claims in the complaint and not just “those the decision maker might wish to address.” The Court also dismissed the director’s argument for partial institution because the power to do so simply does not appear in the AIA, and the text that Congress chose to utilize strongly counsels against permitting “partial institution.”

The Supreme Court next addressed the comprehensive AIA framework for IPR proceedings to show that Congress was clear when requiring institution of all claims. Justice Gorsuch cited § 312(a)(3), explaining that the petition, not the institution decision, defines the contours of the proceeding. Next, citing § 314(b), Gorsuch stated that the director’s decision to institute “pursuant to [the] petition” is simply a yes or no choice—not a piecemeal determination.

Additionally, citing § 314(a), The Supreme Court explained that the statute requires institution when a reasonable likelihood of success is shown for “at least one of the claims challenged in the petition.” As the majority explained, this requirement combined with the need to use the petition itself as the procedural contour of the proceeding suggests, if anything, a regime where reasonable likelihood of success on one claim is both necessary and sufficient to justify review of all the challenged claims.

AIA § 316(a)(8) was also informative for the Court, since it discusses the patent owner’s response “to the petition” and not their response to the instituted claims. Lastly, the Court noted that §318(a) mandates that the Board issue a final decision for “any patent claim challenged by the petitioner.”

In contradistinction to AIA proceedings, the Supreme Court looked to the provision covering a related proceeding, ex parte reexamination, where the director is explicitly granted discretion to determine, on a claim-by-claim basis, whether to review for patentability. 35 USC § 303(a).

In attempting to reconcile the statutory sections of the AIA, the director argued justification for the Board to exercise discretion in the language of §§ 314 and 318. According to the director, since § 314 is directed to claims in the petition while § 318 is directed to claims challenged in the by the petitioner, there is enough linguistic discrepancy to find the number of claims in the petition to be something less than those eventually challenged by the petitioner in the actual IPR proceeding. As Justice Gorsuch stated, “[w]e just don’t see it,” noting that whatever differences there may be are insufficient to authorize the PTO’s regulation. If anything, this discrepancy could be a result of the patent owner’s ability to either cancel, settle or amend various claims (powers specifically within the statute’s text), thereby making the claims in the petition less than those eventually challenged.

The Supreme Court dismissed the director’s final two arguments. One, a policy argument, as being in the wrong forum; and the other, an argument based on the reviewability of institution decision as being outside the scope of Cuozzo’s limitations on appellate review. As for the policy argument that investing the Board with discretion for partial institution promotes efficiency at the PTAB, thus expediting the streamlined nature of the IPR system, the Court simply noted that was a job for Congress. The Director’s argument that reviewing a decision not to institute on some challenged claims was violative of the Court’s Cuozzo decision (IP Update, Vol. 19, No. 7), was also rejected, Here, the Court noted that this was not a case where the determination of a likelihood of success is being challenged, but rather an appeal over whether the Director exceeded its statutory authority in declining to institute all claims despite finding the requisite likelihood of success for at least one challenged claim.

One dissent, authored by Justice Ginsburg, was short, yet strongly worded. Ginsburg noted that the viewing the combination of the majority’s interpretation of § 318(a) and the absence of a mandate to institute IPRs at all under Cuozzo, the Board could simply decline to institute on petitions having some challenged claims where no reasonable likelihood of success is demonstrated while simultaneously noting that other claim challenges warrant ex parte reexamination. Such a procedure would permit petitioners to file multiple petitions in order to determine which claims are most likely to be instituted and then file amended petitions that would receive institution. Justice Ginsburg finds it difficult to believe that Congress would implicitly authorize this practice while clearly precluding the more rational way of weeding out insubstantial challenges through the Board’s process of “partial institution.”

Another dissent, by Justice Breyer, noted many linguistic gaps in the statutory framework that the majority found so clear. For example, Breyer explained that the phrase “any patent claim challenged by the petitioner” is not clear as to whether those claims are from the “original petition.”  Under the majority view, if 16 claims are challenged, and 15 of the challenges are found to be frivolous, the Board is nevertheless now required to issue appealable decisions on each of these claims as opposed to the PTAB’s regulatory framework where only a decision on the one non-frivolous claim would be appealable and the decision not to institute IPR on the remaining 15 claims would not be appealable.

Breyer’s dissent also focused on the need to effectuate the purpose of the statute, and avoid a “rigid” reading of the statute as was done by the majority. The dissent points to the director’s ability to institute as an authorization of discretion because some challenges are allowed and others are not. The dissent wonders why a hard line to stop at all claims or no claims is preferred over the more efficient claim-by-claim alternative. 

The dissent also found the majority’s reading of the statute at odds with Cuozzo, noting that it was difficult to understand why Congress would make decisions not to institute non-appealable and wholly within the director’s discretion while simultaneously requiring institution of all challenged claims even if a likelihood of unpatentability is demonstrated for only one. In Breyer’s view, that paradigm creates appellate review of final decisions upholding the patentability of claims in cases where a petitioner, in its petition, failed to raise a reasonable likelihood that a claim(s) was invalid. This additional work for the PTAB and the Federal Circuit, argues the dissent could not have been the intent of Congress when creating a more streamlined and inexpensive procedure for patentability review.

Practice Note: Going forward, institution decisions will be based on whether the petitioner has established a reasonable likelihood that at least one challenged claim is unpatentable.

McDermott Will & Emery law clerk Paul St. Marie, Jr. also contributed to this article.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McDermott Will & Emery | Attorney Advertising

Written by:

McDermott Will & Emery
Contact
more
less

McDermott Will & Emery on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.