# United States **Court of Appeals**  **for the Federal Circuit**

______________________
ACHATES REFERENCE PU BLISHING, INC., Appellant

v.

APPLE INC., Appellee

______________________

2014

- 1767

______________________ Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2013

- 00080.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ACHATES REFERENCE PU BLISHING, INC., Appellant

v.

APPLE INC., Appellee

______________________

2014

- 1788

______________________ACHATES REFERENCE PU BLISHING v. APPLE INC

. 2

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2013

- 00081.

______________________ Decided: September 30, 2015

______________________

V INCENT M C G EARY , McGeary Cukor LLC, Morri stown, NJ, argued for appellant. Also represented by M ICHAEL C UKOR ; B RAD P EDERSEN , Patterson Thuente Pedersen, P.A., Minneapolis, MN; W AYNE S. B REYER , J ASON P AUL D E M ONT , K ENNETH O TTESEN , Kaplan, Breyer, Schwarz & Ottesen, LLP, Matawan, NJ.

J OSEPH G UERRA , Sidley Austin LLP, Washington, DC, argued for appellee. Also represented by J E FFREY P AUL K USHAN , S COTT B ORDER , J OSEPH A. M ICALLEF , A NNA M AYERGOYZ W EINBERG

.

K

AKOLI C APRIHAN , Office of the Solicitor ̧ United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Michelle K. Lee. Also represented by T HOMAS W. K RAUSE

 ̧ F RANCES L YNCH , J AMIE L YNNE S IMPSON , S COTT W EIDENFELLER

.

______________________
Before P ROST , Chief Ju dge, L OURIE and L INN , Circuit Judges.

L INN , Circuit Judge

. Achates Reference Publishing, Inc. (“Achates”) a ppeals from the decisions of the Patent Trial and Appeal Board (the “Board”) in inter partes review (“IPR”) procee dings instituted on petitions filed by Apple Inc. (“Apple”) against Achates’ U.S. Patents No. 5,982,889 (the “’889 patent”) and No. 6,173,403 (the “’403 patent”) (collectiv ely, the “patents

- at

- issue”) and determining that claims 1

–ACHATES REFERENCE PU BLISHING v. APPLE INC

. 3

4 of the ’889 patent and claims 1

– 12 and 17

– 19 of the ’403

p atent were invalid. See Apple Inc. v. Achates Reference Publ’g, Inc.

, IPR2013

- 00081, 2014 WL 2530789 (P .T.A.B. June 2, 2014) (“’889 final written decision”); Apple Inc. v. Achates Reference Publ’g, Inc. , IPR2013

- 00080 , 2014 WL 2530788 (P .T.A.B. June 2, 2014) (“’403 final written decision”). Achates contends that the Board’s decisions were outside of the Board’s statutory authority because the underlying petitions for IPR were time

- barred under 35 U.S.C. § 315(b) . As part of its appeal, Achates also challenges the Board’s denial of Achates’ motion for discovery. See Apple Inc. v. Achates Reference Publ’g, Inc.

, 2013 WL 6514049 (P .T.A.B. Apr. 3, 2013) (“ Discovery Decision ”). Because the Board ’s determination s to inst itute IPR s in this case are final and nonappealable under 35 U.S.C. § 314(d), this court lacks jurisdiction and di smisses th e appeal s.
I. B ACKGROUND On June 20, 2011, Achates sued QuickOffice, Inc. (“QuickOffice”) along with certain other parties (colle ctively, the “codefendants”) in district court for infringing the patents

- at

- issue

. See Complaint, Achates Reference Publ’g, Inc. v. Symantec Corp. , No. 2:11

- cv

- 00294 ( E.D. Tex. June 20, 2011)

, ECF No. 1. One year later, Achates joined Apple in the suit and alleged that it also infr inged the patents

. See Amended Complaint, Achates Reference Publ’g, Inc. v. Symantec Corp. , No. 2:11

- cv

- 00294 ( E.D. Tex. June 20, 2012)

, ECF No. 176. On December 14, 2012, Apple filed petitions for IPR in the United States Patent and Trademark Office (“Patent and Trademark Office”) against each of the patents

- at

- issue

. See ’889 final written decision

, at *5; ’403 final written decision

, at *5.
Achates, in responding to the petitions, contended that, based on a blank indemnification agreement, Apple had a relationship with QuickOffice (and maybe otherACHATES REFERENCE PU BLISHING v. APPLE INC

. 4

codefendants as well) and that such relationship caused Apple’s petition s for IPR to be time

- barred under 35 U.S.C. § 315(b). That section states : 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 time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).
35 U.S.C. § 315(b)

. To support its contention, Achates moved for discovery of evidence to prove Apple’s specific relationships with the codefendants. The Board denied that motion, fi nding no basis to believe that even if the blank indemnification agreement had been signed, it would show QuickOffice or any other codefendants to be real parties in interest or in privity with Apple as those terms are used in § 315(b). See Discovery Deci sion at *1.

The Board f ound that none of the codefendants were real parties in interest or privies of Apple . Specifically, the Board concluded th at there was no evidence that any of the co defendants had “ the right to intervene or control Petitioner’ s defense to any charge of patent infringement ” and that Apple and co defendants had “ distinct interests in the related [district court ] litigation. ” See Apple Inc. v. Achates Reference Publ’g, Inc.

, 2013 WL 8595560 , at *9 (P .T.A.B. June 3, 2013) (the “’889 institution decision” ) ; Apple Inc. v. Achates Reference Publ’g, Inc.

, 2013 WL 8595559 , at *10 (P .T.A.B. June 3, 2013) (the “’403 instit ution decision” ). Accordingly, the Board, acting as the Director’s delegee, instituted IPR proceedings for both patents. During the merits phase of the IPRs, Achates conti nued to argue that Apple’s petition s were time

- barred under § 315(b). I n its final written decisions, the BoardACHATES REFERENCE PU BLISHING v. APPLE INC

. 5

reaffirmed its earlier decision s that the IPR proceedings

were not time

- barred . ’889 final written decision at *7; ’403 final written decision at *8. The Board ultimately invalidated all the challenged claims as either anticipated and/or obvious. See ’889 final written decision at *24; ’403 final written decision at *29.
On app eal, Achates challenges the Board’s final wri tten decision s , arguing that the Board erred in denying its motions for discovery and in concluding that Apple’s petitions were not time

- barred under § 315(b). Achates does not appeal the Board’s substantive de cision s that the challenged claims are invalid. Apple counters Achates’ arguments and asserts that because the question of whether the petitions were time

- barred goes to the pr opriety of the decision to initiate the IPR, this court lacks jurisdiction over the appeal under § 314(d)

. In the alte rnative, Apple argues that the Board’s decisions should be affirmed on the merits.

II. D ISCUSSION A. The Statutory Background
In 2011, Congress amended t itle 35 of the United States Code to create IPR , post

- grant rev iew (“PGR”) and covered business method review (“CBM R ”) proceedings. See 35 U.S.C. §§ 311

– 319 (IPR); Id. at §§ 321

– 329 (PGR); Leahy

- Smith America Invents Act (“AIA”) § 18, Pub. L. No. 112

– 29, 125 Stat. 284 , 329

– 31 (2011) (CBM R ). CBM R proceedings are “regarded as, and

. . . employ the stan dards and procedures of, a [PGR] under chapter 32 [§ § 321

– 329] of title 35, United States Code, subject to ” certain exceptions not relevant here. AIA § 18(a)(1).

Both IPR and CBM R proceed in two stages. In the first stage , the Director determines whether to inst itute IPR or CBM R. By regulation , “[t]he Board institutes the trial on behalf of the Director.” 37 C.F.R. § 42.4 ; see also 37 C.F.R. §§ 42.100(a) (explaining that IPR proceedingsACHATES REFERENCE PU BLISHING v. APPLE INC

. 6

are subject to these trial pr ocedures); 42.300 (a) (same for CBM R). In the second phase, the Board conducts the IPR or CBM R proceedings on the merits and issues a final written decision

. B ased on the petitions and any responses

, the Board decide s whether there are sufficient grounds to institute the proceedings

— in IPR petitions there must be a “re asonable likelihood” that the petition will prevail, 35 U.S.C. § 314(a), and in CBM R petitions it must be “more likely than not ,” 35 U.S.C. § 324(a)

. A n IPR proceeding

“ 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 infring ement of the patent. ” § 315(b). No analogous time -b ar exists for CBM R proceedings. IPR proceedings are not limited to specific types of patents. On the other hand, CBM R proceedings are only permitted “ for a patent that is a covered business method patent. ” AIA § 18 (a)(1) (E). Importantly, identically wo rded statutory provisions make explicit that “[t]he determination by the Director whether to institute [IPR or CBM R] under th[ese] se ction [s] shall be final and nonappealable. ” See § 314(d) and § 324(e) , respectively

. If a proceeding is instituted, the Board considers the merits and “ issue[s] a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added” during the procee dings. 35 U.S.C. § § 318(a) (IP R)

, 328(a) ( CBMR ). “[P]art[ies] dissatisfied with the final written decision of the Patent Trial and Appeal Board under section [s] [ 318(a) or 328(a)] may appeal the decision pursuant to sections 141 through 144. ” Id. §§ 319 (IPR), 329 (CBM R ). Sections 1 41 through 144 of title 35 generally explain that Board decisions are appealable to this court

. Of partic ular relevance, 35 U.S.C. § 141(c) states, with emphasis added :ACHATES REFERENCE PU BLISHING v. APPLE INC

. 7

A party to an inter partes review or a post

- grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board u nder section 318(a) or 328(a) (as the ca se may be) may appeal the Board’ s decision only to the Uni ted States Court of Appeals for the Federal Circuit.

B. This Court’s Precedent

This court first a ddressed the reviewability of a Board decision not to institute an IPR in St. Jude Med. , Cardio logy Div

. , Inc. v. Volcano Corp. , 749 F.3d 1373 (Fed. Cir. 2014)

. In that case, t he court recognized that “the [ IPR ]
statute separates the Director’s decision to ‘institute’ the review, § 3 14, on one hand, from the Board’s ‘conduct’ of the review ‘instituted’ by the Director, § 316 (c) , and the Board’s subsequent ‘written decision,’ § 318, on the other.” Id. at 1375. Because the Director’s decision not to inst itute an IPR was not a “final written decision” under § 318(a), it was held not within this court ’s statutory grant of authority to review under §§ 141(c) or 31 8 (a)

. See id. Moreover, the court held that the appeal of the non

institution decision was with in the express bar to appeals under § 314(d).
That same day, this court held that mandamus was unavailable to take an interlocutory appeal of the Dire ctor’s non

- institution decision, largely because of the statutory scheme explained in St. Jude , and “secti on 314(d)’ s broad declaration” precluding appeals over the director’s decision “whether to institute” an IPR. In re Dominion Dealer Solutions, LLC , 749 F.3d 1379, 1381 (Fed. Cir. 2014).
Recognizing that the court does not have interlocutory review power over the Director’s initiation decisions, parties have attempted to use collateral review through mandamus a nd the Administrative Procedure Act. This
court has rejected the availability of mandamus and APA relief for interlocutory review of the Director ’ s initiationACHATES REFERENCE PU BLISHING v. APPLE INC

. 8

decisions in IPR and CBMR because of the absence of any final written decision of the Board for this court to review, and because of the restriction in § 314(d). In re Procter & Gamble Co. , 749 F.3d 1376, 1378 (Fed. Cir. 2014) (“Our analysis in St. Jude and Dominion . . . a pplies equally” well to interlocutory mandamus jurisdiction ) ; Versata Dev. Grp., Inc. v. Lee (Versata III)

, 793 F.3d 1352 (Fed. Cir. July 13, 2015) (affirming the district court’s ref usal to allow interlocutory review over the Director’s decision to institute CBMR).

This court also has considered whether the Director’s institution decision is subject to review after a final written decision by the Board

. In In re Cuozzo Speed Techs., LLC

, 793 F.3d 1268 (Fed. Cir. 2015 ) , the Director instituted an IPR of certain claim s relying in part on references not cited in the petition. On appeal, Cuoz zo argued that the IPR was improperly instituted because
t he petition

- as

- filed did not pr ovide “a reasonable likel ihood that the petitio n would prevail” as required by § 314(a)

. Id. at 1273

. Cuozzo argued that the review ability prohibition of § 314(d) applied only to interlocutory appeals, and that the initiation decision becomes avail able for review once the Board issues a final written dec ision. The court disagreed with Cuozzo and declined to review the initiation decision, remarking that § 314(d) “ is not directed to precluding revi ew only before a final decision ” and cannot be directed only to precluding inte rlocutory appeals because §§ 319 and 141(c) already serve that role. Id. T he court then recognized that “the IPR statute [does not] expressly limit the Board’s authority at the final decision stage to the grounds alleged in the IPR petition” and that “the failure to cite those references in the petition provides no ground for setting aside the final decision.” Id. at 1273 and 1274.

The court once again addressed the reviewability of an initiation determination , this time in the context of a CBMR in Versata Dev . Gr p., Inc. v. SAP America, Inc.ACHATES REFERENCE PU BLISHING v. APPLE INC

. 9

(“Versata II”)

, 793 F.3d 1306 (Fed. Cir. 2015). There, SAP petitioned for review of Versata’s U .S. Patent No. 6,553,350 (the “’350 patent”), alleging that the patent was a covered business met hod patent under AIA § 18. The Director, via the Board, decided to institute the CBMR, ruling that the ’350 patent was a “covered business met hod patent” as that term is defined in AIA § 18(d)(1). See Versata II

, 793 F.3d at 1314. On the merits, the Board concluded that the challenged claims were directed to an “abstract idea,” and were thus not patent

- eligible under 35 U.S.C. § 101. See id. at 1336. Versata appealed, arguing that the ’350 patent was not a covered business method patent and was also not invalid. The petitioner and the Patent and Trademark Office as intervenor argued that the question of whether the ’350 patent f e ll within the scope of the Board’s autho ri ty under § 18 as a “covered business method patent” was deci ded by the Board at the decision to institute stage, and wa s thus immunized from later judicial review at the final decision stage. The court disagreed.

The court first recognized the distinction between the final merits decision and the initiation decis ion: “instit ution and invalidation are two distinct actions.” Id. at 1319. “[I] t is the merits of the final written decision that are on appeal; we are not here called upon to review the determination by the [Board] whether to institute a CBM review, and indeed [35 U.S.C. § 324(e)] expressly instructs that we may not.” Id. at 1315. T he court went on to point out that although the issue of whether a patent is a CBM was first determined by the Director at the initi ation stage, the same issue was necessar ily implicated in the final merits determination and was appropriate for review because of the fundamental limitation of the Board’s “ultimate invalidation authority” in a CBMR to those patents that meet the CBM definition :ACHATES REFERENCE PU BLISHING v. APPLE INC

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[O] ne of the limits on § 18 invalidation a u thority is that the patent at issue be a CBM patent . . . . If a particular patent is not a CBM patent, there is no proper pleading that could be filed to bring it within the [Board’s] § 18 authority.

Id. at 1320. Compare Cuozzo , 793 F.3d at 1274 ( “The fact that the petition was defective is irrelevant because a proper petition could have been drafted.”)

As t he court made clear

, “[t] he distinct agency actions [on initiation and at the merits phase] do not become the same just because the ag ency decides certain issues at both stages of the process. . . . Overlap of issues is not determinative.” Versata II , 793 F.3d at 1319. T he basis for this court ’s review o f the CBM issue in Versata II was not merely that the Board decided it in the final determ ination stage but more significantly that it uniquely and fundamentally related to the Board’s “ultimate authority to invalidate” only CBM patents in a CBMR proceeding.

C. Th e Present Dispute
In this case, the Patent and Trademark Office and Apple ar gue that the Board ’s determination that an IPR petition i s timely is part of the determination whether to institute and is therefore nonappealable, even after the final written decision

. They believe this case is analogous
to Cuozzo

. Achates responds that the question of whether Apple’s petition was time

- barred goes to the Board ’s ultimate authority to invalidate the patents, and ther efore , under Versata II , is reviewable under § 319

. We agree with Apple and the Patent and Trademark Office that Versata II is limited to the unique circumstances of CBMR and that , following Cuozzo

, th e Board’s determin ation to initiate the IPRs in this case is not subject to review by this court under 35 U.S.C. § 314(d).
First, the § 315(b) time bar doe s not impact the Board’s authority to invalidate a patent claim

— it onlyACHATES REFERENCE PU BLISHING v. APPLE INC

. 11

bars particular petitioners from challenging the claim

. The Board may still invalidate a claim challenged in a time

- barred petition via a properly

- filed petition from another petition er. Further, § 315(b) provides that “[t]he time limitation .

. . shall not apply to a request for joinder under subsection (c).” 35 U.S.C. § 315(b). This means that an otherwise time

- barred party may nonetheless participate in an inter partes review proceeding if another party files a proper petition. See 35 U.S.C. § 315(c). Just as the pleading in Cuozzo could have been sufficient by the inclusion of the missing prior art reference, see 793 F.3d at 1274 (“The fact that the petition was defe ctive is irrelevant because a proper petition could have been drafted.”), the timeliness issue here could have been avoided if Apple’s petition had been filed a year earlier or if a petition identical to Apple’s were filed by another party. This is in con trast to the issue in Versata II , where “no proper pleading [] could be filed to bring it within the [Board’s] § 18 authority.” 793 F.3d at 1320.
In addition, t he time

- bar here is not like the CBM classification addressed in Versata II

. Versata II found that review of the CBM determination was proper b ecause the determination was the “ defining characteristic” of the Board’s “authority to invalidate” a patent in the specialized CBMR process. See Versata II , 793 F.3d at 1320

- 21 . The determination is “defi ning” because it subjects that patent “to a special [Board] power to inval idate.” Id. at 1321. Whether an IPR petition is filed one year after the petitioner is served with an infringement complaint or one year and a day is not such a characteri stic beca use compliance with the time

- bar does not itself give the Board the power to invalidate a patent. Instead, the time

- bar sets out the procedure for seeking IPR

. Indeed, like other “[f]iling deadlines,” the IPR time bar here is merely a “rule[] that seek [s ] to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times. ”ACHATES REFERENCE PU BLISHING v. APPLE INC

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Henderson ex rel. Henderson v. Shinseki , 56 2 U.S. 428, 435 (2011) (therefore holding that the requirement that a
veter an file an appeal within 120

- days is not “jurisdi ctional”); see also Sebelius v. Auburn Reg’l Med. Ctr. , 133 S. Ct. 817, 825 (2013) (“ filing deadlines ordinarily are not jurisdictional ”).
Achates argues two additional theories for pulling this issue into this court ’s jurisdiction to review the Board’s “final written decision.” First, Achates notes that the Board reaffirmed its time

- bar determination in its final written decision and argues that this indicates that the time

- bar determination is, in fact, part of the final written decision. As this court noted in Versata II

, “ [o] verlap of issues is not determinative, neither is the timing dete rminative.” 793 F.3d at 1319. That the Board co nsidered the time

- bar in its final determination does not mean the issue suddenly becomes available for review or that the issue goes to the Board’s ultimate authority to inval idate

— the Board is always entitled to reconsider its own deci sions. GTNX , Inc. v. INTTRA, Inc. , 789 F.3d 1309, 1313 (Fed. Cir. June 16, 2015) . The Board’s reconsider ation of the time

- bar is still “fair[ly] characteriz[ed]” as part of the decision to insti tute. Id. at 1312. Finally, Achates also contends that § 314(d) does not limit this court ’s review of the timeliness of Apple’s pet ition under § 315, because § 314(d) says “[t] he determin ation by the Director whether to institute an inter partes review under this section s hall be final and nonappeal able” (emphasis added). Achates’ reading is too crabbed and is contradicted by this court ’s precedent. The words “under this section” in § 314 modify the word “institute” and proscrib e review of the institution determination for whatever reason. Thus, in St. Jude we held that § 314(d)

pr ecluded this court from reviewing the Patent and Trademark Office ’s determination that § 315(b) (the same subsection at issue here) precluded it from instituting an IPR petition. See St. Jude , 749 F.3d at 1376. Likewise inACHATES REFERENCE PU BLISHING v. APPLE INC

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GTNX , we held that § 324(e), which also precludes review of “determination[s] whether to institute .

. . review under this section,” prevented this court from reviewing the Board’s decision that a petition was barred under § 325(a)(1). See GTNX , 789 F.3d at 1 312

. We thus hold that 3 5 U.S.C. § 314(d) prohibits this
court from review ing the Board’s determination to initiate IPR proceedings based on its assessment of the time

- bar of § 315(b) , even if such assessment is reconsidered during the merits phase of proc eedings and restated as part of the Board’s final written decision

. Still, “ even when the statutory language bars judicial review, courts have recognized that an implicit and na rrow exception to the bar on judicial review exists for claims that the agency exceeded the scope of its delegated authority or violated a clear statutory mandate. ” Hana uer v. Reich , 82 F.3d 1304, 1307 (4th Cir. 1996) ; see also Leedom v. Kyne, 358 U.S. 184 (1958)

. However, statutory interpretation disputes fall outside this excepti on for ultra vires agency action, and “[o] nly the egregious error melds the agency’s decision into justiciability .” Am. Airlines, Inc. v. Herman , 176 F.3d 283, 293 (5th Cir. 1999) (quoting United States v. Feaster

, 410 F.2d 1354, 1368 (5th Cir. 1969) ) ; see also Key Med. Supply, Inc. v. Burwell , 764 F.3d 955, 962 (8th Cir. 2014)

. Here, although Achates did not raise this argument, the Board’s institution decision does not viol ate a clear statutory mandate.

Because we cannot review the Board’s determinati on that Apple’s petition s were not time

- barred, we also
cannot review the Board’s denials of Achates’ motions for discovery relating thereto

. III. C ONCLUSION For the foregoing reasons

, th e appeal s are dismissed

. DISMISSEDACHATES REFERENCE PU BLISHING v. APPLE INC

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C OSTS Each of the parties shall bear its own costs.