Source: http://www.ptabblog.law/?p=286
Timestamp: 2019-04-22 18:44:54+00:00

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The Federal Circuit will not change the standard of review for appeals from the Patent Trial and Appeal Board (“PTAB”) in Inter Partes Review (“IPR”) proceedings—leaving PTAB findings of fact with greater finality than findings of fact made by a district court.1 The effect is realized on appeal, where invalidity determinations in IPR proceedings are stronger and less likely to be reversed or vacated. Thus, the PTAB may be a more attractive venue for challenging validity of a patent because a decision by the PTAB will likely carry more weight on appeal to the Federal Circuit than one made by the district court. After a primer on fact finding at the PTAB, a recent decision and its rationale are discussed, followed by some practical implications.
By way of introduction to the topic, the Leahy-Smith America Invents Act (“AIA”) created a new tribunal in the USPTO to hear several types of post-grant proceedings or challenges.2 Inter Partes Review (“IPR”), Post-Grant Review (“PGR”), and Covered Business Method Review (“CBM”) are the big three patentability challenges that can be made before the PTAB. During some of these proceedings, the PTAB will conduct a proceeding “similar to trial in the district courts, with discovery, evidence, testimony, briefs, hearings, and a written decision,” all of which creates a record.3 Using IPR as an example, the PTAB will make findings of fact as to the subject matter disclosed in and taught by the prior art to support its decision of whether the challenged patent is invalid as anticipated or obvious.4 Those findings of fact become part of the record. When the PTAB makes its final written decision, either or both parties may appeal that decision on the record to the Federal Circuit, bypassing the district court entirely, if the party believes that the PTAB’s decision was made in error.5 The Federal Circuit’s review is limited to the record generated at the PTAB.6 The applicable standard of review dictates how much scrutiny or deference the Federal Circuit gives to the lower tribunal’s findings of fact on the record.
Why does the standard of review for findings of fact of a lower tribunal differ depending on whether the lower tribunal is a district court or an agency such as the PTAB? The Supreme Court long ago explained that appealing the decision of an agency like the USPTO/PTAB is different than appealing a district court’s decision because it is, at a higher level, “more than a mere appeal,” it is the judiciary reviewing the executive, “it is an application to the court to set aside the action of the executive departments of the government.”13 In general, that difference warrants the application of different standards of review.
Therefore, unless and until Congress or the Supreme Court aligns the “court reviewing court” and “court reviewing agency” appellate standards of review with respect to IPR proceedings, findings of fact on the record during IPR are afforded greater finality than those on the record of district court litigation. Thus, when deciding between the PTAB and district court, a challenger should consider the relative weight to be afforded by the Federal Circuit on appeal.
1 See Merck & Cie v. Gnosis S.p.A, — F.3d —-, 2016 WL 1695852 (Fed. Cir. 2016).
2 Id. at *4 (Newman, J., Dissenting) (citing Pub. L. No. 112-29, 125 Stat. 284 (2011)).
4 Dickinson v. Zurko, 527 U.S. 150, 153 (1999) (citing In re Zurko, 111 F.3d 887, 889, and n. 2 (1997)).
5 35 U.S.C. § 141.
6 35 U.S.C. § 144 (1994) (“The United States Court of Appeals for the Federal Circuit shall review the decision from which an appeal is taken on the record before the Patent and Trademark Office.”).
7 Merck & Cie, at *2 (citing In re Gartside, 203 F.3d 1305, 1313 (Fed. Cir. 2000); 5 U.S.C. § 706(2)(E).
8 Dickinson, 527 U.S. at 162 (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
9 See Merck & Cie, at *5 (Newman, J., Dissenting) (calling substantial review the “rubber-stamp” category).
11 Dickinson, 527 U.S. at 162.
12 Id. at 153 (citing 2 K. Davis & Pierce, Administrative Law Treatise § 11.2, p. 174 (3d ed. 1994)).
13 Id. at 159 (quoting Morgan v. Daniels, 153 U.S. 120, 124 (1894)).
14 See generally Merck & Cie v. Gnosis S.p.A., — F.3d —-, 2016 WL 1695852 (Fed. Cir. 2016).
15 Id. at 3-4 (“While the failure to change our standard or review is seemingly inconsistent with what Congress sought to accomplish by creating IPR proceedings.”); Accord, Id. at 4 (Newman, J., dissenting) (“En banc action is needed to realign the Federal Circuit’s standard of review with the legislative purpose.”).
16 Merck & Cie at *1.
17 Id. at *2 (emphasis added).
19 See supra note 16.
20 Merck & Cie at 3.
21 Id. at *3 (“I believe we continue to be bound by the Supreme Court’s decision in Zurko absent an express directive to the contrary. See Zurko, 527 U.S. at 155 (relying on the “congressional specification in the APA that ‘[n]o subsequent legislation shall be held to supersede or modify the provisions of this Act except to the extent that such legislation shall do so expressly.’” (emphasis added))).
22 Id.; Dickinson v. Zurko, 527 U.S. at 158.
23 Dickinson, 527 U.S. at 154.
24 Merck & Cie at *3 (quoting APA § 12, 60 Stat. 244, 5 U.S.C. § 559).
Excellent article! I saw it on Lexology, but came over to this site to get the footnotes. Thank you for revealing another ingredient in the District Court v. IPR strategy stew.

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