Source: http://www.ipwatchdog.com/2018/04/29/supreme-court-holds-ptab-must-decide-validity-all-challenged-claims-iprs/id=96579/
Timestamp: 2019-01-21 05:08:23
Document Index: 252617978

Matched Legal Cases: ['§42', '§318', '§318', '§318', '§318', '§311', '§314', '§314', '§304', '§314', '§314', '§316', '§318', '§314', '§318', '§314', '§318', '§314', '§318', '§316', '§314', '§314', '§314', '§314', '§318']

SCOTUS: PTAB Must Decide Validity of Every Challenged Claim in IPR
Supreme Court Holds PTAB Must Decide Validity of All Challenged Claims in IPRs
SAS Inst., Inc. v. Iancu, No. 16-969, 2018 U.S. LEXIS 2629 (Apr. 24, 2018) (Gorsuch, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Thomas, and Alito, JJ., joined. Ginsburg, J., filed a dissenting opinion, in which Breyer, Sotomayor, and Kagan, JJ., joined. Breyer, J., filed a dissenting opinion, in which Ginsburg and Sotomayor, JJ., joined, and in which Kagan, J., joined except as to Part III-A. Click Here for a copy of the opinion.
SAS petitioned for an inter partes review to challenge all 16 claims of ComplementSoft’s patent. Patent Trial and Appeal Board (PTAB) instituted review on some claims and declined to institute other claims. The PTAB relied on a Patent Office regulation authorizing a review “to proceed on all or some of the challenged claims and on all or some or the grounds of unpatentability asserted for each claim.” 37 CFR §42.108(a). SAS sought review in the Federal Circuit, arguing that 35 U.S.C. §318(a) required the Board to decide the patentability of every claim SAS challenged in its petition. The Federal Circuit rejected SAS’s argument, and the Supreme Court granted certiorari. The Patent Office, through its Director, defended the regulations allowing for a trial to be instituted only for claims that are likely to be invalid, based on the Petitioner’s challenge and the Patent Owner’s preliminary response.
An administrative agency must follow the plain and unambiguous language of the applicable statute. Section 318(a) directs that “[i]f an inter partes review is instituted and not dismissed under this chapter, the [Board] shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner . . . .” §318(a) (emphasis added). The word “shall” generally imposes a nondiscretionary duty, and the word “any,” as used here, implies every member of the class or group. Consequently, when §318(a) says the Board’s final written decision “shall” resolve the patentability of “any patent claim challenged by the petitioner,” it plainly means the Board must address every claim the petitioner has challenged.
The discretion to grant a “partial institution” does not appear in the text of §318 or anywhere else in the statute. Furthermore, “the statutory text and context strongly counsel against the Director’s view.” First, §311(a) states that a party may seek inter partes review by filing “a petition to institute an inter partes review.” Here, Congress structured a process in which the petitioner, not the Director, gets to define the contours of the proceeding. In comparison, the statute concerning ex parte reexamination authorized the Director to investigate a question of patentability “[o]n his own initiative, and at any time.”
Under §314(b), the Director must decide “whether to institute an inter partes review . . . pursuant to a petition.” §314(b). The Director is only given the choice “whether” to institute an inter partes review. “That language indicates a binary choice — either institute review or don’t.” This section provides that the Director may not institute an IPR unless “there is a reasonable likelihood” that petitioner will prevail on “at least 1 of the claims challenged in the petition.” The Director argued that this language requires him to “evaluate claims individually” and must likewise allow him to institute review on a claim-by-claim basis. The Court rejected this argument, explaining that “[o]nce a single claim threshold is satisfied, it doesn’t matter whether the petitioner is likely to prevail on any additional claims; the Director need not even consider any other claim before instituting review.” In contrast, the ex parte reexamination statute allows the Director to assess whether a request raises a “substantial new question of patentability affecting any claim” and (if so) to institute reexamination limited to “resolution of the question.” §304 (emphasis added). This comparison shows that Congress explicitly gave the Director certain discretion in other proceedings, did not do so for IPRs, and could not be implied.
The Director also pointed to the fact that §314(a) does not require him to institute an inter partes review, even if the “reasonable likelihood” threshold is met with respect to one claim. This broad discretion to institute review at all should extend to individual claims. the Court disagreed. While §314(a) gives the Director discretion to decide whether to institute review, it does not follow that he has discretion to decide what claims the review will encompass. The rest of the statute confirms this interpretation. For example, §316(a)(8) tells the Director to adopt regulations ensuring that, “after an inter partes review has been instituted,” the patent owner will file “a response to the petition.” It would make little sense for Congress “to insist on a response to the petition if, in truth, the Director enjoyed the discretion to limit the claims for review.” Additionally, §318(a) commands the Board to address in its final written decision “any patent claim challenged by the petitioner.”
The Director further contended that discretion is shown by comparing §314(a) and §318(a). When addressing whether to institute review at the beginning of the litigation, §314(a) says the Director must focus on the claims found “in the petition.” But when addressing what claims the Board must address at the end of the proceedings, §318(a) says it must resolve the claims challenged “by the petitioner.” However, both §314(a) and §318(a) focus on the petitioner’s contentions. Consequently, “it’s difficult to see how they might be read to give the Director power to decide what claims are at issue.” Furthermore, a patent owner may move to “[c]ancel any challenged patent claim” during the course of an inter partes review, effectively conceding one part of a petitioner’s challenge. §316(d)(1)(A). Thus, the claims challenged “in the petition” will not always survive to the end of the case, and “it is plain enough why Congress provided only that claims still challenged ‘by the petitioner’ must be addressed in the Board’s final written decision.”
After moving past the statute’s text and context, the Director argued that partial institution is efficient because it permits the Board to focus on viable challenges and avoid spending time and resources on others. The Court noted that “efficiency” could be argued both ways, since non-instituted claims may still be litigated in court. It refused to decide this argument, explaining that “[p]olicy arguments are properly addressed to Congress, not this Court.”
Finally, the Court addressed the Director’s suggestion that, however, the Court might read the statute, his Patent Office regulations should prevail under Chevron deference, according to Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). The Director argued that the statute is ambiguous on the propriety of the Director’s discretion to institute some but not all claims, and the Court should, therefore, leave the matter to his judgment. But under Chevron, the Court does not owe an agency’s interpretation any deference unless, after “employing traditional tools of statutory construction,” it finds itself unable to discern Congress’s meaning. Chevron, 467 U.S. at 843, n.9. Here, “[t]he statutory provisions before [the Court] deliver unmistakable commands.”
Finally, the Director argued that its institution decision is “final and non-appealable,” even to the Supreme Court, under §314(d) and the Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. __ (2016). In Cuozzo, the Court held that this provision prevented courts from entertaining an argument that the Director erred in instituting an inter partes review of certain patent claims. However, Cuozzo does not extend to the present case. There is a strong presumption in favor of judicial review. To overcome that presumption, there must be “clear and convincing indications” that Congress meant to foreclose review. Cuozzo concluded only that §314(d) precludes judicial review of the Director’s initial determination that there is a reasonable likelihood that claims are unpatentable on the grounds asserted. However, Cuozzo emphasized that §314(d) does not “enable the agency to act outside its statutory limits.” Nothing in §314(d) or Cuozzo prevents the Court from ensuring that an inter partes review “proceeds in accordance with the law’s demands.”
The Court reversed the judgment of the Federal Circuit and remanded for further proceedings.
Justice Ginsburg authored a dissenting opinion, joined by Justices Breyer, Sotomayor, and Kagan, questioning why the statute should be read to preclude the Board’s “more rational way to weed out insubstantial challenges.”
Justice Breyer authored a second dissenting opinion, joined by Justices Ginsburg and Sotomayor. This dissent argued that the phrase “any patent claim challenged by the petitioner” in §318(a) does not unambiguously refer to the petitioner’s original petition. Moreover, it is unclear why Congress would “have intended to require the Board to proceed with an inter partes review, take evidence, and hear argument in respect to challenges to claims that the Board finds have no reasonable likelihood of success. Instead, the statute appears to give the Director discretion to avoid challenges that are not viable. Under Chevron, “where a statute leaves a ‘gap’ or is ‘ambigu[ous,] [the Court] typically interpret[s] it as granting the agency leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute.” Cuozzo, 579 U.S. at __ (slip op., at 13). Here, the dissent concluded that it was reasonable in light of the nature of the statute to give the Director discretion to grant partial institution of challenged claims.
As in civil litigation, the petitioner in an inter partes review is master of its complaint and is “normally entitled to judgment on all of the claims it raises, not just those the decisionmaker might wish to address.” Therefore, the Board must decide the validity of every challenged claim when it agrees to institute inter partes review of any one challenged claim.
Tags:CAFC, Federal Circuit, Federal Circuit Review, inter partes, inter partes review, IPR, litigation, patent, Patent Litigation, Patent Trial and Appeal Board, patents, post grant procedures, post grant proceedings, PTAB, SCOTUS, US Supreme Court
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