Court Opinion

ID: 4471854
Source: CourtListenerOpinion
Date Created: 2020-01-13 17:01:13.477189+00
Date Added: 2024-06-11T08:48:26.119527
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                  ______________________

BIODELIVERY SCIENCES INTERNATIONAL, INC.,
                Appellant

                             v.

      AQUESTIVE THERAPEUTICS, INC., FKA
              MONOSOL RX, LLC,
                    Appellee
             ______________________

             2019-1643, 2019-1644, 2019-1645
                 ______________________

    Appeals from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. IPR2015-
00165, IPR2015-00168, and IPR2015-00169.
                 ______________________

    ON PETITION FOR REHEARING EN BANC
             ______________________

    KIA LYNN FREEMAN, McCarter & English, LLP, Boston,
MA, filed a petition for rehearing en banc for appellant.
Also represented by THOMAS F. FOLEY, WYLEY SAYRE
PROCTOR.

    JOHN LLOYD ABRAMIC, Steptoe & Johnson, LLP, Chi-
cago, IL, filed a response to the petition for appellee. Also
represented by JAMIE LUCIA, San Francisco, CA;
KATHERINE DOROTHY CAPPAERT, Washington, DC.
                   ______________________
2         BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

     Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,
    MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, CHEN,
               and HUGHES, Circuit Judges. ∗
    NEWMAN, Circuit Judge, dissents from the denial of the
              petition for rehearing en banc.
PER CURIAM.
                            ORDER
     Appellant BioDelivery Sciences International, Inc.
filed a petition for rehearing en banc. A response to the
petition was invited by the court and filed by appellee
Aquestive Therapeutics, Inc. The petition for rehearing
and response were first referred to the panel, and thereaf-
ter, to the circuit judges who are in regular active service.
A poll was requested, taken, and failed.
      Upon consideration thereof,
      IT IS ORDERED THAT:
      The petition for panel rehearing is denied.
      The petition for rehearing en banc is denied.
   The mandate of the court will be issued on January 21,
2020.

                                       FOR THE COURT

January 13, 2020                        /s/ Peter R. Marksteiner
     Date                               Peter R. Marksteiner
                                        Clerk of Court

      ∗     Circuit Judge Stoll did not participate.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

BIODELIVERY SCIENCES INTERNATIONAL, INC.,
                Appellant

                            v.

      AQUESTIVE THERAPEUTICS, INC., FKA
              MONOSOL RX, LLC,
                    Appellee
             ______________________

            2019-1643, 2019-1644, 2019-1645
                ______________________

    Appeals from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. IPR2015-
00165, IPR2015-00168, IPR2015-00169.
                 ______________________
NEWMAN, Circuit Judge, dissenting from denial of the pe-
tition for rehearing en banc.
    The court has declined to rehear this appeal en banc. I
write because of the significance of the balance of agency
and judicial authority, and the rules of procedural law in
the administrative state.
    The issue arises from the response of the Patent Trial
and Appeal Board to the Federal Circuit’s mandate and or-
der to apply the Supreme Court’s decision in SAS Institute
Inc. v. Iancu, 138 S. Ct. 1348 (2018). In SAS Institute the
Supreme Court held that 35 U.S.C. § 318(a) requires that
in an inter partes review the PTAB must decide all of the
claims and grounds challenged in the petition. Id. at 1354–
2       BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.

58. Since the PTAB had not met this requirement for these
cases, our Remand Order instructed:
    The Court held that if the Director institutes re-
    view proceedings, the PTAB review must proceed
    “in accordance with or in conformance to the peti-
    tion,” including “ ‘each claim challenged’ and ‘the
    grounds on which the challenge to each claim is
    based.’ ”
BioDelivery Sciences Int’l, Inc. v. Aquestive Therapeutics,
Inc., 898 F.3d 1205, 1207 (Fed. Cir. 2018) (“Remand Or-
der”) (quoting SAS Institute, 138 S. Ct. at 1355–56).
    The PTAB did not comply with the Remand Order,
stating that it would be inefficient and expensive to include
the additional claims and grounds:
    Because the overwhelming majority of unpatenta-
    bility grounds presented by Petitioner fail to meet
    the standard for institution of inter partes review,
    we find that instituting trial as to those grounds at
    this time is neither in the interest of the efficient
    administration of the Office, nor in the interest of
    securing an inexpensive resolution of this proceed-
    ing.
BioDelivery Sciences Int’l, Inc. v. Aquestive Therapeutics,
Inc., No. IPR2015-00165, 2019 WL 494351, at *3 (P.T.A.B.
Feb. 7, 2019) (“Decision on Remand”). 1
    Instead of complying with the Remand Order, the
PTAB withdrew all of its past actions as to these proceed-
ings, although past actions were not the subject of the re-
mand. Neither this court’s order nor the Supreme Court’s

    1  This is a consolidated appeal of the PTAB’s three
separate decisions in IPR2015-00165, IPR2015-00168, and
IPR2015-00169; citations to IPR 2015-00165 apply to all
three PTAB decisions.
BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.     3

ruling in SAS Institute related to aspects that had already
been decided. Nonetheless, my colleagues hold that the
PTAB is not required to comply with the court’s Remand
Order, and further hold that this non-compliance is not re-
viewable. This action raises critical issues of agency au-
thority, judicial responsibility, and the constitutional plan.
                        DISCUSSION
    For U.S. Patent No. 8,765,167, BioDelivery Sciences
International, Inc. (“BioDelivery”)’s petition requested in-
ter partes review of claims 1, 4, 6–9, 11, 12, 26, 27, 32, 38,
44, 51, 58, 65, 72, 82, 109, and 125–127, citing seven prior
art grounds of anticipation or obviousness. BioDelivery
Sciences Int’l, Inc. v. Monosol RX, LLC, No. IPR2015-
00165, 2015 WL 2452905, at *1–2 (P.T.A.B. May 20, 2015).
On May 20, 2015 the PTAB instituted the IPR on most, but
not all of the challenged claims, and on one of the prior art
grounds. Id. at *18. The PTAB received briefing and ar-
gument and held trial, and ruled by Final Written Decision
that claims 1, 4, 11, 12, 26, 27, 44, 51, 58, 65, 72, 82, and
125–127 are patentable. BioDelivery Sciences Int’l, Inc. v.
Monosol RX, LLC, No. IPR2015-00165, 2016 WL
11447939, at *14 (P.T.A.B. Mar. 24, 2016).
    BioDelivery appealed, and we received briefing and ar-
gument. The Supreme Court then decided SAS Institute,
stating that “Congress’s prescribed policy here is clear: the
petitioner in an inter partes review is entitled to a decision
on all the claims it has challenged.” 138 S. Ct. at 1358. On
BioDelivery’s motion, we directed the PTAB “to implement
the Court’s decision in SAS.” Remand Order at 1210.
     The PTAB did not comply with the Remand Order. In-
stead, the PTAB asked the parties for advice, and received
directly opposing positions. The PTAB decided to “modify
[its] Decision to Institute and instead deny the Petition in
its entirety, thereby terminating [the] proceeding.” Deci-
sion on Remand at *1. The PTAB “ORDERED that Peti-
tioner’s request for inter partes review of claims 1, 4, 6–9,
4    BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.

11, 12, 26, 27, 32, 38, 44, 51, 58, 65, 72, 82, 125–127 of the
’167 patent is denied and no inter partes review is insti-
tuted.” Id. at *12.
    The court now ratifies that action. However, the Amer-
ica Invents Act does not include agency authority to disre-
gard the mandate, instead the Federal Circuit’s “mandate
and opinion . . . shall govern the further proceedings in the
case:”
    35 U.S.C. § 144. The United States Court of Ap-
    peals for the Federal Circuit shall review the deci-
    sion from which an appeal is taken on the record
    before the Patent and Trademark Office. Upon its
    determination the court shall issue to the Director
    its mandate and opinion, which shall be entered of
    record in the Patent and Trademark Office and
    shall govern the further proceedings in the case.
Appellate courts may remand for further proceedings, “as
may be just under the circumstances:”
    28 U.S.C. § 2106. The Supreme Court or any other
    court of appellate jurisdiction may . . . remand the
    cause and direct the entry of such appropriate judg-
    ment, decree, or order, or require such further pro-
    ceedings to be had as may be just under the
    circumstances.
The further proceedings here relate to implementing SAS
Institute as to the additional claims and grounds. The re-
mand did not include review of the decision to institute
these IPRs.
     My concern is with the PTAB’s position that it need not
follow the court’s Remand Order, for reasons of efficiency
and expense. Such agency authority cannot be discerned
in the America Invents Act, and contravenes decades of
constitutional jurisprudence. E.g., Chi. & S. Air Lines, Inc.
v. Waterman S.S. Corp., 333 U.S. 103, 113 (1948):
BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.     5

    Judgments, within the powers vested in courts by
    the Judiciary Article of the Constitution, may not
    lawfully be revised, overturned or refused faith and
    credit by another Department of Government.
See also Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 218
(1995) (“Congress cannot vest review of the decisions of Ar-
ticle III courts in officials of the Executive Branch.”).
    In SAS Institute the Court reiterated that “the duty of
an administrative agency is to follow its commands as writ-
ten, not to supplant those commands with others it may
prefer.” 138 S. Ct. at 1355. See City of Cleveland v. Fed.
Power Comm’n, 561 F.2d 344, 346 (D.C. Cir. 1977) (foot-
notes omitted):
    The decision of a federal appellate court establishes
    the law binding further action in the litigation by
    another body subject to its authority. . . . These
    principles, so familiar in operation within the hier-
    archy of judicial benches, indulge no exception for
    reviews of administrative agencies.
Judicial authority may be manifested in orders on remand.
See Mefford v. Gardner, 383 F.2d 748, 758 (6th Cir. 1967):
    [O]n the remand of a case after appeal, it is the
    duty of the lower court, or the agency from which
    appeal is taken, to comply with the mandate of the
    court and to obey the directions therein without
    variation . . . .
The Administrative Procedure Act “directs courts to set
aside agency action ‘not in accordance with law’ or ‘in ex-
cess of statutory jurisdiction, authority, or limitations.’”
SAS Institute, 138 S. Ct. at 1359 (quoting 5 U.S.C.
§§ 706(2)(A),(C)). Agency action is bound by the mandate
rule:
    The mandate rule . . . dictates that ‘an inferior
    court has no power or authority to deviate from the
6       BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.

    mandate issued by an appellate court.’ Once a
    question has been considered and decided by an ap-
    pellate court, the issue may not be reconsidered at
    any subsequent stage of the litigation, save on ap-
    peal.
Banks v. United States, 741 F.3d 1268, 1276 (Fed. Cir.
2014) (citation omitted) (quoting Briggs v. Pa. R. Co., 334
U.S. 304, 306 (1948)). These premises are beyond debate.
    The PTAB has elsewhere recognized its obligation to
comply with a judicial mandate, stating: “As an initial mat-
ter, we recognize that we are bound by the mandate on
matters that the mandate addressed.” Zodiac Pool Sys.,
Inc. v. Aqua Prods., Inc., No. IPR2013-00159, 2019 WL
548667, at *9 (P.T.A.B. Feb. 11, 2019).
     The PTAB acknowledged an Office SAS Guidance on
how to proceed following the decision in SAS Institute. The
Office SAS Guidance states: “for pending trials in which a
panel has instituted trial only on some of the challenges
raised in the petition . . . the panel may issue an order sup-
plementing the institution decision to institute on all chal-
lenges raised in the petition.” 2 “[T]he Office SAS Guidance
is to be interpreted with the weight of Office policy as pre-
cluding termination of a partially instituted proceeding in
response to SAS Institute.” ESET, LLC v. Finjan, Inc., No.
IPR2017-01738, 2018 WL 3854167, at *4 (P.T.A.B. Aug. 10,
2018). Here, the PTAB mentioned the Office SAS Guid-
ance but did not follow it, stating that it applies only to
“pending trials” and does not apply to judicial remands.
Decision on Remand at *4.

    2    Guidance on the Impact of SAS on AIA Trial Pro-
ceedings, U.S. Patent & Trademark Office (Apr. 26, 2018),
https://www.uspto.gov/patents-application-process/patent-
trial-and-appeal-board/trials/guidance-impact-sas-aia-
trial (“Office SAS Guidance”).
BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.      7

    Thus the PTAB departed from not only the letter but
also the spirit of the Remand Order. However, the “letter
and spirit” of a mandate control actions on remand. See
SUFI Network Servs., Inc. v. United States, 817 F.3d 773,
779 (Fed. Cir. 2016) (“[B]oth the letter and the spirit of the
mandate must be considered.”); Laitram Corp. v. NEC
Corp., 115 F.3d 947, 951 (Fed. Cir. 1997) (“[A]ctions on re-
mand should not be inconsistent with either the letter or
the spirit of the mandate.”).
    The panel herein held that this PTAB action is not re-
viewable. I repeat, the court’s Remand Order was not for
review of the PTAB’s “institution” decisions; the Remand
Order was to review additional claims and grounds. See
St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749
F.3d 1373, 1375 (Fed. Cir. 2014) (“The statute separates
the Director’s decision to ‘institute’ the review, § 314, on
one hand, from the Board’s ‘conduct’ of the review ‘insti-
tuted’ by the Director, § 316(c), and the Board’s subsequent
‘written decision,’ § 318, on the other.”) The legislative rec-
ord contains no contemplation of a PTAB procedure
whereby, after full PTAB trial and decision and appeal to
the Federal Circuit, the PTAB could annul the appeal and
remove the entire action and decisions and procedure from
history, insulated from review.
     The Supreme Court has observed that “the agency
bears a ‘heavy burden’ in attempting to show that Congress
‘prohibit [ed] all judicial review’ of the agency’s compliance
with a legislative mandate.” Mach Mining, LLC v. EEOC,
575 U.S. 480, 486 (2015) (alteration in original) (quoting
Dunlop v. Bachowski, 421 U.S. 560, 567 (1975)). In SAS
Institute the Court reiterated that “nothing in
§ 314(d) . . . withdraws our power to ensure that an inter
partes review proceeds in accordance with the law’s de-
mands” and “everything in the statute before us confirms
that SAS is entitled to a final written decision addressing
all of the claims it has challenged.” 138 S. Ct. at 1359. The
PTAB’s refusal to comply with our Remand Order to
8    BIODELIVERY SCIS. INTL. v. AQUESTIVE THERAPEUTICS, INC.

implement the Supreme Court’s ruling warrants en banc
attention.
    Of further concern is the PTAB’s contravention of the
purpose of the America Invents Act, to provide agency ex-
pertise to resolution of patentability issues. See H.R. Rep.
No. 112–98, pt. 1, at 48 (2011) (“[T]he purpose of the [post-
grant review proceedings is to] provid[e] quick and cost ef-
fective alternatives to litigation.”); 157 Cong. Rec. S1352
(daily ed. Mar. 8, 2011) (statement of Sen. Udall) (“These
proceedings are intended to serve as a less-expensive alter-
native to courtroom litigation and provide additional access
to the expertise of the Patent Office on questions of patent-
ability.”). On this background, the PTAB’s explanation of
agency efficiency and cost is curious, as litigation cost was
a primary concern of the America Invents Act.
    In the interest of achieving a viable and effective ad-
ministrative process, and the nation’s critical need for an
effective system of innovation law and practice, the PTAB’s
action is seriously flawed. From my colleagues’ inaction, I
respectfully dissent.