Court Opinion

ID: 4434549
Source: CourtListenerOpinion
Date Created: 2019-08-29 16:00:42.868272+00
Date Added: 2024-06-11T14:53:04.459883
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 MOTION
                ______________________

   KIA LYNN FREEMAN, McCarter & English, LLP, Boston,
MA, for appellant. Also represented by THOMAS F. FOLEY,
WYLEY SAYRE PROCTOR.

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

Before NEWMAN, LOURIE, and REYNA, Circuit Judges.
     Order for the court filed by Circuit Judge REYNA.
    Opinion dissenting filed by Circuit Judge NEWMAN.
REYNA, Circuit Judge.
                         ORDER
    Aquestive Therapeutics, Inc. moves to dismiss these
appeals on the basis that our review is barred by 35 U.S.C.
§ 314(d). BioDelivery Sciences International, Inc. opposes
the motion. Having considered the parties’ arguments, we
grant the motion and dismiss these appeals.
                        BACKGROUND
    In October 2014, BioDelivery filed three petitions for
inter partes review (“IPR”) of U.S. Patent No. 8,765,167.
The petitions contained a combined total of seventeen
grounds. The petition in IPR2015-00165 included seven
grounds, the petition in IPR2015-00168 included five
grounds, and the petition in IPR2015-00169 included five
grounds.
     The Patent Trial and Appeal Board (“Board” or
“PTAB”) instituted review on a single ground in each peti-
tion. For the fourteen other non-instituted grounds, the
Board found that BioDelivery failed to establish a reason-
able likelihood of prevailing on the merits. In the final
written decisions, the Board sustained the patentability of
all claims subject to the instituted challenges in each pro-
ceeding. BioDelivery appealed.
     After oral argument in the appeals, the Supreme Court
issued its decision in SAS Institute, Inc. v. Iancu, 138 S. Ct.
1348 (2018). BioDelivery subsequently moved to remand
the appeals based on SAS’s requirement that IPR proceed-
ings must proceed “‘in accordance with’ or ‘in conformance
to’ the petition,” id. at 1356 (quoting Pursuant, Oxford Eng-
lish Dictionary, http://www.oed.com/view/Entry/155073),
BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.     3

including “‘each claim challenged’ and ‘the grounds on
which the challenge to each claim is based,’” id. at 1355
(quoting 35 U.S.C. § 312(a)(3)).
    We granted BioDelivery’s motion without deciding the
merits of any of the appealed issues and vacated the
Board’s final written decisions in the three IPR proceed-
ings. BioDelivery Scis. Int’l, Inc. v. Aquestive Therapeutics,
Inc., 898 F.3d 1205, 1210 (Fed. Cir. 2018) (“Remand Or-
der”). Specifically, we ordered that “BioDelivery’s request
for remand to implement the Court’s decision in SAS is
granted in [the three appeals]” and “[t]he PTAB’s decisions
in PTAB Nos. IPR2015-00165, IPR2015-00168, and
IPR2015-00169, are vacated.” Id.
     On remand, the Board requested briefing on whether it
would be appropriate to vacate its prior institution deci-
sions and deny the petitions in their entirety. See BioDeliv-
ery Scis. Int’l, Inc. v. Aquestive Therapeutics, Inc. f/k/a
MonoSol RX, LLC, No. IPR2015-00165, Paper No. 91
(P.T.A.B. Feb. 7, 2019) (“PTAB Remand Dec.
IPR2015-00165”), at 3; BioDelivery Scis. Int’l, Inc. v.
Aquestive Therapeutics, Inc. f/k/a MonoSol RX, LLC, No.
IPR2015-00168, Paper No. 88 (P.T.A.B. Feb. 7, 2019)
(“PTAB Remand Dec. IPR2015-00168”), at 3; BioDelivery
Scis. Int’l, Inc. v. Aquestive Therapeutics, Inc. f/k/a Mono-
Sol RX, LLC, No. IPR2015-00169, Paper No. 89 (P.T.A.B.
Feb. 7, 2019) (“PTAB Remand Dec. IPR 2015-00169”), at 3.
After considering the parties’ arguments and whether pe-
titioner had shown a reasonable likelihood of prevailing on
all grounds, including those which were not previously in-
stituted, the Board modified the institution decisions, de-
nied the petitions, and terminated the proceedings. E.g.,
PTAB Remand Dec. IPR2015-00165 at 3.
    The Board emphasized its discretion to institute IPR
under 35 U.S.C. § 314(a) even upon a showing of a reason-
able likelihood of prevailing on at least one challenged
claim. Id. at 5 (citing SAS, 128 S. Ct. at 1356). The Board
4    BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

also emphasized its statutory directive to prescribe regula-
tions for conducting IPR and the Director’s obligation to
“consider the effect of any such regulation on . . . the effi-
cient administration of the Office.” Id. (quoting 35 U.S.C.
§ 316(b)); see also 37 C.F.R. § 42.1(b) (“This part shall be
construed to secure the just, speedy, and inexpensive reso-
lution of every proceeding.”).
     The Board considered the merits of the previously non-
instituted grounds and found that BioDelivery had not “es-
tablish[ed] a reasonable likelihood of success in relation to
those claims and grounds.” Id. at 7. “Because the over-
whelming majority of unpatentability grounds presented
by Petitioner fail to meet the standard for institution of in-
ter partes review, [the Board found] 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 proceeding.”
Id.
     Although BioDelivery argued that the finality require-
ment of § 314(d) prohibited the Board from reconsidering
its decisions to institute, the Board rejected that argument
and noted that it has previously reconsidered institution
decisions and terminated IPR proceedings without issuing
a final decision. Id. at 8–10 (citing Medtronic, Inc. v. Robert
Bosch Healthcare Sys., Inc., 839 F.3d 1382, 1386 (Fed. Cir.
2016); GTNX, Inc. v. INTTRA, Inc., 789 F.3d 1309, 1313
(Fed. Cir. 2015)). In applying SAS and making the “binary
choice” to either institute review or not, the Board reeval-
uated the petitions and declined to institute. Id. at 10
(quoting SAS, 138 S. Ct. at 1355).
     BioDelivery then filed these appeals of the Board’s de-
cisions on remand.
                         DISCUSSION
    Section 314(a) of the Leahy-Smith America Invents Act
provides that
BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.     5

    [t]he Director 1 may not authorize an inter partes
    review to be instituted unless the Director deter-
    mines that the information presented in the peti-
    tion filed under section 311 and any response filed
    under section 313 shows that there is a reasonable
    likelihood that the petitioner would prevail with re-
    spect to at least 1 of the claims challenged in the
    petition.
35 U.S.C. § 314(a) (footnote added). Subsection (a) identi-
fies a threshold requirement that must be met before the
Director is even authorized to institute review, and then
“grants the Director discretion not to institute even when
the threshold is met.” Wi-Fi One, LLC v. Broadcom Corp.,
878 F.3d 1364, 1372 (Fed. Cir. 2018) (citing Cuozzo Speed
Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016)). In other
words, the Director is limited in his power to institute re-
view but has discretion to not institute review even when
the threshold showing is met. See Saint Regis Mohawk
Tribe v. Mylan Pharm. Inc., 896 F.3d 1322, 1327 (Fed. Cir.
2018) (“While he has the authority not to institute review
on the merits of the petition, he could deny review for other
reasons such as administrative efficiency . . . .”), cert. de-
nied, 139 S. Ct. 1547 (2019).
    In SAS, the Supreme Court held that the Patent Office
exceeded its statutory authority by limiting its review to
fewer than all of the claims challenged in the IPR petitions.
SAS, 138 S. Ct. at 1359–60. The Court said that § 314 “in-
dicates a binary choice—either institute review or don’t.”
Id. at 1355.
   In PGS, we recognized the Court’s holding “that the
IPR statute does not permit a partial institution on an IPR

    1   The Director has delegated the authority on
whether to institute review to the Board. 37 C.F.R.
§ 42.4(a).
6    BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

petition.” PGS Geophysical AS v. Iancu, 891 F.3d 1354,
1359 (Fed. Cir. 2018). We stated that under SAS, the stat-
ute “require[s] a simple yes-or-no institution choice re-
specting a petition, embracing all challenges included in
the petition.” Id. at 1360. In our Remand Order in this
case, we also recognized that “the statute does not permit
a partial institution leading to a partial final written deci-
sion.” Remand Order, 898 F.3d at 1208 (quoting Med-
tronic, Inc. v. Barry, 891 F.3d 1368, 1371 n.1 (Fed. Cir.
2018)).
    Section 314(d) plainly states that the Patent Office’s
decision whether to institute IPR is not appealable. See
Cuozzo, 136 S. Ct. at 2139. As the Board recognized, we
have previously held that under § 314(d), “[t]he Board’s va-
catur of its institution decisions and termination of the pro-
ceedings constitute decisions whether to institute inter
partes review and are therefore ‘final and nonappealable.’”
Medtronic, 839 F.3d at 1383 (quoting 35 U.S.C. § 314(d));
see also GTNX, 789 F.3d at 1313.
    Although BioDelivery argues to the contrary, there is
no requirement that once instituted, IPRs must proceed
through final written decisions. Indeed, § 318(a) on its face
provides that a “proceeding can be ‘dismissed’ after it is in-
stituted.” Medtronic, 839 F.3d at 1385. We have also rec-
ognized that “administrative agencies possess inherent
authority to reconsider their decisions, subject to certain
limitations, regardless of whether they possess explicit
statutory authority to do so.” Id. (quoting Tokyo Kikai Sei-
sakusho, Ltd. v. United States, 529 F.3d 1352, 1360 (Fed.
Cir. 2008)). Nothing “clearly deprives” the Board from ex-
ercising that inherent, “default authority” here. Id. at
1385–86 (quoting GTNX, 789 F.3d at 1313).
    Despite the “strong presumption in favor of judicial re-
view” when interpreting statutes, Congress clearly in-
tended to bar review of institution decisions in at least
some circumstances by passing the “No Appeal”
BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.       7

provision—§ 314(d). “[W]here a patent holder merely chal-
lenges the Patent Office’s ‘determin[ation] that the infor-
mation presented in the petition . . . shows that there is a
reasonable likelihood’ of success ‘with respect to at least 1
of the claims challenged,’ . . . § 314(d) bars judicial review.”
Cuozzo, 136 S. Ct. at 2142.
     We have such a case here; BioDelivery’s appeals merely
challenge the Board’s determination not to institute re-
view, something the Board has discretion to do even upon
a showing that there is a “reasonable likelihood of success
with respect to at least 1 claim challenged” in the petition.
As in Medtronic, we would be “strained to describe” these
decisions to modify the Board’s previous institution deci-
sions and deny institution on remand “as anything but a
‘determination . . . whether to institute’ proceedings—stat-
utory language that is not limited to an initial determina-
tion to the exclusion of a determination on
reconsideration.’” 839 F.3d at 1386 (quoting GTNX, 789
F.3d at 1312). “[S]uch a decision is ‘final and nonappeala-
ble.’” Id. (quoting GTNX, 789 F.3d at 1312).
    In this case, the Board initially erred under SAS by in-
stituting partial review instead of making yes-or-no insti-
tution decisions. In following our Remand Order to
“implement SAS,” the Board corrected its partial institu-
tion errors by revisiting its institution decisions and
properly exercising its discretion not to institute review at
all. Nothing in our Remand Order divested the Board of
that discretion.
     Alternatively, the Board could have implemented SAS
by revisiting its institution decisions and deciding to insti-
tute review on all challenges raised in the petitions. This
course of action would have required the Board to conduct
full trial proceedings on all challenges, including supple-
mental briefing, additional discovery, and further oral ar-
gument. See Guidance on the Impact of SAS on AIA Trial
Proceedings, U.S. Patent & Trademark Office (Apr. 26,
8    BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

2018), https://www.uspto.gov/patentsapplication-process/
patent-trial-and-appeal-board/trials/guidance-impact-sas-
aia-trial. These additional proceedings would have related
to the fourteen additional challenges that the Board deter-
mined did not meet the threshold standard for institution
in the first place and would have likely led to the same out-
come.
    Undertaking such proceedings would contravene the
Director’s statutory charge to consider the efficiency of the
Patent Office in conducting IPR proceedings. See 35 U.S.C.
§ 316(b). It would also contravene the Director’s own reg-
ulations promulgated pursuant to that statutory charge,
which require the Patent Office to “secure the just, speedy,
and inexpensive resolution of every proceeding.” 37 C.F.R.
§ 42.1(b).
     Here, the Board’s orders on remand modifying its pre-
vious institution decisions constitute the Board’s (1) deter-
mination of whether the information presented in the
petitions shows that there is a reasonable likelihood of suc-
cess with respect to at least 1 of the claims challenged, and
(2) exercise of its discretion whether to institute IPR. Sec-
tion 314(d) bars judicial review of both aspects of the
Board’s decisions. Cuozzo, 136 S. Ct. at 2142.
    Accordingly,
    IT IS ORDERED THAT:
    The above-captioned appeals are dismissed.

                                FOR THE COURT

    August 29, 2019             /s/ Peter R. Marksteiner
        Date                    Peter R. Marksteiner
                                Clerk of Court
BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.   9

ISSUED AS A MANDATE: August 29, 2019
  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.
     The Patent Trial and Appeal Board, on remand from
the Federal Circuit, rejected this Court’s remand instruc-
tion to implement the Supreme Court’s holding in SAS In-
stitute. The Board’s action departs from principles of
appellate review, and negates the agency’s obligations un-
der the America Invents Act. From my colleagues’ endorse-
ment of these irregular positions, I respectfully dissent.
   The Federal Circuit’s Remand Order
     Three petitions for inter partes review (“IPR”) were
filed by BioDelivery. The PTAB granted the petitions on
selected claims and a single ground for each petition, as
2    BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

practice then permitted. Trial was held with witnesses,
testimony, briefing and argument, followed by three final
written decisions, all sustaining validity of the claims ex-
amined. These decisions were duly appealed by BioDeliv-
ery, briefed and argued in the Federal Circuit, and awaited
our decision.
     Meanwhile, the Supreme Court decided SAS Institute,
Inc. v. Iancu, 138 S. Ct. 1348 (2018). The Court held that
the IPR statute, 35 U.S.C. § 318(a), requires that if an IPR
petition is granted and review is instituted, the PTAB must
decide all the claims and grounds that were raised in the
petition. Id. at 1354. Since here the PTAB had not met
these requirements, we remanded with instructions “to im-
plement the Court’s decision in SAS.” BioDelivery Scis.
Int’l, Inc. v. Aquestive Therapeutics, Inc., 898 F.3d 1205,
1210 (Fed. Cir. 2018) (“Remand Order”).
    On remand, the PTAB held that it would be inefficient
and expensive to implement the Supreme Court’s decision.
See BioDelivery Scis. Int’l, Inc. v. Aquestive Therapeutics,
Inc., No. IPR2015-00165, Paper No. 91 (P.T.A.B. Feb. 7,
2019), at 28 (“[W]e find that instituting trial as to those
grounds at this time is neither in the interest of the effi-
cient administration of the Office, nor in the interest of se-
curing an inexpensive resolution of this proceeding.”); see
also BioDelivery Scis. Int’l, Inc. v. Aquestive Therapeutics,
Inc., No. IPR2015-00168, Paper No. 88 (P.T.A.B. Feb. 7,
2019), at 8; BioDelivery Scis. Int’l, Inc. v. Aquestive Thera-
peutics, Inc., No. IPR2015-00169, Paper No. 89 (P.T.A.B.
Feb. 7, 2019), at 37. Instead, the PTAB withdrew all of its
actions as to these three IPRs.
     My colleagues hold that since the PTO is not required
to accept any petition for IPR, the PTO can now withdraw
its initial acceptance and all ensuing proceedings as if they
never occurred, and negate our Remand Order. However,
the question is not whether the PTO could have initially
declined to institute these reviews; the question is whether
BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.     3

the PTO must comply with this court’s Remand Order and
implement the ruling of the Supreme Court. That is, must
the PTO conform to standard administrative practice
whereby the agency must comply with the remand instruc-
tion of the reviewing court.
     Appellate courts have statutory authority to remand
for further proceedings:
    The Supreme Court or any other court of appellate
    jurisdiction may . . . remand the cause and direct
    the entry of such appropriate judgment, decree, or
    order, or require such further proceedings to be had
    as may be just under the circumstances.
28 U.S.C. § 2106. The obligation to comply with a remand
order is beyond debate, whether remand is to a lower court
or an administrative agency. See, e.g., City of Cleveland v.
Fed. Power Comm’n, 561 F.2d 344, 346 (D.C. Cir. 1977)
(“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 hierarchy of judicial benches, indulge
no exception for reviews of administrative agencies.”); see
also In re Sanford Fork & Tool Co., 160 U.S. 247, 255 (1895)
(“When a case has been once decided by this court on ap-
peal, and remanded to the circuit court, whatever was be-
fore this court, and disposed of by its decree, is considered
as finally settled. The circuit court is bound by the decree
as the law of the case, and must carry it into execution ac-
cording to the mandate. That court cannot vary it, or ex-
amine it for any other purpose than execution. . . .”).
    Precedent illustrates this rule as followed by agencies
and courts, without quibble. See Braniff Airways, Inc. v. C.
A. B., 379 F.2d 453, 468 n.11 (D.C. Cir. 1967) (“We have
frequently remanded agency cases with specific directions,
and we have no reservations about our statutory power to
do so.”) (citations omitted); Mefford v. Gardner, 383 F.2d
748, 758 (6th Cir. 1967) (“[O]n the remand of a case after
4    BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

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 . . . .”); see also Zodiac Pool Sys., Inc. v. Aqua Prods.,
Inc., No. IPR2013-00159, Paper No. 87 (P.T.A.B. Feb. 11,
2019), at 20 (“As an initial matter, we recognize that we are
bound by the mandate on matters that the mandate ad-
dressed.”).
    For PTO tribunals, 35 U.S.C. § 144 assigns review ob-
ligations to the Federal Circuit:
    The United States Court of Appeals for the Federal
    Circuit shall review the decision from which an ap-
    peal 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 Pa-
    tent and Trademark Office and shall govern the
    further proceedings in the case.
Here, the PTAB decisions were duly appealed to the Fed-
eral Circuit, where they were briefed and argued. When
the Supreme Court decided SAS Institute, we recognized
the applicability and because the record was not complete
for the issues on appeal, we remanded to the PTAB with
instructions “to implement the Court’s decision is SAS.”
Remand Order, 898 F.3d at 1210.
    Nonetheless, the PTAB declined to execute our Re-
mand Order. Instead, the PTAB discarded these three
completed IPR cases as if they had never occurred. How-
ever, “actions on remand should not be inconsistent with
either the letter or the spirit of the mandate.” Laitram
Corp. v. NEC Corp., 115 F.3d 947, 951 (Fed. Cir. 1997); see
also Quern v. Jordan, 440 U.S. 332, 347 n.18 (1979) (“[W]e
remanded the matter . . . , and we hold today that the
award . . . is not inconsistent with either the spirit or ex-
press terms of our decision . . . .”); Banks v. United States,
721 F. App’x 928, 933 (Fed. Cir. 2017) (“After our mandate
issues, the mandate rule forecloses reconsideration of
BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.       5

issues implicitly or explicitly decided on appeal . . . . [B]oth
the letter and the spirit of the court’s mandate must be con-
sidered.”); Best Key Textiles Co. v. United States, 660 F.
App’x 905, 906 (Fed. Cir. 2016) (“When a trial court inter-
prets a mandate from this court, both the letter and the
spirit of the mandate must be considered.”) (internal quo-
tation marks omitted); SUFI Network Servs., Inc. v. United
States, 817 F.3d 773, 779 (Fed. Cir. 2016) (“[I]n interpret-
ing this court’s mandate, both the letter and the spirit of
the mandate must be considered.”); Bankers Trust Co. v.
Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir. 1985) (“A
trial court must implement both the letter and spirit of the
mandate, taking into account the appellate court’s opinion
and the circumstances it embraces.”).
    The PTAB’s action is not consistent with the “letter or
spirit of the mandate,” which ordered further proceedings
in conformity to the Court’s ruling in SAS. This Remand
Order requires compliance, not avoidance at the agency’s
option. However, my colleagues endorse the PTAB’s ac-
tion, reasoning that since it was within the PTAB’s author-
ity to decline to institute these IPR petitions, that action
and all ensuing proceedings can be retroactively cancelled,
at the PTAB’s unreviewable choice.
     The PTO indeed had discretion to decline to institute
these IPRs. However, here the PTO did institute the IPRs,
and conducted full trials and issued final written decisions
on the aspects it considered. Although my colleagues state
that “there is no requirement that once instituted, IPRs
must proceed through final written decisions,” Maj. Op. at
6, here the three IPRs did proceed through final written
decisions. The Court has ruled that these decisions must
include all the claims and grounds raised by the petition.
Our Remand Order and instruction was to implement the
Supreme Court’s holding, which was “that SAS is entitled
to a final written decision addressing all of the claims it has
challenged.” SAS, 138 S. Ct. at 1359–60. BioDelivery is
entitled to such decision.
6    BIODELIVERY SCIS. INT’L v. AQUESTIVE THERAPEUTICS, INC.

     Incidentally, I take note that my colleagues state that
“[t]he Board considered the merits of the previously non-
instituted grounds and found that BioDelivery had not ‘es-
tablish[ed] a reasonable likelihood of success in relation to
those claims and grounds.’” Maj. Op. at 4. However, the
Board presented no final written decision as to all the
claims and grounds in the petitions.
     The PTO’s action in response to our Remand Order
fails not only the Supreme Court’s requirement, but the
PTO’s assignment under the America Invents Act to re-
solve certain validity issues by agency IPR proceeding.
From my colleagues’ endorsement of the agency’s action, I
respectfully dissent.