Court Opinion

ID: 3006005
Source: CourtListenerOpinion
Date Created: 2015-09-30 16:01:05.901456+00
Date Added: 2024-06-11T15:03:09.544101
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
               ______________________

   ACHATES REFERENCE PUBLISHING, 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 PUBLISHING, INC.,
                Appellant

                          v.

                   APPLE INC.,
                      Appellee
               ______________________

                     2014-1788
               ______________________
2              ACHATES REFERENCE PUBLISHING   v. APPLE INC.

    Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2013-
00081.
                 ______________________

              Decided: September 30, 2015
                ______________________

   VINCENT MCGEARY, McGeary Cukor LLC, Morris-
town, NJ, argued for appellant. Also represented by
MICHAEL CUKOR; BRAD PEDERSEN, Patterson Thuente
Pedersen, P.A., Minneapolis, MN; WAYNE S. BREYER,
JASON PAUL DEMONT, KENNETH OTTESEN, Kaplan, Breyer,
Schwarz & Ottesen, LLP, Matawan, NJ.

   JOSEPH GUERRA, Sidley Austin LLP, Washington, DC,
argued for appellee. Also represented by JEFFREY PAUL
KUSHAN, SCOTT BORDER, JOSEPH A. MICALLEF, ANNA
MAYERGOYZ WEINBERG.

    KAKOLI CAPRIHAN, Office of the Solicitor¸ United
States Patent and Trademark Office, Alexandria, VA,
argued for intervenor Michelle K. Lee. Also represented
by THOMAS W. KRAUSE¸ FRANCES LYNCH, JAMIE LYNNE
SIMPSON, SCOTT WEIDENFELLER.
                 ______________________

    Before PROST, Chief Judge, LOURIE and LINN, Circuit
                        Judges.
LINN, Circuit Judge.
     Achates Reference Publishing, Inc. (“Achates”) ap-
peals from the decisions of the Patent Trial and Appeal
Board (the “Board”) in inter partes review (“IPR”) proceed-
ings 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”) (collective-
ly, the “patents-at-issue”) and determining that claims 1–
ACHATES REFERENCE PUBLISHING     v. APPLE INC.              3

4 of the ’889 patent and claims 1–12 and 17–19 of the ’403
patent 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 determinations to insti-
tute IPRs in this case are final and nonappealable under
35 U.S.C. § 314(d), this court lacks jurisdiction and dis-
misses the appeals.
                      I. BACKGROUND
    On June 20, 2011, Achates sued QuickOffice, Inc.
(“QuickOffice”) along with certain other parties (collec-
tively, 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 infringed
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 other
4               ACHATES REFERENCE PUBLISHING     v. APPLE INC.

codefendants as well) and that such relationship caused
Apple’s petitions 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, finding 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 Decision at *1.
    The Board found that none of the codefendants were
real parties in interest or privies of Apple. Specifically,
the Board concluded that there was no evidence that any
of the codefendants had “the right to intervene or control
Petitioner’s defense to any charge of patent infringement”
and that Apple and codefendants 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 institu-
tion decision”). Accordingly, the Board, acting as the
Director’s delegee, instituted IPR proceedings for both
patents.
   During the merits phase of the IPRs, Achates contin-
ued to argue that Apple’s petitions were time-barred
under § 315(b). In its final written decisions, the Board
ACHATES REFERENCE PUBLISHING   v. APPLE INC.              5

reaffirmed its earlier decisions 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 appeal, Achates challenges the Board’s final writ-
ten decisions, 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 decisions 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 pro-
priety of the decision to initiate the IPR, this court lacks
jurisdiction over the appeal under § 314(d). In the alter-
native, Apple argues that the Board’s decisions should be
affirmed on the merits.
                      II. DISCUSSION
              A. The Statutory Background
    In 2011, Congress amended title 35 of the United
States Code to create IPR, post-grant review (“PGR”) and
covered business method review (“CBMR”) 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) (CBMR). CBMR
proceedings are “regarded as, and . . . employ the stand-
ards 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 CBMR proceed in two stages. In the
first stage, the Director determines whether to institute
IPR or CBMR. 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 proceedings
6               ACHATES REFERENCE PUBLISHING    v. APPLE INC.

are subject to these trial procedures); 42.300(a) (same for
CBMR). In the second phase, the Board conducts the IPR
or CBMR proceedings on the merits and issues a final
written decision.
    Based on the petitions and any responses, the Board
decides whether there are sufficient grounds to institute
the proceedings—in IPR petitions there must be a “rea-
sonable likelihood” that the petition will prevail, 35
U.S.C. § 314(a), and in CBMR petitions it must be “more
likely than not,” 35 U.S.C. § 324(a). An 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 infringe-
ment of the patent.” § 315(b). No analogous time-bar
exists for CBMR proceedings. IPR proceedings are not
limited to specific types of patents. On the other hand,
CBMR proceedings are only permitted “for a patent that
is a covered business method patent.” AIA § 18(a)(1)(E).
Importantly, identically worded statutory provisions
make explicit that “[t]he determination by the Director
whether to institute [IPR or CBMR] under th[ese] sec-
tion[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 proceed-
ings. 35 U.S.C. §§ 318(a) (IPR), 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 (CBMR).
Sections 141 through 144 of title 35 generally explain that
Board decisions are appealable to this court. Of particu-
lar relevance, 35 U.S.C. § 141(c) states, with emphasis
added:
ACHATES REFERENCE PUBLISHING   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 un-
   der section 318(a) or 328(a) (as the case may be)
   may appeal the Board’s decision only to the Unit-
   ed States Court of Appeals for the Federal Circuit.
                B. This Court’s Precedent
    This court first addressed the reviewability of a Board
decision not to institute an IPR in St. Jude Med., Cardiol-
ogy Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir.
2014). In that case, the court recognized that “the [IPR]
statute separates the Director’s decision to ‘institute’ the
review, § 314, 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 insti-
tute 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 318(a). See id.
Moreover, the court held that the appeal of the non-
institution decision was within 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 Direc-
tor’s non-institution decision, largely because of the
statutory scheme explained in St. Jude, and “section
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 and the Administrative Procedure Act. This
court has rejected the availability of mandamus and APA
relief for interlocutory review of the Director’s initiation
8               ACHATES REFERENCE PUBLISHING     v. APPLE INC.

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 . . . applies 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 refusal 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 claims relying in part on
references not cited in the petition. On appeal, Cuozzo
argued that the IPR was improperly instituted because
the petition-as-filed did not provide “a reasonable likeli-
hood that the petition would prevail” as required
by § 314(a). Id. at 1273. Cuozzo argued that the reviewa-
bility prohibition of § 314(d) applied only to interlocutory
appeals, and that the initiation decision becomes availa-
ble for review once the Board issues a final written deci-
sion. The court disagreed with Cuozzo and declined to
review the initiation decision, remarking that § 314(d) “is
not directed to precluding review only before a final
decision” and cannot be directed only to precluding inter-
locutory appeals because §§ 319 and 141(c) already serve
that role. Id. The 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. Grp., Inc. v. SAP America, Inc.
ACHATES REFERENCE PUBLISHING   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 method patent under AIA § 18. The
Director, via the Board, decided to institute the CBMR,
ruling that the ’350 patent was a “covered business meth-
od 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 fell within the scope of the Board’s author-
ity under § 18 as a “covered business method patent” was
decided by the Board at the decision to institute stage,
and was 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 decision: “institu-
tion 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. The 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 initia-
tion stage, the same issue was necessarily 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:
10               ACHATES REFERENCE PUBLISHING    v. APPLE INC.

     [O]ne of the limits on § 18 invalidation authority
     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 the court made clear, “[t]he distinct agency actions
[on initiation and at the merits phase] do not become the
same just because the agency decides certain issues at
both stages of the process. . . . Overlap of issues is not
determinative.” Versata II, 793 F.3d at 1319. The basis
for this court’s review of the CBM issue in Versata II was
not merely that the Board decided it in the final determi-
nation 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. The Present Dispute
    In this case, the Patent and Trademark Office and
Apple argue that the Board’s determination that an IPR
petition is 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 there-
fore, 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, the Board’s determina-
tion 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 does not impact the
Board’s authority to invalidate a patent claim—it only
ACHATES REFERENCE PUBLISHING     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 petitioner. 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 defective 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 contrast 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, the time-bar here is not like the CBM
classification addressed in Versata II. Versata II found
that review of the CBM determination was proper be-
cause 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 “defining” because it
subjects that patent “to a special [Board] power to invali-
date.” 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 characteris-
tic because 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.”
12              ACHATES REFERENCE PUBLISHING    v. APPLE INC.

Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428,
435 (2011) (therefore holding that the requirement that a
veteran file an appeal within 120-days is not “jurisdic-
tional”); 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 deter-
minative.” 793 F.3d at 1319. That the Board considered
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 invali-
date—the Board is always entitled to reconsider its own
decisions. GTNX, Inc. v. INTTRA, Inc., 789 F.3d 1309,
1313 (Fed. Cir. June 16, 2015). The Board’s reconsidera-
tion of the time-bar is still “fair[ly] characteriz[ed]” as
part of the decision to institute. Id. at 1312.
    Finally, Achates also contends that § 314(d) does not
limit this court’s review of the timeliness of Apple’s peti-
tion under § 315, because § 314(d) says “[t]he determina-
tion by the Director whether to institute an inter partes
review under this section shall be final and nonappeala-
ble” (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 proscribe review of the institution determination for
whatever reason. Thus, in St. Jude we held that § 314(d)
precluded 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 in
ACHATES REFERENCE PUBLISHING    v. APPLE INC.             13

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 1312.
     We thus hold that 35 U.S.C. § 314(d) prohibits this
court from reviewing 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 proceedings 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 nar-
row 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.” Hanau-
er 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 exception 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 violate a clear statutory mandate.
    Because we cannot review the Board’s determination
that Apple’s petitions were not time-barred, we also
cannot review the Board’s denials of Achates’ motions for
discovery relating thereto.
                     III. CONCLUSION
    For the foregoing reasons, the appeals are dismissed.
                       DISMISSED
14              ACHATES REFERENCE PUBLISHING     v. APPLE INC.

                            COSTS
     Each of the parties shall bear its own costs.