Federal Circuit Reaffirms Non-reviewability of PTAB’s Institution Decisions

cafc1The Federal Circuit reiterated this week, in Harmonic Inc. v. Avid Technology, Inc. (2015-1072), that it does not have jurisdiction to review the PTAB’s institution decisions, including decisions to institute an IPR, decisions to deny institution of an IPR, and decisions to institute on only a subset of grounds identified in a petition.

Harmonic petitioned for IPR alleging that all twenty claims of Avid’s patent 5,495,291 were unpatentable in view of several different prior art grounds. The Board instituted IPR of claims 1-16 based on one ground and disposed all other grounds directed to these claims as redundant. The Board then issued a final decision concluding that claims 11-16 were confirmed as patentable. Harmonic appealed and argued that the Board should have considered the other prior art grounds that were not instituted, especially after finding claim 11 patentable in view of the instituted ground. The court disagreed, citing several cases, summarized below, where it declined to review the Board’s institution decisions based on the plain language of 35 USC 314(d), which states that a “determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”

The court cited St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014), holding that it lacked jurisdiction to review the Board’s decision to not institute an IPR proceeding since the Board determined that the petition was time-barred; In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (Fed. Cir. 2015), where the court rejected the patent owner’s argument that 314(d) does not preclude but postpones review of institution decisions until after issuance of the final decision, and declined to decide whether the Board improperly instituted an IPR on certain claims since it relied on prior art not identified in the petition; Versata Development Group Inc. v. SAP America Inc., 793 F.3d 1306 (Fed. Cir. 2015), where the court clarified that the Board’s institution decisions in the CBM context are also nonappealable under 35 USC 324(e), but held that the Board’s determination that the patent was a CBM patent was not an institution decision and was reviewable because that determination involved the Board’s ultimate authority to deem the patent unpatentable under the CBM review proceedings; Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015), where the court declined to review the Board’s institution decision premised on IPR petitions that the patent owner argued contravened section 315(b)’s time bar because the time bar is simply a procedural rule that does not itself give the Board the power to deem a patent unpatentable; and Synopsys Inc. v. Mentor Graphics Corp., __ F.3d __, 2016 WL 520236 (Fed. Cir. 2016), where the court declined to review the Board’s decision to institute review for some, but not all, of the claims challenged in the petition, but held that the Board is not required to address all claims raised in an IPR petition in its final decision under 35 USC 318(a).

Relying on this precedent, the court reiterated that section 314(d) prohibits review of the decision to institute an IPR as well as the decision to deny institution of an IPR and clarified that a decision to institute on only a subset of grounds identified in a petition is simply a combination of the two and is likewise unreviewable. The court emphasized that the Board’s decision to institute on one prior art ground or another does not raise fundamental questions about the scope of its statutory authority to deem patents unpatentable and is simply the Board’s exercise of its institution authority in a given case, which is unreviewable.

The court explained that the Board’s reference to the non-instituted grounds as redundant simply meant that the claims addressed by the non-instituted grounds were already addressed by the instituted grounds and therefore did not alter the court’s decision. Noting that 35 USC 314 does not compel the PTO to institute an IPR proceeding in any instance, the court opined that the Board may choose to institute some grounds and not institute others as part of its comprehensive institution decision consistent with 37 CFR 42.108, which permits the Board to institute on a subset of claims challenged in a petition. The court was unwilling to change its opinion because the Board found claim 11 patentable over the instituted ground since the court noted that the Board’s patentability determination was distinct from the Board’s institution decision, which remained unreviewable.

Federal Circuit Clarity on Key IPR Issues May Be on the Way

cafc1We are entering an interesting phase in the development of inter partes review proceedings as more and more of the contours of these proceedings are being heard by the Federal Circuit. To date, the Federal Circuit has made substantial use of Rule 36, affirming the Board without opinion in 24 of the first 29 IPR appeals it has heard, but more substantive opinions are sure to be on the way.

On November 2nd, oral argument was heard in the case of Shaw Indus. Grp. v. Automated Creel Sys. In that case, Petitioner challenged the Board’s practice of denying grounds contained in IPR petitions on redundancy grounds. In a high percentage of its decisions to institute an IPR trial, the Board will grant trial relative to one or more challenge grounds, but deny others it deems to be horizontally or vertically redundant.

Then, on November 3rd, oral argument was heard in the cases of Synopsis Inc. v. Lee and Synopsys Inc. v. Mentor Graphics Corp. In that case, Petitioner challenged the Board’s practice of only instituting trial on those claims that meet the “reasonable likelihood” standard, instead of granting trial on the entire petition when at least one claim meets that threshold.

Also interesting relative to these cases is the interplay between these issues, which ostensibly are part-and-parcel with the institution decision and the Court’s recent pronouncement, in Achates v. Apple. In that case, the Federal Circuit held that 35 USC 314(d) (“[t]he determination by the Director whether to institute IPR under this section shall be final and nonappealable.”) prevents its review of the 315(b) time bar. Some commentators have suggested that the rationale of that decision extends to any issue decided in the decision to institute. If that view is correct, this would likely preclude the CAFC from reviewing the issues raised int he Synopsis and Shaw Industries cases.

In sum, the issues heard by the Federal Circuit this week could substantially change the way IPR practice is handled at the Board….or, the CAFC might punt this issues, holding that is not able to review the issues because they are inherently a part of the institution decision.

Don’t Count on Avoiding a Redundancy Finding by Filing Multiple IPR Petitions

36457258_sFrom the very outset of inter partes review proceedings, the Board has helped to manage its docket by rejecting challenge grounds in petitions that are redundant to other grounds in the petition. See Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., CBM2012-00003 (explaining vertical and horizontal redundancy). As a strategy to avoid this type of redundancy finding, Petitioners began to file multiple petitions directed to the same patent, hoping that by paying an extra $23,000+ filing fee, the Board would consider additional grounds against the same patent. That strategy is facing headwinds, however, as demonstrated in the case of LG Elec., Inc. v. ATI Techs., ULCIPR2015-00327, Paper 15 (Sept. 2, 2015) (denying request for rehearing). In that case, the Board (once again) denied a petition relying in part on 35 U.S.C. § 325(d), finding that the overlapping of arguments between two related petitions, and the institution of an IPR of the same claims in the related case, warranted a denial of the petition.

Of the reasons given by the Board for its decision, the one factor that might have tipped the Board’s decision in Petitioner’s favor relates to the purported overlap between the primary references cited in each of the two petitions at issue. If Petitioner had provided some rationale regarding why the primary references do not disclose substantially the same subject matter, the decision might have come out differently. And, of course, if the references really did disclose the same subject matter, a second petition was likely not necessary in the first place.

Regardless, a denial of a decision to institute is non-appealable, so this type of decision by the Board is, effectively, immune from challenge. 35 U.S.C. § 314(d).

PTAB Denies Challenged Grounds as Redundant in View of Grounds in Different Petition

37975151_sThe Board has a well-established reputation for denying grounds in a petition that are deemed redundant to other instituted grounds. In view of that reputation, Petitioners are adapting, seeking to file multiple petitions, putting grounds that might otherwise be deemed redundant into a separate petition in the hopes that they will be considered in that context. The Board, however, is not backing down, finding on occasion that grounds in one petition may be denied as redundant in view of grounds in a separate petition. That situation arose in CoreLogic, Inc. v. Boundary Solutions, Inc., IPR2015-00219, wherein the Board denied certain grounds in the IPR petition as redundant in view of grounds that were instituted in a completely separate IPR.

In coming to this conclusion, the Board remarked that “Petitioner makes no attempt to distinguish the grounds asserted against the claims of the ‘352 patent in this case from those asserted in [the co-pending IPRs].” Id. at 11. Further, the Board pointed out that instituting a trial in an IPR proceeding is permissive, in the discretion of the Patent Office. In short, because Petitioner did not show, and the Board was not convinced, that any additional obviousness grounds add substantively to the already-instituted grounds (albeit from a different petition), the Board denied certain grounds in the ‘219 proceeding.

As such, Petitioners are warned that the redundancy rejections from the Board may not be overcome simply by placing the additional grounds in a separate petition. Instead, Petitioners must be diligent to explain why each additional ground is necessary and adds substantively to the grounds before the Board, even over grounds presented in completely different petitions.