May/June 2014
IP Litigator
By Daniel C. Cooley; J. Derek McCorquindale; Jason L. Romrell
Authored by Daniel C. Cooley, J. Derek McCorquindale, Jason L. Romrell, and Kara F. Stoll
The America Invents Act (AIA) that created the Patent Trial and Appeal Board (PTAB) post-grant review proceedings placed appellate jurisdiction in the United States Court of Appeals for the Federal Circuit.1 But few anticipated the tidal wave of appeals that these proceedings would create for the court. As of May 1 of this year, parties have filed over 1,139 inter partes review (IPR) petitions and over 160 covered business method review (CBMR) petitions.2 For perspective, the Federal Circuit reviewed a total of 1,259 appeals in FY2013, with just 132 from the U.S. Patent and Trademark Office (USPTO).3 Given the rising popularity of PTAB proceedings, as well as the importance of those proceedings, it is predicted that the Federal Circuit could hear more than 500 appeals a year from the USPTO.4
The Federal Circuit has typically affirmed a relatively high percentage of USPTO decisions, affirming about fifty percent of the USPTO decisions before it last year by Rule 36 alone (i.e., with no opinion written). As the volume of appeals increases, it is difficult to see these figures decreasing significantly. Parties appealing PTAB determinations, therefore, need to understand what will most likely distinguish their cases so as to rise above the others soon to inundate the Federal Circuit's docket.
The first ripples from the PTAB AIA proceedings have already reached the Federal Circuit. The appellate court recently issued a trio of precedential orders that dealt with PTAB decisions on whether or not to institute an IPR: St. Jude Medical Cardiology Division, Inc. v. Volcano Corp.;5In re Dominion Dealer Solutions, LLC;6 and In re Procter & Gamble Co.7 The cases provide some clues on how the court will approach its jurisdiction to review the new PTAB appeals.
The first of the trio, St. Jude Medical, arrived at the Federal Circuit on a direct appeal from the PTAB. Litigation between the parties had commenced years earlier when St. Jude sued for patent infringement. Volcano counterclaimed with an infringement claim of its own, but after two years, the district court dismissed Volcano's claims. Six months after the dismissal, St. Jude filed an IPR petition targeting Volcano's patent. The PTAB concluded that St. Jude's petition was barred by 35 U.S.C. § 315(b), which bars such institution where "the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner . . . is served with a complaint alleging infringement of the patent." St. Jude appealed to the Federal Circuit, and Volcano and the Director of the USPTO moved to dismiss the appeal for lack of jurisdiction. The Federal Circuit granted the motion, noting that the statutory framework creates a "two-step procedure" for IPR: first, the Director's decision whether to institute a proceeding; and second, if instituted, the PTAB's "conduct" of the proceeding and its patentability decision.8 The Federal Circuit held that only the result of the second step (i.e., the final written decision of the PTAB) could be appealed because § 314(d)'s "broadly worded bar on appeal . . . may well preclude all review by any route" but "certainly bars an appeal of the noninstitution decision here."9
In re Dominion Dealer was a challenge to a PTAB non-institution decision through a different channel—a petition to the Federal Circuit for mandamus relief. The Federal Circuit has broad discretion to issue writs of mandamus pursuant to the All Writs Act10 to correct a "clear abuse of discretion or 'usurpation of judicial power.' "11 Dominion had requested an IPR of several patents that another party had asserted against it in district court. The PTAB refused to institute because Dominion's IPR petitions failed to show that it would likely prevail on at least one of the claims challenged per 35 U.S.C. § 314(a).12 Dominion sought a writ of mandamus challenging the PTAB's decision, which the Federal Circuit denied.13 Consistent with its conclusions about its appellate jurisdiction in St. Jude Medical, the court found that Dominion had not demonstrated a "clear and indisputable" right to challenge a noninstitution decision by mandamus.14
In re Procter & Gamble also arrived at the Federal Circuit as a petition for mandamus. But it involved the patent owner, The Procter and Gamble Company (P&G), challenging the PTAB's institution decision. P&G had argued against institution below because the IPR petitioner, Clio USA Inc., had already filed a declaratory judgment action against P&G, which P&G argued barred Clio under § 315(a) from filing an IPR. The PTAB disagreed, so P&G petitioned for a writ of mandamus. Following its reasoning in St. Jude Medical and In re Dominion Dealer, the Federal Circuit denied the petition, stating that it "may not hear an appeal from the Director's decision to institute an inter partes review."15
Setting aside the merits, these results are consistent with a court bracing the floodgates where it can. Had the court allowed immediate appeal or mandamus review of PTAB decisions to institute, the already large volume of PTAB appeals would have increased even more. Although it remains to be seen whether the court will review institution decisions under different circumstances,16 the Federal Circuit has thus far declined to second-guess the agency by means of extraordinary writ or otherwise.17
The vast majority of appeals from post-grant review proceedings will take a more traditional route to the Federal Circuit, as direct appeals from final written decisions.18 But even these appeals will require skilled advocacy to rise to the top and overcome the deferential review owed by the Federal Circuit to PTAB decisions. Given the intersecting laws and policies at play, PTAB appeals will require a keen understanding of appellate procedure, USPTO practice, agency review standards, appellate precedent, and the unique nature of the Federal Circuit itself.
Right from the outset, appellants wanting to distinguish their cases will need to consider which PTAB errors they should advance on appeal. In making this assessment, appellants should consider the standard of review that the Federal Circuit applies to each issue. For instance, the Federal Circuit applies the deferential "substantial evidence" test to the PTAB's anticipation and written-description determinations, which are both questions of fact.19 In contrast, the Federal Circuit reviews questions of law—including enablement, obviousness, indefiniteness, and patentable subject matter—under a de novo standard, without deference. At the same time, the PTAB's underlying factual findings with respect to obviousness and enablement are reviewed under the more deferential "substantial evidence" standard.20 Understanding these standards of review can guide appellants, both in choosing the best issues to appeal and in framing their arguments.
To be sure, sometimes the best arguments cannot be made at the Federal Circuit because they were not properly raised, preserved, or considered by the PTAB.21 But there are some limited exceptions whereby skilled litigators may salvage what may have foundered below. For example, the Federal Circuit has explained that, "[o]n judicial review, the correctness of the decision appealed from can be defended by the appellee on any ground that is supported by the record . . . ."22 Moreover, the Federal Circuit may, "where appropriate, affirm the Board on grounds other than those relied upon in rendering its decision, when upholding the Board's decision does not depend upon making a determination of fact not previously made by the Board."23
Understanding the nuances of USPTO practice and Federal Circuit law is also critical to crafting a successful argument on PTAB appeal. The law on claim construction highlights this point well. In a case arising from a district court proceeding, the Federal Circuit recently confirmed that claim construction is a question of law, reviewed de novo.24 But unlike district courts, the PTAB construes claims under a "broadest reasonable interpretation" standard in post-grant proceedings.25 At least one judge has noted that the Federal Circuit applies "two (possibly three . . .) inconsistent standards" when reviewing the PTAB's "broadest reasonable interpretation" of claim terms.26 Thus, parties should be aware of this body of precedent when urging the Federal Circuit to either affirm or replace the PTAB's claim construction.
At bottom, appellants and appellees alike need to understand the Federal Circuit itself. Unlike postgrant proceedings, which due to the nature of the proceeding and the USPTO's technical expertise27 are largely driven by factual determinations (e.g., the scope and content of the prior art), a Federal Circuit appeal requires the parties to move beyond recitation of technical arguments. The audience is an Article III court, with jurisdiction beyond patent cases. Its judges are by design generalists, coming from government, industry, private practice, academia, and trial courts. Thus, including in the PTAB record, where possible, facts for developing compelling equitable and/or policy arguments and then highlighting those facts on appeal can be important to the eventual outcome. The Federal Circuit must consider how its decision will affect not only the present parties, but future litigants as well.
Endnotes
1 Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011).
3 See http://www.cafc.uscourts.gov/the-court/statistics.html.
4 Not only direct PTAB appeals pursuant to IPRs and CBMRs (and eventual PGRs), but also appeals of CBMR stay denials in the district court allowed on an interlocutory basis under AIA § 18; appeals of so-called "legacy" inter partes reexaminations, many of which were filed just before the deadline; and appeals of original prosecution, which substantial backlog will be disposed of more quickly by the addition of Administrative Patent Judges.
5 No. 2014-1183 (Fed. Cir. Apr. 24, 2014).
6 Misc. No. 109 (Fed. Cir. Apr. 24, 2014).
7 Misc. No. 121 (Fed. Cir. Apr. 24, 2014); see also In re Trustees of the Univ. of Ill., Misc. No. 122 (Fed. Cir. May 5, 2014) (denying mandamus regarding IPR institution decision).
8 St. Jude Med., slip op. at 4-5.
9 Id. at 5.
10 28 U.S.C. § 1651(a).
11 In re Mark Indus., 751 F.2d 1219, 1222 (Fed. Cir. 1984) (citations omitted).
12 In re Dominion Dealer, slip op. at 2-3.
13 Id. at 3.
14 Id. at 4.
15 In re Procter & Gamble, slip op. at 4.
16 See, e.g., In re Procter & Gamble, slip op. at 5.
17 Cf. In re MCM Portfolio, LLC, No. 2014-104, 2014 WL 595366 (Fed. Cir. Feb. 18, 2014) (denying writ of mandamus without prejudice where MCM sought relief from institution of review on privity grounds).
18 35 U.S.C. §§ 319, 329.
19 See, e.g., In re Gartside, 203 F.3d 1305, 1315-16 (Fed. Cir. 2000).
20 See, e.g., In re NTP, Inc., 654 F.3d 1279, 1297 (Fed. Cir. 2011).
21 See, e.g., In re Watts, 354 F.3d 1362, 1367-68 (Fed. Cir. 2004) ("Just as it is important that the [US]PTO in general be barred from raising new arguments on appeal to justify or support a decision of the Board, it is important that the applicant challenging a decision not be permitted to raise arguments on appeal that were not presented to the Board." (footnote omitted)).
22 Rexnord Indus., LLC v. Kappos, 705 F.3d 1347, 1356 (Fed. Cir. 2013) (second emphasis added).
23 Killip v. Office of Pers. Mgmt., 991 F.2d 1564, 1568-69 (Fed. Cir. 1993); see also In re Skvorecz, 580 F.3d 1262, 1267 n.2 (Fed. Cir. 2009) ("Because [the USPTO's alternative claim construction argument] is a matter of law, it does not raise an issue of the Chenery doctrine, as stated in S.E.C. v. Chenery Corp., 318 U.S. 80, 87–88, 63 S.Ct. 454, 87 L.Ed. 626 (1943).").
24 Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 744 F.3d 1272, 1281 (Fed. Cir. 2014) (en banc).
25 37 C.F.R. § 42.300(b).
26 Flo Healthcare Solutions, LLC v. Kappos, 697 F.3d 1367, 1376 (Fed. Cir. 2012) (Plager, J., additional views) (noting that while review for "reasonableness" affords deference to the Board’s decision, akin to the "not arbitrary and capricious" standard of review, de novo review affords no deference).
27 See In re Watts, 354 F.3d at 1367 ("The Board is an expert body that plays an important role in reviewing the rejection of patent applications.").
Reprinted with permission from the IP Litigator, published by Aspen Law and Business. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
Webinar
September 10, 2024
Webinar
Federal Circuit IP Blog
August 16, 2024
IP Updates
August 9, 2024
Federal Circuit IP Blog
Federal Circuit Clarifies Reach of Patent Estoppel in SoftView v. Apple
August 8, 2024
Webinar
Section 102 and Prior Art: Navigating the Expanded Scope of Prior Art and AIA Exceptions
August 7, 2024
Webinar
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.