Estoppel May Apply After Pre-Institution Disclaimer of Challenged Claims in an IPR Proceeding

During the early stages of an IPR proceeding initiated by Smith & Nephew, patent owner Arthrex disclaimed all patent claims challenged in the petition.  Arthrex then filed a preliminary response contending that institution should be denied due to the disclaimer.  To avoid the estoppel effects of 37 C.F.R. § 42.73(d), Arthrex also argued that an adverse judgment should not be entered.  The PTAB, however, issued an adverse judgment against Arthrex, and the Federal Circuit affirmed.

Although the patent owner attempted to avoid the adverse judgment in its preliminary response, the Federal Circuit confirmed that § 42.73(b) permits the PTAB to interpret a disclaimer as a request for adverse judgment.  As a result, the estoppel of § 42.73(d)(3)(i) attached.

Judge Newman dissented from this holding because § 42.73(b) requires that a disclaimer “such that the party has no remaining claim in the trial” be construed as a request for adverse judgment.  Because no trial was instituted, Judge Newman believed that issuing an adverse judgment failed to comply with this rule.

The Federal Circuit also confirmed that a pre-institution adverse judgment is appealable under 35 U.S.C. § 1295.  While § 319 only provides for review from a “final written decision” and § 314(d) prohibits appeals of institution decisions, the court found that neither statute precluded appellate review.  Because an adverse judgment is a final decision disposing of an IPR proceeding, the patent owner has a statutory right of appeal under § 1295(a)(4)(A).