Confirming that the same panel of judges at the Patent Trial and Appeal Board (PTAB or Board) has the authority to institute America Invents Act (AIA) reviews and make a final determination on the merits, the US Court of Appeals for the Federal Circuit denied the patent owner’s petition to rehear the issue en banc. Ethicon Endo-Surgery, Inc. v. Covidien LP, Case No. 14-1771 (Fed. Cir., June 22, 2016) (Newman, J, dissenting).
Ethicon Endo-Surgery owns a patent for a surgical stapler. Covidien challenged claims of the patent in an inter partes review (IPR) as being obvious over certain prior art. A three-member PTAB panel decided to institute the IPR, and that same panel later issued a final written decision finding the challenged claims invalid for obviousness. The patent owner appealed, challenging the authority of the same panel to both institute and try the case to a final written decision. On appeal, the Federal Circuit affirmed that the AIA permits the same PTAB panel to render both the institution and final decisions (IP Update, Vol. 19, No. 2). Ethicon sought en banc review, and the Federal Circuit has now denied the petition without comment.
Judge Newman dissented, stating that the plain text of the AIA expressly divides IPR into two distinct phases, to be heard by two distinct entities. First the director makes a threshold institution determination. Then the PTAB conducts a merits trial. Judge Newman noted that independence of the two decision-makers “is crucial to achieving the statutory purpose” and protecting patentees by ensuring that the threshold decision to institute does not pre-ordain or prejudice the later decision on the merits. She also cited practitioners who have criticized the practice of allowing the same PTAB panel to both institute and make a final decision on the merits because of the potential bias against the patent owner. Newman concluded by voicing her concern that the US Patent and Trademark Office’s practice of assigning the same PTAB panel to both institute and conduct a merits trial “is not only contrary to the statute, but has devastating consequences for the public confidence in post-grant proceedings and the patent system as a whole.”