Due to the increasing popularity of post-grant proceedings (such as inter partesreview, covered business method patent review, and post grant review)1 as tools for defendants in patent cases and the significant impact of a successfulinter partes review, it is critical that litigants and their counsel become familiar with the potential risks inherent in an IPR. This article discusses one of those risks - the risk of a negative institution decision that is practically unreviewable.

A Federal Circuit panel is presently considering the question of whether decisions to institute, or not institute, an inter partes review are reviewable.2 At issue is 35 U.S.C. § 314(d), which provides:

(d) NO APPEAL.--The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

While the statutory language concerning review of those decisions may seem clear at first glance, the provision has already received significant attention from the Federal Circuit. This article will (1) briefly review the relevant Federal Circuit decisions surrounding this issue, (2) review the arguments presented in the pending In re Cuozzo Speed Technologies appeal, and (3) discuss potential strategic implications of unreviewable institution decisions for both patent owners and challengers.

Relevant Federal Circuit Decisions

Federal Circuit panels have routinely denied requests seeking review of inter partes review institution decisions. For example, in St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp., St. Jude filed an appeal of the PTO’s decision denying St. Jude’s petition for inter partes review.3 The court dismissed the appeal, finding that it did not have jurisdiction to entertain an appeal of a decision not to grant a petition for inter partes review and noting that (a) the decision is not a “final written decision of the Board,” (b) appeal of the decision is barred by the “broadly worded bar” of Section 314(d), and (c) the court’s jurisdictional statute, read in light of the inter partes review statutes, does not reach a decision not to grant an inter partes review.4 Similarly, the court has also held that a decision denying an inter partes review cannot be challenged through a writ of mandamus.5

The court has also held that a patent owner cannot challenge a decision granting an inter partes review through mandamus.6 In Proctor & Gamble, the court noted that the analysis in St. Jude and Dominion “applies equally to the Director’s decision to institute” an inter partes review. Id. The court did, however, leave open the possibility of challenging a decision to institute an inter partes review when appealing a final decision on the merits.7

Pending Appeal to Federal Circuit: In re Cuozzo

In the pending In re Cuozzo appeal, the issue of appealability of a decision on institution was fully briefed by Cuozzo (the patent holder) and the PTO, an intervenor. On November 3, 2014, a Federal Circuit panel including Judge Newman, Judge Dyk, and Judge Clevenger held oral argument for this appeal. Below are relevant highlights of those arguments.

In its opening brief, Cuozzo likened the PTAB’s decision on institution of aninter partes review to an issue of subject matter jurisdiction, which a “federal appellate court must review,” “even if such issues were not raised in the lower court proceeding.”8 Cuozzo then argued that the language of 314(d) did not suggest that Congress intended to prevent judicial review of institution, noting the statutory mandate of one year after institution for the PTAB to issue a final decision. The purpose of 314(d), Cuozzo argued, was to prevent “immediate Federal Circuit review at the outset of the proceeding” rather than to give the PTAB “unchecked, unreviewable discretion” in this area.9

The PTO responded that, given the statutory scheme for inter partes review, “Congress could hardly have expressed more clearly its intent to foreclose after-the-fact relitigation of the USPTO’s decision to institute an inter partesreview.”10 The PTO also argued that analogous precedent involving decisions to institute reexamination proceedings undermine Cuozzo’s arguments, citing toIn re Hiniker.11 In Hiniker, which was an appeal from a completed ex parte reexamination, the court noted:

Section 303, the provision that Hiniker argues was violated here, is directed toward the Commissioner's authority to institute a reexamination, and there is no provision granting us direct review of that decision. Any error in that decision was washed clean during the reexamination proceeding.

Id. at 1367.

In its reply brief, Cuozzo argued that a proper interpretation of Section 314(d) only precludes review of the PTAB’s “discretionary determination that there is a reasonable likelihood that the petitioner will prevail” because 314(d)’s reference to “this section” is limited to the discretion given to the Director in portions of Section 314.12 Cuozzo also listed a number of “non-discretionary threshold jurisdictional requirements” to which it contends 314(d) does not apply:

  • the petition must be filed by a person who is not the patent owner;13
  • the grounds of unpatentability must be limited to 35 U.S.C. § 102 or 103 and only based on patents or printed publications;14
  • the petition must be filed after the later of 9 months after the patent is granted and after a post-grant review under 35 U.S.C. § 321 et seq. is terminated;15
  • the petition must contain all of the statutory requirements in 35 U.S.C. § 312(a)
  • the PTAB’s institution decision must be limited to the information presented in the petition;16
  • the petitioner or real party in interest cannot have filed a civil action challenging the validity of a claim of the patent;17
  • the petitioner, real party in interest or privy of the petitioner cannot have been served with a complaint alleging infringement of the patent more than 1 year before the date on which the petition is filed;18 and
  • the petitioner, real party in interest or privy of the petitioner did not previously file an IPR petition challenging the patent and a final written decision was issued.19

Cuozzo then provided an example of a clear ultra-vires act (if the PTAB decided to institute an IPR as to grounds of unpatentability under 35 U.S.C. § 101, in contravention of 35 U.S.C. § 311(b)) that would, under the PTO’s interpretation of 314(d), be completely unreviewable.

At oral argument, Judge Dyk asked counsel for Cuozzo about the court’s decision in St. Jude, implying that the decision in St. Jude may have barred appeals on institution decisions.20 Counsel responded that the present case is an appeal of the final decision by the PTAB that includes errors made in deciding whether to institute the review rather than an appeal of the institution decision itself as in St. Jude.21 He further explained that a final decision by the PTAB includes the non-discretionary requirements of the inter partes review statutes as well as merits-related issues such as anticipation or obviousness.22

Judges Dyk and Clevenger questioned the PTO Solicitor about how much the PTO could disregard the inter partes review statutes in instituting an IPR while still not being subject to appeal or review.23 The Solicitor responded that jurisdiction on appeal is limited to the merits of the decision on patentability, only conceding that review may be appropriate where there is a Constitutional issue.24 On rebuttal, Cuozzo’s counsel pointed out the inconsistency of the PTO’s position that a final decision is limited to patentability with the PTO’s admission that rulings on motion to amend, some of which are denied on purely procedural grounds, are included in the final decision and subject to appeal.25

Strategic Implications of Non-Reviewable Institution Decisions

The Federal Circuit’s ultimate decision in Cuozzo on whether any review is available for institution decisions will clearly have significant implications on practice in inter partes review proceedings. Even prior to that decision, however, there are strategic implications related to the reviewability of institution decisions that should be considered.

Because institution decisions by the PTO are not immediately reviewable, both patent owners and third party requesters have incentives to ensure that the PTO has all of the information required to rule in their favor. For example, once a decision to institute an inter partes review is made, a patent owner has to go through the entire inter partes review before being able to challenge that decision. Along the same lines, if a request for an inter partes review is improperly denied, then the requester has no way to challenge the denial.

To offset these risks, parties requesting an inter partes review should be extremely careful in ensuring that they have provided sufficient rationale and evidence (consistent with the most recent precedent from the PTAB and the Federal Circuit) for instituting an inter partes review in their request. For example, requesters should present all available arguments and evidence supporting their request for an IPR, especially those related to the non-discretionary factors listed above. Patent owners should also exercise care in deciding whether to file an initial response to a request for inter partes review and in deciding how detailed to make that response. For example, if a patent owner has a defense to institution of an IPR based on the requester (or a real party in interest) having previously “filed a civil action challenging the validity of a claim of the patent” per 35 U.S.C. § 315(a)(1), it would be wise to not only provide sufficient argument and evidence establishing the filing of a civil action but to also anticipate and proactively address all potential arguments against that evidence in its responsive filing.