In Ethicon Endo-Surgery, Inc. v. Covidien LP, a majority Federal Circuit held that neither the relevant statute nor the Constitution precludes the same Patent Trial and Appeal Board panel (“Board”) from making a decision to institute an inter partes review and from also making the final determination on the validity of the claims at issue.1

Covidien filed a petition with the U.S. Patent and Trademark Office on March 25, 2013, requesting inter partes review of claims 1–14 of U.S. patent number 8,317,070 (“the ‘070 patent”) on the ground that the claims would have been obvious over the prior art. The Board granted the petition on August 26, 2013.2 In a June 9, 2014, final decision, the same panel of the Board that instituted the inter partes review rejected all of Ethicon’s arguments and found all of the challenged claims of the ’070 patent obvious under 35 U.S.C. § 103.3

Ethicon did not challenge the institution decision, but rather alleged a defect in the final decision. It argued that the final decision was invalid because it was made by the same panel that instituted inter partes review. According to Ethicon, having the same panel make the decision to institute and then later decide the merits of the inter partes review raises “serious due process concerns.”4

The Federal Circuit in confirming that it had jurisdiction, cited its recent holding in In re Cuozzo Speed Techs.5 According to the Federal Circuit, Section 314(d) provides that “[t]he determination by the Director whether to institute an inter partes review shall be final and nonappealable. Section 314(d) here plainly ‘prohibits review of the decision to institute [inter partes review] even after a final decision.’ It does not, however, preclude review of the final decision.”6

Turning to the merits, the Federal Circuit, citing several precedential cases from multiple courts including the U.S. Supreme Court, determined that there was no due process or statutory concerns in combining the functions of initial decision and final disposition in the same Board panel. According to the majority, “the inter partes review procedure is directly analogous to a district court determining whether there is “a likelihood of success on the merits” and then later deciding the merits of a case.7

The majority also disagreed with Ethicon’s argument that because Congress (1) specifically gave the Director the power to institute, (2) did not explicitly give the Director authority to delegate the institution decision to the Board, and (3) gave the Board the power to make the final determination, Congress intended to keep the functions of institution and final decision separate. According to the majority,

there is nothing in the statute or legislative history of the statute indicating a concern with separating the functions of initiation and final decision. Ethicon ignores the longstanding rule that agency heads have implied authority to delegate to officials within the agency, even without explicit statutory authority and even when agency officials have other statutory duties. Congress regularly gives heads of agencies more tasks than a single person could ever accomplish, necessarily assuming that the head of the agency will delegate the task to a subordinate officer.8

Judge Newman, dissenting, disagreed with the majority’s statement that “there is nothing in the Constitution or the statute that precludes the same Board panel from making the decision to institute and then rendering the final opinion.”9 Judge Newman believed that the statute requires that the proceedings be separated, the first decision required to be made by the Director, and the second decision made by the Board. According to Judge Newman,

the threshold determination to institute post-grant review requires the Director to find that there is more likely-than-not an error in the grant of at least one claim of the patent. When such finding is made by the Director, the newly created independent tribunal in the PTO conducts a full trial, with discovery, testimony, experts, and other trappings of district court litigation. This trial, and the ensuing Board decision, are independent of and give no deference to the Director’s decision “to institute” the proceeding.10