On February 10, 2016, the Federal Circuit issued an opinion in Synopsys, Inc. v. Mentor Graphics Corp.1 This decision is important because it addresses whether the Patent Trial and Appeal Board (“Board”) is required by statute to address every claim raised in a petition for post grant proceeding, including inter partes review (“IPR”), in the Board’s final decision.2

Background

There are two stages to an IPR.  The first stage requires the Board to review the petition and, if filed, the patent owner’s preliminary response.3  If the Board institutes a review, then the second stage requires the Board to conduct a review and issue a final decision regarding “any patent claim challenged by the petitioner.”4

On September 26, 2012, Synopsys filed a petition for IPR challenging twenty-nine claims of Mentor Graphics patent, U.S. Patent No. 6,240,376, as being anticipated or obvious in light of certain prior art references.5  The Board instituted review on twelve of the twenty-nine challenged claims based solely on anticipation and ultimately issued a decision finding three claims anticipated and nine claims not anticipated.6  Synopsys appealed the decision in part on the basis that the Board failed to issue a final decision addressing the patentability of all twenty-nine claims raised in its petition, including the seventeen claims the Board refused to grant review.7

Majority Opinion

On appeal, Synopsys argued that the Board must issue a final decision addressing all claims raised in the petition because § 318(a) of the America Invents Act (“AIA”) instructs the Board to issue a final written decision regarding “any patent claim challenged by the petitioner.”8  The court dismissed this argument finding that § 318(a) “only requires the Board to address claims as to which review was granted.”9  In reaching this finding, the court first explained that Congress uses different language in regards to the claims in § 314(a) and § 318(a), which indicates that two different meanings should be ascribed to each section.10  Specifically, § 314(a) states that an IPR may not be instituted unless “the information presented in the petition . . . and any response filed . . . shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”11  Section 318(a), however, states that the Board must issue a final decision regarding any “claim challenged by the petitioner.”12  The court also noted that § 318(a) includes conditional language, such as “[i]f an inter partes review is instituted,” which suggests that the “claim[s] challenged by the petitioner”13 are the claims upon which an IPR was instituted and not all the claims challenged in the petition.14

Additionally, the court explained that the Board issues a final decision based on a full record, including arguments, discovery, affidavits, and expert declarations, which the Board would not have with respect to the claims upon which review was not instituted.15  Thus, it would make little sense if § 318(a) required the Board to address every claim included in the petition in its final decision if IPR was instituted on only some of the claims.16

The court further cited § 314(a) of the statute to support its conclusion that the Board can institute review on a claim-by-claim basis to determine if “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”17  The court concluded that this statutory language clearly suggests that the Board can pick and choose claims upon which to institute review because at least one of the claims must satisfy the threshold standard before the Board can institute a review.18

Finally, although the court noted that the statutory language is clear, it also looked to regulations promulgated by the Patent and Trademark Office (“PTO”).  Specifically, § 42.108(a) of the regulations “authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim.”19  The court rejected Synopsys’s argument that the regulation is invalid for two reasons.  First, the court noted that the PTO is authorized by statute to promulgate regulations “setting forth the standards for the showing of sufficient grounds to institute”20 an IPR.21  Second, the court found that under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,22 § 42.108 of the regulations is a reasonable interpretation of the statutory provision regarding the institution of an IPR.23  Thus, under the court’s decision, the Board is only required to address the claims upon which an IPR was instituted.24

Judge Newman’s Dissent

Judge Newman addressed the majority panel’s holding that the Board may institute review on a claim-by-claim basis by first discussing § 318(a) of the AIA and § 42.108(a) of the regulations.  Specifically, § 318(a) of the AIA states that the Board “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”25  Judge Newman focused on the term “shall,” noting that it is a commanding term that requires the Board to address every claim raised in a petition for IPR.26  Judge Newman then noted that § 318(a) of the AIA is negated by § 42.108(a) of the regulations because § 42.108(a) grants the Board the authority to institute an IPR on “all or some of the challenged claims.”27  Judge Newman noted that “[a] statutory requirement cannot be overridden by agency rule.”28

Judge Newman then criticized the majority’s invocation of Chevron, concluding that Chevrondeference does not apply in this instance because it “applies to statutory implementation in fidelity to the statute—not statutory departure from the legislative plan.”29  In support of this conclusion, Judge Newman noted that the purpose of the AIA is to reduce costs and delay.30  According to Judge Newman, this purpose is frustrated when the Board institutes review on a claim-by-claim basis because the claims upon which institution was not granted must then be decided in district court, which leads to “duplicative proceedings” before the Board and the district court and increased costs and delay.31  Thus, according to Judge Newman, the Board’s procedure of instituting review on a claim-by-claim basis departs from the legislative plan.

Finally, Judge Newman reiterated her concern that the majority decision ignored the purpose of the AIA by finding that it too readily dismissed a vast legislative record.32  Judge Newman focused on a number of congressional records that described post-grant reviews, including IPRs, as a cost-efficient and viable alternative to district court litigation.33  Based on these congressional records, Judge Newman concluded that the majority opinion “is inconsistent with the entirety of the America Invents Act.”34

Conclusion

The court decided Synopsys, Inc. by a 2-1 split panel, so Synopsys may still petition to have the decision heard before the Federal Circuit en banc.  Until then, the majority panel’s holding that the Board is only required to address the claims upon which an IPR was instituted still rules the day.