On April 24 2018, in a five-to-four decision in SAS Institute Inc v Iancu, the Supreme Court held that when the US Patent and Trademark Office (USPTO) institutes an inter partes review it must decide the patentability of all of the claims challenged by the petitioner, based on the plain text of 35 USC Section 318(a).

Facts

SAS filed a petition seeking inter partes review of all 16 claims of ComplementSoft's software patent. The USPTO concluded that SAS was likely to succeed in showing that at least some of those claims were unpatentable. Pursuant to its 'partial institution' practice as set out in USPTO Regulation 37 CFR Section 42.108(a) (purporting to authorise "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"), the USPTO instituted review on some, but not all, of the 16 claims. Consequently, the USPTO's final written decision addressed the patentability of only some of the claims challenged in SAS's petition.

Decision

The court found no basis in the statutory text or framework for the USPTO's partial institution practice. Section 318(a) of the statute states that:

"[i]f an inter partes review is instituted and not dismissed… the [USPTO] shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner."

The court found that 'shall' meant that the USPTO must address all claims challenged by the petitioner, and that 'any' patent claim meant every patent claim. Reasoning that inter partes review is supposed to mimic civil litigation, the court concluded that the scope of review was defined by the petitioner's petition, not by the USPTO's discretion. Although Section 314(a) of the statute allows the USPTO discretion in whether to institute review, the court explained that this decision was "a binary choice – either institute review or don't"; "it doesn't follow that the statute affords [the USPTO] discretion regarding what claims that review will encompass".

Thus, the court's decision abrogates the first part of 37 CFR Section 42.108(a). Under the court's ruling, a final written decision must address every challenged claim. Consequently, the final written decision with respect to every challenged claim is subject to appeal to the Federal Circuit. Previously, as a practical consequence of partial institution, a petitioner would not have been able to seek review of the patentability of challenged but non-instituted claims because:

  • they would not have been addressed in the final written decision; and
  • the court's Cuozzo decision would have prevented the appeal of the non-institution decision on patentability grounds.

Although the court did not discuss whether the second part of Section 42.108(a) was still in effect, the USPTO has since decided as a matter of policy to institute on all grounds raised by petitioner. Nor did the court discuss the effect – if any – of its decision on inter partes review estoppel attaching to final written decisions.

Chevron deference

An undercurrent in the case was the issue of Chevron deference – specifically, whether the court would accept SAS's invitation to abandon the judicial practice of deferring to an agency's interpretation of ambiguous statutory language. Having found that the statutory text here was plain and unambiguous, the court concluded that it did not owe Chevron deference to the USPTO's interpretation and left open the question of whether Chevron deference should remain. The dissenting judges would have found the statute ambiguous and would, under Chevron, have found the USPTO's regulation to be a reasonable interpretation which promoted the policy of efficient, streamlined review.

In any event, the majority quickly dispensed with the USPTO's policy argument, explaining that this was an argument properly addressed to Congress, not the court. The USPTO "may (today) think [its] approach makes for better policy", but the court explained that a policy argument cannot create ambiguity when the statute's text is clear. Thus, it is up to Congress to change the statute if it favours the USPTO's approach.

For further information on this topic please contact Douglas Sharrott or Shannon K Clark at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email (dsharrott@fchs.com or skclark@fchs.com). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.

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