In BioDelivery Sciences International v. Aquestive Therapeutics, Inc., the Federal Circuit recently denied a petition for a rehearing en banc after the Patent Trial and Appeal Board (“PTAB” or “the Board”) interpreted its remand order to “implement the [Supreme] Court’s decision in [SAS Institute v. Iancu]” by modifying its institution decision, denying the inter partes review petitions, and terminating the proceedings. In doing so, the Federal Circuit effectively agreed with the PTAB that a SAS remand of a partial institution of an IPR does not require the PTAB to subsequently institute on all grounds.
Petitioner BioDelivery challenged 22 claims of Aquestive’s U.S. Patent No. 8,765,167 on several grounds of anticipation and obviousness. In May of 2015, the PTAB instituted IPR on only one of the seven grounds presented by the petitioner. After briefing and argument, the PTAB ruled in its final written decision that all challenged claims were valid. BioDelivery appealed to the Federal Circuit; and during the appeal process, the Supreme Court issued its decision in SAS Institute, ruling that a “petitioner is entitled to a decision on all the claims it has challenged.” 138 S. Ct. 1348 (2018). Thus, the Federal Circuit remanded back to the PTAB, ordering it to comply with SAS. The PTAB responded by denying institution of the IPR petitions entirely, reasoning that reviewing all of the claims and ground would be inefficient and expensive when the overwhelming majority of the grounds raised by the petitioner failed to meet the standard for institution of IPR. BioDelivery Sci. Int’l v. Aquestive Therapeutics, Case No. IPR2015-00165, Paper No. 91 (PTAB Feb. 7, 2019). In doing so, the PTAB rejected arguments from Aquestive that its decision was contrary to the requirements of Section 314 of the Patent Act. Noting that its decision was based solely on the information presented in the petition, it found no conflict with the requirements of § 314(a), and it equally succinctly dismissed § 314(d) non-appealability provision by qualifying the current decision as a reconsideration, not an appeal. The Board cited other cases in which it has changed its determination of institution outside the three-month period set out under § 314(b), and pointed to language in §318(a) as express contemplation that a proceeding can be “dismissed” after institution. Finally, it rejected arguments that reversing its original decision was contrary to guidance, policy, practice, or the Federal Circuit’s remand order. The Board stated that the order simply required the PTAB to make a yes-or-no institution choice regarding the petition.
When Aquestive appealed, a panel of Federal Circuit judges granted a motion to dismiss on the basis that § 314(d) clearly barred judicial review of institution decisions. 935 F.3d 1362, 1366 (Fed. Cir. 2019). Rather than finding that the SAS remand required institution of all the grounds brought forth by the petition, it agreed with the PTAB that the case required either an institution on all grounds, or no institution at all. Id. at 1365 (citing SAS, 138 S. Ct. at 1355). It further agreed that while the Director of the USPTO may be limited in his power to institute review by the institution threshold of § 314(a), he has full discretion to deny review even when that threshold is met. Thus, the court concluded that the PTAB corrected its decision on remand by denying institution, noting that nothing in its remand order divested the PTAB from its discretion.
Aquestive then requested that the panel decision be reheard en banc, which was denied. 946 F.3d 1382 (Fed. Cir. 2020). Judge Newman issued a lone dissenting opinion arguing that the PTAB’s dismissal was a direct disregard of the court’s order; that the Patent Act acknowledges that the Federal Circuit’s orders shall govern further proceedings in the PTAB; and that the PTAB’s action and the court’s ratification runs contrary to constitutional judicial authority, administrative law, and the America Invents Act. She explained that the remand order did not direct the PTAB to reconsider its institution decision, but to review the additional claims and grounds. She thus concluded that the PTAB failed to comply when it dismissed the IPR. She continued that the PTAB was aware of how to properly proceed following the decision in SAS Institute because it issued guidance on how to do so, and it failed to follow its own guidance. She concluded by summarizing that judicial authority and written law require agencies to follow judicial remands and orders.
Newman’s strongly worded dissent aside, the PTAB’s decision to terminate the IPR proceedings stands. This decision suggests that a SAS remand does not strip the PTAB of its discretion to institute review. A prior PTAB decision instituting review on one ground will not serve as an anchor, forcing the PTAB to institute on all other grounds. When a petitioner presents weak grounds for review, even if some of the grounds meet the reasonable likelihood standard, the PTAB has authority to deny institution on an efficiency basis. Going forward, a petitioner should take care to avoid overreaching on claims and grounds, as it may risk the opportunity to invalidate any claims at all.