When a patent owner attempts to resolve an IPR validity challenge at the patent office by disclaiming or cancelling some of its patent claims either before or after institution of IPR proceedings, the patent office may enter an adverse judgment that precludes the patent owner from obtainingclaims that are not patentably distinct from the disclaimed or cancelled claims.


Petitioners Smith & Nephew Inc. and Arthrocare Corp. filed an IPR petition in the U.S. Patent and Trademark Office, challenging the validity of certain claims of one of Arthrex’s patents.

In response, Arthrex disclaimed the challenged patent claims and argued that an IPR proceeding should not be instituted on disclaimed claims.

Arthrex tried to minimize the impact of this disclaimer by stating that it was not requesting an adverse judgment by filing its disclaimer. However, the patent office rules state that ”[c]anellation or disclaimer of a claim such that the party has no remaining claim in the trial” is considered a request for an adverse judgment. 37 C.F.R. §42.73(b).

As a result, the Patent Office Board disagreed with Arthrex’s position and entered an adverse judgement against Arthrex, precluding Arthrex “from taking action inconsistent with the adverse judgment, including obtaining in any patent . . . [a] claim that is not patentably distinct from a finally refused or canceled claim.” The resulting estoppel affected Arthrex’s two continuation patent applications, which were pending at the time and subsequently issued as patents, as well as a recently filed continuation application.

Arthrex appealed and the petitioners moved to dismiss, arguing the Patent Office Board had not issued a final written decision and thus, there was no appellate subject matter jurisdiction.

The Federal Circuit denied the motion to dismiss and heard two issues on appeal: 1) whether an adverse judgment is a final appealable judgment and 2) whether the board properly entered adverse judgment pursuant to 37 C.F.R. §42.73(b).

Regarding the issue of appealability, the Federal Circuit found that the Patent Office Board’s entry of an adverse judgment was a final and appealable decision because it terminated the IPR proceeding at the U.S. Patent and Trademark Office. The Federal Circuit has jurisdiction over an appeal from “a decision” of the Board “with respect to” IPRs under 28 U.S.C. §1295, so the Board’s decision to enter adverse judgment was a decision with respect to the IPR of the patent at issue and was also a final decision because it terminated the IPR proceeding. A prior decision of the Federal Circuit finding that non-institution decisions are not appealable did not squarely address the issue in this case and therefore was not persuasive in the outcome in this case.

As to the issue of judgment entry, Arthrex did not contend the PTO does not have the authority to adopt a regulation providing for estoppel on cancellation of claims. Therefore, the Federal Circuit left that question for another day, answering solely the question of whether the Board properly entered an adverse judgment under 37 C.F.R. §42.73(b).

Relying on the language of the rule, which gives the Board the authority to construe a patent owner’s action as a request for an adverse judgment, the Federal Circuit rejected Arthrex’s argument that the regulation was not applicable because it specifically stated it did not request an adverse judgment.

Arthrex then relied on the language of the rule that refers to cancellation of claims “in the trial,” to argue the rule should only apply if an IPR proceeding has been instituted. The Federal Circuit rejected that argument as well, explaining that the PTO rules defined proceedings as a trial or a preliminary proceeding, which begins with the filing of a petition.

Thus, the court found the Patent Office Board properly entered an adverse judgement here, where the patent owner cancels all claims after an IPR petition was filed but before an institution decision.

Strategy and Conclusion

While a patent owner may disclaim or cancel claims to resolve an IPR petition or proceeding, such an action may result in an adverse judgment impactingpending applications or potential future patent application with claims that are not patentably distinct from the disclaimed or cancelled claims, and preventing such claims from being prosecuted or asserted.