In TriVascular, Inc. v. Samuels, Appeal No. 2015-1631 (Fed. Cir. Feb. 5, 2016), a unanimous Federal Circuit panel affirmed a PTAB final written decision that concluded the petitioner (TriVascular) did not meet its burden of demonstrating the challenged claims were unpatentable during inter partes review. TriVascular successfully petitioned the Board to institute the review after the patent owner (Samuels) accused TriVascular of infringing the same patent in a California federal court. TriVascular’s short-lived success, however, was tempered by the Board’s claim construction in the institution decision that differed from the construction TriVascular sought in its petition. That construction might have foreshadowed the adverse final written decision TriVascular ultimately received. And, in any event, TriVascular is now estopped from attacking the patent in litigation based on the printed prior art of the instituted grounds.
The court found no reversible error in the Board’s claim construction or in its determination that TriVascular did not satisfy its burden of proving the challenged claims are obvious. Those aspects of the court’s decision are largely unremarkable. But the court offered interesting commentary on TriVascular’s contention that the Board’s final written decision is inconsistent with its institution decision. In instituting review, the Board necessarily found that TriVascular had “initially demonstrated a reasonable expectation of success in demonstrating obviousness.” TriVascular unsuccessfully argued to the court that this same panel of “the Board should not have changed its view of the patent’s validity without clearly explaining why it had done so.” (See our previous post on the propriety of the same panel rendering the institution and final written decisions at this link.)
The court explained that the Board is not bound by its institution decision findings:
[T]he Board is not bound by any findings made in its Institution Decision. At that point, the Board is considering the matter preliminarily without the benefit of a full record. The Board is free to change its view of the merits after further development of the record, and should do so if convinced its initial inclinations were wrong. To conclude otherwise would collapse these two very different analyses into one, which we decline to do. If those determinations were somehow binding with respect to the Board’s final decision, as TriVascular urges, the patentee’s appeal rights as to that second determination would be close to illusory.
Slip Op. at 18-19. The court emphasized that there is “a significant difference between a petitioner’s burden to establish a ‘reasonable likelihood of success’ at institution, and actually proving invalidity by a preponderance of the evidence at trial.” Id.; compare 35 U.S.C. § 314(a) (standard for institution of inter partes review), with 35 U.S.C. § 316(e) (burden of proving invalidity during inter partes review).That explanation, as benign as it may seem, is an important caution to putative petitioners that have been charged with infringement in a district court action. The Board’s decision to institute a trial, while a victory in some sense, certainly does not ensure the petitioner will prevail. Here, the petitioner could (and did) satisfy its burden to establish a “reasonable likelihood of success” at institution. But the petitioner was unable to prove invalidity by a preponderance of the evidence at trial. According to recently published Patent Office data, 96 of 732 final written inter partes review decisions concluded that none of the challenged claims were unpatentable, despite having earlier found that the petitioners had a reasonable likelihood of succeeding.
Blinded, perhaps, by the hopeful light of an institution decision, a petitioner could be led to a potentially disastrous fate. Petitioners should consider objectively reevaluating the prospects of prevailing following a seemingly favorable decision instituting trial. Further, petitioners involved in parallel litigation should further evaluate the merits of moving to terminate the Board proceeding quickly after the institution decision if, for example, the Board’s initial claim construction will make prevailing much more difficult than anticipated. Termination without a final written decision does not result in an estoppel. Despite the higher burden of proof, the petitioner might be better off challenging validity in a court where it may have more expansive opportunities to favorably shape the claim construction.