In Ethicon Endo-Surgery, Inc. v. Covidien LP, a split Federal Circuit panel held that having the same PTAB panel that instituted an inter partes review also decide its merits does not violate the AIA or the Constitution. No. 2014-1771 (Fed. Cir. January 13, 2016). Ethicon, appealing the invalidation of a patent directed to surgical stapling devices, argued on appeal that this practice raised due process concerns and contravened the AIA’s assignment of those functions.

As a preliminary matter, the majority held that 35 U.S.C. § 314(d) did not bar consideration of the issue. The Court held that Section 314(d) only bars appellate review of institution decisions and that Ethicon’s challenge was to the PTAB’s authority to make a final decision.

Ethicon argued that having the same panel institute the IPR and issue the final decision biased the panel against the patent on a limited record and deprived the patent holder of their due process rights to an impartial decision maker. The majority disagreed, and analogized the IPR procedure to a district court first determining the likelihood of success on the merits, and later the merits of the case.

Ethicon also argued that the AIA’s text and history reflect an intent to withhold from the Director the power to delegate institution decisions to the PTAB. The majority disagreed, finding such delegation within the implied authority of agency heads and also permitted under the AIA’s grant of rulemaking powers to the Director.

Thus, the majority concluded that “[t]here is nothing in the Constitution or the statute that precludes the same Board panel from making the decision to institute and then rendering the final decision.”

Turning to the merits, the majority affirmed the obviousness determination.

In dissent, Judge Newman argued that the AIA requires separation of the institution and trial phases of inter partes review, with the first being explicitly assigned to the Director and the second to the PTAB. According to Judge Newman, it would be proper for the Director to delegate institution to examiners or solicitors, but not to the PTAB.