We previously reported on the Federal Circuit’s decision that neither the AIA nor the Constitution precludes the same PTAB panel from rendering both institution and final decisions in Ethicon Endo-Surgery, Inc. v. Coviden LP, No. 2014-1771 (Fed. Cir. 2016). Last week, in a 10-1 decision, the Federal Circuit denied Ethicon’s petition for rehearing en banc.
The petition was denied without comment by the majority, providing no response to the amici briefs filed by the Biotechnology Industry Organization and Pharmaceutical Research and Manufacturers of America, industry representatives including Eli Lilly & Company and Bristol-Myers Squibb Company, and eleven law school professors, all of which raised due process concerns regarding the current design of IPR proceedings .
Judge Newman dissented, reiterating her view that institution and adjudication are two discrete steps in IPR procedure, which the statute assigns to separate bodies within the USPTO.
“Ignoring the statutory division of responsibility is contrary to the plain text and carefully designed structure of the America Invents Act, and imperils the public confidence in the fairness and correctness of these proceedings.”
While acknowledging that the Director may delegate some duties and exercise procedural rulemaking authority, Judge Newman maintained that the USPTO may not ignore the explicit statutory provisions and congressional intent to separate the authority for institution and final decisions. According to Judge Newman, Congress incorporated safeguards against delay at the USPTO, harassment of patentees, and violation of due process in AIA proceedings; charging the Director (not the PTAB panel) with institution decisions was one such safeguard. In this regard, Judge Newman explained: “This initial step permits the Director to reject a petition that is cumulative, harassing, anti-competitive, or non-meritorious; it also permits the Director to decline to institute if the resources of the Office are overburdened.” The purpose of the PTAB trial is to then finally determine the validity of challenged claims, free of taint of the institution decision. The independence of the two decision-makers “is crucial to achieving the statutory purpose” in Judge Newman’s view.
Perhaps most interesting is the dissent’s reference to PTAB statistics. According to Judge Newman, the bifurcated design of IPR proceedings ensures that “the threshold decision to institute neither pre-ordains or prejudices the later decision on the merits.” PTAB statistics “do not bode confidence” that the trial phase is free of prejudice from the institution decision, where the Board has “found patentability” in only 9% of instituted IPRs and has invalidated 82.5% of challenged claims (citing PTAB Statistics, at 10 (April 30, 2016)). Judge Newman concluded her dissent by suggesting that consolidating decision-making authority in a PTAB panel not only violates statutory text and purpose, but has “devastating consequences for the public confidence in post-grant proceedings and the patent system as a whole.”
We previously reported on the USPTO’s proposed pilot program wherein a single APJ would decide whether to institute IPR, and two additional APJs would be assigned to complete the panel to render a final decision. After considering comments from the public about the proposal, the USPTO decided not to proceed with the program.