The US Court of Appeals for the Federal Circuit concluded that, post-SAS, it possessed jurisdiction to hear an appeal from an inter partes review (IPR) even where the Patent Trial and Appeal Board (PTAB) erred in limiting its institution decision to less than all the challenged claims and grounds. PGS Geophysical AS v. Iancu, Case Nos. 16-2470; -2472; -2474 (Fed. Cir., June 7, 2018) (Taranto, J).

PGS Geophysical is the patent owner of methods and systems directed toward marine seismic surveying. A competitor filed three separate IPRs against PGS’s patent. The PTAB instituted all three petitions, but only for some of the claims and not on all asserted grounds. PGS initially appealed the findings of the PTAB’s final written decisions (FWDs) as to obviousness, but during the pendency of the appeal, the parties settled. Director Iancu intervened to defend the PTAB’s decisions, however.

The Federal Circuit explained that under SAS Institute, Inc. v. Iancu (IP Update, Vol. 21, No. 5), in which the Supreme Court of the United States held that the IPR statute does not permit partial institution on an IPR petition, the PTAB erred in limiting the scope of the IPRs it instituted and in the scope of its FWDs. The Court concluded, however, that it still had jurisdiction to address the merits of the PTAB’s decisions and did not need to remand to the PTAB to address the claims and grounds the PTAB improperly excluded.

Specifically, the Court found that the standard for “final agency action” under the Administrative Procedure Act, 5 USC § 704, was met because the PTAB’s FWDs constituted a completion of the decision making process sufficient to determine all legal rights and obligations at issue. The Court explained that the PTAB issued institution decisions and FWDs in each IPR, and that even though the decisions were erroneous under SAS, they terminated the IPR proceedings as to all claims and grounds. Drawing an analogy to civil litigation, the Federal Circuit compared this situation to one where a district court erroneously and prematurely dismisses one count of a complaint while proceeding to a merits determination on a second count. Once the second count is resolved, both counts are subject to appeal. The Court noted that “legal error does not mean lack of finality.”

The Federal Circuit also pointed out that it was under no obligation to sua sponte correct the PTAB’s error regarding its failure to institute on all claims under a harmless error analysis requiring the challenger to bear the burden of showing prejudice. Noting that neither party expressly sought relief under SAS, the Court declined to exercise its discretion to revive the non-instituted claims in the interest of finality and expedition. Indeed, the Court declined to comment on whether the outcome would be altered if either party had specifically sought SAS-based relief. 

On the merits of the FWDs, wherein the PTAB found certain claims to be obvious, the Federal Circuit affirmed, noting precedent regarding affirmance of an agency action “of less than ideal clarity if the agency’s path may reasonably be discerned.”

Practice Note: When applicable, patent owners should consider specifically appealing for SAS-based relief.