The Court of Appeals for the Federal Circuit has recently announced that it will hear en banc the question of whether certain decisions of the Patent Trial and Appeal Board (PTAB) that are entered at the beginning of America Invents Act (AIA) trials (e.g. at the outset of an Inter Partes Review) are reviewable on appeal.1 This has the potential to reshape the conduct of PTAB Trial proceedings and may alter the relationship between PTAB Trials and parallel District Court proceedings.
The AIA created a two-step process for trials within the PTAB. First, the PTAB2 is to consider the petition and any preliminary response thereto filed by the patent owner and determine if “there is a reasonable likelihood that the petitioner will prevail” in the challenge. 35 U.S.C. § 314(a).3 If so, the PTAB publishes an institution decision summarizing the PTAB’s preliminary decision. 35 U.S.C. § 314(c). If the PTAB determines that the threshold was met, the formal review commences, depositions take place, briefs and additional evidence are submitted, and oral argument occurs. Thereafter, the PTAB issues a final written decision regarding the patentability of the challenged claims. 35 U.S.C. § 318.
While the AIA provides that any party to the Trial may appeal the final written decision of the PTAB, it explicitly states that the institution decision is “final and nonappealable.” 35 U.S.C. §§ 314(d), 319.4 Nevertheless, since the beginning of the AIA, parties have sought review of PTAB institution decisions. In Archates Reference Publishing, Inc. v. Apple, the patent owner (Archates) argued that an IPR proceeding brought by Apple was time-barred under 35 U.S.C. § 315(b),5 because Apple was purportedly in privity with a party that was sued under the patent more than one year before Apple filed its petition. The PTAB concluded that the patent owner had not made a sufficient showing of privity, and instituted the proceeding on the basis that it was not time-barred.
The PTAB eventually entered a final written decision, which found several claims invalid. The patent owner then attempted to appeal the PTAB’s determination that the proceedings were not time barred. The Federal Circuit concluded that “35 U.S.C. § 314(d) prohibits this court from reviewing the Board’s determination to initiate IPR proceedings based on its assessment of the time-bar of § 315(b).”6 Accordingly, under Achates, patent owners are precluded from appealing from a PTAB loss on the basis that the petition was time-barred.
After the Federal Circuit’s opinion in Achates, the Supreme Court in Cuozzo Speed Technologies LLC v. Lee considered the scope of the AIA’s provision precluding appellate review of institution decisions, although not in the context of a time-bar under § 315(b). In Cuozzo, the dispute centered on how the PTAB interpreted the claim language in the patent when it decided to institute review. The Supreme Court concluded that the AIA “does bar judicial review of the kind of mine-run claim at issue” in Cuozzo. But, the Court left open the possibility of challenging institution decisions in other contexts, such as “appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond [§ 314].” The Court noted that its decision did not “enable the agency to act outside its statutory limits” and that any such “‘shenanigans’ may be properly reviewable.”
Wi-Fi One’s Argument
The dispute in the Wi-Fi One case closely parallels the facts in Archates. In particular, Wi-Fi One argued that Broadcom’s petition was time-barred under § 315(b), because Broadcom was in purportedly in privity was certain entities that had been sued under the challenged patent more than 1 year before Broadcom’s petition was filed. Wi-Fi One sought and was denied discovery on the issue of privity between Broadcom and those other entities, and the PTAB ultimately instituted the petition and found some of the patent claims unpatentable. In the initial panel decision, the Federal Circuit concluded that Wi-Fi One’s appeal was foreclosed by Achates and concluded that nothing in the Supreme Court’s Cuozzo decision overruled Achates.
In response to Wi-Fi’s One’s request for rehearing en banc, the Federal Circuit vacated the panel opinion and has requested supplemental briefs on the question of whether Achates should be overruled such that “judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review.” The court also invited amicus briefs on this issue and noted that further oral argument would be scheduled.
Potential Impact If Wi-Fi One Prevails
If the Federal Circuit were to overrule Achates, its decision could have several important ramifications for PTAB practice. Moreover, the relationship between PTAB proceedings and parallel district court litigation may be significantly altered.
First, if the Federal Circuit determines that it can review institution decisions relating to purported time-bar issues, it would also permit the Federal Circuit to review the PTAB’s rules and practices relating to pre-institution discovery. While the AIA and PTAB’s rules permit the PTAB to award “additional discovery” outside the mandatory cross-examination of witnesses who submit written testimony during the proceeding, in practice very little such “additional discovery” takes place.7 For example, in the Wi-Fi One case, the PTAB refused to award the discovery that the patent owner was seeking in an attempt to show a privity relationship between the petitioner and an entity that was previously sued for infringement of the subject patent. In particular, the PTAB found that Wi-Fi One had not provided evidence “to show that there is more than a mere possibility that the sought-after discovery even exists” or that the discovery had “more than a mere possibility of producing useful evidence” to it. This is consistent with the PTAB’s practice of limiting discovery during PTAB proceedings.8 If the Federal Circuit determines that it has jurisdiction to consider the PTAB’s institution decision in Wi-Fi One, it will have an opportunity to consider the appropriateness of the PTAB’s practice of denying discovery unless the party seeking the discovery can show, using evidence it obtained outside the PTAB process, that relevant and discoverable evidence is likely to exist and be helpful to that party’s position in the PTAB. A ruling on that issue by the Federal Circuit has the potential to significantly reshape discovery in PTAB proceedings and would not necessarily be limited to pre-institution discovery sought by the patent owner on issues of privity or real party in interest (the issue presented in Wi-Fi One).
Second, if the Federal Circuit determines that it has jurisdiction over appeals by patent owners seeking to challenge PTAB institution decisions, it potentially opens the door for appeals by dissatisfied petitioners as well, when their petitions are denied. For instance, if the PTAB were to require a petitioner to show unpatentability by a preponderance of the evidence at the institution stage of an IPR, rather than the lower statutory standard merely requiring a showing of “a reasonable likelihood that the petitioner will prevail,” such a situation might become reviewable if Wi-Fi One prevails. Thus, while the precise question posed by the Federal Circuit in its order on rehearing en banc is focused on appeals by patent owners, the rule it adopts in this case may eventually expand to permit some petitioner appeals.
Finally, the decision in Wi-Fi One raises a challenging set of procedural questions that have the potential to re-shape the interaction between the PTAB and parallel district court proceedings. For instance, currently if a petition is instituted, any parallel district court litigation is often stayed while the PTAB Trial is completed. If institution decisions become appealable, this dynamic has the potential to change, depending on the procedural rules that will apply to these appeals.
Moreover, if institution decisions are appealable, can the patent owner immediately take an interlocutory appeal or must it wait until after a final written decision? If the patent owner must wait until after a final decision on the merits invalidating all or part of the patent before it can appeal an improper decision to institute a PTAB Trial, it has arguably been harmed by the cloud the PTAB’s decision has cast over the patent. If, however, the patent owner is permitted to take an interlocutory appeal from an adverse institution decision, will the PTAB proceeding be stayed or will it proceed in parallel with the appeal? If the PTAB proceeding continues, it will be difficult for the Federal Circuit to hear and rule on the appeal before the publication of the PTAB’s final written decision which, by statute, must issue within one year of its institution decision — absent unusual circumstances.9 If the PTAB proceeding is stayed pending an appeal of an institution decision, then patent owners will have an incentive to frequently appeal such decisions to delay the PTAB proceeding and potentially avoid a finding of unpatentability by the PTAB. If this becomes the prevailing practice, it is possible that the district courts will be more resistant to motions to stay their proceedings in favor of PTAB Trials because of the uncertainty as to whether the PTAB trial will simplify issues and the much longer pendency times of those proceedings if they must await the completion of an interlocutory appeal to the Federal Circuit at their outset.
In short, the Wi-Fi One case raises several interesting procedural issues that could impact several import aspects of PTAB Trial practice. It remains to be seen how many of these issues will be directly addressed by the Federal Circuit in its opinion, if it decides to permit challenges to PTAB institution decisions at all.
1 Order on Petition For Rehearing, Wi-Fi One, LLC v. Broadcom Corp., (No. 2015-1944) (Fed. Cir., Jan. 18, 2017).
2 The AIA gives this power to the Director of the PTO. However, in the implementing regulations, the power was delegated to the PTAB. See e.g. 37 C.F.R. § 42.4(a).
3 For post-grant reviews (PGR) and covered business method (CBM) reviews (which inherit many of the procedures relating to post-grant reviews), the standard is whether it is “more likely than not that” the petitioner will prevail. 35 U.S.C. § 324.
4 This is true for PGR and CBM reviews as well. 35 U.S.C. §§ 324(e); 329.
5 That section states, in relevant part: “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” (emphasis supplied).
6 Achates, 803 F.3d at 658.
7 Discovery in PTAB Trials is generally governed by the five factors set out in Garmin Int’l, Inc. v. Cuozzo Speed Tech’s LLC, IPR2012-00001, Paper 26 (PTAB Mar. 5, 2013) <https://www.uspto.gov/sites/default/files/documents/Garmin%20Intl%20v%20Cuozzo%20Speed%20Techs%20IPR2012-00001_Paper%2026.pdf>
8 See n. vii.
9 35 U.S.C. § 316(a)(11) (setting 1 year deadline for final written decisions).