Year in Review: Key Decisions from 2017

22
Dec

Year in Review: Key Decisions from 2017

With the end of the year approaching, we look back on the most important decisions affecting PTAB practice of 2017 and look forward to what is coming in 2018.

  • Oil States Energy Group, LLC v. Greene’s Energy Group LLC, No. 16-712 (Expected Spring 2018) — Perhaps the most important PTAB case since the creation of IPRs in 2013, the Supreme Court heard oral arguments on November 27 regarding whether IPRs extinguish private property rights through a non-Article III forum without a jury, in violation of the Seventh Amendment. One of the primary disputes between the parties is whether IPRs involve public rights, which Congress can permit resolution of through administrative agencies, or private rights that retain the constitutional guarantee to a jury trial. If the Supreme Court agrees that patents are private rights, entitled to a jury trial, the Court’s decision may mark the end of all post-issuance challenges to patentability, including IPRs, CBMRs, and reexaminations, which will increase the frequency and importance of trial court proceedings. A decision is expected in early 2018.
  • SAS Institute Inc. v. Matal, No. 16-969 (Expected Spring 2018) — The Supreme Court also heard arguments on November 27 in a case concerning whether the PTAB must issue a final written decision addressing every claim challenged by the IPR petition, or whether it has the authority to institute only a subset of claims, leaving some of the claims in the petition unadjudicated. The Federal Circuit held in two previous decisions that the text of the AIA permits the Board to issue final decisions on instituted claims, which may be different than those raised in the IPR petition. And institution decisions are currently insulated from Federal Circuit review. Therefore if the Supreme Court disagrees with the Federal Circuit, the Court’s opinion may effectively grant a petitioner the ability to seek appellate review of those claims denied institution. A decision is also expected in early 2018.
  • Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. Oct. 4, 2017) (en banc) — In a long-awaited opinion from the en banc court, the Federal Circuit held in a controlling opinion that the burden of persuasion for motions to amend during IPRs should lie with the petitioner and not, as the PTAB previously required, with the patent owner. The Federal Circuit however was deeply divided on both the holding and the reasoning. Although the controlling opinion found the statue ambiguous, a majority of judges disagreed. Nevertheless, some judges joined in the result of the controlling opinion because, in their view, the PTAB had not promulgated appropriate regulations through notice-and-comment rulemaking. The PTAB may attempt to cure its lack of rulemaking and issue regulations shifting the burden to the patent owner. Given the sharp division among the court and the apparent lack of rulemaking, we can expect that this issue will not be settled for some time.
  • Novartis AG v. Torrent Pharmaceuticals Ltd., 853 F.3d 1316 (Fed. Cir. Apr. 12, 2017) — In this case, the Federal Circuit allowed the PTAB leeway to rely on non-instituted references in its final written decision. The PTAB instituted an IPR based on the combination of two references, but then used a third non-instituted reference as a background reference to show a motivation to combine in its final written decision. Novartis appealed, arguing that the use of the third reference was improper under the Administrative Procedure Act and denied Novartis notice and a hearing. The Federal Circuit disagreed, finding the PTAB’s use of the non-instituted reference in its final written decision not improper because the parties discussed it at length in the papers and during the hearing, and no party moved to exclude the reference. Based on this decision, practitioners may now attempt to put the Board on notice of additional references in their IPR petitions, for example in describing the background of the technology and the state of the art. By including references in these sections, petitioners may be able to avoid a redundancy rejection while counting on the Board’s ability to use these additional references at its discretion in the final decision. This decision may also open the door for the PTAB to rely on references it discovers on its own so long as the parties have notice and an opportunity to be heard on those references.
  • Secure Axcess, LLC v. PNC Bank National Ass’n, 848 F.3d 1370 (Fed. Cir. Feb. 21, 2017) — In a rare decision impacting covered business method (“CBM”) reviews, the Federal Circuit held that the PTAB’s definition of a “covered business method patent” was improper. The PTAB originally found that a petitioned patent qualified as CBM patent and instituted review. On appeal, the court found that the PTAB improperly relied on non-statutory language such as “incidental to a financial activity” and extra-statutory sources of information, such as Secure Axcess’ litigation history. The court held the statutory definition of a CBM patent requires the patent to include a single claim that recites a financial activity element. To be such a qualifying claim, no particular words are required but, when properly construed in light of the specification, the claim must require one of the finance-related activities that fall within the CBM statute. And while disclaimer before institution of those claims reciting a financial activity destroys the patent’s CBM eligibility, according to current PTAB law, it remains to be seen whether a disclaimer after institution would do so as well, since the Federal Circuit has not weighed in.

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