IP Law Daily PTAB’s real party-in-interest ruling during IPR is unreviewable
Tuesday, July 28, 2020

PTAB’s real party-in-interest ruling during IPR is unreviewable

By Cheryl Beise, J.D.

PTAB’s real party-in-interest ruling during an IPR was judicially unreviewable under 35 U.S.C. § 314(d), but the case was remanded under Arthrex because the Administrative Patent Judges assigned to the case were unconstitutionally appointed.

Judicial review of a patent holder’s challenge—styled as a request for mandamus review—of the Patent Trial and Appeal Board’s real party-in-interest ruling under 35 U.S.C. § 312(a)(2) during an inter partes review proceeding was precluded by the "no appeal" provision of Section 314(d), the U.S. Court of Appeals for the Federal Circuit has ruled. The statutory prohibitions of appellate review "cannot be sidestepped simply by styling the request for review as a petition for mandamus." However, because the proceeding was conducted by Administrative Patent Judges (APJs) who were appointed in violation of the Appointments Clause of Article II of the U.S. Constitution, the Board’s final decision was vacated and the case remanded for reassignment to a new PTAB panel for further proceedings in accordance with the Federal Circuit’s Arthrex decision (Fall Line Patents, LLC v. Unified Patents, LLC, July 28, 2020, O’Malley, K.).

On October 6, 2017, Unified Patents, LLC filed a petition for inter partes review of claims 16–19 and 21–22 of U.S. Patent No. 9,454,748 (the ’748 patent), owned by Fall Line Patents, LLC. At the time of the filing, the ’748 patent was involved in a variety of patent matters against certain companies. However, Unified did not list any of these companies as a real party-in-interest. Fall Line argued that Unified’s real parties-in-interest identification was insufficient under Section 312(a)(2). In its institution decision, the Board rejected Fall Line’s argument as insufficiently supported. After institution, Fall Line sought authorization to file a motion for discovery regarding Unified’s real party-in-interest designation, but asked the Board to wait for a district court ruling before filing the motion. The Board instructed Fall Line to re-seek authorization when it was prepared to file the motion, but Fall Line failed to reassert its challenge until a few days before oral hearing. In its final written decision, the Board held that Fall Line’s real party-in-interest objection was untimely, and in any case, the evidence was insufficient to support such a challenge. On the merits, the Board held that claims 16–19 and 21–22 of the ’748 patent are unpatentable.

Real party-in-interest challenge. Section 312(a) of the Patent Act states that a petition "may be considered only if" it includes an "identification" of "all real parties in interest." 35 U.S.C. § 312(a)(2). Recently, in ESIP Series 2, LLC v. Puzhen Life USA, LLC, 958 F.3d 1378 (Fed. Cir. 2020), the Federal Circuit held that preclusion of judicial review under § 314(d) extends to a Board decision concerning the "‘real parties in interest’ requirement of § 312(a)(2).". Consequently, the court ordered further briefing on the real party-in-interest issue. In light of the Supreme Court’s decision in Thryv, Inc. v. Click-to-Call Techs., LP, 140 S. Ct. 1367 (2020), the ESIP Series 2 panel concluded that the "no appeal" prohibition of Section 314(d) precludes appellate review of the real party-in-interest determination. Because the ESIP 2 decision was issued after the parties competed their briefing in this appeal, the court ordered further briefing on the subject.

Given the Supreme Court’s intervening Thryv decision, Fall Line conceded that the Federal Circuit lacked normal appellate jurisdiction over the Board’s real party-in-interest ruling. Fall Line nevertheless argued that the appeals court was authorized to review the Board’s decision under its "mandamus jurisdiction." According to Fall Line, mandamus is authorized when the Board engages in "shenanigans." To support its position, Fall Line cited Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016). In Cuozzo, the Supreme Court held that §314(d) bars review of matters "closely tied to the application and interpretation of statutes related to" Board institution decisions. The Court also indicated that its holding did not categorically preclude review of all institution issues, such as those that implicate constitutional questions or jurisdictional violations.

The Federal Circuit disagreed with Fall Line’s assertion that Cuozzo permits the court to exercise its mandamus powers to review "an ordinary dispute about the application of" an institution-related statute. "While we once relied on this precise language in Cuozzo to conclude that statutory prerequisites to the Director’s authority to institute an IPR were not related to institution within the meaning of § 314(d), the Supreme Court disagreed with that conclusion in Thryv," the appeals court explained. It is true that the Thryv Court said it did "not decide whether mandamus would be available in an extraordinary case," but as Justice Gorsuch noted in his dissenting opinion, prior Federal Circuit decisions "cast doubt on that possibility." For example, in In re Power Integrations, Inc., 899 F.3d 1316, 1310 (Fed. Cir. 2020), the Federal Circuit held that statutory prohibitions of appellate review "cannot be sidestepped simply by styling the request for review as a petition for mandamus." "So, while the Supreme Court side-stepped the issue in Thryv, we have not," the Federal Circuit said.

The court concluded that Fall Line’s appeal of the Board’s real party-in-interest ruling as involving "no issues extraneous to the Board’s Section 312(a)(2) determination" and, therefore, was unreviewable.

Appointments Clause. Fall Line additionally argued that the Board’s final written decision was erroneous because, at the time of the decision, the structure of the Board violated the Appointments Clause. In Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), the Federal Circuit held that the Board’s Administrative Patent Judges were principal officers, appointed in violation of the Appointments Clause. To remedy this constitutional violation, the court severed the problematic removal restrictions regarding APJs and concluded that impacted cases must be vacated and remanded for rehearing before a new panel of APJs.

Fall Line argued that because no properly appointed Board panel existed at the time, the Federal Circuit had to vacate and dismiss the Board’s written decision. The court disagreed. "As a panel, we are bound by our holding in Arthrex that severance is ‘an appropriate cure for an Appointments Clause infirmity,’" the court said. Because the Board’s decision in this case preceded the court’s Arthrex decision, and Fall Line’s Appointment Clause challenge on appeal was timely, the Federal Circuit vacated the Board’s decision and remanded the case for a new IPR proceeding before a constitutionally appointed panel.

The case is No. 2019-1956.

Attorneys: Matthew James (Antonelli, Harrington & Thompson LLP) for Fall Line Patents, LLC. James R. Barney (Finnegan, Henderson, Farabow, Garrett & Dunner, LLP) for Unified Patents, LLC f/k/a Unified Patents, Inc.

Companies: Fall Line Patents, LLC; Unified Patents, LLC f/k/a Unified Patents, Inc.

MainStory: TopStory Patent GCNNews FedCirNews

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