IP Law Daily Supreme Court ponders appealability of PTAB’s institution decision after erroneous time-bar finding
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Monday, December 9, 2019

Supreme Court ponders appealability of PTAB’s institution decision after erroneous time-bar finding

By Thomas Long, J.D.

Some Justices appear worried that construing AIA Section 314(d)’s no-appeal provision broadly would allow USPTO to engage in "shenanigans" that no court could review.

The U.S Supreme Court today held oral arguments in Thryv, Inc. v. Click-To-Call Technologies, LP, a case that gives the Court the opportunity to refine the scope of judicial review of inter partes review institution decisions under the America Invents Act (AIA). The Court was asked to review whether the no-appeal provision of 35 U.S.C. § 314(d) bars judicial review of a Patent Trial and Appeal Board decision to institute an inter partes review upon a purportedly erroneous finding that Section 315(b)’s time bar did not apply. At issue is a decision of the U.S. Court of Appeals for the Federal Circuit, holding that the petitioner’s inter partes review (IPR) petition was time-barred under Section 315(b), and the Board lacked jurisdiction to institute the IPR proceedings.

During today’s oral arguments, several Justices expressed concern that there would be no way to review decisions by the Board or the USPTO Director that amounted to "shenanigans" clearly contrary to the provisions of the Patent Act, raising the specter of a separation of powers problem between the Executive and Judicial branches. The Justices also struggled to reconcile two previous High Court decisions relating to the Board’s powers under the AIA and the appealability of its decisions, while recognizing that applying the no-appeal provision to the situation presented by the case at bar would not preclude challenges to the validity of patent claims in civil court actions for infringement. Other Justices seemed more comfortable with the petitioner’s position, stating that the no-appeal provision in the AIA was "pretty broad" and made it clear that the decision to institute is final and unappealable.

Litigation history. Patent owner Click-to-Call Technologies, LP ("CTC") acquired U.S. Patent No. 5,818,836 ("the ’836 patent") in 2012. On June 8, 2001, the exclusive licensee of the ’836 patent, Inforocket.com, Inc., filed a civil action in the Southern District of New York accusing Keen, Inc. of infringing various claims of the ’836 patent ("the Inforocket Action"). In 2003, Keen acquired Inforocket as its wholly-owned subsidiary. Subject to the terms of the merger, Inforocket and Keen stipulated to a voluntary dismissal of the Inforocket Action. Later in 2003, Keen changed its name to Ingenio, Inc. After CTC acquired the ’836 patent, it filed two infringement suits against several companies, including Ingenio, Inc.

IPR proceedings. In May 2013, Ingenio, along with Oracle Corp., Oracle OTC Subsidiary LLC, and YellowPages.com LLC, filed a single IPR petition challenging claims of the ’836 patent on anticipation and obviousness grounds. During the proceedings, Ingenio merged with Dex Media, Inc. CTC contended that Section 315(b) statutorily barred institution of IPR proceedings. The Board issued its Institution Decision on October 30, 2013. With respect to the timing issue under Section 315(b), the Board acknowledged that Ingenio was served with a complaint alleging infringement of the ’836 patent on June 8, 2001. Section 315(b) provided that an IPR may not be instituted if the petition requesting the proceeding was filed more than one 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. Nevertheless, the Board concluded that CTC did not establish that service of the complaint against Ingenio in the Inforocket Action barred Ingenio from pursuing an IPR for the ’836 patent because that infringement suit was dismissed voluntarily without prejudice on March 21, 2003. In the Board’s view, Federal Circuit precedent held that such dismissals left the parties as though the action had never been brought. The Board subsequently issued a final written decision on October 28, 2014, determining that all 13 challenged claims of the ’836 patent were invalid either for anticipation or obviousness.

Appeal. CTC appealed the Board’s determination on the Section 315(b) time-bar issue. On November 12, 2015, the Federal Circuit issued an order dismissing CTC’s appeal for lack of jurisdiction on the ground that the Board’s decisions to institute IPRs were "final and nonappealable" under 35 U.S.C. §314(d), pursuant to the holding in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015). CTC petitioned for writ of certiorari, and the Supreme Court granted the petition, vacated the November 12, 2015, decision, and remanded for further consideration in light of the Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016). In the interim, the Federal Circuit issued its decision in Wi-Fi One, LLC v. Broadcom Corp., 837 F.3d 1329 (Fed. Cir. 2016), which held that Cuozzo did not overrule Achates and that later panels of the court remained bound by Achates.

On November 17, 2016, the Federal Circuit dismissed CTC’s appeal for a second time. The Federal Circuit then reheard the Wi-Fi One case en banc, and issued a decision on January 8, 2018, expressly overruling Achates and holding that time-bar determinations under Section 315(b) were appealable. The court subsequently granted CTC’s request for a rehearing in this case.

On August 16, 2018, a divided Federal Circuit issued a revised opinion, holding that the petitioner’s IPR review petition was time-barred under Section 315(b) and the Board lacked jurisdiction to institute the IPR proceedings. Although the opinion was primarily issued by a three-judge panel, the full court, sitting en banc, held (with two dissenting judges) that the time-bar was triggered when the complaint was served, regardless of what happened subsequently in the civil litigation. Because the IPR was not instituted properly, the Board’s final written decision finding the challenged claims invalid as anticipated or obvious was vacated. Circuit Judges Timothy B. Dyk and Alan D. Lourie dissented, opining that because courts typically treated voluntary dismissals without prejudice as restoring the parties to the situation that existed before the case had ever been brought, the one-year time-bar of Section 315(b) should not be not triggered if the underlying infringement action is voluntarily dismissed without prejudice.

Petition for review. On January 11, 2019, Dex Media filed a petition for certiorari. In its petition, Dex Media contended that the Federal Circuit erred in vacating the Board’s final written decision. The petition posed two questions: (1) "Whether 35 U.S.C. § 314(d) permits appeal of the PTAB’s decision to institute an inter partes review upon finding that § 315(b)’s time bar did not apply," and (2) "Whether 35 U.S.C. § 315(b) bars institution of an inter partes review when the previously served patent infringement complaint, filed more than one year before the IPR." On June 24, 2019, the Supreme Court granted certiorari as to the first question only. On July 15, 2019, Dex Media, Inc., changed its name to Thryv, Inc.

Petitioner’s argument. Representing Thryv, Adam H. Charnes, asserted that the AIA’s policy goals, as well as the Court's decision in Cuozzo, confirmed that Section 314(d) precludes judicial review of the Director's time-barred determination under Section 315(b). "Congress knew how to limit the appeal bar just to the preliminary patentability determination," Charnes said, but it did not. Charnes bolstered this point by noting that the now-repealed provision for inter parties reexamination had a limited appeal bar, whereas the appeal bar under Section 314(d) was broader in scope. Charnes pointed out that the Cuozzo decision did not deal with a prerequisite to institution in Section 314(a), but rather involved the particularity requirement of Section 312(a)(3). And in that case, the Court held that the particularity requirement was subject to the appeal bar in Section 314(d). He further argued that Section 315(b) was, by definition, closely related to the institution decision.

Justice Kavanaugh, referring to a passage in the Cuozzo dissent opining that the holding in that case did not enable the Board to act outside its statutory limits and suggested that such "shenanigans" could be reviewable, asked Charnes how the Court should take that language into account. According to Charnes, the Court had explained in Cuozzo that if the Board invalidated a patent on grounds that were beyond the scope of an IPR, that that would be a "shenanigan" that could be reviewed. "That's a merits decision," Charnes said. "That's not an institution decision."

Justice Gorsuch seemed skeptical of this argument and asked whether it would be an unreviewable "shenanigan" if a Director with a "political mission to kill patents" instituted a review that was clearly time-barred under the statute. Charnes agreed that his position was that this type of action would not be reviewable in court, adding that "I'm not sure exactly what the Court meant in a shenanigan." However, he then conceded that "It may be that it's an appropriate case for mandamus relief if the circumstances are as egregious as you suggest in your hypothetical." Gorsuch asked, "If the institution decision is not reviewable at all, how would it be mandamus-able?" Charnes replied by saying that mandamus relief is only available when an appeal is not available, and only in "truly egregious" cases, mentioning that the Federal Circuit had expressed this view in "a couple of different cases."

Justice Ginsburg asked Charnes how his argument squared with the Court’s April 2018 decision in SAS Institute, Inc. v. Iancu that Section 314(d) precludes judicial review only of the Board's initial determination under Section 314(a) was that there is a reasonable likelihood that the claims are unpatentable. According to Charnes, the rationale for why there was judicial review in SAS Institute was completely different from the case at bar and Cuozzo, and that the Court in SAS Institute held that Section 318 prohibited the agency's practice of only reviewing some of the challenged claims and not all of the challenged claims. That was a merits decision, he said, and the Court had no need in that case to address more thoroughly the issue of an institution decision.

Government’s argument. Jonathan Y. Ellis, Assistant to the Solicitor General, argued on behalf of the federal government, supporting reversal of the appellate court’s decision. "Section 314(d) on its face precludes judicial review of the determination whether to institute inter partes review," Ellis said. "Because Respondents' challenge in this case is directed solely at that determination, the Federal Circuit lacked authority to review."

Chief Justice Roberts asked Ellis for his views on the effect his proposed holding would have on the separation of powers, which would effectively allow an administrative agency to make decisions that could not be reviewed by Article III courts. Ellis responded, as Charnes had, that any separation of powers problem was mitigated by the fact that eventually the merits—that is, the patentability of the challenged patent claims—would be addressed in one way or another, since validity could be challenged in court as a defense to an infringement action. Ellis added that although institution IPR was time-barred under Section 315(b), the Director of the USPTO was not statutorily precluded from revisiting the patentability of the challenged claims. The Director, Ellis said, "could have taken the exact same materials that was submitted with a petition for inter partes review, decided that the review, inter partes review, was time barred but then instituted an ex parte reexamination."

Justice Gorsuch responded by saying that "a million other things could happen," but in this case, "the patent has now been killed. And there is no way to review it on the basis of its timeliness." Ellis replied by explaining that the merits of the patentability decision could have been appealed, but CTC chose not to challenge that decision, opting instead to challenge the institution decision. Also, in response to a question from Justice Sotomayor, Ellis pointed out that if the Board finds that Section 315(b) should have barred institution of review, it can then vacate its institution decision. However, this decision would not involve the issuance of a final written decision and therefore would not be appealable.

Justice Alito also asked Ellis to reconcile Cuozzo with SAS Institute. Ellis agreed with Charnes that an institution decision wasn’t at issue in the latter case and that SAS Institute instead dealt with a limit on the Board’s authority in Section 318(a). According to Ellis, although the government had characterized the issue as whether it was proper to institute review of only some of the claims, the holding in that case actually went to the final written decision on patentability. Ellis also contended that SAS Institute incorrectly stated that the Court in Cuozzo concluded that Section 314(d) only precludes the Section 314(a) determination, whereas, in Ellis’s view, Cuozzo went further.

Respondent’s argument. Daniel L. Geyser, arguing for CTC, asserted that the argument put forth by the petitioner and the government was "truly extraordinary" in nature, adding, "As we've heard today, as my friends read this statute, Congress delegated the judicial function to an administrative agency, gave that agency the unfettered discretion to say what the law is, and then instructed that no Article III court at any time at any level may review the agency's interpretation of the statutory limits on its own power."

Chief Justice Roberts asked, "But is that really implicated here when you're talking about a time bar on something that a party is going to get review of anyway?" Geyser replied that the Section 315(b) time-bar was "not a minor statutory technicality" but rather was "one of the substantive safeguards that Congress put into the Act in implementing this very new procedure that is adversarial in nature."

The Chief Justice again pointed out that "the ultimate issue that affects the property rights in a patent, it's going to be reached. It's just a question of whether you use one procedure or another." Geyser opined that Congress viewed it otherwise and made it clear in Section 315(b) that the Board’s ability to act was "categorically cut off" if the petition is filed after the one-year deadline.

Justice Kagan suggested that another petitioner would hypothetically be able to raise its own petition if it were sued for infringement and filed with the USPTO within in the one-year time limit. Geyser agreed, but argued that this hypothetical situation had not occurred yet. In response to a question from Justice Breyer about why the Board’s decision should be reviewable, Geyser pointed to the strong presumption favoring judicial review. "Again, it is exceedingly rare for Congress to enact a highly reticulated scheme that's restricting the agency's core authority for significant policy objectives and then says, agency, you figure out what those provisions mean," Ellis said. Justice Kagan, while agreeing that it was rare, posited that the no-appeal language in the AIA was "pretty broad" and that the statute clearly said that the decision to institute is final and unappealable.

In Geyser’s view, the no-appeal language was meant to address the Board’s initial determinations as to the likelihood of successfully challenging the patentability of claims, and not Section 315(b)’s "outright ban" on the Board’s authority to institute review outside the one-year time limit. The purpose of the no-appeal provision, Geyser opined, was to protect patent holders from repeated attacks and harassment by different challengers. Whereas Section 315(b), according to Geyser, presented a "gateway prerequisite," and if that prerequisite was not met, the Director had no power to proceed.

Petitioner’s rebuttal argument. On rebuttal, Charnes said, "If Congress meant to limit the preclusion of judicial review to the preliminary patentability determination in subsection (a) of Section 314, there is no reason it would not have used the language that was already in the statute, that it was replacing, when it drafted the American Invents Act. It did not do that. It specifically changed the language [from the pre-AIA provisions regarding inter partes reexamination]." That change has to have some meaning, Charnes argued. Charnes further added, "This Court in Cuozzo said clearly that denial of an IPR petition is committed to the agency's discretion. And that means it's unreviewable."

The case is Dkt. No. 18-916.

Attorneys: Adam Howard Charnes (Kilpatrick Townsend) for Thryv, Inc. Daniel L. Geyser (Geyser P.C.) for Click-To-Call Technologies, LP. Jonathan Y. Ellis, Assistant to the Solicitor General, U.S. Department of Justice, for USPTO.

Companies: Thryv, Inc.; Click-To-Call Technologies, LP

MainStory: TopStory Patent

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