IP Law Daily USPTO’s application of litigation time-bar to IPR institution decisions cannot be reviewed
Monday, April 20, 2020

USPTO’s application of litigation time-bar to IPR institution decisions cannot be reviewed

By Cheryl Beise, J.D.

Expanding on its 2016 Cuozzo decision, the U.S. Supreme Court holds that the "no appeal" provision of 35 U.S.C. § 314(d) precludes judicial review of the agency’s application of Section 315(b)’s time bar.

In a 7-2 decision, the U.S. Supreme Court has held that Section 314(d) of the Patent Act precludes judicial review of the agency’s application of Section 315(b)’s time prescription because the time bar decision is "closely related" to the decision to institute inter partes review. Writing for the majority, Justice Ginsburg explained "there is no need to venture beyond Cuozzo’s holding that §314(d) bars review at least of matters ‘closely tied to the application and interpretation of statutes related to’ the institution decision." A decision of the U.S. Court of Appeals for the Federal Circuit—holding that the Patent Trial and Appeal Board lacked jurisdiction to institute inter partes review of a telephonic patent owned Click-to-Call Technologies because Thryv, Inc.’s petition was time-barred under Section 315(b)—has been reversed. Justice Gorsuch, in a dissenting opinion joined by Justice Sotomayor, expressed strong disagreement with the majority’s interpretation of Section 315(b) as "another step down the road of ceding core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy" (Thryv, Inc. v. Click-to-Call Technologies LP, April 20, 2020, Ginsburg, R.).

Litigation history. Click-to-Call Technologies LP (CTC) owns a patent relating to a technology for anonymous telephone calls, U. S. Patent No. 5,818,836 (the ’836 patent). In 2013, Dex Media, Inc. and related entities, now known as Thryv, Inc., petitioned for inter partes review (IPR) of several claims of the ’836 patent. CTC argued that 35 U.S.C. §315(b) barred institution of IPR because Thryv filed its petition too late. Section 315(b) provides 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. The Board disagreed that a prior suit filed against the petitioners by CTC’s exclusive licensee barred the IPR because that suit had been voluntarily dismissed. The Board ultimately determined that all 13 challenged claims of the ’836 patent were invalid either for anticipation or obviousness.

CTC appealed to the Federal Circuit, again arguing that Section 315(b) barred institution of IPR. 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). CTC petitioned for writ of certiorari, and the Supreme Court granted the petition, vacated the Federal Circuit’s 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).

On remand, in November 2016, the Federal Circuit dismissed CTC’s appeal for a second time, but subsequently granted CTC’s request for a rehearing. In April 2018, in another case, the en banc Federal Circuit held that "time-bar determinations under §315(b) are appealable" notwithstanding §314(d). Wi-Fi One, LLC v. Broadcom Corp., 878 F. 3d 1364, 1367 (2018). On August 16, 2018, a divided Federal Circuit issued a revised opinion, holding that the petitioner’s inter partes review petition was time-barred under Section 315(b) and the Board lacked jurisdiction to institute the IPR proceedings. That decision prompted Thryv’s petition for certiorari. The Court agreed to consider the first question presented, "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."

Scope of § 314(d)’s non-appeal bar. 35 U.S.C. §314(d) provides that the "determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable." The Court observed that the text of Section 314(d) encompasses the entire determination "whether to institute an inter partes review."

In Cuozzo, the Supreme Court held that Section 314(d) precludes review of the Patent Office’s institution decisions. The Court reasoned that the "strong presumption" favoring judicial review was overcome by "clear and convincing" indications that Congress intended to bar review. The Court emphasized that its interpretation applies "where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review." The Court in Cuozzo also explained that the bar extends to challenges grounded in "statutes related to" the institution decision. Therefore, the entire determination "whether to institute an inter partes review" includes the specifications found in other provisions.

Framing the question now before it as whether a challenge based on Section 315(b) ranks as an appeal of the agency’s decision "to institute an inter partes review," the Court answered in the affirmative. "Section 315(b)’s time limitation is integral to, indeed a condition on, institution," the Court said. In other words, a challenge to a petition’s timeliness under Section 315(b) raises "an ordinary dispute about the application of" the institution-related provision.

The Court concluded that the USPTO’s application of Section 315(b)’s time limit is closely related to its decision whether to institute IPR and is therefore rendered nonappealable by Section 314(d).

The purpose and design of the America Invents Act (AIA)—to efficiently weed out bad patent claims—reinforced this conclusion, according to the Court. The Court also observed that Section 315(b) does not prevent the USPTO from conducting inter partes review of the challenged patent claims at the behest of another petitioner. In that case, the time-barred petitioner also could participate on the merits and the PTAB could conclude IPR even if no petitioner remains.

Lastly, the Court rejected CTC’s contention that the Court had adopted its interpretation of Section 314(d) in SAS Institute, Inc. v. Iancu, 584 U. S. (2018). SAS Institute first held that once the agency institutes an inter partes review, it must "resolve all of the claims in the case." SAS Institute next held that Section 314(d) did not bar judicial review of Section 318(a)’s application. The Court said that "nothing in §314(d) or Cuozzo withdraws our power to ensure that an inter partes review proceeds in accordance with the law’s demands."

The Court accordingly vacated Federal Circuit’s decision and remanded the case.

Dissenting opinion. Justice Neil Gorsuch, joined in part by Justice Sonia Sotomayor, filed a dissenting opinion. Justice Sotomayor joined as to Parts I- IV, but not Part V, of the opinion.

Justice Gorsuch opined that the plain language of Section 314(d) does not insulate from judicial review the agency’s interpretation of an entirely different provision, Section 315(b). According to Justice Gorsuch, the only thing Section 314(d) insulates from judicial review is "[t]he determination" made "by the Director" "under this section"—that is, a determination discussed within Section 314. Further, Section 315(b) promises that an inter partes review "may not be instituted" more than a year after the initiation of litigation. "This stands as an affirmative limit on the agency’s authority," Justice Gorsuch said. "Much like a statute of limitations, this provision supplies an argument a party can continue to press throughout the life of the administrative proceeding and on appeal."

To support his reading of the statute, Justice Gorsuch also pointed to the "well-settled presumption favoring interpretations of statutes that allow judicial review of administrative action" as a safeguard against arbitrary government. The Court in Cuozzo expressly acknowledged this presumption, as did the Court in SAS Institute.

In the final section of his dissenting opinion not joined by Justice Sotomayor, Justice Gorsuch lamented the Court’s departure from "the plain language of a statute, our interpretative presumptions, and our precedent." By sanctioning a departure from the constitutional plan and allowing the Executive Branch to assume responsibilities long reserved to the Judiciary, the Court has "denied inventors the right to have their claims tried before independent judges and juries," Justice Gorsuch said.

Practitioner comments. Kilpatrick Townsend & Stockton LLP, which represented Thryv before the High Court, said the firm was pleased with today’s ruling agreeing with the firm’s position that under the America Invents Act, a PTAB decision instituting review is final and nonappealable, and, in this case, the Federal Circuit should not have ruled that appeals on the time-bar issue are allowed since it is not certain that Congress meant to prohibit them. "The obvious takeaway from today’s decision is that §314(d) means what it says, ‘The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable,’" the firm said in a statement. In addition to Adam Charnes, Thryv was represented by Kilpatrick’s Mitchell Stockwell, Amanda Brouillette, and Jason Steed.

Milbank LLP litigation partner, John Lu, told Wolters Kluwer that today’s decision "gives back to the Patent Office substantial power that was taken away by the Federal Circuit’s en banc Wi-Fi One, LLC decision two years ago." He noted that there was concern that the Federal Circuit in Wi-Fi One had opened the door too much on attacking institution decisions on appeal. "The Supreme Court has closed that door to make virtually all Patent Office determinations regarding institution—including those unrelated to patentability—final and nonappealable." Lu found it "interesting that the Court’s decision seemed to prioritize a Congressional charge to weed out invalid patents; one can wonder whether the outcome would have been different had the patent at issue instead been found patentable."

"For patent owners, the Court’s decision means it is even more important to put their best arguments and evidence forward in the preliminary patent owner response to prevent institution, because that determination is final and nonappealable," Lu said. "There was already litigation gamesmanship to avoid §315(b) before this decision, and that is unlikely to change. Building on its holding in Oil States Energy Services, LLC, the Court’s decision here further erodes the patent owner’s ability to argue that patents are subject to the same constitutional protections as real property."

The Case is Dkt. No. 18-916.

Attorneys: Adam Howard Charnes (Kilpatrick Townsend & Stockton LLP) for Thryv, Inc. f/k/a Dex Media, Inc. Daniel L. Geyser (Geyser PC) for Click-To-Call Technologies, LP. Noel J. Francisco, U.S. Department of Justice, for USPTO.

Companies: Thryv, Inc. f/k/a Dex Media, Inc.; Click-To-Call Technologies, LP

MainStory: TopStory Patent GCNNews USPTO

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