By Andrew Williams --
Earlier this week, in the Achates Reference Publishing, Inc. v. Apple Inc. case, the Federal Circuit reaffirmed the holding in In re Cuozzo Speed Techs., LLC that it could not review any decision by the Patent Trial and Appeal Board ("PTAB" or "Board") related to institution, including a determination whether the decision was time-barred according to the AIA statute. Moreover, the Court chose to not extend the reasoning used in the Versata Dev. Grp., Inc. v. SAP America, Inc. ("Versata II") case because whether a case is time-barred does not relate to the "ultimate authority to invalidate." Instead, the Court held that "Versata II is limited to the unique circumstances of CBMR and . . . the Board's determination to initiate the IPRs in this case is not subject to review by this court under 35 U.S.C. § 314(d)."
The particular facts of this case really turned on whether a defendant in a litigation should have been a real party-in-interest or privy of the petitioner, thereby giving rise to the one-year time bar. Achates had sued QuickOffice, Inc., among others, for patent infringement in district court on June 20, 2011. Achates joined Apple to the case the following year. On December 14, 2012, Apple filed the IPR petitions at issue in this case. Achates alleged that a blank indemnification agreement had created a relationship between Apple and QuickOffice that would cause the petition to be time-barred under 35 U.S.C. § 315(b) ("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."). The Board rejected this argument when instituting trial, in part, because "there was no evidence that any of the codefendants had 'the right to intervene or control Petitioner's defense to any charge of patent infringement' . . . ." The Board reiterated this decision in the Final Written Decision, in which it invalidated all of the challenged claims.
The relevant statutory language of 35 U.S.C. § 314(d) is: "No Appeal—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable." Before the Cuozzo decision, the Federal Circuit had held on several occasions, in several different ways, that a decision not to institute could not be appealed. In Cuozzo, the Court extended this prohibition to decisions to institute; specifically in that case the decision to combine cited art in a new ground of rejection that did not appear in the petition. Important to that decision was that the new ground of rejection on which the trial was instituted could have been included in a properly filed petition. Of course, this begged the question whether, for example, the PTAB could have conducted its own examination to craft its own ground of rejection (although in reality such a possibility is extremely slim -- not least in part because of the sheer number of petitions being filed)).
The Versata II case brought some hope to patent owners. That case arose in the context of a CBM review, which only apply to "covered business method patents." The Court in that case reviewed whether the patent at issue was indeed such a CBM patent. Although concluding that it was, the Court was taken to task by the dissent in that case because it allegedly should not have been reviewing the determination of the Board. The Court defended its analysis by pointing out the distinction between institution and invalidation. Because the determination whether the patent at issue was a covered business method patent related to the "ultimate invalidation authority" of the Board, review was appropriate. This, of course, opened the door for arguing that other decisions made at institution relate to the authority to invalidate, and therefore are subject to review.
Nevertheless, that door was not wide enough for Achates. The Court held that the time bar does not impact the authority to invalidate. Indeed, a properly filed petition by another petitioner can be used to invalidate (which is basically what happened in this case). Moreover, Achates, the time-barred party, could still have even participated in this proceeding by using the joinder provision of 35 U.S.C. 315(c). Finally, according the Court, this case was just like Cuozzo, in that the timeliness issue could have been avoided if Apple had filed the petition earlier, or another party altogether had filed the petition. This is in contrast to the Versata II case in which the Court was determining whether no party could have ever filed a proper petition.
The Court was quick to point out, however, that it was conceivable that it could review a Board's institution decision, but only for a narrow exception "that the agency exceeded the scope of its delegated authority or violated a clear statutory mandate." This exception for ultra vires agency action, however, only applies to egregious error. Therefore, for example, if the Board ever instituted trial in a case in which the petitioner had been sued for patent infringement on the same patent five years prior, the Court might be able to reverse the determination on appeal. But, the present institution decision did not violate the clear statutory mandate, according to Court, so this exception did not apply.
Achates Reference Publishing, Inc. v. Apple Inc. (Fed. Cir. 2015)
Panel: Chief Judge Prost and Circuit Judges Lourie and Linn
Opinion by Circuit Judge Linn