By Andrew Williams --
"It appears to me that en banc consideration is warranted." -- Judge Taranto (concurring in Click-To-Call Technologies, LP v. Oracle Corp.).
"I write separately, however, to note that I believe the Supreme Court's language in Cuozzo leaves room for us to question our reasoning in Achates and to suggest that we do so en banc." -- Judge O'Malley (concurring in Click-To-Call Technologies, LP v. Oracle Corp.).
"I write separately to convey my sense that this Court has jurisdiction to address the time bar question despite the statutory requirement that the Board's institution decisions "shall be final and nonappealable." -- Judge Reyna (concurring in Wi-Fi One, LLC v. Broadcom Corp.).
In the Cuozzo Speed Technologies, LLC v. Lee case, the Supreme Court held that a PTAB's decision to institute an IPR proceeding was not subject to judicial review. The question in that case centered on the correct interpretation of 35 U.S.C. § 314(d) ("No appeal. – The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable."). However, that case involved the specific situation where the PTAB had instituted trial on grounds that were not explicitly identified in the petition. Justice Breyer, writing for the Court, concluded that it was the intent of Congress to bar the review of decisions about whether the "reasonable likelihood" standard of ultimately prevailing in the case had been met. Justice Breyer also believed that institution decisions could not be reviewed when "a patent holder grounds its claim in a statute closely related to that decision to institute."
This did not mean, though, that the Supreme Court viewed all questions related to institution as unreviewable: "[We] need not, and do not, decide the precise effect of §314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond 'this section.'" For example, constitutional questions related to due process could still be appealed. In addition, if the Patent Office were to partake in "shenanigans," the Federal Circuit could set aside the decision as "'contrary to constitutional right,' 'in excess of statutory jurisdiction,' or 'arbitrary [and] capricious.'"
One of the situations that the Supreme Court did not address was whether a Court can review a Board's decision whether a third-party is a real-party-in-interest, which can implicate the IPR time bar set forth by 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 Federal Circuit had previously decided this question in Achates Reference Publ'g, Inc. v. Apple Inc., which issued before the Supreme Court's Cuozzo decision. The Court concluded it could not review any decision related to the statutory time-bar, for example whether a petitioner was barred from filing an IPR petition because it had been sued in district court more than one year beforehand. At the time of Cuozzo, we suggested that this type of situation might fall within the "shenanigans" standard and thus allow review of such cases (see "Cuozzo Speed Technologies, LLC v. Lee (2016) -- Question 2 -- PTAB Shenanigans and Reviewability"). However, the Federal Circuit subsequently decided in Wi-Fi One, LLC v. Broadcom Corp. that it still could not review time-bar decisions, even in view of Cuozzo v. Lee ("We see nothing in the Cuozzo decision that suggests Achates has been implicitly overruled."). The Court even disagreed that the time-bar issue was an example of "shenanigans" ("To hold that such a ruling falls within the narrow exception to the Supreme Court's unreviewabiltiy holding would render routine procedural orders reviewable, contrary to the entire thrust of the Cuozzo decision."). Therefore, barring further Supreme Court review, the only hope for change is for the Federal Circuit to take up the question en banc.
Such a possibility is not out of the question, however, as there are signs that point toward the entire Court taking up this question. First, in the Wi-Fi One case, Judge Reyna concurred in the decision because he agreed that Wi-Fi One had failed to show that the petitioner, Broadcom, was in privity with a Texas defendant. Nevertheless, he wrote that he believes that the legal distinction between institution decisions and final decisions compelled the conclusion that decisions about the time bar were "final," and therefore subject to review. Then, recently, the Federal Circuit issued the Click-To-Call Technologies, LP v. Oracle Corp. case. That case was itself on remand from the Supreme Court, after the Court had granted certiorari, vacated the previous judgement, and remanded (GVR'ed) for further consideration in view of Cuozzo v. Lee. The Federal Circuit, in a five page per curiam decision, also concluded that Achates had not been overturned by the Cuozzo decision, and besides it was also bound by the Wi-Fi One case. But two of three judges on that panel wrote separate concurrence to express their belief that the issue should be addressed en banc. The third judge was Leonard P. Stark, Chief District Judge of the U.S. District Court for the District of Delaware, sitting by designation.
Judge O'Malley focused on the difference between a petition for a PTAB post-grant proceeding (whether IPR, CBM, PGR, or derivation) and the act of institution by the PTAB as provided for by the statute. Believing that Congress established this distinction, she pointed out that "315(b)'s bar on institution in necessarily directed to the PTO, not those filing a petition to institute." Aschates, therefore, got it wrong when it concluded that the time bar did not impact the Board's authority to invalidate. Instead, the statute commands that an IPR proceeding "may not be instituted" by the Board if the petition is time barred. "Because only the Director or her delegees may 'institute' a proceeding, § 315(b)'s bar on institution is necessarily directed to the PTO, not those filing a petition," Judge O'Malley wrote.
Judge O'Malley also found support in the Cuozzo decision itself. The Supreme Court had used as an example a hypothetical of what to do if a panel institutes an IPR proceeding based on § 112 indefiniteness. Of course such a decision would be reviewable because it would fall outside the statutory framework for IPRs, which limit challenges to specific parts of §§ 102 and 103. Judge O'Malley pointed out that the same reasoning applied to the time bar. Cuozzo v. Lee involved a challenge to the PTAB's conclusion that the information presented in a petition warranted review. An appeal of a time-bar determination, however, goes to "the fundamental statutory basis on which Congress has authorized the Director to institute an IPR proceeding." As a result, Judge O'Malley suggested that the Court "collectively assess whether our reasoning in Achates comports with the precise language in the statutory provision it analyzes," and make a determination whether it should remain the law.
To complement Judge O'Malley's analysis, Judge Taranto provided his own reasoning why he thought the en banc Court should consider the issue. He began by noting that a high standard must be met before concluding that any statutory provision creates an exception to the default rule favoring reviewability. In addition, he noted that Cuozzo v. Lee was clear in two respects -- (1) § 314(d) bars review of some institution determinations, and (2) the specific determination of the Board in the Cuozzo case fell within this bar. But the Court stopped short of prohibiting any determination related to institution. Therefore, Judge Taranto noted that IPRs were different than other aspects of the patent statute, concluding that: "A statutorily proper petitioner – one entitled to file the petition when filed – is an essential statutory requirement for the PTO to conduct an IPR." For example, the PTO is able to unilaterally institute ex parte reexaminations. This is even reflected in the PTO regulation, where the timing rules for IPRs are treated as a matter of "Jurisdiction."
Judge Taranto identified several reasons why the time bar was distinct from the issue decided in Cuozzo v. Lee. First, the determination of who is a statutorily proper petitioner is unrelated to the substance of the allegation. Second, even though the Supreme Court has determined that other decisions are "unreviewable," such as a grand jury's finding of probable cause and the denial of summary judgement, all of these determinations are unlike the time bar. Third, relatedly, the time bar is different than institution decisions for ex parte reexamination and the old inter partes reexamination. Fourth, and finally, the "proper-party" requirement is a clear structural limit on the Patent Office's ability to cancel issued patents under the IPR scheme. Nevertheless, Judge Taranto acknowledged that there might be even more reasons why time-bar determinations should be reviewable. As such, Judge Taranto believes en banc review is warranted.
The Federal Circuit may take up the issue as the en banc Court sooner than later. Wi-Fi One filed a petition for en banc review on October 17, 2016, and Broadcom filed its response on November 18, 2016. We will, of course, continue to monitor the issue and report on any interesting developments.
I would be delighted to see the CAFC reconsider the flaws of Achates. I would note, however, that there is a growing body of precedent, by now, that is built on Achates (e.g. think of the way that the panel in Husky v Athena used Achates to prevent the application of the equitable doctrine of assignor estoppel to IPRs). If the CAFC does reconsider Achates en banc, they are going to have their work cut out for them teasing apart the various threads now woven into the law that spin out from Achates.
Posted by: GrzeszDeL | December 05, 2016 at 12:02 PM
When you mention flaws, GrzeszDel, are you talking about the holding or the dicta in Achates?
Posted by: skeptical | December 07, 2016 at 06:03 AM