Patent Docs

USPTO Issues Guidance on Supreme Court Ruling in SAS v. Iancu

By Kevin E. Noonan --

Well, that didn't take long.  The U.S. Patent and Trademark Office issued Guidance today, just two days after the Supreme Court decision in SAS Institute Inc. v. Iancu came down, regarding how the Patent Trial and Appeal Board (PTAB) will apply the Court's mandate in that inter partes review (IPR) decisions are all or nothing with respect to challenged claims ("Guidance on the Impact of SAS on AIA Trial Proceedings").

The Guidance is simple:  going forward (i.e., for all pending and future-filed petitions), the Board will institute on all challenged claims so long as the petitioner has shown a reasonable likelihood of invalidating at least one of the claims.  For cases where the Board has engaged the parties in partial institution proceedings, the Board "may" issue an order "supplementing the institution decision to institute on all challenges raised in the petition."  In such cases the Board also has discretion to take action "permitting additional time, briefing, discovery, and/or oral argument."  Examples included in the Guidance include granting additional time for the Patent Owner Response or, if the statutory twelve-month time is close to expiry, taking advantage of the additional six months provided by the statute for extraordinary cases.  The Guidance stresses however that such decisions will be made on a case-by-case basis.

The Petitioner and Patent Owner responses to such a supplementation order are specified to include a "meet-and-confer" discussion between the parties on whether additional briefing, time, etc. is needed; the Guidance notes that while the Board may (i.e., has the discretion to) act sua sponte, there may be no accommodation of the parties unless they request it.  And of course the parties can affirmatively waive any changes to the briefing schedule or timing, the Guidance suggests.  The result of such a meet-and-confer will be a conference with the Board, which will resolve any failure to agree between the parties.  The Final Written Decision arising from such cases will contain a decision on all challenged claims, both as originally instituted and added through amendment of the institution decision.

The Guidance directs parties to contact the panel (only for case-specific questions) or to submit written questions to the [email protected] mailbox.

The Guidance closes by reminding the public that the Office fortuitously scheduled a "Chat with the Chief" webinar on Monday, April 30 at noon EDT, where Chief Patent Judge David Ruschke will discuss the Guidance.

Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)

By Andrew Williams --

Earlier today, the Supreme Court held in Oil States Energy Services, LLC v. Greene's Energy Group, LLC that inter partes review proceedings do not violate Article III or the Seventh Amendment of the Constitution.  Justice Thomas, writing for the 7-2 majority, explained that a grant of a patent is a matter involving a public right.  Moreover, because IPR proceedings involve the same basic matter as the grant of a patent, they also fall within the public rights doctrine.  As a result, the Constitution does not prohibit the Patent Office from resolving issues of validity post issuance outside of an Article III Court.  Important to the analysis was the lack of distinction between IPR proceedings and the initial grant of the patent because "[p]atent claims are granted subject to the qualifications that the PTO has 'the authority to reexamine – and perhaps cancel – a patent claim' in an inter partes review."  Justice Breyer wrote a concurrence that was joined by Justices Ginsberg and Sotomayor.  Even though he joined the Court's opinion in full, he wanted to stress that the decision should not be read as stating that matters involving private rights could never be adjudicated outside of Article III courts.  Justice Gorsuch dissented, and was joined by the Chief Justice.  In his dissent, Justice Gorsuch explained that the history of the patent system and the prior case law required the finding that patents are private rights, and therefore must be adjudicated in Article III courts.

We have previously explained the background of the Oil States case.  Interestingly, this case was appealed from a Federal Circuit Rule 36 affirmance.  Nevertheless, the Federal Circuit had previously considered the issue of the constitutionality of IPRs in MCM Portfolio LLC v. Hewlett-Packard Co.  In that case, a three-judge panel concluded that because patents are public rights and "the grant of a patent is primarily a public concern," Congress was able to create administrative procedures for assessing their validity.  This case was consistent with the Federal Circuit's decision in Patlex Corp. v. Mossinghoff, in which the Court had determined that ex parte reexaminations did not violate Article III of the constitution.  Nevertheless, not all Federal Circuit judges appeared to agree with this conclusion.  In a dissent to the denial of a petition for en banc hearing in Cascades Projection LLC v. Epson America, Inc., Judge Reyna explained that Supreme Court precedent was clear that only Article III courts had the authority to set aside or annul a patent right.

One of the cases that Judge Reyna cited, McCormick Harvesting Machine v. Aultman, was discussed at length in today's Supreme Court decision by both the majority and the dissent.  And as we predicted, both sides pointed to McCormick Harvesting as either supporting their opinion (or at least not being in conflict with it).  Justice Gorsuch pointed to the broad sweeping language from that case that stated "[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent."  However, the majority correctly pointed out that this is "best read as a description of the statutory scheme that existed at that time," and did not address whether Congress had authority to establish an entirely different scheme.  In fact, before the 1870 change to the patent statute discussed in that case, Congress did provide examiners with absolute discretion to cancel any reintroduced original claim in a reissue proceeding.  It was the fact that Congress withdrew this grant of authority before McCormick Harvesting that made the Patent Office's cancellation of original claims in reissue proceedings a violation of due process and an invasion on the then-exclusive jurisdiction of the judicial branch by the executive.

The Court did stress, however, that its holding was limited to the question of the constitutionality of IPRs only.  For example, the Court pointed out that "Oil States [did] not challenge the retroactive application of inter partes review, even though that procedure was not in place when its patent issued."  This will almost certainly lead to continued constitutional challenges for patents that issued prior to the enactment of the AIA.  In addition, the Court noted that it was not determining whether IPR proceedings raise due process concerns, which is interesting in view of the questioning about expanded panels during oral argument.  Finally, the Court stressed that the holding should not be misconstrued to suggest that other constitutional challenges could not be made, for example challenges related to the Due Process Clause or the Takings Clause.  These limitations to the holding virtually ensure that there will be continued challenges to particular IPR practices adopted by the PTAB.

A potential silver lining for Patent Owners is that the patent system appears to have a new friend in Justice Gorsuch.  His dissent did an admirable job in pointing out the policy reasons that supported his conclusion.  He stressed the time and cost of not only inventing something truly novel, but the additional resources necessary to apply for and obtain a patent.  And this fails to capture any investment made to commercialize the patent in reliance of the patent rights.  But as Justice Gorsuch put it, "what happens if someone later emerges from the woodwork, arguing that it was all a mistake and your patent should be canceled?"  Of course, if true, the patent holder would not have been deserving of the patent in the first place.  However, should "a political appointee and his administrative agents, instead of an independent judge, resolve the dispute?"  This was the crux of his problem with the Court's decision.  As Justice Gorsuch pointed out, the Director of the Patent Office serves at the pleasure of the President, and he supervises and pays the Board.  The Director can select the APJs that will hear a case, determine how many will be on a particular panel, and even add more members to the panel if the decision is not to his liking.  This problem can be solved by allowing Article III courts to be the only venue to resolve validity disputes of issued patents.  As Justice Gorsuch put it, "when an independent Judiciary gives ground to bureaucrats in the adjudication of cases, the losers will often prove the unpopular and vulnerable."  Instead of the judicial independence, we are at the risk of "armies of lobbyists and lawyers [that will] influence (and even capture) politically accountable bureaucracies."  We can only hope that this doomsday scenario does not come to pass (and hope that the Federal Circuit will be a reliable backstop for any true abuse of power).  But it will be interesting to see if Justice Gorsuch will continue to champion the patent system in future case (or whether it was just his distrust of the administrative state that brought him to the defense of patents in this case).

Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)
Opinion of the Court by Justice Thomas, joined by Justices Kennedy, Ginsburg, Breyer, Alito, Sotomayor, and Kagan; concurring opinion by Justice Breyer, joined by Justices Ginsburg and Sotomayor; dissenting opinion by Justice Gorsuch, joined by Chief Justice Roberts

SAS Institute Inc. v. Iancu (2018)

By Kevin E. Noonan --

The Supreme Court reversed the judgment of the Federal Circuit today in SAS Institute Inc. v. Iancu.  In a rare close decision in patent cases, Justice Gorsuch (joined by the Chief Justice and Justices Kennedy, Thomas, and Alito) provided a textual explication of the inter partes review (IPR) statute in deciding that the U.S. Patent and Trademark Office was compelled to render a Final Written Decision (FWD) on all claims challenged by a petitioner in its IPR petition.  This decision overruled the Patent Office's practice (by rule; 37 C.F.R. § 41.108(a)) that the Director (through the Patent Trial and Appeal Board) could institute an IPR on less than all challenged claims and then limit the FWD to only the instituted claims.

According to the majority, the decision to institute is binary (either the PTAB decides to institute or not), but once instituted, the Board must render a decision on all challenged claims.  Justice Gorsuch in his opinion set forth the relevant statutory language he believed supported the Court's opinion and the various procedures (one "inquisitorial" in nature, like ex parte reexamination, in contrast to the more adjudicatory IPR procedure).  IPRs "look[] a great deal like civil litigation," in his opinion and are governed by express provisions in the statute regarding the standards for instituting an IPR (§§ 311-314), conducting the IPR proceeding (§ 316), settlement (§ 317) and coming to a final decision on patentability (§ 318).

Justice Gorsuch's explication of the language of the statute is based on earlier instances of statutory interpretation by the Court as well as with reference to dictionaries and legal scholarship.  Important terms in the statute include the use of the word "any" in 35 U.S.C. § 318(a) (that the Office "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner") to mean "every," stating that "[t]he agency [here, the USPTO] cannot curate the claims at issue but must decide [the validity] of them all."  This interpretation is further supported by the use of the word "shall," which the opinion notes "generally imposes a nondiscretionary duty."  This language provides a "ready answer" to the question presented, the opinion stating that the language of § 318(a) is "both mandatory and comprehensive" with regard to the statutory requirement that the Board render a Final Written Decision on all claims challenged in an IPR petition.

While stating that this analysis "would seem to make this an easy case," the opinion reviews (and rejects) the Director's arguments to the contrary.  The majority finds no basis in the statute for the Director to have discretion regarding "partial institution."  Indeed, the opinion notes that, unlike in ex parte reexamination, the IPR provisions of the statute do not permit the Director to initiate an IPR sua sponte.  "From the outset, we see that Congress chose to structure a process in which it's the petitioner, not the Director, who gets to define the contours of the proceeding," says the majority.

The Court majority also sees interpretive meaning in further distinctions between IPR proceedings and ex parte reexamination.  In the latter proceedings, Congress chose "an inquisitorial approach" (analogous to ex parte examination in the first instance) and thus Congress "knew exactly how to" expressly give the Director the discretion he argues he has under the IPR provisions of the America Invents Act.  "Congress's choice to depart from the model of a closely related statute is a choice neither we nor the agency can disregard," according to the opinion, citing University of Tex. Southwestern Med. Center v. Nassar, 570 U.S. 333, 353 (2013).

Further, the Court's opinion cites the language of § 314, where that language appears to provide either that the IPR proceedings be instituted or that they are not, based on the provision that the Director must decide "whether to institute an inter partes review . . . pursuant to the petition."  Both the terms "whether" and "pursuant to the petition" have meaning to the Court majority.  "Whether" to institute an IPR implies a "yes or no" option, and "pursuant to the petition" supports the earlier-stated view that what is instituted is an IPR on the claims challenged by the petitioner.  As stated in the opinion, "[n]othing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design" (emphasis in opinion).

The majority also held that this portion of the statute, which the Director relied upon to imply discretion based on the language that the Director should institute if there is a "reasonable likelihood" that "at least 1 of the claimed challenged by the petition" is invalid, implies exactly the opposite.  For the Court majority, "[o]nce that single claim threshold is satisfied, it doesn't matter whether the petitioner is likely to prevail on additional claims"; the Director should institute the IPR on all challenged claims (emphasis in opinion).  The opinion again references the ex parte reexamination statute to show that if Congress had intended to give the Director the discretion he claims there was language available to do so.

The opinion summarily rejects the Director's reliance on his discretion under § 314 to institute an IPR to support his discretion to institute partially, once again characterizing the decision as binary.  This conclusion is supported, according to the opinion, by the language of the other provisions in the statute which reference "the petition" rather than challenged claims, the majority interpreting Congress not to have intended the Director to have discretion other than whether or not to institute an IPR against the claims the petitioner challenged.

With regard to the ambiguity purported to be in the statute due to slight differences in the language of § 314 and § 318 (which forms the basis for the dissent's position), the majority assert that they "just don't see it," characterizing it as a "slight linguistic discrepancy."  Any differences between the claims challenged in the petition and the claims available for Final Written Decision can be explained by the patentee's ability to cancel or amend claims, according to the opinion (terming it a "winnowing mechanism").  The opinion states that "[w]e need not and will not invent an atextual explanation for Congress's drafting choices when the statute's own terms supply an answer," citing U.S. v. Ron Pair Enterprises Inc., 489 U.S. 235, 240-241 (1989).

Neither are the Director's policy arguments persuasive (in contrast to the effects of these arguments on the dissenting Justices).  Even though "[e]ach side offers plausible reasons why its approach might make for the more efficient policy[,] who should win that debate isn't our call to make," because "[p]olicy arguments are properly addressed to Congress, not this Court."  And "[w]hatever its virtues or vices, Congress's prescribed policy here is clear: the petitioner in an inter partes review is entitled to a decision on all the claims it has challenged" says the Court, nicely closing the door on the basis for the dissenting Justices' contrary opinion.

Because the majority saw no ambiguity in the statutory language, deference to the agency's implementation decisions under Chevron v. Natural Resources Defense Council did not apply.  In an interesting side note (with regard to Justice Gorsuch's acknowledged antipathy to Chevron), the majority deigns to leave the continued vitality of the agency deference doctrine "for another day," merely holding that "we owe an agency's interpretation of the law no deference" if there is (as here, for these Justices) no ambiguity in the statute's mandate.

And not surprisingly, the Court rejects the Director's final argument that the question before it is one regarding the institution decision, which Congress under § 314(d) put beyond judicial review, citing Cuozzo Speed Technologies LLC v Lee (2016).  The majority reminds the Director that Cuozzo recognized a "strong presumption" of judicial review of agency decisions, and that judicial review was necessary to preclude agency "shenanigans" that would "exceed its "statutory bounds."

Justice Breyer dissented, joined by Justices Ginsberg, Sotomayor, and Kagan.  These Justices did perceive an ambiguity in the differences in language (albeit slight) between § 314 and § 318 sufficient to support both the Director's application of the statute and entitlement to Chevron deference.  To the dissenters, the statutory language is far from being as clear as the majority believes; to them, the statute is "technical, unclear and constitutes a minor procedural part of a larger administrative scheme."  The dissent expressly relies upon Chevron, characterizing it as "an interpretative technique that judges often use in such cases" where the statute contains an ambiguity (and perhaps setting the terms of a future dispute between the Justices on the question of Chevron deference).  Using this technique, the dissent finds such an ambiguity and further that the Director's interpretation of the ambiguous statutory language is reasonable (and thus the dissenting Justices would affirm).  Helpful in considering the dissenting Justices' thinking in this regard, Justice Breyer sets forth a hypothetical (as is his wont) in which a petitioner challenges sixteen claims and the Board institutes an IPR on one of them, and the uses this hypothetical as a practical guidepost for its explication of the statutory language.

The dissenting opinion performs its own brand of statutory exegesis and, unsurprisingly, finds ambiguity between reference to claims challenged in the petition and claims surviving to Final Written Decision.  These Justices perceive that the majority relies on its own statutory language that actually does not exist in the statute (specifically "'any patent claim challenged by the petitioner' in the petitioner's original petition") and for them, "[w]hich reading we give the statute [theirs or the majority's] makes a difference."  Without expressly making the point, the dissent illustrates that, if these Justices cannot agree on the meaning of the statutory language, such language is prima facie ambiguous and thus Chevron deference should attach to the Director's interpretation.

In addition, these Justices agreed with the Director's argument that interpreting the statute as the majority did would impose tremendous inefficiencies on the PTAB, requiring them to provide a FWD on claims that the petitioner had not shown had a reasonable likelihood of being invalid.  This point was emphasized in a one-paragraph, separate dissent penned by Justice Ginsberg (joined by the other dissenting Justices), who saw "no cause to believe Congress wanted the Board to spend its time so uselessly."

One practical consequence of this decision (that Justice Breyer in his dissent fully appreciates) is that it provides a route for a petitioner, unhappy that the Board refused to institute IPR on any particular claim, to appeal the FWD and thus overcome the prohibition in the statute that the institution decision is at the Director's discretion and not appealable.  This is clearly contrary to the legislative scheme (and Justice Sotomayor, one of the dissenting Justices here, at oral argument quizzed counsel aggressively on whether the entire exercise was a way to get around the Court's Cuozzo decision).  This decision also raises the possibility that the Board, rather than issue an appealable FWD on claims that do not rise to the "reasonable likelihood" standard will instead refuse to institute using language in the decision providing a roadmap for further petitions of more limited scope that it will institute.  No matter how the Board adapts its practices to avoid the outcome mandated by this decision, the majority's clear holding provides the basis for the Office and the public to petition Congress to intercede to change the statutory language to give the Director the discretion the Court majority could not find in the statute Congress enacted.

SAS Institute Inc. v. Iancu (2018)
Opinion of the Court by Justice Gorsuch, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito; dissenting opinion by Justice Ginsburg, joined by Justices Breyer, Sotomayor, and Kagan; dissenting opinion by Justice Breyer, joined by Justices Ginsburg and Sotomayor, and joined except as to Part III-A by Justice Kagan

PTAB Grants Two Motions to Amend in March -- Aberration or Sign of Things to Come?

By Andrew Williams --

The U.S. Patent and Trademark Office appears to have taken the position that neither party has the burden of persuasion with regard to Motions to Amend after the Aqua Products v. Matal en banc decision (see "Motions to Amend at the PTAB -- Does Anyone Have the Burden (And Will That Change)?").  It was unclear, however, whether this position would have any practical impact for parties appearing before the Patent Trial and Appeal Board.  Correspondingly, the Board's grant of two Motions to Amend last month is revealing.  These are the first two motions that were granted outright since Aqua Products, both of which occurred in IPRs entitled Apple Inc. v. Realtime Data LLC, with both being directed to U.S. Patent No. 8,880,862.  Before this, the Board had only granted-in-part two additional motions:  (1) Taiwan Semiconductor Manufacturing Co. v. Godo Kaisha IP Bridge (IPR2016-01249) at the end of last year (see "More Aqua Products Fallout -- Taiwan Semiconductor Manufacturing Co. v. Godo Kaisha IP Bridge"); and (2) Polygroup Ltd. v. Willis Electric Co. (IPR2016-01613) in February (although to be fair, the contingent part of this motion was denied because the challenged claims were found to not be unpatentable).  Clearly, the flood gates have not been opened with respect to claim amendments in IPR proceedings because there have still been many more motions denied than granted (even in part).  But these two Apple v. Realtime Data cases could be instructive for Patent Owners seeking to amend claims in a post-Aqua Products world, especially with respect to whether the petitioner bears the burden with regard establishing the unpatentability of the substitute claims.

The technology at issue in the '862 patent was "[s]ystems and methods for providing accelerated loading of operating system and application programs upon system boot or application launch . . . ."  Id., Abstract.  As explained in one of the motion decisions, Realtime Data proposed adding four limitations to the issued claims in response to the instituted grounds:  "(1) preloading a portion of boot data; (2) into a volatile memory, the portion of boot data in the compressed form being associated; (3) wherein the preloading comprises transferring the portion of boot data in the compressed form into the volatile memory, and wherein the preloading occurs during the same boot sequence in which a boot device controller receives a command over a computer bus to load the portion of boot data; and (4) accessing the preloaded portion of the boot data in the compressed form from the volatile memory."  IPR2016-01737, Paper 57 at 46-47.  The Patent Owner argued in the motions that none of the cited prior art references taught or suggested "preloading" of compressed boot data into a "volatile" memory.

The Board first determined that Realtime Data had satisfied 37 C.F.R. § 42.121.  In IPR2016-01737, the Patent Owner proposed substituting 55 claims for the 55 challenged claims, while in IPR2016-01738, the Patent Owner proposed 45 claims to substituted for the 45 challenged claims.  Nevertheless, because there was a one-for-one correspondence, the number of claims was determined to be reasonable.  In addition, the Patent Owner had identified support in the original specification for the newly added limitations, for example where support could be for the limitation that the preloading may occur in volatile memory.  Moreover, the Board determined that these limitations were narrowing and did not add new subject matter.  Finally, the Board found that these proposed narrowing limitations were in direct response to the instituted grounds of unpatentability.  Correspondingly, the Patent Owner had met its burden with regard to the statutory and procedural requirements for the Motion to Amend.

The Board then turned to whether the proposed substitute claims were patentable over the prior art.  At first, the Board appeared to again suggest that neither party had the burden by citing to Aqua Products and the Chief Judge's guidance in explaining the requirement that unpatentability be determined based on the "entirety of the record, including any opposition made by the petitioner."  See, e.g., IPR2016-01737, Paper 57 at 46.  However, two sentences later, the Board seemed to place the burden squarely on the petitioner when it "determine[d] that Petitioner fail[ed] to establish that proposed substitute claims 118-173 are obvious over" the cited art.  Id.     

Even more telling was a discussion by the Board of the claim limitation for "preloading" boot data into "volatile" memory.  The Patent Owner had contended that even though one of the cited references, Zwiegincew, discussed the use of "boot" in its background section, it did not do so in the context of preloading boot data into volatile memory.  The Patent Owner also pointed out that two of the other references, Burrow and Dye, did not teach or suggest this limitation.  In fact, Patent Owner noted that Petitioner cited these references for their teaching regarding compression/decompression, and not for the newly added claim limitation.  The Petitioner, on the other hand, did not address any of these three references individually.  However, instead of stating that the claim limitation was not met by the cited art after reviewing "the entirety of the record," the Board instead concluded that it found "that Petitioner fail[ed] to establish that Zwiegincew, Burrow or Dye teach or suggest 'preloading' boot data into 'volatile' memory."  Id.  at 51.

Therefore, even though the Board did conclude its grant of the Motion to Amend by noting "that when considering the entirety of the record before us, we determine that the preponderance of the evidence fails to establish that the proposed substitute dependent claims are unpatentable," it did appear to put the burden on petitioner to reach that conclusion.  It is unclear whether this case is an aberration, or whether there will be more emphasis on the burdens assigned to petitioners in Motions to Amend going forward.  It is also unclear whether this case will make it easier for patent owners to get similar motions granted in the future.  Nevertheless, some of the language found in these two cases should be considered persuasive for patent owners to use going forward.

Apple, Inc. v. Realtime Data LLC, Case IPR2016-01737 (PTAB 2018)
Panel: Administrativbe Patent Judges Stpehens, Braden, and Chung
Final Written Decision by Administrative Patent Judge Braden

Apple, Inc. v. Realtime Data LLC, Case IPR2016-01738 (PTAB 2018)
Panel: Administrativbe Patent Judges Stpehens, Braden, and Chung
Final Written Decision by Administrative Patent Judge Braden

Putting on Your Best Face: Expanded PTAB Panels in IPRs and Other PTO Proceedings

By Kevin E. Noonan --

There has been a great deal of angst generated by the practice before the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) of expanding panels from the customary three Administrative Patent Judges to include additional APJ's, including the Chief Judge and his deputies.  This practice was identified, seemingly by accident, during oral argument in Yissum Research Development Co. v. Sony Corp.; there, it became evident that the USPTO administration can and had intervened to alter or expand panels.  This practice has raised concerns regarding whether the PTAB is observing the procedural niceties that ensure due process will be satisfied.  This happened most recently in Ericsson v. Regents of the University of Minnesota and LSI Logic v. Regents of the University of Minnesota, which some commentators have noted are strikingly similar, and the practice has raised judicial eyebrows at the Supreme Court as well as the Federal Circuit.  The most recent donnybrook has involved production of redacted e-mails and other documents requested by counsel and obtained under a Freedom of Information Act request relating to the St. Regis Mohawk Tribe's assertion (unsuccessful, so far) tribal sovereign immunity to avoid Final Written Decision in a series of inter partes review proceedings initiated prior to transfer of patent rights from drugmaker Allergan to the tribe.

In an effort to improve the optics of the situation, a March 13, 2018 "Chat with the Chief (Judge)" program, featuring David P. Ruschke, Chief Patent Judge, joined by Michelle N. Ankenbrand, Lead Administrative Patent Judge, addressed the issue by discussing a study of the use of expanded panels in IPR and other proceedings before the PTAB.  The program started with the assertion that the Chief Judge has the authority (albeit not citing the statutory basis therefor), to expand panels but moderated that statement by emphasizing that expanded panels are "rare" and "ordinarily not used."  Expanded panels, when they are used are used for two purposes.  According to these officials.  First, the panels are used when the Board is considering "issues of exceptional importance," which the Judge's PowerPoint slide characterized as "guidance."  Second (and perhaps more controversially), expanded panels are used to maintain uniformity (termed "consistency") in PTAB (USPTO, actually) policy decisions.  The Chief Judge explained that an expanded panel requires a written request to the Commissioner of Patents or his delegate (who?); the request can come from an APJ, a merits or interlocutory panel, a patent owner or applicant in ex parte matters, or the parties in inter partes reexamination, interference, or "AIA trial."  The request must also contain reasons for expanded panel consideration; this can, again with some controversy, relate to an issue of first impression or "governed by a prior Board decision where Commissioner has determined it would not be in the public interest to follow the prior Board decision" (emphasis added).  Acceptable justifications or rationales include:

• Predictable and uniform application of agency policy
• Similarly situated parties, under the same facts, are treated the same
• Notice to the public

In practice, when expanded panels are employed, it is preferred that the panel include the Chief and a Deputy; include in the decision an explanation of the reason for expanding the panel; and preferably the expanded panel does not change the result arrived at by the original panel.  In view of these rationales, decisions from expanded panels are expected to be designated either as informative or precedential.

The study described by the Chief Judge involved four questions:  1) how frequent were expanded panels convened? 2) under what circumstances? 3) what was the reasoning behind expanding the panel? and 4) what was the result?  The study considered 7,390 petitions filed before December 31, 2017, involving 6,033 institution decisions, 1,912 Final Written Decisions (FWDs), and "thousands" of interlocutory orders.  Expanded panel decisions were assessed "manually" and excluded families where expanded panels were used to conserve resources (multiple consolidated cases).

Regarding the first question, the statistics showed 23 expanded panels of 6,033 institution decisions; 31 expanded panels of thousands of interlocutory orders; no expanded panels in 1,912 FWDs; and 5 expanded panels involving decisions in multiple consolidated IPRs.

Expanded panels when they arose were empaneled to make a decision on the merits 80% of the time and on request for rehearing in the other 20%.

Data on the rationales for expanded panels were explicated in more detail.

There were 21 instances where the panel was expanded at institution to consider questions of statutory interpretation.

These included:

• § 314(a) Multiple Petitions:  General Plastic v. Canon, Case IPR2016-01357, -01358, -01359, -01360, -01361 (PTAB Sept. 6, 2017) (Paper 19) (precedential) (vote from 3-0 to 7-0 with expansion on rehearing)
    – Emphasizes the factors that the Board considers in deciding whether to exercise its discretion to deny a follow-on Petition in an AIA proceeding under 35 U.S.C. § 314(a).

• § 325(d) Similar Art/Arguments:  Neil Ziegmann v. Carlis G. Stephens, Case IPR2015-01860 (PTAB Sept. 6, 2017) (Paper 13) (vote from 3-0 to 5-0 with expansion on rehearing)
    – Emphasizes that prior art or arguments may be considered "substantially the same" under 35 U.S.C. § 325(d) if they are "cumulative to or substantially overlap  with issues previously considered by the Office with respect to the patent."

• CBM Pre-Institution Disclaimer:  Facebook v. Skky, Case CBM2016-00091 (PTAB Sept. 28, 2017) (Paper 12) (precedential) (vote from 3-0 to 5-0 with expansion on rehearing)
    – Emphasizes that CBM patent review eligibility is determined based on the claims of the challenged patent as they exist at the time of the decision to institute, and that statutorily disclaimed claims must be treated as if they never existed for the purpose of institution.

Five instances arose at institution decision for questions of petition requirements.

Four occurred on motion procedure.

Twelve involved decisions to impose sanctions.

Seven involved questions of sovereign immunity; and ten were at the request of the PTAB panel.  In these ten cases, HTC America v. Virginia Innovation Sciences, Case IPR2017-00870, -00871, -00872, -00873, -00874, -00875, -00876, -00877, -00878, -00879 (PTAB Sept. 13, 2017), the original panel suggested expansion to maintain uniformity due to substantial difference of opinion among the judges on a group of 10 related cases regarding an issue arising under 35 U.S.C. § 112(f).

With regard to the fourth question, the Chief Judge contended that the expanded panel came to the same conclusion as the original panel, with the exception of Target Corp. v. Destination Maternity Corp. (IPR2014-00508), and Nidec Motor Co. v. Zhongshan Broad Ocean Motor Co., No. 2016-2321, slip op. (Fed. Cir. Aug. 22, 2017).

The Chief provided these conclusions:

• Expanded panels are very rare
• Most expanded panel decisions issued as original decisions, not decisions on rehearing
• Panels were expanded for guidance and consistency:
    • to provide forward-looking guidance on reoccurring issues; and/or
    • to treat similarly situated parties the same
• Underlying result remained the same after panel expansion on rehearing, except for Target and Nidec, both of which address same-party joinder

Article I courts, and the PTAB in particular, have a legitimate goal:  providing consistent application of the law to applicants and, in the case of implementing the adversarial avenues the AIA created, developing a consistent body of procedural and substantive law.  To this end, for example, the PTAB has designated some (albeit few) cases precedential, thus providing notice to the public regarding how the Office can be expected to conduct the "trials" mandated by the statute.  But the manner in which the Board has attempted to provide this consistency, in particular with regard to expanded panels in post-grant review proceedings, has provoked sufficient controversy that Chief Judge Ruschke felt it necessary (or at least politically expedient) to requisition a study and include the results in his "chat."  The kerfuffle that has arisen over expanded PTAB panels is the direct result of the chimerical nature of the proceedings engendered by the Leahy-Smith America Invents Act.  Characterized as "trials" in the rhetoric used to obtain passage of the Act, the various post-grant review instruments are more in the nature of "a specialized agency proceeding" as the Supreme Court noted in Cuozzo Speed Technologies v. Lee.  Seen in this light the practice of expanding panels to ensure consistency of agency action would appear to have some merit.  Seen as a trial, however, the overriding consideration is due process, wherein a patentee cannot be deprived of her property except in an adjudicatory proceeding where she has a fair opportunity to be heard without the deck stacked against her.  The Office has been zealous in putting patents of purportedly dubious validity through the gauntlet of post-grant review.  To many, the Board needs to be just as zealous in ensuring that patentees be deprived of their patent properties only if due process is followed as rigorously in the Office as it is in district court.  It may be impossible to reconcile these two diverse mistresses intertwined in post-grant review, but if the Office does not, cannot, or will not, eventually the Supreme Court will.

Federal Circuit Issues Stay in St. Regis Mohawk Tribe Sovereign Immunity Appeal

By Kevin E. Noonan --

The Federal Circuit has granted the St. Regis Mohawk Tribe's motion for stay in inter partes review proceedings before the Patent Trial and Appeal Board, in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc.  In the Order, the Court notes that the PTAB had scheduled final hearing in the IPR for April 3, 2018, and that the Court had sua sponte ordered expedited briefing in the Tribe's appeal in advance of a June 2018 date for oral argument.

The Order also contained this passage, indicating a certain degree of impatience with how the PTAB has observed the jurisdictional niceties:

At this juncture, it appears that the appeals divested the Board of jurisdiction over the aspects of the case on appeal, see Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982); Princz v. Fed. Republic of Ger., 998 F.2d 1 (D.C. Cir. 1993) (appeal from denial of motion to dismiss on grounds of sovereign immunity divests district court of jurisdiction over entire case); Apostol v. Gallion, 870 F.2d 1335 (7th Cir. 1989); accord In re Graves, 69 F.3d 1147, 1149 (Fed. Cir. 1995), and that exclusive jurisdiction to resolve the threshold issue of whether these proceedings must be terminated vests in this court, and that the Board may not proceed until granted leave by this court.  The stay shall remain in effect until the day after oral argument in the appeals in June 2018.  The court will address whether the stay shall remain in effect or whether it will be lifted at that time based on further consideration of the merits of the appeals.

The Tribe’s opening brief is due no later than April 18, 2018, and Mylan and the other Petitioners' brief are due no later than May 11, 2018, with the Tribe's Reply brief and the joint appendix due no later than May 18, 2018.  While not specifically mentioned, amicus briefing falls under Federal Circuit Rule 29, wherein briefs will be due one week after the Tribe's brief for amici supporting their position and amici supporting neither party, and one week after Petitioner's brief for its amicus supporters.  Amici must obtain permission of all parties or leave of the court.

What You Can Do to Prevent Multiple Petitions (or How You Can Successfully File One) -- Part I: The PTAB's "Multiple Petition Study"

By George "Trey" Lyons, III --

As an endcap to a recent webinar Andrew Williams and I did on the most important PTAB stories from the past year, I addressed the effects that multiple, often serial, petitions can have on patent owners and their patents, and what can be done to alleviate some of the associated stresses -- or increase them if you're the petitioner.  See Top Stories at the PTAB: What You Need to Know (Mar. 13, 2018), available here.  As final topics often go, however, my coverage was constrainedly brief.  So, here I will unpack the analysis patent owners and petitioners, alike, should keep top-of-mind when moving through this strategy.

To frame this issue, for PTAB petitioners who pay no attention to sunk-cost fallacies, the idea of throwing good money after a bad petition (e.g., those filed by another petitioner, based on different art and/or arguments) may always seem like the most aggressive and effective option at your disposal.  From the point of view of the patent owner, the anxiety of finding yourself as the recipient of a multiple petition barrage crying for the revocation of your hard-earned patent rights is often real, and may even seem fundamentally unfair.

Understanding this concern, late last year the PTAB undertook a comprehensive study to look at just how many patents have actually faced multiple petitions, who filed them, when they were filed, and how effective they were, both in terms of institution rate and the number of challenged patents that were ultimately lost (in whole or part).  See Multiple Petitions Study (Oct. 24, 2017), available here.  Because both the ultimate message (i.e., "Fear not, multiple petitions are really not that big of a threat") and the delivery (e.g., fairly confusing metrics, etc.) felt a little unsettling, a few key aspects of the study are likely worth further explication.

In the study, the PTAB reviewed 7,168 petitions addressing 4,376 patents.  From this, taking a "just the facts" approach where we can, some of the more important statistics presented in the study were as follows:

Who's Filing:  84.8% of patents were challenged by a single petitioner, and 94.5% faced two or fewer.

What's Being Filed:  67% of patents are challenged by one petition, 20.2% of patents are challenged by two petitions, and the numbers fall off quickly from there.

When Are They Filed:  Next, in slightly different approach, the PTAB examined when all of these petitions were actually filed.  The presentation, however, may have been a little misleading considering the topic at hand -- the impact of multiple petitions on post-grant proceedings.  The PTAB's graph below indicates that 79% of petitions are filed before the patent owner preliminary response or institution decision, 95% of petitions are filed in a given petitioner's first round (before any institution decision), and only 5% of petitions are filed after a patent owner preliminary response, but before institution decision.

The slightly confusing part of this graph, however, is that some might interpret it on first impression as applying only to multiple petitions.  Not so.  Instead, the 41% (seen here in purple) included in the PTAB-touted "79% of Petitions" being filed without the benefit of seeing a patent owner preliminary response or institution decision are actually instances in which only one petition was ever filed.  But, if you are more interested in the more pressing question seemingly at the center of the study -- when multiple petitions were filed -- the percentage of "wait-and-see" petitioners are actually much more substantial.  Specifically, normalizing these percentages over the number multiple petitions filed, the impact looks more like this:  64.4% of multiple petitions were filed on or near the same day, 8.4% were filed after the patent owner preliminary response, and 27.19% were filed after the decision institution.  Thus, if you're going to be filing (or facing) multiple petitions, the "wait-and-see" strategy seems to be alive and well.

Finally, perhaps not surprisingly at this point, the Board also found that instances of any further, subsequent rounds of petitions past a second round were statistically insignificant (less than 0.1%, and where a "round" is all petitions filed before receiving a decision institution on one of those petitions).  Considering the typical timeline from filing to institution decision in light of the statutory time bar for filing, the PTAB really only confirmed that there are, statistically, very few instances in which multiple full rounds of petitions were filed.

Based on these figures, it would seem that some of the biggest challenges for patent owners who consider these petitions (and PTAB proceedings generally) as "death marches" for their hard-earned property rights (e.g., facing more than one petitioner, facing more than two petitions) are not, statistically, as relevant as some may have thought; but facing the ever-dreaded (and often effective) "wait-and-see" petitioners may well be.

The impact articulated by the PTAB that these petitions actually have on the challenged patent was also very surprising -- although a little difficult to appreciate in the graphs presented below.

Multiple Petition Effect on Institution Decision:

First, the PTAB noted that although institution rates have decreased, the effect that multiple petitions have on those ultimate institution rates is marginal (70% versus 64% in 2017), but has increased slightly (4% in 2013 to 7% in 2016).  To help cut through these figures, the blue line below indicates a measure of the institution rate by patent, which is agnostic of how many petitions were actually filed against the patent (e.g., two petitions filed against a patent, one gets instituted, one does not = 100% institution rate).  The green line, on the other hand, indicates a measure of the institution rate by petition, which is an outcome averaged by how many petitions were actually filed against the patent (e.g., two petitions filed against a patent, one gets instituted, one does not = 50% institution rate).

Thus, as you can see, although the overall institution rate in post-grant proceedings has decreased over the past four years, the impact of filing multiple petitions has increased slightly (note, the figures for 2017 only include analysis for the first half of the year).  Even so, the PTAB's answer to biggest question left on everyone's lips -- "What will this process ultimately mean for my patent (or the one I'm challenging)?" -- was perhaps the most surprising of all.

Multiple Petition Effect on Ultimate Outcome of the Challenged Patent:

Turning to this answer, it is clear that the real effect of multiple petitions is most naturally viewed by considering how these same variables affect the ultimate outcome of the trial[s] and how the patent itself actually changed by going through it [them].  In the graph below, once again the blue and green coloration reflects the scenarios above, which indicate that 69% of all petitions result in a patent being unchanged and 58% of patents are completely unchanged at the end of one or more AIA proceedings.  Furthermore, the PTAB's figures also indicate that multiple petitions are slightly more beneficial for challenging some claims as unpatentable, as opposed to all claims as unpatentable.  Regardless, from the PTAB's view, the impact of multiple petitions in post-grant proceedings on the number of challenged patents that were ultimately lost (in whole or part) does not seem as great as some people feared.

Takeaways:

Bringing all of this back home, although somewhat hard to believe the results of the PTAB's "Multiple Petition Study" seem to indicate that the threats posed to patent owners by petitioners "abusing the system" and filing multiple petitions is not as rampant or pressing as many believed -- at least based on the PTAB's metrics.  The effect that these statistics really have on strategies for navigating post-grant proceedings moving forward, however, really seems to be threefold, all depending on the chair you're sitting in.

First, if you're in the petitioner's chair, and you want to make multiple attempts at invalidating a patent using these proceedings (e.g., correct deficiencies of your own petition, divide and conquer claims, or show another petitioner what they should have argued), you're going to be inclined to throw good money after what you've perceived to be bad (or, more fairly, incomplete) results.  Second, if you're in the patent owner's chair, you don't really care what this study says or what happened to anybody else, because you just got a second (or potentially third, etc.) petition dropped in your lap and you want to know the best path forward.  And third, if you're in the PTAB's chair, based on this study, you probably don't even think there's a problem, and even if there is, you'll deal with it in the "broad discretion" you've been granted by 35 U.S.C. §§ 314(a) and 325(d).

But all said, because this strategy is likely not going away in the foreseeable future, we will turn to the factors and strategies at play when navigating multiple petition proceedings in light of this study and subsequent case law in the next installment. 

Bosch Automotive Service Solutions, LLC v. Matal -- Follow-up on Who Has Burden After Aqua Products?

By Andrew Williams --

We recently noted that the U.S. Patent and Trademark Office appears to have taken the position that neither party has the burden of persuasion with regard to Motions to Amend after the Aqua Products v. Matal decision.  Certainly, the Patent Owner no longer has the burden, as that is one of the only conclusions that can be ascertained from that en banc decision.  However, in no circumstance has the Board expressed the opposite conclusion that the burden falls on the petitioner.  Instead, everything that has come from the Chief Judge or the Board suggests that the Patent Office has taken a third approach -- that neither party currently has the burden.  As a case in point, the Patent Office filed its Intervenor's Petition for Panel Rehearing last month in Bosch Automotive Service Solutions, LLC v. Matal.  As we noted at the time, the Office was not asking the Federal Circuit to alter its judgment in that case.  Rather, it believed that the panel decision incorrectly stated the holding of Aqua Products.  The Federal Circuit last week granted the petition for the limited purpose of amending the earlier opinion.  However, the new opinion still might not be completely to the Patent Office's liking.

Before granting the petition for this limited purpose, the Federal Circuit had requested a response from Bosch Automotive, to which Bosch asserted that the petition should be denied.  In so doing, it said that "[t]o the extent some of the judges [in Aqua Products] found 35 U.S.C. Section 316(e) ambiguous, the panel opinion in this matter resolved the ambiguity."  The Federal Circuit took this as evidence that the original "opinion could be improperly misread."  Therefore, it amended the sentence:

Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable "by a preponderance of the evidence."  35 U.S.C. § 316(e).

to read instead:

Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable "by a preponderance of the evidence."

Obviously, this still is a pronouncement from the Federal Circuit that the petitioner now bears the burden in Motions to Amend, and any suggestion from the Office to the contrary will need to be revised.  However, it does remove the citation to the statute.  As such, it removes any suggestion that the Court believes that the statute is unambiguous.  Correspondingly, should the Office choose to promulgate rules to shift the burden back to the Patent Owner (as Aqua Products suggests it can), then it could be entitled to Chevron deference (which wouldn't be the case if the statute were unambiguous).

As a result, we are still left guessing whether the Patent Office intends to promulgate such a rule, but the pathway forward appears clearer than it did (if the Office show chooses).  Perhaps newly confirmed Director Iancu will provide some insight during his "Fireside Chat" at the 2018 PTAB Bar Association Conference in Washington D.C. on March 22, 2018.  According to the PTAB Bar, this will be the first time since he was named as Director that he addresses a formal gathering of lawyers who appear before the PTAB.  This author will be in attendance at the Conference, and looks forward to any clue that the new Director might suggest.  We will, of course, continue to monitor developments and report any updates in this space as warranted.

PTAB Releases Orange Book-Listed Patent Study

By Andrew Williams --

Pharmaceutical patent owners have been one of the more vocal groups decrying the creation and existence of inter partes reviews and other PTAB post-issuance proceedings.  And for good reason.  Congress enacted the Hatch-Waxman statute to create an abbreviated approval pathway for generic small molecule drugs.  In so doing, it crafted a fine balance between the interests of branded pharmaceutical NDA holders and generic drug-product manufacturers.  As part of this balance, Congress established a procedure by which ANDA filers could challenge the validity of patents that cover the drug product and methods of its use in district court without needing to launch at risk.  This included the creation of the Orange Book, which listed all such patents.  An ANDA filer wishing to challenge these patents files a Paragraph IV certification for each patent that it believes is not infringed, is invalid, or is unenforceable.  Technically, however, it is the filing of the ANDA that is the act of infringement regardless of whether the patent is Orange Book listed or not.  Nevertheless, with the introduction of IPRs and related proceedings, ANDA filers have a new mechanism to challenge the validity of these patents outside the carefully balanced patent-resolution scheme of the Hatch-Waxman statute.  Correspondingly, the new PTAB proceedings have the potential to shift the balance away from patent and NDA holders and towards generic drug manufacturers.

Likely in response to these concerns, Chief Judge Ruschke announced the results of an Orange Book-listed Patent Study during his "Chat with the Chief" on March 13, 2018.  The meeting presentation slides can be found here.  During the chat, the Chief Judge also revealed the results of an expanded panel study, which we will analyze in a future post.  For the Orange Book study, the PTAB classified a petition as challenging an Orange Book-listed patent if, unsurprisingly, the patent was listed in the Orange Book when the petition was filed.  The data provided was through the end of the fiscal year 2017, which ended on September 31, 2017.  We will look at three of the questions asked by the Office in this study.

What Are the Filing Trends for Petitions Challenging Orange Book-listed Patents?

The PTAB has been releasing filing trends for the various technology centers since at least April, 2015.  For fiscal year 2015, Bio/Pharma patents from TC 1600 accounted for 9% of all petitions filed.  For fiscal year 2017, that number was 11%.  However, it is important to keep in mind that this is a relative number, and that the total number of Bio/Pharma petitions has risen every year (despite the relative number hovering around 10%).  The current study broke down the numbers in this technology center by whether it was an Orange Book-listed patent or a miscellaneous Bio/Pharma patent.  The results since September 16, 2012, and the results for fiscal year 2017 are reproduced below.

The picture that emerges is that, overall, Orange Book-listed patents have accounted for about half of all Bio/Pharma petitions, but that this ratio has recently shifted away from such patents.  This could be due to the rise in the use of IPRs and other post-grant proceedings in the BPCIA context.  The Patent Office also included the actual number of petitions that fell into the Orange Book-listed category, and it appears that such petitions peaked in FY15, with the number of petitions filed in FY17 being about 2/3 of the numbers filed in FY16 (80 versus 127).

How Does the Institution Rate on Petitions Challenging Orange Book-listed Patents Compare to Those of Other Technologies?

The Patent Office highlighted the fact that the cumulative institution rate of Orange Book petitions was essentially the same as the cumulative overall rate (66% versus 68%).  Interestingly, the institution rate of the miscellaneous Bio/Pharma patents was 60%, lower than both.  Moreover, whereas it would have made the study more complicated, it would have been interesting to break out the institution rate number by whether the patents contained composition-of-matter claims or method-of-use claims.

What Are the Outcomes of Challenges to Orange Book-listed Patents?

When looking at the 82 total final written decisions for Orange Book-listed patents, the Office found that more than 50% retained all claims as patentable.  This is an extraordinary number, considering the number for all other technologies was 17%.  The charts are reproduced below:

Nevertheless, the number one "number" highlighted by the study was that 83% of all such petitions resulted in the patent being unchanged.  This is represented in the below reproduced graphic:

Touting this number seems suspect, however.  The Patent Office considered a patent as being unchanged when it survived final written decision, when the parties settled, when the case was dismissed, and when the case was not instituted in the first place.  In addition to the aforementioned success of such patents at the final written decision stage, there are unique factors intrinsic to Orange Book-listed patents that may help explain this number.  For example, Orange Book-listed patent holders may be more motivated to settle with parties in order to retain the listing (and thereby prevent the flood-gates of ANDA filers from opening).  In addition, many petitioners are not the first ANDA filers, and the NDA holder may have already settled with the first filer.  In such cases, there may be less of a barrier to settle with follow-on challengers.  Importantly, the patent holder in such situations may not consider a settlement a positive outcome.

The other two conclusions reached by the study relate to the issue of serial petitions.  In general, the Office has been concerned about multiple petitioners filing against the same patent.  However, the problem seems more pronounced in the Orange Book context because of the potential for multiple ANDA filers for a particular drug product.  Nevertheless, the Office found that 80% of all challenged Orange Book-listed patents have only 1 or 2 petitions filed against it, as opposed to 87% for all challenged patents.  Moreover, 85% of all challenged Orange Book-listed patents have 1 or 2 petitioners, as opposed to 94% for all challenged patents.  These numbers are presented in such a way to suggest that the problem is not as significant as feared.  However, what isn't represented is that 1/3 of all Orange Book-listed patents are challenged by more than one petitioner (as compared to 15.6% for all challenged patents).  Moreover, according to this study, 1/3 of all patents are challenged by more than one petition, but for Orange Book-listed patents, the number is closer to 42%.  Therefore, there does seem to be a multiple-petition or multiple-petitioner problem with this subset of patents.

In any event, this study by the Patent Office is certainly interesting.  It does go a long way to allaying the fears of NDA holders.  Nevertheless, considering that an IPR is a lose-or-draw proposition for any patent holder, and that Orange Book-listed patents are so valuable to NDA holders, this may come as little comfort to the community.  Instead, anything that disrupts the balance struck by Hatch-Waxman is not going to be seen as favorable, no matter how the actual numbers have been borne out.

St. Regis Mohawk Tribe (and Allergan) File Motion to Preclude PTAB Final Written Decision in IPR

By Kevin E. Noonan --

The St. Regis Mohawk Tribe and Allergan filed a joint motion late last week before the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB), arguing that its Notice of Appeal divested the Board of jurisdiction over the inter partes review proceedings related to the Tribe's patents obtained by assignment by Allergan, and thus that the Board can no longer proceed to Final Written Decision in any of these IPRs.  In the alternative, the Tribe argues that the Board should suspend the IPRs under 37 C.F.R. § 42.5(a) pending Federal Circuit review, because "the issues raised in [these proceedings] are important matters of first impression not contemplated by the statutory scheme."

On the divestiture argument, the Tribe's brief in support of its Motion first establishes its right to immediate appellate review under the collateral order doctrine, citing Osage Tribal Council ex rel. Osage Tribe of Indians v. U.S. Dep't of Labor, 187 F.3d 1174 (10th Cir. 1999); Wisconsin v. Ho-Chunk Nation, 512 F.3d 921, 928 (7th Cir. 2008); and In re Board of Regents of The Univ. of Tex. Sys., 435 F. App'x 945, 947-48 (Fed. Cir. 2011), all to the effect that denial of tribal sovereign immunity in an administrative agency proceeding is immediately appealable.  The Tribe cites the Supreme Court standard, that interlocutory review of an order is immediately reviewable if it "conclusively determine[s] the disputed question, resolve[s] an important issue completely separate from the merits of the action, and [is] effectively unreviewable on appeal from a final judgment," citing Justice Brennan's concurring opinion in Mitchell v. Forsyth, 472 U.S. 511, 543 (1985).  The Tribe is entitled to having immunity decided before final judgment, according to the Tribe's interpretation of Supreme Court precedent, because if properly immune, the Tribe should not be subjected to judgment at all.  It is "immunity from suit rather than a mere defense to liability[]" that is at issue, and "[the immunity] is effectively lost if a case is erroneously permitted to go to trial," according to the brief, citing Burlington N. & Santa Fe Ry Co. v. Vaughn, 509 F.3d 1085, 1090 (9th Cir. 2007) (emphasis in original).

The brief counters Petitioners' position that, inter alia, precedent related to immunity is inapposite because an IPR is not a trial but rather a specialized administrative agency proceeding by contending that an IPR is an "adjudicatory process" and the Tribe is asserting absolute immunity from being subjected to it.  Also, sovereign immunity is a jurisdictional issue that can be raised at any time, according to the brief, and the Tribe asserts that it raised it "at its first opportunity to do so - the day it acquired the patents."

As a consequence, the Tribe argues that its appeal divests the Board from jurisdiction over the IPR unless and until the Federal Circuit decides the appeal, citing Forsyth and Apostol v. Gallio, 870 F.2d 1335, 1338 (7th Cir. 1989), to the effect that "[t]he justification for the interlocutory appeal is that the trial destroys rights created by the immunity."  The brief also cites precedent from several Circuit Courts of Appeal as well as the Supreme Court that a notice of appeal divests a district court of jurisdiction.  Closer to home, the brief cites Federal Circuit (In re Graves, 69 F.3d 1147, 1149 (Fed. Cir. 1995)) and Board (Smart Microwave Sensor GmbH, IPR2016-00488, 2017 WL 3669083, at *1 (Aug. 24, 2017)) cases on this point ("The general rule is that the Board is divested of jurisdiction when either party files a notice of appeal to the Federal Circuit.").  The brief also sets forth the equitable basis for its position:  "If this Board went forward despite the appeal, the Tribe will be forced to choose between appearing before the Board, thereby losing its immunity, or risk losing its substantial property rights in absentia."  Hardly seems fair.  And the argument that the Tribe's interests can be adequately represented by Allergan begs the question, because whether or not that is the case is "'inextricably tied' to the question of immunity" that is the subject of the Tribe's appeal to the Federal Circuit.

The brief then ups the ante, by contending that the Board is without authority to ignore these procedural requirements or to have determined that Allergan could adequately represent the Tribe's interests in the IPR:

The Tribe will further argue that PTAB has no authority to create equitable or common law rules to facilitate the exercise of its Congressional mandate through its written decisions and orders in IPRs; only the Director has rulemaking authority under the AIA. 35 U.S.C. § 316(a); Am. Library Ass'n v. FCC, 406 F.3d 689, 698 (D.C. Cir. 2005) (noting agencies have no constitutional or common law authority, only authority granted by Congress).  PTAB has no implied authority to create ad hoc rules and new forms of PTAB standing to facilitate what it perceives to be its mission.  The Supreme Court has held "[r]egardless of how serious the problem an administrative agency seeks to address, [an agency] may not exercise its authority in a manner that is inconsistent with the administrative structure that Congress enacted into law."  Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 125 (2000) (internal quotation omitted).  Doing so "would deal a severe blow to the Constitution's separation of powers."  Utility Air Regulatory Group v. E.P.A., 134 S. Ct. 2427, 2446 (2014).  Thus, on appeal, the Tribe will argue that the Board erred when it deemed Allergan the "effective owner" in order to avoid the Tribe's immunity as an impediment to Board jurisdiction.

In the only portion of the brief resembling a carrot or peace offering, the Tribe argues in the alternative that there is a mechanism for the Board to suspend proceedings in anticipation of the Federal Circuit's ultimate ruling on the tribal sovereign immunity question.  Under 37 C.F.R. § 42.5(a), the Board is empowered to "determine proper course of conduct in a proceeding for any situation not specifically covered" and to "set times by order."  Sovereign immunity is just such an issue that is "not specifically covered" or anticipated by the statute, and thus the Tribe argues in its brief that it is entitled to the "extraordinary relief" contemplated by Rule 42.1(a).  In addition, the brief reminds the Board that the statute already permits the time limit for a Final Written Decision to be extended by six months and (as here) in cases of joinder, citing 35 U.S.C. § 316(a)(11).  The brief mentions that failure to adhere to the statutory time limit is without penalty, and then recites three "distinct and important issues" raised in this case that justify resorting to the extension of time provisions of the statute:

• Tribal immunity from suit before the PTAB;
• The "schism" between the Board's decision regarding tribal immunity and State sovereign immunity in Ericsson Inc., et al v. Regents of the Univ. of Minn., IPR2017-01186, Paper 14 at 4 (Dec. 19, 2017); and
• The panel split over jurisdiction as applied to the tribe in this case and to state actors (universities) in Covidien LP v. Univ. of Fla. Research Found. Inc., IPR2016-01274, Paper 21 at 19 (Jan. 25 2017); Neochord, Inc. v. Univ. of Md. et al, Case IPR2016-00208, Paper 28 at 6-7 (May 23, 2017); Reactive Surfaces Ltd, LLP v. Toyota Motor Corp., Case IPR2016-01914, Paper 36 at 7-8 (July 13, 2017); Minnesota Order at 4-6.

The brief ends with a warning:  "If necessary, the Tribe and Allergan intend to seek emergency relief from the Federal Circuit no later than March 16, 2018."

In addition to the legal issues addressed in the Tribe's brief, another question arises:  by filing this motion is the Tribe (or at least their counsel) playing with fire?  Recall that after filing a motion for discovery regarding, inter alia, whether the PTAB would "stack the panel" by adding members to "ensure consistency with Office policies" (see "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances"), the PTAB in a sharply-worded Order precluded the tribe or their counsel from filing any additional papers in the IPR without express authorization from the Board (see "The PTAB Strikes Back -- Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR").  That Order also included the following warning:

As a final note, we caution counsel for the Tribe that failure to comply with an applicable rule or order, abuse of discovery, and abuse of process are all grounds for sanctions.  37 C.F.R. § 42.12(a)(1), (5), (6).  We strongly advise counsel for the Tribe to review our rules and caution that any further actions that demonstrate a disregard for our process will not be tolerated.  See 37 C.F.R. § 42.12(b).

This prohibition does not apply to the Notice of Appeal, of course, filed at the end of last month (see "St. Regis Mohawk Tribe and Allergan Appeal Denial of Motion to Dismiss on Sovereign Immunity Grounds").  But this Motion once again contains a flavor of mistrust, that the Board will attempt to forestall the Tribe's appeal by mooting it and issuing a Final Written Decision before the Federal Circuit can decide the issue.  Perhaps provoking the kind of response from the Board that the Tribe did with its earlier discovery motion is intentional, the aim being to use any similar response to support a motion to the Federal Circuit for a writ precluding the Board from acting peremptorily.  It is clear that the Tribe and its counsel are willing to use the kind of zealous tactics common in district court litigation against the Board, and that the Board is not used to and does not appreciate being treated in this fashion.  But the stakes here, for both Allergan and the Tribe (and all tribes; see "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs") are apparently sufficiently high to justify ruffling a few Administrative Patent Law judge's feathers in the process and the Tribe and its counsel show no reluctance to ruffle.

St. Regis Mohawk Tribe and Allergan Appeal Denial of Motion to Dismiss on Sovereign Immunity Grounds

By Kevin E. Noonan --

Clearly wishing to maintain the momentum and initiative in its inter partes review proceedings before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office, the St. Regis Mohawk Tribe and Allergan jointly filed a Notice of Appeal to the Federal Circuit yesterday under 35 U.S.C. § 141, 28 U.S.C. § 1295(a)(4)(A), and 37 C.F.R. § 90.2 for the PTAB's decision denying the Tribe's Motion to Dismiss IPRs in those patents assigned to the Tribe by Allergan last fall.  The parties indicated in a footnote that Allergan was identified as a "patent owner" on the appeal solely due to the PTAB's order that the caption must so designate what the parties contend is an exclusive licensee.  The Notice bases the procedural competence of the appeal under 28 U.S.C. § 1295(a)(4)(A) on the collateral order doctrine, which according to the Notice can be invoked to overcome the final judgment rule under 28 U.S.C. § 1291 regarding questions of tribal sovereign immunity; cited in support of this application of the doctrine to tribal immunity questions are several appellate court decisions, including Chehazeh v. Attorney Gen. of U.S., 666 F.3d 118, 136 (3d Cir. 2012); Burlington N. & Santa Fe Ry. Co. v. Vaughn, 509 F.3d 1085, 1094 (9th Cir. 2007); Osage Tribal Council ex rel. Osage Tribe of Indians v. U.S. Dep't of Labor, 187 F.3d 1174, 1179 (10th Cir. 1999); In re Board of Regents of Univ. of Texas Sys., 435 F. App'x 945, 947-48 (Fed. Cir. 2011); and Baum Research & Dev. Co. v. Univ. of Massachusetts at Lowell, 503 F.3d 1367, 1369 (Fed. Cir. 2007).

The Notice also recites a litany of grounds for the appeal; for the Tribe these include:

• Whether the Board erred in denying the Tribe's Motion to Dismiss for Lack of Jurisdiction Based on Tribal Sovereign Immunity.

• Whether the Board erred in finding that inter partes review is not the type of "suit" to which an Indian tribe would traditionally enjoy immunity under common law, declining to find the holding in Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743, 754-56 (2002), applies to Tribal sovereigns as it does State university sovereigns.

• Whether the Tribe is entitled to a dismissal of the Proceedings under tribal sovereign immunity because an IPR is adjudicative in nature, Tribes have inherent immunity from suit, and absent express abrogation, there is no indication that Congress intended the Tribe be subject to actions in this forum.

• Whether the Board's conclusion that it is not adjudicating claims and that it has no authority to provide a remedy against the Tribe in the Proceedings means the Board also lacked statutory authority to proclaim the Tribe lacks immunity from participation in the Proceedings.

• Whether the Board erred in concluding that tribal sovereign immunity is a defense that may only be raised by statutory authority, rather than a jurisdictional threshold issue that can be raised at any time in the Proceedings.

• Whether the Board erred in holding that the Tribe may not assert immunity from participation in the Proceedings based on the Board's conclusion that the Proceedings are "federal administrative proceedings" despite the fact that the Proceedings were instituted and prosecuted by private parties and as such, were private actions brought by Petitioners.

• Whether the Board erred in holding that it does not exercise personal jurisdiction over the Tribe as a patent owner.

• Whether the Board erred in finding that the Tribe's assertion of its sovereign immunity does not serve as a basis to terminate these inter partes review Proceedings.

• Whether the Board erred in finding that the Tribe is not an indispensible party to the Proceedings.

• Whether the Board erred in finding that Allergan obtained all substantial rights in the patents at issue in these Proceedings.

• Whether the Board's Decision should be found unlawful due to any of the statutory reasons set forth in 5 U.S.C. § 706(2).

• Whether inter partes review violates the Constitution by extinguishing private property rights through a non-Article III forum.

• Whether the rules applied or misapplied and decisions rendered during the Proceedings violated the Tribe's due process rights to a fair hearing.

And for Allergan:

• Whether the Board erred in finding that Allergan obtained all substantial rights in the patents at issue in these Proceedings.

• Whether the Board erred in finding that Allergan "remains an effective 'patent owner' of the challenged patents in these proceedings" and erred in denying Allergan's requests and motion to withdraw from the Proceedings.

The Tribe and Allergan (and the PTAB) remain under the specter of the rule for completing an IPR within twelve months of institution, which in this case is March 31, 2018.  This date is already delayed due to the Board's decision to consolidate IPRs from different parties and use the consolidation decision date as the date from which the deadline was calculated.  The Board has the discretion to extend this date by an addition six months under appropriate circumstances, however.  And in many ways it would be appropriate in this case (inter alia, being as the PTAB asserted in its denial decision a question of first impression regarding whether tribal sovereign immunity applies to IPR proceedings).  Should the PTAB deign to abide by the March 31st deadline, this Notice could be moot.  On the other hand, the Federal Circuit could order the Board to stay proceedings on the merits while it considers this appeal.  The Office has not responded to this motion, but in view of how quickly the PTAB denied the Tribe's earlier motion for discovery (see "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances" and "The PTAB Strikes Back -- Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR"), it is likely that the Office's response will not be long in coming.

PTAB Denies St. Regis Mohawk Tribe's Motion to Terminate IPRs based on Sovereign Immunity

By Kevin E. Noonan --

In an extensive, 42-page per curiam opinion, the Patent Trial and Appeal Board (PTAB) surprised no one last Friday by denying the St. Regis Mohawk Tribe's motion to terminate several inter partes review proceedings based on the Tribe's assertion of tribal sovereign immunity.  In an effort to avoid undue suspense, the Board provided a pithy summary of its decision at the beginning of the opinion:

Upon consideration of the record, and for the reasons discussed below, we determine the Tribe has not established that the doctrine of tribal sovereign immunity should be applied to these proceedings.  Furthermore, we determine that these proceedings can continue even without the Tribe's participation in view of Allergan's retained ownership interests in the challenged patents.  The Tribe's Motion is therefore denied.

The Board's decision is consistent with Board rule, 37 C.F.R. § 41.121(b), that the proponent of a motion bears the burden of establishing their right to the relief requested.  It is also consistent with the Board's evident policy position from recent decisions (see Ericsson Inc. v. Regents of the University of Minnesota, Case IPR2017-01186 (PTAB Dec. 19, 2017) (Paper 14) ("Ericsson"), and LSI Corp. v. Regents of the University of Minnesota, Case IPR2017-01068 (PTAB Dec. 19, 2017) (Paper 19) ("LSI")) that, once instituted, it will not terminate post-grant review proceedings (absent settlement, and perhaps not even then) on sovereign immunity grounds, unless the Director, Congress, or the courts compel them to do so.  And the opinion, in its recitation of the relevant facts, provided the panel with another opportunity to display its pique (see "The PTAB Strikes Back -- Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR") at the Tribe's representatives, stating:

The Tribal Council Resolution states that the Tribe was approached by the law firm Shore Chan DePumpo LLP "to engage in new business activities related to existing and emerging technologies, which may include the purchase and enforcement of intellectual property rights, known as the 'Intellectual Property Project."

In setting forth the legal basis for its decision, the Board recognized that "[a]s a matter of federal law, an Indian tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity," citing Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998).  Nevertheless, the Board applying at least Rule 121(b), refuges in the fact that there is no "controlling precedent or statutory basis" for applying sovereign immunity to IPR.  Acknowledging that this is a "case of first impression" (making its mention of a lack controlling precedent at least inherently redundant), the opinion distinguishes Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743 (2002) ("FMC"), on the grounds that FMC was concerned with State sovereign immunity which is distinct from tribal sovereign immunity by being protected by the Eleventh Amendment and not being subject to abrogation by Congress as tribal immunity is.  The Board states that:

The Tribe and its supporting amici, however, have not pointed to any federal court or Board precedent suggesting that FMC's holding with respect to state sovereign immunity can or should be extended to an assertion of tribal immunity in similar federal administrative proceedings.

The opinion also distinguished State sovereign immunity decisions that recognized the immunity for state universities acting as an "arm of the state" (Covidien LP v. Univ. of Fla. Research Found. Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017) (Paper 21); Neochord, Inc. v. Univ. of Md., Case IPR2016-00208 (PTAB May 23, 2017) (Paper 28); and Reactive Surfaces Ltd, LLP v. Toyota Motor Corp., Case IPR2016-01914, (PTAB July 13, 2017) (Paper 36)) on this basis.

The opinion also disregards analogous decisions of other agencies ("[w]e are not bound by those agency decisions") and also curiously distinguishes Bodi v. Shingle Springs Band of Miwok Indians, 832 F.3d 1011, 1021 (9th Cir. 2016), and Contour Spa at the Hard Rock, Inc. v. Seminole Tribe of Fla., 692 F.3d 1200, 1201 (11th Cir. 2012), both cases having declined to Lapides v. Bd. of Regents of the Univ. Sys. of Ga., 535 U.S. 613 (2002), concerning waiver of state's sovereign immunity based on litigation conduct, to tribal immunity).  The opinion expressly relies on the Board's precedential decision in Athena Automation Ltd. v. Husky Injection Molding Sys. Ltd., Case IPR2013-00290, slip op. at 12–13 (PTAB Oct. 25, 2013), to assert that in contrast to 19 U.S.C. 1337(c) where "[a]ll legal and equitable defenses may be presented' in International Trade Commission (ITC) investigations" that is not the case for 35 U.S.C. § 311(a).

The Board went further than deigning not to grant the Tribe's motion; no doubt in part to stem the expected tide of similar assignment and licensing arrangements, the Board declared that tribal sovereign immunity does not apply to IPR proceedings.  The basis for this decision represents somewhat of a turning of the tables:  rather than addressing the Tribe's point that sovereign immunity should lie unless Congress has specifically abrogated it, the Board decision characterizes IPR proceedings as being the product of a "generally applicable statute" that does not implicate sovereign immunity concerns or protections.  This determination is based on the applicability (or risk) of IPR proceedings against any patent "regardless of ownership," their being "subject to the conditions and requirements of [the Patent Act]."  The opinion cites authority limiting application of tribal immunity for "laws of general applicability," including Donovan v. Coeur d'Alene Tribal Farm, 751 F.2d 1113, 1116 (9th Cir. 1985) (quoting U.S. v. Farris, 624 F.2d 890, 893–94 (9th Cir. 1980), to the effect that such laws must affect "exclusive rights of self-governance in purely intramural matters"; involve "abrogat[ing] rights guaranteed by Indian treaties"; or that there be legislative history that supports a conclusion that Congress did not intend the law to apply to an Indian tribe.  Of course, in this instance none of these apply.

Portions of the opinion appear to imply that IPRs are an assertion of "superior sovereign powers" of the Federal government that tribal immunity cannot thwart, citing Quileute Indian Tribe v. Babbitt, 18 F.3d 1456, 1459 (9th Cir. 1994), and that tribal immunity has not prevented assertion by the Federal government of other administrative proceedings, citing Consumer Fin. Prot. Bureau v. Great Plains Lending, LLC, 846 F.3d 1049, 1058 (9th Cir. 2017), and Menominee Tribal Enters. v. Solis, 601 F.3d 669, 674 (7th Cir. 2010).  In this the Board disregards at least the distinction that in those cases the action was by the government represented by a government lawyer.  The Board also gives little credence to the argument that in an IPR a private third party remains involved, stating that "a private entity's continued involvement as a party in a federal administrative proceeding does not necessarily entitle a tribal entity to assert its immunity in the proceeding."

The opinion contains additional discussion of sovereign immunity as a "common law" concept granting immunity from suit, on the grounds that an IPR is not that sort of suit, and also notes the public interest inherent in IPRs, citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016).  While not basing its decision on the distinction made by several amici (see "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs") between actions in personam and in rem (to the effect that IPRs as an in rem proceeding are not subject to an assertion of sovereign immunity), the Board does note that it has the authority to hold IPR proceedings in cases where the patent owner does not appear and the ability for the Board to continue an IPR even if the parties settle, stating "[t]he Board's authority to proceed without the parties' participation underscores its independent role in ensuring the correctness of granting patentable claims."

Finally, the Board says that the IPR can continue with Allergan alone (i.e., without the Tribe's participation), based on the rights in the patents granted by the license(s) and agreeing with Petitioners that Allergan remains the "patent owner" despite the assignment (while taking pains not to assert that the ownership transfer is a sham).  The opinion cites the Federal Circuit for holding that the "party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights," citing Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250 (Fed. Cir. 2000), and also Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1358–59 (Fed. Cir. 2010), for the proposition that "[a] patent owner may transfer all substantial rights in the patents-in-suit, in which case the transfer is tantamount to an assignment of those patents to the exclusive licensee."  The Board panel recognizes the following analysis of "the rights transferred and the rights retained under the license agreement, including:

(1) the nature and scope of the right to bring suit; (2) the exclusive right to make, use, and sell products or services under the patent; (3) the scope of the licensee's right to sublicense; (4) the reversionary rights to the licensor following termination or expiration of the license; (5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent; (6) the duration of the license rights; (7) the ability of the licensor to supervise and control the licensee's activities; (8) the obligation of the licensor to continue paying maintenance fees; and (9) any limits on the licensee's right to assign its interests in the patent.

Azure Networks, LLC v. CSR PLC, 771 F.3d 1336, 1343 (Fed. Cir. 2014) (vacated on other grounds); see also Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d at 1360–61.  The opinion compares the Allergan-Mohawk Tribe license using these factors; here is the scorecard:

With regard to the first factor, the opinion notes that "[e]ach of the challenged patents is listed in the FDA's 'Orange Book.'  . . .  As such, we find that any viable infringement allegation for the challenged patents would have to necessarily be limited to drug products that require FDA approval . . ." and "[b]ased on the record before us, we find that the Tribe has not retained anything more than an illusory or superficial right to sue for infringement of the challenged patents."  The Tribe's rights to make, use, and sell the patented invention was negligible in the Board's view, because "the claims of the challenged patents are directed to pharmaceutical compositions and methods used to treat human medical conditions, [and under these circumstances] we find Allergan's exclusive right to exploit the challenged patents 'or all FDA-approved uses in the United States' to be a substantial right."  Allergan's rights under the license are "co-extensive in scope" with the claimed invention and the license thus does not limit Allergan's rights "in any meaningful sense."  The opinion further notes that the Tribe's right to sublicense and assign its patents to a third party are restricted, and that "[w]ith respect to 'Contested PTO Proceedings' in particular, which include these inter partes review proceedings, the License provides that '[a]s between the Parties, Allergan shall have . . . the first right, but not the obligation, to defend and control the defense of the validity, enforceability and patentability of the Licensed Patents in such Contested PTO Proceeding.'"

In toto, the Board concluded from this analysis that:

We find these provisions to be significant restrictions on the Tribe's purported ownership rights.  "The right to dispose of an asset is an important incident of ownership, and such a restriction on that right is a strong indicator" of whether a license agreement transferred all substantial rights under the patent.

and:

In sum, upon considering the relevant License terms, we find that Allergan obtained all substantial rights in the challenged patents.  The Tribe points out that Allergan executed an assignment of the challenged patents to the Tribe, and this assignment was recorded at the PTO.  . . .  As recognized by the Tribe, however, a recordation of a patent assignment only creates a rebuttable presumption regarding ownership.  See SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, 1328 (Fed. Cir. 2010).

Importantly, the opinion also states that "[i]n reaching this conclusion, we do not comment on whether the License and the other agreements between the Tribe and Allergan constitute a 'sham' transaction, nor do we need to decide whether the agreements are otherwise improper under the law."

As a consequence, the Board further held that the Tribe is not an indispensible party under Federal Rule of Civil Procedure.  This is important because Supreme Court precedent holds, in Republic of Philippines v. Pimentel, that:

"[a] case may not proceed when a required-entity sovereign is not amenable to suit . . . where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign.  553 U.S. 851, 867 (2008) and "once a tribunal recognizes that an assertion of sovereign immunity is 'not frivolous,' it is 'error' for the tribunal to proceed further to address the merits" (Pimentel, 553 U.S. at 864).

The Board distinguished Pimentel on its facts (involving a foreign sovereign), and on the need for courts to assess based on Rule 19(b) rather than the mere non frivolous assertion of sovereign immunity, citing Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V., 734 F.3d 1315, 1326 (Fed. Cir. 2013).  The Board noted that its proceedings are not bound by the FRCP.  Even if the Board applied Rule 19, the opinion states the Tribe is not an indispensible party:

Allergan has at least an identical interest to the Tribe—if not more of an interest as the effective patent owner for the reasons discussed above—in defending the challenged patents.  Thus, we do not find that the Tribe will be significantly prejudiced in relation to the merits of the patentability challenges in these proceedings if it chooses not to participate based on its alleged tribal immunity because Allergan will be able to adequately represent any interests the Tribe may have in the challenged patents.

The original panel rendered this decision, putting at rest for the moment any inference of possible impropriety at least implied by the Tribe's motion for discovery on this issue (among others); see "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances").  But this clearly is not the end of the matter; it remains to be seen whether the Board quickly follows with a Final Written Decision on the merits (due within the statutorily mandated twelve months on March 31st) or whether the Tribe files a Notice of Appeal on this issue (although the availability of such an appeal, likely to be considered interlocutory in nature, is uncertain; it is unlikely the PTAB will certify the question or otherwise facilitate an early appeal).  And there remain efforts in Congress (inter alia, by Senator Claire McCaskill; see "A Bill to abrogate sovereign immunity of Indian tribes as a defense in inter partes review of patents") to abrogate by statute assertion of sovereign immunity by Indian tribes in patent cases.  Stayed tuned.

Arthrex, Inc. v. Smith & Nephew, Inc. (Fed. Cir. 2018)

By Kevin E. Noonan --

Although having built up a track record for several years and several thousand petitions and "trials," inter partes review proceedings under the Leahy-Smith America Invents Act are still relatively new.  As a statute administered by an administrative agency having the power (and duty) to promulgate rules effecting implementation of that statute, IPRs, like many administrative proceedings, have in due course generated controversies on how the statute has been implemented.  A fair number of these controversies have been reviewed by the Federal Circuit (see "Redline Detection, LLC v. Star Envirotech, Inc. (Fed. Cir. 2015)"; "Aqua Products, Inc. v. Matal (Fed. Cir. 2017)"; "Wi-Fi One, LLC v. Broadcom Corp. (Fed. Cir. 2018) (en banc)") and the Supreme Court (see "Cuozzo Speed Technologies LLC v. Lee (2016)"), and indeed even the constitutionality of the proceedings has put in question (see "Oil States Energy Services, LLC v. Greene's Energy Group, LLC").  This week, the Federal Circuit ruled on the proper interpretation of another PTAB Rule, entry of adverse judgment under 37 C.F.R. § 42.73(b) in Arthrex, Inc. v. Smith & Nephew, Inc., affirming the PTAB's interpretation of the rule.

The case arose in an IPR against Arthrex's U.S. Patent No. 8,821,541; claims 1-9 were challenged (remaining claims 10 and 11 were not) and claim 1 is representative:

1.  A suture anchor comprising: an anchor body having a longitudinal axis, a proximal end, a distal end, a central passage, a first suture opening, and a second suture opening, wherein the central passage extends along the longitudinal axis, the central passage extends from the first suture opening which is located at the proximal end of the anchor body and through a portion of a length of the anchor body, the first suture opening is encircled by a perimeter of the anchor body, and the second suture opening extends through a portion of the anchor body; a rigid support fixed to the anchor body, wherein the rigid support extends across the central passage and has a first portion and a second portion spaced from the first portion, the first portion branching from a first wall portion of the anchor body and the second portion branching from a second wall portion of the anchor body, the rigid support spaced axially away from the first suture opening along the longitudinal axis of the anchor body, and the second suture opening is disposed near the rigid support; and at least one suture strand threaded into the central passage, wherein the at least one suture strand is supported by the rigid support and threaded through the first suture opening and the second suture opening of the anchor body.

Prior to institution of the IPR, Arthrex disclaimed claims 1-9 under 37 C.F.R. § 42.107(e) and filed their preliminary response to the petition, arguing that the Board should dismiss the petition because Rule 107(e) precludes instituting an IPR on disclaimed claims.  Arthrex also asserted in its petition that it was not requesting that the Board enter an adverse judgment, rather Arthrex argued that the Board's rule precluded the Board from instituting the IPR because all the challenged claims had been disclaimed.  Nevertheless, the Board entered an adverse judgment, based on its interpretation of another rule, under 37 C.F.R. § 42.73(b), which states:

A party may request judgment against itself at any time during a proceeding. Actions construed to be a request for adverse judgment include:
    (1) Disclaimer of the involved application or patent;
    (2) Cancellation or disclaimer of a claim such that the party has no remaining claim in the trial;
    (3) Concession of unpatentability or derivation of the contested subject matter; and
    (4) Abandonment of the contest.

(emphasis in opinion).  The significance of entering judgment is that the estoppel provisions of 37 C.F.R. § 42.73(d)(3)(i) attached; these provisions prevent a patent owner from "taking action inconsistent with the adverse judgment, including obtaining in any patent . . . [a] claim that is not patentably distinct from a finally refused or canceled claim."  This rule materially affected the scope of claims Arthrex could pursue in two pending continuation and a third more recently filed applications.  Arthrex appealed; as part of that appeal the Federal Circuit denied Smith & Nephew's motion that Arthrex was precluded from appealing this decision under 35 U.S.C. § 319 because the Board had not entered a Final Written Decision.

The Federal Circuit affirmed, in an opinion by Judge Dyk joined by Judge O'Malley (who filed a concurring opinion) over a dissent by Judge Newman.  The panel first held that the Board's decision was appealable, not falling within the proscriptions of 35 U.S.C. § 314(d) regarding institution decisions.  The panel majority started from the presumption that PTAB decisions were appealable as for any other final administrative agency action.  5 U.S.C. §§ 701,704.  The panel also found support in 28 U.S.C. § 1295(a)(4)(A), which provides for judicial review of final agency action absent statutory provisions precluding review.  The Board did not find the Court's decision in St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014), to be to the contrary, based on the different procedural posture in that case (which considered whether § 1295(a)(4)(A) permitted appeal of the PTAB's decision not to institute, which is precluded by § 314(d)).

Next the panel held that, Arthrex having disclaimed any argument regarding whether the PTAB had exceeded its statutory authority to promulgate the rules, the PTAB properly applied its rules under these circumstances.  The panel rejected the argument that Arthrex had immunized itself from adverse judgment by specifically asserting that it was not requesting adverse judgment by disclaiming claims 1-9; the panel stated that if this was the rule then any patentee disclaiming any claims in an IPR would make the same representation; this would "render the rule a nullity," according to the Court.  Moreover, the panel majority believed that the language of the rule centered around how the Board construed the disclaimer and was not dependent on representations from a patentee.  The panel also rejected Arthrex's argument that an adverse judgment should be entered only if claims are disclaimed after an IPR is instituted; the panel backed the Board's interpretation that "an adverse judgment may be entered after a petition has been filed, but before an IPR proceeding has been instituted."  The Board interpreted the rule to mean that there is no remaining claim "ready for trial," whether the IPR has been instituted or not.  Accordingly, the panel majority stated that

The purpose of the estoppel provision is to "provide[ ] estoppel against claims that are patentably indistinct from those claims that were lost."  For this purpose, there seems to be no meaningful distinction between claims that are cancelled before an IPR proceeding is instituted and claims that are cancelled after an IPR proceeding is instituted [citations omitted].

In Judge O'Malley's concurrence, the Judge agrees with the outcome under the present rule but has "doubts about whether the Director had the authority under 35 U.S.C. § 316 (or any other statutory provision) to issue that regulation or whether, if so, the regulation was properly promulgated."  Specifically, the Judge finds a contradiction with the result here and the result in Facebook, Inc. v. Skky, LLC, No. CBM2016-00091, 2017 WL 4349404, at *3 (P.T.A.B. Sept. 28, 2017), where the Court held that covered business method patent review cannot be instituted on disclaimed claims.  She cites the Board's position in that case as "our case law requires that statutorily disclaimed claims must be treated as if they never existed and therefore those claims cannot support institution of CBM review."  If that is the case, then for Judge O'Malley it should also apply here and "if the Board lacks the authority to institute review based on statutorily disclaimed claims, as § 42.107(e) and Facebook seem to indicate, it is unclear to me why the Board would have the authority to take any other action—particularly prior to institution—with respect to disclaimed claims."

Judge O'Malley also disagreed with the Board's position that the word "proceeding" as used in Rule 73(b) includes both the time before and after institution, i.e., the entire time period from when the petition is filed until a Final Written Decision is issued.  But under Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016), however, "[t]he IPR does not begin until it is instituted."  Entering an adverse judgment in this case seems to the Judge to be a contradiction of this controlling Federal Circuit precedent.  And nowhere in the AIA provisions regarding IPRs can Judge O'Malley find the authority for the Board to enter an adverse judgment in an IPR.

Judge Newman's dissent is based on her opinion that Arthrex had disclaimed all claims challenged in the petition prior to the Board's decision whether to institute an IPR, and accordingly under 37 C.F.R. § 42.107(e) there were no claims against which an adverse judgment could be entered.  For Judge Newman, the relevant language of 37 C.F.R. § 42.73(b) in subparagraph (2) is that "[c]ancellation or disclaimer of a claim such that the party has no remaining claim in the trial" (emphasis in opinion), because under the factual circumstances at bar there was no trial and thus entering an adverse judgment was contrary to the express language of the rule.  Judge Newman believes that the PTAB has exceeded its statutory authority, and it is "[t]he judicial obligation is to assure agency compliance with its legislated authority," citing Nat'l Broad. Co. v. United States, 319 U.S. 190, 224 (1943).  For Judge Newman, "[s]ubsection (b)(2) on its face is directed to disclaimer or cancellation 'in the trial.'  It is not disputed that 'in the trial' can occur only after institution."  Thus, because claims 1-9 were disclaimed before the IPR was instituted, it is a misapplication of the rule for the Board to have entered an adverse judgment.  Any other interpretation is for Judge Newman an explicit change in the rule, which requires rulemaking procedures specified under the APA (35 U.S.C. § 2(b)(2)(B)).

Arthrex, Inc. v. Smith & Nephew, Inc. (Fed. Cir. 2018)
Panel: Circuit Judges Newman, Dyk, and O'Malley
Opinion by Circuit Judge Dyk; concurring opinion by Circuit Judge O'Malley; dissenting opinion by Circuit Judge Newman

Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs

By Kevin E. Noonan --

In what everyone (including the Patent Trial and Appeal Board) considers an unprecedented administrative action, the PTAB late last year set out an order (Patent Trial and Appeal Board's Order, 2017 WL 5067421, P.T.A.B. Nov. 3, 2017) inviting amicus briefing on the question of whether the transfer of patent rights from Allergan to the St. Regis Mohawk Nation should lead the Board to dismiss several consolidated inter partes review actions (Nos. IPR2016-01127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, and IPR2016-01132, instituted against U.S. Patent Nos. 8,685,930, 8,629,111, 8,642,556, 8,633,162, 8,648,048, and 9,248,191, respectively) on the grounds of sovereign immunity (see "Mohawk Nation Exercises Sovereign Immunity in Inter Partes Review").  The Board has ruled previously that state universities, as "arms of the state," could so assert the immunity and have such IPRs dismissed (see Covidien LP v. Univ. of Fla. Research Found., Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017); NeoChord, Inc. v. Univ. of Md., Balt., Case IPR2016-00208 (PTAB May 23, 2017); and Reactive Surfaces Ltd., LLP v. Toyota Motor Corp., Case IPR2016-01914 (PTAB July 13, 2017)).  The question is not as clear for the Native American tribes, because their sovereign immunity is more proscribed and subject to abrogation by Congress (albeit requiring express and unequivocal government action; see, Santa Clara Pueblo v. Martinez and Ransom v. St. Regis Mohawk Educ. and Cmty. Fund, Inc., 86 N.Y.2d 553, 560 (1995)).  Even assertion of sovereign immunity by the several States is controversial (see "The Wall Street Journal's Problem with the U.S. Constitution"); indeed, the Board denied a motion to dismiss recently based on assertion of the patent in parallel district court litigation (see "PTAB Decides Patent Infringement Lawsuit Waives Eleventh Amendment Sovereign Immunity to Inter Partes Review").

Despite its unconventionality, fifteen amicus briefs were filed, almost evenly split between those believing that the Tribe could properly assert sovereign immunity and the Board should dismiss the IPRs and those distinguishing this case from the grants of dismissal to state universities on both legal and policy grounds.  (As set forth below, one brief breaks the tie in favor of denying the motion, under a unique contract law theory.)  The briefs were filed by the following parties:

In favor of granting the motion to dismiss

• Amicus Curiae Brief of the Oglala Sioux Tribe
• Amicus Curiae Brief of The National Congress of American Indians et al.
• Amicus Curiae Brief of Luis Ortiz and Kermit Lopez
• Amicus Curiae Brief of Scholars
• Amicus Curiae Brief of the Seneca Nation
• Amicus Curiae Brief of the NAIPEC
• Amicus Curiae Brief of U.S. Inventor, LLC

In favor of denying the motion

• Amicus Curiae Brief of the SIIA
• Amicus Curiae Brief of The Association for Accessible Medicines
• Amicus Curiae Brief of The BSA | The Software Alliance
• Amicus Curiae Brief of the Public Knowledge and the Electronic Frontier Foundation
• Amicus Curiae Brief of Askeladden LLC
• Amicus Curiae Brief of Deva Holding A.S.
• Amicus Curiae Brief of the High Tech Inventors Alliance
• Amicus Curiae Brief of James R. Major

One of these briefs, by practitioners Luis Ortiz and Kermit Lopez challenged the Board's authority to solicit amicus briefs on this question:

[T]he APA only allows an agency to engage in rulemaking through the notice and comment procedure set forth in 5 U.S.C. § 553, unless the agency is creating rules that "are required by statute to be made on the record after opportunity for an agency hearing."

And:

Allowing amici briefs in this IPR by parties aligned with the petitioners does nothing more than allow various commercial interests to complain in the wrong forum.  Only Congress, whose elected members have the authority and duty to make the political decision whether to abrogate sovereign immunity, and who must face voters after such decisions, can choose to eliminate sovereign immunity for Indian tribes in IPRs [emphasis in brief].

A similar sentiment was echoed in the brief in favor of denying the Tribe's motion, filed by the Public Knowledge and Electronic Frontier Foundation (as amicus collegii), which argued that public notice and comment under the APA are the proper route to permit public comment -- "[t]hat procedure would enable participation by members of the public with key knowledge or interests, would guarantee consistency across Board decisions, and would work to avoid conflicts with other policy decisions and positions of the Office."  Certifying the question to the Director would have the advantages that 1) "a notice and comment proceeding would enable all interested parties to participate and provide useful information to the Office and the Board, and to do so without expensive and onerous requirements of retaining registered counsel"; 2) "certification to the Director will avoid inconsistent policy across panels of the Board"; and 3) the Director is best positioned to assess any consequences for the Office as a whole."

Otherwise, as might be expected, the briefs recite common themes.  Briefs in favor of granting the motion and dismissing the IPRs focus on it being the exclusive provenance of Congress to make any determinations on the scope of sovereign immunity for the Tribes, and that even the Supreme Court has been circumspect in encroaching on Congressional purview in this regard.  These briefs also advocate the policy goals of tribal self-sufficiency; for example, the Oglala Sioux tribe's brief with regard to public policy of encouraging tribes for commercial activity and self-sufficiency, cities White Mountain Apache Tribe v. Bracker to the effect that these efforts can't just be "casinos alone."  Several of these briefs take solace in Justice Sotomayor's concurring opinion in Michigan v. Bay Mills Indian Community, 134 S.Ct. 2024(2014).  In that case, the Justice stated that:

"Tribes face a number of barriers to raising revenue in traditional ways," and, thus, "[i]f Tribes are ever to become more self-sufficient, and fund a more substantial portion of their own governmental functions, commercial enterprises will likely be a central means of achieving that goal."  134 S.Ct. at 2041 (Sotomayor, J., concurring) (emphasis added).

The Ortiz and Lopez brief argues that "[t]he PTO has no expertise in determining the scope of sovereign immunity in any context" and addressed the policy arguments by saying "[t]he Board cannot interpret the statutes it administers to meet a policy goal contrary to clearly stated Congressional will, nor can the Board manipulate the statutes it interprets in a way not commensurate with Congressional intent," citing Utility Air Regulatory Grp. v. EPA, 134 S.Ct. 2427, 2445 (2014).  And, using the types of assessments the Supreme Court has been known to employ, their brief argues that the Leahy-Smith America Invents Act was enacted in light of current precedent regarding tribal sovereign immunity, including Kiowa Tribe of Okla. v. Manuf'g Techs., Inc., 523 U.S. 751 (1998), Okla. Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505 (1991) ("Potawatomi I"), and Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978) -- Potawanomi being particularly relevant because it involved sovereign immunity regarding a tribe's commercial activity -- ("not a close call") under Michigan v. Bay Mills Indian Community, 134 S.Ct. 2024, 2037 (2014), that it is up to Congress to limit tribal sovereign immunity.  Finally, this brief uniquely cites Executive Order 13175 in support of "tribal sovereignty and self-determination" and that "[a]gencies shall respect Indian tribal self-government and sovereignty."

The brief from the National Congress of American Indians raised the pending Supreme Court decision in Oil States and Congressional action (including the STRONGER Patents Act) as reasons for the Board to delay making a decision, counsel that may be less persuasive in view of the statutory 12-month time limit on rendering a decision (albeit tempered by the additional 6-month extension available under extraordinary circumstances, a standard the current situation should easily satisfy).  This brief also finds support for sovereign immunity outside the Constitution (which could be restricted to the States), finding the basis for the immunity in English common law, ALEXANDER HAMILTON, THE FEDERALIST NO. 81, 548-49 (Jacob E. Cooke ed., 1961).  Insofar as the immunity derives from common law it should be "applicable to all sovereigns: federal, state, tribal, and foreign."

The common themes that 1) abrogation of sovereign immunity is limited to Act of Congress, and 2) the PTAB would be outside of its Constitutional scope as an Article I court is found in briefs from the Seneca Nation and U.S. Invent, an inventor group, the latter brief arguing:

[I]t would be inconceivable that an Article I administrative agency has the authority to make binding decisions concerning the applicability of Native American tribal sovereign immunity when the U.S. Supreme Court -- which has plenary judicial oversight of that same administrative agency -- has declared that absent Congressional legislation, the Court does not have the power to qualify or limit the assertion of Native American sovereign immunity.

This point is also the focus of a brief from a group of Constitutional scholars, including Lawrence Tribe, William Eskridge Jr., Erwin Chemerinsky, Joseph Singer, David Orozco, and Jonathan Massey.  This brief (as well as the Seneca Nation brief) cites Republic of Philippines v. Pimentel, 553 U.S. 851, 864 (2008), which states that "once a tribunal recognizes that an assertion of sovereign immunity is 'not frivolous,' it is 'error' for the tribunal to proceed further to address the merits."  The brief also asserts that the question of tribal sovereign immunity is beyond the Board's "statutory purview and institutional expertise":

The Supreme Court has established that administrative agencies should not decide questions — especially complex and sensitive questions, such as those arising from Petitioners' arguments against tribal sovereign immunity — beyond their statutory purview and institutional competence.  In such situations, agencies lack the expertise to resolve broader policy issues and risk interference with Congress's legislative prerogatives.  Further, an agency acting beyond its purview lacks legitimacy and accountability.  Controversial measures such as Petitioners' proposed restrictions on tribal sovereign immunity require a broader national democratic debate than an agency like the Board can provide [citing Hampton v. Mow Sun Wong, 426 U.S. 88, 116 (1976), Greene v. McElroy, 360 U.S. 474 (1959), and King v. Burwell, 135 S. Ct. 2480, 2489 (2015)].

This institutional incompetence is exacerbated by the allegations that:

[T]he Allergan/Mohawk contract is a 'sham agreement'[,] a 'sham assignment'[,] a 'scheme[] to buy tribal immunity for dubious activities'[,] and even an example of 'rent-a-tribe' schemes" [internal quotation marks and citation omitted] because "[n]ot only are these arguments highly disrespectful to the sovereign Tribe, but adjudicating them will embroil the Board in an intrusive and politically charged inquiry into tribal motivations and the policy wisdom of tribal economic freedom.  These are issues for Congress, not the courts, and not an agency.

Allegations that the underlying agreement is a sham are also addressed in an amicus brief from the Native American Intellectual Property Enterprise Council.

In like manner, briefs from amici arguing that the PTAB should deny the Tribe's petition make many of the same arguments, the most prominent of which is that IPRs are proceedings in rem ("one against the world") and not in personem, and that sovereign immunity does not bar these proceedings, analogous to bankruptcies.  The brief from the BSA/The Software Alliance argues that the IPR provisions of the AIA are "statutes of general applicability" (an argument also made in the brief from Askeladden LLC) subject to what they call the Tuscarora rule, from Fed. Power Comm'n v. Tuscarora Indian Nation, 362 U.S. 99, 116 (1960), that such statutes apply unless the application is related to or would abrogate some aspect of tribal autonomy or self-governance.  This brief, as well as most of the other briefs on this side of the question, take the language of the Supreme Court's Cuozzo opinion (see "Cuozzo Speed Technologies LLC v. Lee (2016)") that IPRs are not "mini-trials" or in the form of a lawsuit but rather specialized agency proceedings (despite the rhetoric from supporters of these proceedings that they are indeed intended to be in the form of an adversarial proceeding as a substitute for litigation).

The policy argument in this brief, as well as others in favor of denial, is that "the IPR process serves to advance the important public policy—rooted in the Constitution's Patent and Copyright Clause—of ensuring that the American public and economy are not burdened by unwarranted monopolies."  The brief also analogizes the IPR proceedings to other agency actions, including NLRA (NLRB v. Little River Band of Ottawa Indians Tribal Gov't, 788 F.3d 537, 555–56 (6th Cir. 2015)), OSHA (Menominee Tribal Enters. v. Solis, 601 F.3d 669, 674 (7th Cir. 2010); Reich v. Mashantucket Sand & Gravel, 95 F.3d 174, 177–82 (2d Cir. 1996)), ERISA (Smart v. State Farm Ins. Co., 868 F.2d 929, 932–36 (7th Cir. 1989)), and EEOC (EEOC v. Fond du Lac Heavy Equip. & Constr. Co., 986 F.2d 246, 249 (8th Cir. 1993).

The brief from the Association for Accessible Medicines makes similar arguments, characterizing their "significant interest in ensuring that brand-name drug manufacturers are not allowed to abuse the U.S. patent system by attempting to invoke rented Native American tribal immunity to frustrate the Board's authority to review erroneously issued patents."  This brief emphasizes the purported "sham" nature of the assignments and echoing the in rem arguments made by other amici.  This brief also analogizes to other cases involving private property and inapplicability of sovereign immunity, all under state law (Anderson & Middleton Lumber Co. v. Quinault Indian Nation, 929 P.2d 379, 381 (Wash. 1996); Smale v. Noretep, 208 P.3d 1180, 1180 (Wash. Ct. App. 2009); Cass Cnty. Joint Water Res. Dist. v. 1.43 Acres of Land, 643 N.W.2d 685, 688 (N.D. 2002)).  Their contribution to the policy argument is to assert that:

[A]llowing a drug company patent owner to force an IPR to halt on the eve of an IPR hearing, by paying tens of millions of dollars to rent tribal immunity, would reward bad-faith behavior.  It would also provide other holders of weak but extremely profitable patents with a roadmap for shielding their patents from review while wasting the valuable resources of their competitors and the Board.

And:

Prior Board decisions involving sovereign state entities are of limited relevance here because none of those cases involved last-minute bad-faith transfers specifically intended to divest the Board of its authority to take a second look at an issued patent—actions that cannot be squared with equity or good conscience.

The brief from the Software and Information Industry Association characterizes IPRs as a compromise intended to improve patent quality and "restore confidence in the presumption of validity afforded patents issued by the Patent and Trademark Office."  The brief (as is also argued in the brief from Askeladden LLC) relies heavily on Judge Bryson's decision granting the Tribe's motion to join ANDA litigation involving some of these same patents:

The essence of the matter is this: Allergan purports to have sold the patents to the tribe, but in reality it has paid the Tribe to allow Allergan to purchase—or perhaps more precisely, to rent—the Tribe's sovereign immunity in order to defeat the pending IPR proceedings in the PTO . . . .  If that ploy succeeds, any patentee facing IRO proceedings would presumably be able to employ the same artifice.  In short, Allergan's tactic, if successful, could spell the end of the PTO's IPR program, which was a central component of the America Invents Act of 2011.

According to this brief, if the Board does not deny this motion, tribal immunity will be asserted in most if not all IPRs (a fear not without some justification; see "More Instances of Tribal Sovereign Immunity Shielding Patents from PTAB Invalidation").

A brief from the High Tech Inventors Alliance, Computer & Communications Industry Association, and Internet Association repeats the argument that patent laws are law of general applicability from which sovereign immunity provides no protection, basing this characterization in part because "[private petitioners] cannot compel the Patent Office to conduct a review and their ongoing participation is unnecessary to complete one" (another argument also made in the brief from Askeladden LLC).  According to this brief, "[i]nter partes review is thus 'less like a judicial proceeding and more like a specialized agency proceeding' in which third parties that petition for review 'need not have a concrete stake in the outcome; indeed, they may lack constitutional standing,'" citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143-44 (2016).  According to this brief (in an argument made nowhere else), "tribes that own patents must, like all other patentees, pay the fees to maintain the patent, or else the patent will expire.  See 35 U.S.C. § 41(b).  The condition that the Patent Office may reexamine or review the patent is no different."

At least one of the amici arguing for denial of the Tribe's motion has a specific interest in the decision:  Deva Holding A.S. is a Turkish company, in an "early stage" lawsuit against Allergan.  This amicus argues that substitution is unnecessary (and thus tribal sovereign immunity does not prevent IPRs to proceed) because the Tribe and Allergan have identical interests based on litigation conduct, and so Allergan can represent the Tribe's interests -- "actions speak louder than words."  In this argument, the purported inconsistency of positions before the Board and the Court, citing a specific September 8, 2017 letter to the Court, mandate this conclusion and provide sufficient basis to deny the Tribe's motion.

In addition to its recommendation that the Board would be better to certify the question to the PTO Director, the amicus collegii brief from the Public Knowledge and Electronic Frontier Foundation cites Hazel-Atlas Glass Co. v. Hartford-Empire Co. and Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co. (inequitable conduct) for the "patents in the public interest" concept, saying that the PTAB is an "agency of public justice" and draws analogies to Supreme Court decisions precluding limitations on challenging validity, including Laboratories v. University of Illinois Foundation, Medimmune v. Genentech, Cardinal Chem. Co. v. Morton Int'l, Inc., and Lear v Atkins.

The brief from James R. Major, D. Phil., opposes the tribe's motion on contractual grounds, arguing that Tribe's patent rights outside the grantback to Allergan are illusory and thus the assignment nugatory, and that the Tribe has no independent interests to assert.  These rights include "research, scholarly use, teaching, education, patient care incidental to the foregoing, sponsored research for itself and in collaborations with Non-Commercial Organizations . . . ."  Dr. Major's point is that the Tribe already had these rights because they were immune from patent infringement liability due to the exercise of sovereign immunity:

In sum, any infringement suit that the Tribe has the first right to bring would fail.  Therefore, the right of the Tribe to enforce the Licensed Patents in infringement suits unrelated to a Generic Equivalent is nugatory.

In Dr. Major's view, "the Agreement has stripped the Tribe of any meaningful rights in the Licensed Patents."

The time for filing amicus briefs in this matter has passed, and the Board is scheduled to render its decision by spring.