A Look at Inter Partes Reviews One Year After ‘SAS Institute’

Written by: Christopher H. Blaszkowski

This article first appeared in the January 10, 2019 edition of the Legal Intelligencer.

In October 2017, the U.S. Supreme Court issued a boon to patent challengers (also known as “petitioners” at the Patent Trial and Appeal Board (“PTAB”)) in SAS Institute Inc. v. Iancu, holding that the PTAB must issue a final written decision as to any patent claim challenged by an inter partes review (“IPR”) petitioner.  Immediately thereafter, the PTAB issued written guidance explaining its new “binary” decision following SAS, namely to “institute as to all claims or none.”   Currently, if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.”  The PTAB has since clarified that, with respect to “challenges,” it meant that not only would the it cease its “partial institution” practice of instituting on fewer than all claims (forbidden by SAS); it would also cease instituting on fewer than all grounds of invalidity raised in a challenge (not specifically forbidden by SAS).

The SAS ruling had immediate and significant effects on certain post grant proceedings on appeal.  In pending appeals of cases in which the PTAB had instituted a trial on some, but not all grounds or claims (a “partially-instituted case”), the Court of Appeals for the Federal Circuit has summarily granted remand requests.  SAS also opened up a new avenue of appeal for patent challengers.  Previously, if the PTAB declined to institute a ground or claim raised by the patent challenger, there was no ability to appeal that (institution) decision.  Now that the PTAB must institute on all grounds/claims or none—the patent challenger can continue to fight its challenges through appeal (assuming the PTAB’s “binary” decision is to institute trial).

So, how has SAS affected post grant proceedings over the past year?

SAS REMANDS GENERALLY

Nothing unexpected here.  Petitioners involved in the appeal of a partially-instituted case quickly realized that the Federal Circuit would grant requests to remand.  The Federal Circuit concluded that remanding the appealed partially-instituted cases prior to a merits determination is “the most efficient course of action ….”  Ulthera, Inc. v. DermaFocus LLC, No. 2018-1542 (Fed. Cir. May 25, 2018).  Rather than having to first consider the appealed grounds, then remand for the PTAB’s consideration of the non-instituted grounds and wait for an almost-certain second appeal, the Federal Circuit opted to have the PTAB complete the record prior to appeal.  As such, partially-instituted cases have flooded back to the PTAB.

The Federal Circuit has granted remand requests before briefing even began in certain cases.  See, e.g., Ulthera, No. 2018-1542; Baker Hughes Oilfield Operations, LLC v. Smith Int’l, Inc., No. 2018-1754 (Fed. Cir. May 30, 2018).  In others, cases were remanded following briefing, but without any determination on the merits of the appeal itself.  Nestlé Purina Petcare Co. v. Oil-Dri Corp. of Am., No. 2017-1744 (Fed. Cir. Jun. 11, 2018); Polaris Indus. Inc. v. Arctic Cat, Inc., No. 2017-1870 (Fed. Cir. May 30, 2018).

Notably, the petitioner is not required to have even previously objected to the PTAB’s partial institution to obtain a remand.  In Baker Hughes, the Federal Circuit clarified that remand was available even if the petitioner failed to raise an objection with the PTAB regarding partial institution, because doing so would have been futile pre-SAS.  In other words, petitioners did not waive the ability to seek a remand of a partially-instituted case on appeal by failing to raise the issue previously before the PTAB.

REQUEST REMAND OR FACE ESTOPPEL

We know that, following SAS, Petitioner could seek remand of an appealed partially-instituted case—but what happens if they don’t?  What happens to petitioners who—either intentionally or not—did not assert SAS as a basis for remanding an appealed partially-instituted case?

At least one case considering this issue determined that the petitioner who does not seek such a remand is estopped from subsequently pursuing these non-instituted grounds in district court or a subsequent post grant proceeding.  35 U.S.C. § 315(e)(2), the estoppel statute, provides that “the petitioner in an inter partes review of a claim in a patent … that results in a final written decision … may not assert … in a civil action … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” (emphasis added).

In SiOnyx, LLC v. Hamamatsu Photonics K.K., the defendant/petitioner failed to seek remand of a partially-instituted case.  330 F. Supp. 3d 574, 600 (D. Mass. 2018).  In the underlying federal patent litigation, the district court found that, post-SAS and under the plain language of 35 U.S.C. § 315(e)(2), this must result in estoppel:  “HC could have appealed and sought such a remand in order to allow the PTAB evaluate the claims and grounds that it raised in its petition on which the PTAB did not institute review. It therefore ‘reasonably could have raised’ those grounds before the PTAB against any claim in the [patent], and is estopped from raising them again before this Court.”  Id.

Given that the PTAB no longer permits partially-instituted cases, post SAS, petitioners should not be facing the same dilemma as the Hamamatsu defendant/petitioner.  But the SiOnyx decision is a warning to be vigilant regarding the doctrine of estoppel and its evolution in response to the Supreme Court’s attention to post grant proceedings, generally.

POST-SAS CHALLENGES

Challenges to the regime created by SAS still continue.  Recently, the PTAB ruled that there is no requirement for a petitioner to show that all of its challenges will be successful in order to institute an inter partes review.  In Nichia Corp. v. Document Security Systems, Inc., the patent owner argued that SAS actually required the PTAB to deny institution for all challenges if “any challenge to any claim in the Petition is deficient.”  Paper 11, p. 11 Case No. IPR2018-01165 (Dec. 11, 2018).  The pre-SAS rules—consistent with the partial institution practice at the time—permitted a claim-by-claim and ground-by-ground evaluation.  The patent owner reasoned that the Director was required to prescribe new regulations following SAS that would permit the PTAB to institute all grounds against all challenges, regardless of whether the petitioner established a reasonable likelihood of prevailing on all challenged claims and all grounds.

The PTAB rejected this argument.  In particular, the PTAB found that the guidance in SAS was sufficiently clear, and that the binary decision to institute did not conflict, nor create any ambiguity, with the existing regulatory framework.  The Director, according to the PTAB, was not required to issue new regulations consistent with SAS.

GOING FORWARD

The dust has largely settled, as the PTAB has ceased its practice of partially instituted post grant proceedings.  Most (if not all) of the pre-existing partially instituted cases have now been remanded and/or reconfigured to add (or waive) the non-instituted grounds and/or claims.  Moving forward, Institution Decisions will include all grounds, if even a single ground actually forms the basis of the Decision.  This will also remove at least some of the ambiguity regarding which grounds/claims are subject to estoppel pursuant to 35 U.S.C. § 315(e)(2).

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