The Supreme Court and IPRs – a Mixed and Messy Bag of Results

April 24, 2018
Patterson Thuente IP

In the Oil States decision handed down today, Justice Thomas authored the 7-2 majority decision affirming the constitutionality of IPR proceedings over challenges based on Article III separation of powers and the 7th Amendment Right to Trial by Jury.  Depending upon which camp you are in, this will be seen as either generally favorable (petitioners) or generally unfavorable (patent owners).

In the SAS Institute decision also handed down today, Justice Gorsuch authored the 5-4 majority decision strictly construing what the Patent Trial and Appeal Board must rule upon in a Final Written Decision at the end of an IPR trial. In overturning USPTO rulemaking, Justice Gorsuch held that the Board is not authorized to render so-called “partial institution” decisions. Instead, the statute is clear that the Board must address all of the claims that are being challenged by a petition in a Final Written Decision at the end of an IPR trial. Regardless of which camp you are in, this decision is a mixed and messy bag of results.

The SAS Institute decision creates immediate chaos and uncertainty for the hundreds, if not thousands, of IPR proceedings for which an IPR trial has been instituted but all appeals are not yet finalized. Will IPR cases already on appeal be remanded, en mass, by the Federal Circuit back to the Board to effectively rework each Final Written Decision?  Will parties be allowed to introduce evidence and/or arguments in pending IPR trials relative to claims for which an IPR trial was not instituted, and would this apply if pending appeals are remanded? If non-instituted claims must now be addressed in each Final Written Decision, does that effectively end the partial approach to patentee estoppels set forth in the Federal Circuit’s Shaw Industries decision (817 F.3d 1293)?

On the brighter side. the mixed and messy SAS Institute decision may be the push Congress needs to revisit the America Invents Act and address the many issues relating to fairness, procedures, claim construction, claim amendments, and burdens of proof that commentators have raised regarding IPR proceedings.

In the interim, it is likely that the USPTO will be forced to provide some type of stop-gap measure in response to the SAS Institute decision. The Office will need to promulgate rules as quickly as they can on how to deal with claims challenged in a petition that were not part of the claims for which an IPR trial was instituted. One approach to such a stop-gap solution would be to promulgate rules that no new evidence or arguments can be introduced by the parties during an IPR trial for any claims which did not meet the threshold test for institution, and that the Board will repeat the same analysis set forth in the Decision to Institute relative to such non-instituted claims as part of any Final Written Decision.  USPTO rule promulgation, however, is never a quick and clean process, so it may be at least several months before even stop-gap measures will be in place.

Together, the two decisions on IPRs handed down by the Supreme Court today forecast an active and uncertain summer in the world of IPRs.

 

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