Supreme Court Reviews the Scope of Inter Partes Review

On April 24, 2018, the United States Supreme Court decided SAS Institute Inc. v Iancu, an important decision dealing with the scope of inter partes review (“IPR”) in the U.S. Patent and Trademark Office.

In an IPR proceeding a petitioner can seek to challenge the patentability of issued patent claims alleged to be anticipated or obvious in light of prior art patents or printed publications. If, based on the evidence and arguments the petitioner presents the Patent Office determines there is a reasonable likelihood that the petitioner “would prevail with respect to at least 1 of the claims challenged in the petition”, the Patent Office institutes a review. See 35 U.S.C. §314(a).

If a review is instituted based on the petitioner’s evidence, the patent owner has an opportunity to submit evidence and arguments in response. There is also an opportunity to cross-examine the other side’s witnesses and for oral argument. The Patent Office Trial and Appeal Board will then issue a final written decision. The IPR statute, and in particular Section 318(a), states that the final written decision “shall” be on “any patent claim challenged by the petitioner.”

The SAS case asked the Court to consider the propriety of the Patent Office instituting an IPR for some, but not all, of the claims challenged in the IPR petition. See 37 CFR §42.108(a). SAS argued that a “partial institution” runs counter to the language of Section 318(a) that states that the final written decision shall be issued with respect to “any patent claim challenged by the petitioner.”

Justice Gorsuch, writing for a 5-4 majority, agreed that the partial institution of an IPR on some but not all of the challenged claims runs counter to the “plain text” of Section 318(a). The Supreme Court ruled that “when 318(a) says the Board’s final written decision ‘shall’ resolve the patentability of ‘any patent claim challenged by the petitioner,’ it means the Board must address every claim the petitioner has challenged.” Slip. op. at 5 (emphasis in original). Justice Gorsuch explained the 318(a)’s “directive is both mandatory and comprehensive. The word ‘shall’ generally imposes a nondiscretionary duty. And the word ‘any’ naturally carries ‘an expansive meaning.’” Id.at 4 (citations omitted).

On April 26, 2018, the Patent Office issued its “Guidance” on the impact of SAS which provides that in the future “[a]s required by the decision, the PTAB [Patent Trial and Appeal Board] will institute as to all claims [challenged in the petition] or none.” In other words, the Patent Office will institute an IPR reviewing all of the challenged claims, or deny the petition in its entirety.

Additionally, the Patent Office said, “At this time, if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.” (Emphasis added.) This eliminates the Patent Office’s previous partial institution practice in which it sometimes only included some of the grounds asserted by the petitioner. See 37 CFR §42.108(a). Although not specifically addressed by the holding of the SAS decision, if it institutes an IPR, the PTO will now include all grounds submitted in the petition. However, by including the language “at this time”, the Patent Office is leaving open the possibility that its policy on this issue may change in the future.

For pending IPRs where the review was partially instituted on some but not all claims and grounds, absent agreement by the parties to waive additional claims or grounds the PTAB will ordinarily issue an order on all challenged claims and grounds. The PTAB will also order the parties to meet and confer to consider the need for additional briefing, evidence and argument, as well as whether to extend any deadlines.

By statute, a final written decision should be issued within a year of granting the petition. However, that time limitation may be extended by six months “for good cause shown.”  In its “Guidance,” the Patent Office states that “cases near the end of the 12-month statutory deadline may be extended on a case-by-case basis, if required to afford all parties a full and fair opportunity to be heard.”

As a result of SAS and its implementation at the Patent Office the PTAB’s and parties’ workload will increase with respect to pending partially instituted IPRs, which will now be expanded to address all claims and grounds included in the petition. For new cases, parties will need to assess the Patent Office’s binary all or nothing approach, and consider carefully how many claims to include in an IPR. While on first blush a patent challenger may think it best to include every possible line of attack, this may backfire if the grounds are not strong enough and the Patent Office decides not to institute a review at all. Therefore, challengers will still need to assess and present their strongest grounds for invalidity.

If you are considering an IPR or are currently involved in one and want to consider how SAS impacts your case, please contact us.

Leave a Reply

Your email address will not be published. Required fields are marked *