Intellectual Property

The Supreme Court Limits the Power of the PTAB

4/25/2018 | Article

Authors:

Scott Chambers, Ph.D.

Richard Oparil

Matthew Zapadka

In SAS Institute Inc. v. Iancu, available here, the Supreme Court limited the power of the U.S. Patent and Trademark Office (USPTO)in Inter Partes Review (IPR) proceedings. The Court held that the USPTO must address all claims in validity challenges in IPRs and it must address all arguments raised in validity challenges as required by the provisions enacted under the American Invents Act. The Patent Trial and Appeal Board (Board), which is the USPTO body that decides the administrative challenges known as IPRs, had been interpreting the Patent Act to permit it to limit its proceedings to only those claims in the patent that it said a patent challenger had a reasonable likelihood of successfully invalidating, given the initial challenger's filing. Thus, while a patent challenger might, for example, attack ten claims in a patent, the Board could pick and choose to only review some of the claims. The Supreme Court, in a 5-4 decision, said that was improper. The Supreme Court issued this decision on the same day the Court issued its decision affirming the constitutionality of IPRs.

According to the Court, when the USPTO initiates an IPR it must resolve all of the claims set forth in the challenger's petition and not limit its review to some of those claims. The statute authorizing IPRs said that the PTAB must write a final written decision as to “any patent claim challenged.” However, the Board had been instituting trials only on the arguments that were likely to win, and its final written decisions only addressed those claims. The Supreme Court said that approach is inconsistent with the statute’s plain language. The decision to institute trial is a simple yes or no question, and the PTAB’s practice of instituting trial on just some claims is improper. This is important because the estoppel provisions of IPRs that limit later challenges by accused infringers only apply to claims that have actually been instituted by the Board.

IPRs will continue to be a method of invalidating patents, which provides an alternative course to challenging patents in district court, particularly those that were improvidently issued. Nonetheless, it is not yet clear how the Board will handle claims that it did not believe had a reasonable likelihood of being invalidated when it instituted the IPR. In addition, this decision raises questions regarding Chevron deference and makes it imperative that the patent challenger determine early on which validity challenges she is willing to sacrifice in district court as a result of challenging them before the Board and may be estopped from later challenging them in district court. This decision leaves the dozens—if not hundreds— of IPRs in progress indeterminate. By statute, IPRs must be completed within 18 months:  the Board's already-issued institution decisions may not have included all of the challenged claims, and thus, may be rapidly progressing contrary to this decision.