United States: Federal Circuit Judges Voice Concern Over PTAB Practice Of Denying AIA Petitions Based On "Redundancy"

In a recent oral argument, Federal Circuit judges criticized the USPTO practice of not instituting AIA post grant proceedings on grounds considered "redundant" of other grounds in a petition. The USPTO conceded that it uses "redundancy" to control its docket without substantive review of the grounds presented in a petition, but contends that its decisions effectively are not subject to judicial review. Two Federal Circuit judges expressed concern that the practice may be unconstitutional and may prevent litigants from having "their day in court."

Practice Points:

  • USPTO's PTAB has adopted practice of denying some grounds alleged in a petition seeking to invalidate a patent as "redundant" over other grounds.
  • A PTAB decision to institute review of a claim based on some, but not all, alternative grounds for invalidity based on redundancy may preclude a subsequent challenge on the non-instituted grounds due to estoppel and other restrictions placed on AIA petitions.
  • The Federal Circuit panel's recent open criticism of the redundancy practice may signal an attempt by the court to check the practice, despite cases holding that institution decisions are generally not subject to court review.


The Leahy-Smith America Invents Act created three new administrative proceedings to allow members of the public to challenge the validity of issued patents without the expense of federal court litigation: Inter partes review ("IPR"), Post grant review ("PGR"), and the Transitional Program for Covered Business Method Patents ("CBM"). The AIA provides that the Patent Trial and Appeal Board ("PTAB") must reach a final determination within 12 months after institution of review proceedings, with a six month extension available for good cause. 35 U.S.C. § 316(a)(11). The unexpected popularity of AIA post grant proceedings has resulted in a surprisingly high volume of petitions seeking review. One technique adopted by the USPTO to manage the AIA trial docket is to institute review on less than all the claims, and on less than all the grounds, identified in a petition seeking review. Most controversial is the PTAB's practice of denying institution on grounds deemed "redundant" of other grounds in the petition. 

The USPTO justifies redundancy-based denials as an exercise of the agency's broad discretion whether to grant AIA review petitions. The Patent Act and the regulations promulgated by the USPTO regulating AIA trials do not expressly identify redundancy as a ground for denying institution of review on a particular claim or ground, but give the USPTO authority to prescribe regulations. For example, 35 U.S.C. § 316(a) states that, "The Director shall prescribe regulations . . . (2) setting forth the standards for the showing of sufficient grounds to institute [IPR review]," and § 316(b) identifies as factors to be considered in formulating regulations "the efficient administration of the Office, and the ability of the Office to timely complete proceedings[.]" The Patent Rules governing IPRs merely provide that "the Board may deny some or all grounds for unpatentability for some or all of the challenged claims. Denial of a ground is a Board decision not to institute inter partes review on that ground." 37 C.F.R. § 42.108(a).

The PTAB explained its rationale for denying petitions based on redundancy in an early CBM decision, Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., No. CBM2012-00003, Paper 7 (PTAB 2012). In Liberty Mutual, the petition identified over 400 different grounds of invalidity directed to 20 claims. The PTAB explained that this large number of combinations created an undue burden on both the patent owner and on the PTAB, and could result in delays in arriving at a final decision. The PTAB placed the burden on the petitioner to identify its strongest ground for challenge, and noted that in the absence of any prioritization the PTAB would institute on grounds it selected.

As the PTAB faced increasing volumes of AIA petitions, and limited resources threatened to prevent the agency from reaching final decisions in IPR and CBM proceedings within 12 months from the date of institution, the PTAB increased its use of redundancy as a basis to deny review of some challenged claims. Despite the approach set forth in Liberty Mutual, the PTAB adopted a practice of denying petitions to institute on "redundant" grounds without affording the petitioner an opportunity to comment on the strength of each ground. As a result, the PTAB may grant a petition for less than all the challenged claims, and even as to those claims the PTAB may consider less than all the references or combination of references alleged to invalidate. For example, in Shaw Indus. Group Inc. v. Automated Creel Sys. Inc., IPR2013-00132 (PTAB), the PTAB denied review on seven of 15 alleged grounds of invalidity, without explanation as to how it evaluated the merits of the grounds. In fact, the PTAB instituted review of less than all the claims, and denied as "redundant" an allegation that one reference independently anticipated multiple claims. 

A decision to deny a petition for review on grounds deemed to be redundant creates several potential difficulties for the petitioner. First, the grounds chosen for review may not be the strongest grounds for challenging a patent. Second, the petitioner may never receive substantive review of the grounds deemed redundant, due to time limits for commencing an IPR, and/or by an estoppel arising from a final determination in which the claim survives the ground chosen for review. See, e.g., 35 U.S.C. § 315(a)(1) (IPR must be filed within one year of action by petitioner or real party in interest seeking to invalidate patent) and § 315(e) (estoppel bars petitioner from asserting in a later proceeding "any ground that that the petitioner raised or reasonably could have raised" during IPR proceeding).

Federal Circuit Panel Criticizes "Redundancy" Practice

During oral argument in an appeal of the Shaw Industries matter, two judges of the Federal Circuit closely questioned the USPTO's counsel concerning the PTAB's use of redundancy as a means to pare issues in AIA review proceedings. Shaw Indus. Group, Inc. v. Automated Creel Systems, No. 2015-1115 (Fed Cir. Arg. Nov. 2, 2015). The USPTO admitted that petitions are denied, in part, based on redundancy as an administrative measure to allow the PTAB to manage its volume of AIA trial proceedings. The USPTO contended that a decision to deny review on redundancy was not a substantive agency decision, and was based on practical considerations relating to the board's ability to complete review within the prescribed one-year time limit.

In addition, the USPTO continued to press its position that a PTAB decision to institute is not subject to judicial review. See 35 U.S.C. §§ 314(d) and 324(d). See also St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp., 749 F.3d 1373 (Fed.Cir.2014); ZOLL Lifecor Corp. v. Philips Elecs. N. Am. Corp., 577 F. App'x 991 (Fed. Cir. 2014).

The Federal Circuit panel was openly skeptical of the USPTO's position. When the agency agreed with Circuit Judge Kimberly A. Moore's understanding that a denial of institution on redundancy grounds was not a "substantive" determination, but rather meant that the issues not instituted were "redundant in terms of too many different grounds of rejection," she criticized the practice as resembling "Putting a blindfold on and throwing darts at a wall and deciding which grounds to go forward with. I see no rhyme, reason, or logic in the decisions made." For example, Judge Moore pointed out that the PTAB decided that one reference cited by the petitioner in Shaw was redundant, and did not institute review based on that reference, even though it was the only reference cited as anticipating numerous claims in the challenged patent.

Circuit Judge Jimmie V. Reyna criticized the practice as amounting to a substantive decision, stating that, "You are doing something that prevents in my opinion some litigants from . . .  having their day in court."

Practical Significance:

Although comments made during oral argument must be interpreted with caution, the comments by Judges Moore and Reyna appear to reflect concern about the PTAB's practice of denying review in order to meet the board's procedural time constraints, rather than based on an assessment of the substantive merits. To the extent that a petitioner is not afforded the opportunity to elect the grounds it seeks to review, the practice may raise due process concerns. Although the Federal Circuit does not have jurisdiction to review a PTAB decision to institute, it retains the power to consider actions using its mandamus power. In addition, the Federal Circuit's pointed criticism of the PTAB's practice may cause the agency to reconsider its practices without direct court intervention.

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