United States: How Much Discretion Does The Patent Trial And Appeal Board Have In Instituting Inter Partes Reviews?

2016 promises to bring clarity to issues that have confounded a country in the throes of change. No, we do not mean the presidential election. Instead, we are looking forward to the Federal Circuit's review of a number of decisions by the Patent Trial and Appeal Board. This guidance will provide increased clarity for practitioners as the Federal Circuit weighs in on matters both procedural and substantive. Two recent decisions address the scope of the Board's discretion in instituting inter partes reviews and conducting trials.

Synopsys v. Mentor Graphics

The Board may grant IPR if "there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition." 35 U.S.C.§314(a); 37 C.F.R.§42.4(a). The Board has discretion to review only certain claims in a petition, or only certain grounds raised by the petitioner. The Board's institution decision is not appealable. 35 U.S.C.§314(d).

In Synopsys, Inc. v. Mentor Graphics Corp., No. 2014-1516, 2014-1530, 2016 U.S. App. Lexis 2250 (Fed. Cir. Feb. 10, 2016), Synopsys sought review of claims 1-15 and claims 20-33 of Mentor's patent as anticipated or obvious in light of various prior art references. The Board instituted review of only claims 1-9, 11, and 28-29 based on a single prior art reference, denying review of the remaining claims. After a hearing, the Board issued a written decision invalidating claims 5, 8, and 9. Synopsys appealed the decision, arguing the Board should have found claims 1 and 28 invalid and that the Board erred in issuing a final written decision that did not address the validity of all claims raised in the petition. Because an institution decision is not appealable, Synopsys instead challenged the scope of the final decision itself, arguing that "because§318(a) directs the Board to issue a final written decision with respect to 'any patent claim challenged by the petitioner,' the Board's final decision must address every claim raised in the petition."

The Federal Circuit looked at the language of the statute to determine that Congress used different language to refer to claims challenged in a petition and claims adjudicated in the final written decision and rejected the argument that Congress intended the IPR proceeding to be a complete substitute for invalidity determinations in district court. Instead, the Federal Circuit affirmed that the validity of claims for which the Board did not institute review could still be litigated in district court.

Redline Detection LLC v. Star Envirotech

At the other end of the process, the Federal Circuit has confirmed that the Board has discretion to decline review of timely filed "supplemental" information from a petitioner. 37 C.F.R.§42.123 provides that a party may file a motion to submit supplemental information after an IPR is instituted. Subsections (b) and (c) of the Rule, addressing late submission of supplemental information and other supplemental information, require Board authorization to file and a showing of good cause. Subsection (a) does not include those requirements — it simply requires that the motion be timely filed and that the supplemental information is relevant to an instituted claim.

Redline submitted an IPR petition seeking review on twelve grounds based on combinations of four prior art references. Redline planned to timely supplement its petition under 37 C.F.R.§42.123(a) to include expert declarations after the Board issued its institution decision. Because Redline's obviousness arguments could not be supported without the supplemental information — including a 60-page expert declaration — Redline believed it met the requirement of relevance. The Board denied Redline's motion, stating that Redline did not provide any justification for submitting the information after institution beyond a desire to reduce costs. The Board then upheld the challenged patent. Redline Detection, LLC v. Star Envirotech, Inc., No. 2015-1047, 2015 U.S. App. LEXIS 22897 (Fed. Cir. Dec. 31, 2015).

On appeal Redline pointed to the language of the statute, noting the lack of requirement for good cause in subsection (a), and argued that the Board's decision was arbitrary and capricious because the Board has permitted other petitioners to timely submit supplemental information. The Federal Circuit held that the Board was entitled to deference in interpreting its own rules and that its interpretation of 37 C.F.R.§42.123(a) was not plainly erroneous. Requiring the Board to accept all timely, relevant supplemental information would read out other portions of the regulations governing IPR and trial proceedings and would remove the Board's discretion to grant or deny motions under 37 C.F.R.§42.5(a) and (b).

These decisions continue a trend of the Federal Circuit confirming the Board's discretion in interpreting the statues and regulations governing IPRs. We will continue to follow the Federal Circuit's jurisprudence in this area while we wait for the Supreme Court's decision in Cuozzo Speed Techs. v. Lee. The Supreme Court granted certiorari on January 15 of this year. Cuozzo Speed Techs. v. Lee, 193 L. Ed. 2d 783 (2016). In the meantime, put all your supporting evidence in the petition, and think carefully before trying to appeal institution decisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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