Federal Circuit Decides that Disclaimer Filed Before Institution of a Post Grant Proceeding Is a Request for Adverse Judgment

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On Wednesday, the Federal Circuit ruled that filing of a disclaimer by the patent owner pre-institution in an inter partes review is correctly construed as a request for adverse judgment by the patent owner. While the patent owner Arthrex, Inc. did not dispute the cancellation of the challenged claims on appeal, Arthrex asked the Federal Circuit to consider whether a rule allowing a party to request adverse judgment against itself in a post-grant proceeding applies when the party did not specifically request adverse judgment and the disclaimer was filed prior to institution of proceeding. Smith & Nephew, Inc., the party that filed the petition in underlying IPR2016-00917, lodged counterarguments that (1) the entry of adverse judgment was not an appealable decision, and (2) absent entry of adverse judgment, Arthrex would be free to prosecute claims that are patentably indistinct from the claims it had disclaimed.

After initially deciding that the entry of adverse judgment was indeed appealable since it was a final judgment that terminated the IPR proceeding, the Federal Circuit turned to the regulation at the center of the appeal—37 C.F.R. § 42.73(b)). In doing so, the court considered Arthrex’s statement filed with its disclaimer that “[b]y filing the statutory disclaimer, Arthrex, Inc. is not requesting an adverse judgment.” The court was unmoved by Arthrex’s arguments that the regulation at issue was inapplicable based on Arthrex’s characterization of its disclaimer filing. In addition, the Federal Circuit held that the timing of the disclaimer filing did not affect the applicability of the regulation. In sum, whether the disclaimer was filed before or after institution, with or without a characterization of the disclaimer filing by the patent owner, the act of filing the disclaimer by the patent owner qualifies under § 42.73(b) as a request for adverse judgment.

Since a disclaimer relinquishes rights to the challenged claims, why did Arthrex find it necessary to appeal the entry of adverse judgment? Briefly, along with an adverse judgment comes estoppel against claims that are patentably indistinct from those claims that were surrendered. Accordingly, the upheld adverse judgment could prevent Arthrex in the future from pursuing certain patent claims related to the suture anchor technology featured in the surrendered claims. In fact, Arthrex recently filed a patent application claiming priority to the patent at issue here, the examination of which will be affected by the upheld adverse judgment.

The Federal Circuit’s decision yesterday should serve as a cautionary tale for patent owners contemplating a course of action in a post-grant proceeding similar to Arthrex. While disclaimers may certainly be the right course of action in certain scenarios, we now know from Arthrex’s unsuccessful appeal arguments that a disclaimer filing will be treated as a request for adverse judgment, which will then trigger the estoppel provision for any related pending or future patent applications. Therefore, when contemplating a disclaimer in a post-grant proceeding, a patent owner should consider the implications on any pending patent applications in the family.

If you are interested in reading the entire precedential opinion from the Federal Circuit, it can be found here (17-1239).