Review of All Claims in Petition for Inter Partes Review Required after SAS Institute
Intellectual Property News
On the same day that the Supreme Court upheld the constitutionality of inter partes reviews, it ruled in SAS Institute Inc. v. Iancu that the United States Patent and Trademark Office wrongly implemented regulations allowing for partial institution of the reviews. Writing for a five justice majority, Justice Gorsuch explained that, under the plain text of the statute, a petitioner in an inter partes review “is entitled to a final written decision addressing all of the claims that it has challenged.” Although SAS was previously overshadowed by the potential implications of Oil States (coverage of that decision here), the decision in SAS will have significant impacts for accused infringers and patent owners.
The Partial Institution Practice of the Patent Trial and Appeal Board
An important feature of the America Invents Act was the creation of inter partes reviews. These reviews allow a third party to challenge an issued patent before the Patent Trademark Trial and Appeal Board at the Patent Office. As compared to previous forms of post-grant review, inter partes reviews “look a good deal . . . like civil litigation.” The process begins when a party files a petition to institute review, which must identify one or more claims challenged as unpatentable. Based on that petition and the patent owner’s response, the board must determine whether there is “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims.” If there is, the board may exercise its discretion to institute (or not institute) review. Once review is instituted, the board “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner” (35 U.S.C. § 318(a)).
Implementing this statutory scheme, the Patent Office issued a regulation providing that, “[w]hen instituting inter partes review, the [Director] may authorize the review to proceed on all or some of the challenged claims” (37 C.F.R. § 42.108(a) (emphasis added)). That is, the office construed the statute as providing the board with authority to order only “partial institution.”
The facts in SAS illustrate the practice of partial institutions. There, SAS filed a petition challenging all 16 claims of the relevant patent. Although the board concluded that there was a reasonable likelihood of success against at least one claim, it instituted review and issued a final written decision on only nine claims of the patent. SAS challenged that final decision before the Federal Circuit, which upheld the practice. SAS then appealed to the Supreme Court.
Supreme Court Strikes Down Partial Institutions
The Supreme Court reversed, explaining that “the plain text of §318(a) supplies a ready answer.” Focusing on the meaning of the words “shall” and “any,” the majority reasoned that the statute “means the Board must address every claim the petitioner has challenged.” It specifically rejected that the board had the power to winnow certain claims, as the petitioner is the master of its petition and that the petition governs the scope of review.
The majority also dismissed a four-justice dissent authored by Justice Breyer. According to Justice Breyer, section 318(a) left a gap to fill regarding which claims were the “patent claim[s] challenged by the petitioner.” He reasoned that the statute could plausibly be interpreted to mean the patent claims still being challenged at the end of the review. Under the Chevron doctrine, Justice Breyer would therefore defer to the Patent Office’s interpretation. The majority, however, dismissed any ambiguity based on the plain text and statutory scheme. In short, the statute “indicates a binary choice—either institute review or don’t.”
Perhaps the most significant impact of SAS will be on accused infringers considering whether to petition for an inter partes review. For the claims identified in a petition, inter partes reviews are now an all-or-nothing proposition. Petitioners will therefore have to balance a handful of related concerns when choosing which claims to challenge. Those include:
- Under 35 U.S.C. § 315(e), any final written decision from an inter partes review has important estoppel consequences that attach to all claims addressed in the decision. Various courts had interpreted the estoppel provisions not to attach, however, to any claims that the board weeded out at the institution phase. That meant that if the board viewed a particular challenge as unmeritorious at the outset, the board would partially deny institution and effectively save the petitioner from estoppel. Those days are gone.
- The board also imposes certain page limitations and other restrictions on petitions. Those considerations already require petitioners to choose carefully on which claims to challenge and on which arguments to assert. But now a petitioner must more carefully consider the consequences of adding claims to a petition. Rather than piggyback a weakly supported claim, or a claim that might benefit from additional, space-prohibitive arguments, a petitioner may be well-advised to consider other options. Those might include filing another petition or opting to challenge the claim in another forum instead.
- On the other hand, courts are more apt to stay concurrent litigation where all asserted claims have been challenged in an inter partes Given that petitioners now exclusively control the claims in such reviews, courts may look even more disfavorably on requests to stay if less than all of the asserted claims are challenged.
The decision in SAS will also have some practical consequences for the board and litigants. Because the board will be tasked with issuing final decisions that address more claims and because institution decisions are now binary, the office may ultimately elect to issue less detailed institution decisions. In that case, litigants will receive less guidance indicating the board’s initial views on topics such as claim construction. And that lack of guidance may exacerbate an already current complaint that litigants need to know more about the board’s views before the final written decision. Some have suggested, for instance, that the board should issue Markman-style claim construction orders before its final decision. Although it remains to be seen, the decision in SAS may hasten such reforms to the board’s practices.