January 18, 2018Blog

Federal Circuit Rules that PTAB Time-Bar Determinations in IPRs Can Be Appealed*

(*Originally published as a Michael Best client alert on January 10, 2018, co-authored by J. Donald Best and Kenneth M. Albridge, III)

On January 8, 2018, in Wi-Fi One, LLC v. Broadcom Corp., the United States Court of Appeals for the Federal Circuit issued an en banc decision expanding the range of issues subject to judicial review on appeal from decisions of the Patent Trial and Appeal Board (PTAB) in inter partes review (IPR) proceedings. In a 9-4 decision, the full Federal Circuit overruled its prior panel decision in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and held for the first time that the PTAB’s time-bar determinations under 35 U.S.C. § 315(b) are not exempt from judicial review under § 314(d). Wi-Fi One, LLC v. Broadcom Corp., No. 2015-1944, slip op. at 21 (Fed. Cir. Jan. 8, 2018).

Section 315(b) prohibits the Director of the United States Patent and Trademark Office from instituting inter partes review if the petition requesting said review is filed more than one year after the petitioner, real party in interest, or privy of the petitioner is served with a complaint for patent infringement. 35 U.S.C. § 315(b). Section 314(d), however, provides that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and non-appealable.” 35 U.S.C. § 314(d). The question on appeal in Wi-Fi One was whether this bar on judicial review applies to time-bar determinations under § 315(b).

The Federal Circuit previously addressed the issue in Achates and expressly held that § 314(d) prohibits the Federal Circuit from reviewing the PTAB’s time-bar determinations under 35 U.S.C. § 315(b), even if they are reconsidered during the merits phase of proceedings and restated as part of the final written decision. 803 F.3d at 658. Yet, this was before the Supreme Court issued its decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), which refused to foreclose judicial review of all potential institution-related decisions:

[O]ur interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review. See § 314(d) (barring appeals of “determinations . . . to initiate an inter partes review under this section” (emphasis added)). This means that we need not, and do not, decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.”

Id. at 2141.

The proper interpretation of that portion of the Cuozzo decision, leaving open the potential for review of some institution-related decisions, was front and center before the Federal Circuit in Wi-Fi One. On appeal, the merits panel concluded that Cuozzo did not implicitly overrule Achates, and therefore ruled that the patent owner’s time-bar challenges were unreviewable. 837 F.3d 1329, 1334-35, 1340 (Fed. Cir. 2016). The majority of the full Federal Circuit, sitting en banc, disagreed.

Recognizing the strong presumption favoring judicial review, the majority started its analysis with the statutory language of § 314(d), which it interpreted as limiting “the reach of § 314(d) to the determination by the Director whether to institute IPR as set forth in § 314.” Wi-Fi One, slip op. at 15. It then looked to “the only subsection addressing substantive issues that are part of the Director’s determination ‘under this section’”—§ 314(a)—and concluded it does only two things: “it identifies a threshold requirement for institution [i.e., a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition], and as Cuozzo recognized, it grants the Director discretion not to institute when the threshold is met.” Id. at 15-16. “In contrast,” the majority noted, “§ 315(b) controls the Director’s authority to institute IPR that is unrelated to the Director’s preliminary patentability assessment or the Director’s discretion not to initiate an IPR even if the threshold ‘reasonable likelihood’ is present.” Id. at 17.

The majority thus found that the statutory language favored reviewability. It then further concluded that its reading of the statutory language was “consistent with the overall statutory scheme as understood through the lens of Cuozzo’s directive to examine the statutory scheme in terms of what is ‘closely related’ to the § 314(a) determination.” Wi-Fi One, slip op. at 18. According to the majority, the Supreme Court’s decision in Cuozzo “strongly points to unreviewability being limited to the Director’s determinations closely related to the preliminary patentability determination or the exercise of discretion not to institute.” Id. And because “the statutory scheme as a whole demonstrates that § 315 is not ‘closely related’ to the institution decision addressed in § 314(a),” the majority concluded “it therefore is not subject to § 314(d)’s bar on judicial review.” Id. at 20. Importantly, it contrasted this with many of “the preliminary procedural requirements stated in §§ 311-13,” which the majority characterized as relating to “the Director’s ability to make an informed preliminary patentability determination.” Id. at 19.

The practical result of this decision is that it is now more important than ever for parties and practitioners to carefully scrutinize whether potentially appealable institution-related issues go to the PTAB’s authority to institute, or whether they are more closely tied to the PTAB’s preliminary patentability determination or the exercise of discretion not to institute. If it is the former, there may be appealable issues involved.

Other Notable Decisions – Week Ending January 12, 2018

Finjan, Inc. v. Blue Coat Sys., Inc., No. 2016-2520 (Fed. Cir. Jan. 10, 2018) (precedential): In Finjan, the Federal Circuit, among other things, upheld a district court’s patent eligibility determination under the first prong of the Alice test, reasoning that the “claims recite more than a mere result.” “Instead,” the Federal Circuit concluded, “they recite specific steps—generating a security profile that identifies suspicious code and linking it to a downloadable—that accomplish the desired result.” The Federal Circuit in Finjan also partially reversed a jury’s damages award due to the patent owner’s failure to properly apportion damages to certain infringing functionality. Though the patent owner’s royalty base was based on the “smallest, identifiable technical component,” the Federal Circuit emphasized that “if the smallest salable unit—or smallest identifiable technical component—contains non-infringing features, additional apportionment is still required.”

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