Federal Circuit Rules that PTAB Rejection of IPR Time-Bar Defense is Reviewable

Wednesday, January 10, 2018

In an en banc decision, the U.S. Court of Appeals for the Federal Circuit ruled that the appeals court may review the Patent Trial and Appeal Board’s determination, in connection with a decision to institute inter partes review under 35 U.S.C. § 314, that a petition is not time-barred under 35 U.S.C. §315. The decision overrules the Federal Circuit’s decision in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015). Wi-Fi One, LLC v. Broadcom Corp., No. 2015-1944 (Fed. Cir. Jan. 8, 2018).

Background

The America Invents Act provided that the PTAB’s decision to institute post-grant review is not subject to appellate review. See 35 U.S.C. § 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”).  In the Achates decision, the Federal Circuit held that the prohibition on appeals applies to a patent owner’s contention that a petitioner is barred from challenging a patent in an IPR because the petition was filed more than one year after the petitioner or an entity in privity with the petitioner was served with a complaint alleging infringement of the same patent. 35 U.S.C. § 315(b).

In this case, Ericsson filed a complaint against several defendants in 2010, alleging infringement of its patents. Ericsson later assigned the patents to Wi-Fi One, LLC. In 2013, Broadcom Corporation, which was not named as a defendant in the earlier action, filed petitions for inter partes review of the patents. Wi-Fi One argued that Broadcom was in privity with the defendants in the earlier action, and thus the petition was barred under § 315(b). Wi-Fi One filed a motion seeking discovery to support its privity argument, but the PTAB denied the motion, finding that Wi-Fi did not provide sufficient evidence to justify the discovery. After the PTAB denied Wi-Fi One’s petition for rehearing, Wi-Fi One petitioned the Federal Circuit for a writ of mandamus, which was also denied. The PTAB proceeded to institute the IPR, without addressing the privity issue in the institution decision. In a final written decision, the PTAB ruled that the challenged claims were unpatentable, and that Wi-Fi One had not proven the Broadcom was in privity with the defendants in the earlier infringement action. Wi-Fi One appealed to the Federal Circuit.

Federal Circuit Applies Cuozzo, Rules that Time-Bar Determination is Appealable

In an initial panel decision, the Federal Circuit applied Achates and ruled that the PTAB’s determination that Broadcom’s petition was not time-barred was not appealable. Wi-Fi One, LLC v. Broadcom Corp., 837 F.3d 1329 (Fed. Cir. 2016).

Following that decision, however, the Supreme Court decided Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016). In Cuozzo, the Court ruled, among other things, that § 314(d) does not bar all appeals from PTAB institution decisions. In light of that decision, the Federal Circuit granted rehearing en banc to revisit the appealability of the time-bar issue

In a 9-4 decision, the Federal Circuit vacated the panel decision and ruled that Wi-Fi One could appeal the PTAB’s ruling that Broadcom’s petition was not time-barred. Circuit Judge Reyna, writing for the majority, noted that a strong presumption exists that administrative actions are subject to federal court review under the Administrative Procedures Act. “In view of this strong presumption, we will abdicate judicial review only when Congress provides a ‘clear and convincing’ indication that it intends to prohibit review.” Slip op. at 15, quoting Cuozzo, 136 S. Ct. at 2140.

The Federal Circuit applied Cuozzo, which suggested the limits of § 314(d)’s prohibition on appellate review. The Supreme Court ruled that § 314(d) blocked “mine-run” challenges to institution decisions, based on issues that are “closely related” to the PTAB’s preliminary decision that the petitioner has met the standard for initiating review. In contrast, the appeals court noted, the time-bar provision in § 315(b) is unrelated to the question whether a reasonable likelihood exists that the petitioner would prevail on at least one challenged claim. See 35 U.S.C. § 314(a). The Federal Circuit explained:

Whether a petitioner has complied with § 315(b) is not such a determination, as it has nothing to do with the patentability merits or discretion not to institute. The time-bar provision contrasts with many of the preliminary procedural requirements stated in §§ 311–13, which relate to the Director’s ability to make an informed preliminary patentability determination pursuant to § 314(a). Specifically, § 315(b) time-bar determinations are fundamentally different from those evaluating the satisfaction of § 312(a)(3)’s requirements, at issue in Cuozzo.

Slip op. at 19.

Since the time-bar issue was not “closely-related” to the decision to institute, the appeals court concluded that an appeal of that issue was not blocked by § 314(d). “Accordingly, our review of the statutory language and the statutory scheme reveals no clear and convincing indication of Congress’s intent to bar judicial review of § 315(b) time-bar determinations."

Slip op. at 20.

Circuit Judge Hughes, joined by three other judges, dissented, arguing that § 314(d) was a clear statement of Congress’ intent to foreclose all appeals from institution decisions.

Practical Significance

The Wi-Fi One decision creates an opportunity for patent owners to seek review of PTAB institution decisions when the petitioner may be barred from filing an IPR petition due to a prior infringement action. Previously, any determination of the time-bar issue was not appealable.

In addition, the decision may signal the Federal Circuit’s willingness to hear appeals based on other issues not directly related to the merits of the IPR petition. In Cuozzo, Justice Breyer noted that appeals may be available when PTAB decisions fail to comport with due process, when the decision goes beyond the “statutory” limits of the AIA, such as when the review is premised on a violation of 35 U.S.C. § 112 (which is not a ground for invalidity available in IPR proceedings), or other judicial “shenanigans.” Furthermore, in his dissent in Cuozzo, Justice Alito suggested that issues relating to the PTAB’s jurisdiction also may be subject to appeal.

Wi-Fi One likely will lead to additional appeals from IPR decisions, including interlocutory and institution decisions, and the scope of challenges available likely will be explored in future decisions, despite § 314(d).