Federal Circuit Tackles Post-SAS Procedural Tangles – Rules That Patent Owner May Request Remand, Did Not Waive Challenge to Partial Final Written Decision

Tuesday, June 05, 2018

Polaris Industries, Inc. v. Arctic Cat, Inc., No. 2017-1870 (Fed. Cir. May 30, 2018)(nonprecedential).

In the wake of the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 584 U.S. __, 138 S.Ct. 1348 (2018), ruling that 35 U.S.C. § 318(a) requires the PTAB’s final written decision (“FWD”) in an inter partes review proceeding to address every claim challenged by the petitioner, the PTAB and the Federal Circuit have faced a series of procedural issues arising in pending IPRs. The Federal Circuit, in particular, has heard arguments as to whether it has jurisdiction to decide those cases, and whether parties have waived any challenges to a partial FWD.

In a recent nonprecedential decision, Polaris Industries, Inc. v. Arctic Cat, Inc., a Federal Circuit panel cast some light on those two issues.

In Polaris, the patent owner appealed from two FWDs holding claims of its U.S. Patent No. 8,827,028 invalid, but the decision did not address several other claims challenged by the petitioner, Arctic Cat, Inc. Immediately after the SAS decision, Polaris moved to terminate the appeal and remand to the PTAB. In a per curiam order, the Federal Circuit granted the motion.

First, the court ruled that Polaris’ interest in having a decision on all claims challenged in the IPR petition supported its motion:

A patent owner has an interest in obtaining a final written decision that addresses all challenged claims and resolves all questions of patentability that might otherwise cloud the perceived validity of its patent. And further, a patent owner benefits from complete decisions because following a final written decision on a claim, the petitioner, its real-parties-in-interest, and those in privity with the petitioner are largely barred from challenging that claim’s validity.

As a result, Polaris was permitted to file its motion in order to secure the benefits of a full IPR decision. The court did not squarely address whether it had jurisdiction over the appeal from a partial FWD.

Second, the appeals court ruled that Polaris did not waive its objection to the partial FWD by not making an objection on the record, because such an argument would have been futile:

Prior to the Supreme Court’s decision in SAS, any attempt to argue against partial institution would have been futile under the Board’s regulations and our precedent. See, e.g., 37 C.F.R. § 42.108 (permitting partial institution); Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309, 1315 (Fed. Cir. 2016) (“[T]he statute is quite clear that the PTO can choose whether to institute inter partes review on a claim-by-claim basis.”). Polaris’s failure to challenge the Board’s partial institution before the Supreme Court’s issuance of SAS is therefore excused.

Without addressing the substance of Polaris’ grounds for appealing the FWD, the Federal Circuit granted the motion to terminate the appeal and remanded to the PTAB to consider the noninstituted grounds. The court noted that, “On remand, the Board need not reconsider issues already addressed in its final written decisions unless, in the course of considering the noninstituted claims and grounds, it finds it necessary to do so.”

The Polaris order appears to signal that the Federal Circuit will not apply waiver to prevent parties from challenging partial FWDs, despite the Patent Office’s position that those arguments are waived. See BASF Corp. v. Iancu, No. 2017-1425 (Fed. Cir. May 21, 2018) (supplemental post-argument brief of USPTO arguing, inter alia, that objection to partial FWD is subject to waiver).