Can You Appeal the PTAB’s Decision to Institute Review of Patent Claims on Grounds Not Raised in an IPR, PGR, or CBM Petition?
Published: October 27, 2016
The America Invents Act provided several procedures for challenging the validity of patent claims, including inter partes review (“IPR”), post-grant review (“PGR”) and covered business method patent challenges (“CBM”). An IPR, PGR, or CBM challenge begins with a petition filed by the challenging party that identifies each claim challenged and the grounds for each challenge. Based on the petition and the patent owner’s optional preliminary response, the Patent Trial and Appeal Board (“PTAB”) determines whether to institute review of one or more of the challenged patent claims. Under the America Invents Act, this determination whether to institute review is final and nonappealable, but the PTAB’s final decision on patentability of the claims is appealable. Recently, decisions by the PTAB have raised questions as to where the line is between appealable and nonappealable decisions.
In its decision to institute review, the PTAB can choose to review all or some of the patent claims challenged in a petition and on all or some of the grounds of unpatentability asserted for each claim. The statute states that those decisions are not appealable. But, if the PTAB chooses to review claims on grounds not specifically raised in a petition, are those decisions appealable? The Court of Appeals for the Federal Circuit has determined it lacks jurisdiction to review such cases because they are part of the determination to institute review and thus are not appealable. Earlier this year, in Cuozzo Speed Technologies, LLC v. Lee, the U.S. Supreme Court also weighed in on this issue holding that the America Invents Act precludes appeal of decisions by the PTAB to institute review of challenged patent claims. Arguably, however, the Court left the door open for potential exceptions, such as in cases that raise constitutional issues of due process or where the PTAB has exceeded its statutory authority.
In Cuozzo, the patent related to a speedometer that will show a driver when his or her car is exceeding the speed limit. In 2012, Garmin filed a petition seeking inter partes review of the validity of the Cuozzo patent. Garmin’s petition included an argument that claim 17 was invalid as obvious in light of three prior art patents, and the PTAB instituted review of claim 17. While noting that Garmin had not expressly challenged claims 10 and 14 as obvious in light of these references, the PTAB also instituted review of those claims on the same obviousness grounds. The PTAB explained that because claim 17 depends on claim 14 which depends on claim 10, Garmin had implicitly challenged claims 10 and 14. Ultimately, the PTAB invalidated all three claims as obvious.
The owner of the Cuozzo patent appealed to the Federal Circuit arguing that the PTAB erred in instituting review of the two claims not expressly identified in the petition because the relevant statute requires that petitions must be pled with particularity. But the Federal Circuit held that 35 U.S.C. §314(d) rendered the decision to institute inter partes review nonappealable. The U.S. Supreme Court agreed holding that §314(d) precluded judicial review because it says that the “determination by the [Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable.” Further, the Court stated that the logical linking of claims 10 and 14 to claim 17 precluded the need for the petition to “repeat the same argument expressly when it is so obviously implied.” Therefore, the Court found that the “No Appeal” provision’s language must at least forbid an appeal in such circumstances.
The Supreme Court, however, emphasized that its interpretation only applies to appeals 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.” The Court went on to explain that it was not deciding 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 … beyond ‘this section.’” The Court also noted that it did “not categorically preclude review of a final decision where a petition fails to give ‘sufficient notice’ such that there is a due process problem with the entire proceeding, nor does the interpretation enable the agency to act outside its statutory limits ….”
When does a petition fail to give sufficient notice thus causing a due process problem? What constitutes the PTAB acting outside its statutory limits? Those are the questions SightSound Technologies is asking the U.S. Supreme Court to address and clarify in SightSound’s recently-filed petition for a writ of certiorari.
In 2011, SightSound sued Apple for allegedly infringing three SightSound patents related to the electronic sale and distribution of digital audio and video signals. Apple challenged claims of two of the patents in petitions for CBM review asserting that the challenged claims were anticipated under 35 U.S.C. §102 by a CompuSonics system. Apple submitted numerous references and a declaration in support of its §102 argument. Apple did not challenge the claims as obvious under 35 U.S.C. §103. The PTAB, however, decided to institute review of the claims under both §102 and §103 explaining that while Apple’s petitions did not assert obviousness explicitly, the petitions nevertheless supported such a ground based on the detailed explanation of the various CompuSonics references.
SightSound objected that the PTAB lacked authority to raise a ground of unpatentability (obviousness) that Apple had never asserted. The PTAB granted SightSound additional time for argument and authorized it to file sur-replies and new declarations on the issue of obviousness “to ensure that Patent Owner has a full and fair opportunity to be heard on the issue of obviousness.” Ultimately, the PTAB rejected Apple’s anticipation argument but instead invalidated the challenged claims as obvious under §103.
SightSound appealed to the Federal Circuit, which held that decisions relating to the institution of CBM review are not appealable under 35 USC §324(e), which mirrors the language in §314(d) for inter partes review. In its petition to the U.S. Supreme Court, citing Cuozzo, SightSound argues that the PTAB’s decision to institute review based on obviousness is appealable because the PTAB exceeded the its statutory authority and deprived SightSound of due process protection.
First, SightSound argues the PTAB lacked statutory authority to conduct an obviousness review because Apple did not challenge the claims as obvious in its petition. Second, SightSound explains that because a patent is a vested property right, it confers due process protection and patent owners are entitled to “notice and an opportunity to be heard by a disinterested decisionmaker” when the validity of their patent claims is challenged. SightSound argues that it was not provided this notice because the PTAB did not articulate the specific combinations of the twelve “CompuSonics publications” or the motivation for combining those references until the PTAB’s final written decision. SightSound alleges this “forced [SightSound] to shoot in the dark” as to which combination of references formed the basis for the PTAB’s obviousness arguments and prejudiced its ability to locate and submit contrary evidence. Thus, according to SightSound, it was deprived of its due process protection because it was never given sufficient notice of the specific obviousness arguments so that it could fairly defend the validity of its patent claims.
We will have to wait to see whether the Supreme Court weighs in on whether the PTAB has exceeded its authority or deprived a patent owner of due process rights in granting review of patent claims on grounds not raised in a challenger’s petition. For now, patent owners should assume that the PTAB may take a broad interpretation of a challenger’s petition when determining the scope of review.
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