April 24, 2018

Partial Institution Decisions Go, as IPR Proceedings in General are Here to Stay

By Matthew L. Cutler, Principal

As we mentioned, it has been a big day at the Supreme Court for patent law and, in particular, Inter Partes Reviews. This post addresses the second of two Supreme Court rulings issued today. In the first decision, discussed HERE, the Court ruled that IPRs are constitutional. Oil States Energy Services, LLC v. Greene’s Energy Grp., LLC, No. 16-712 (April 24, 2018).

This post addresses the second decision, wherein the Court has overruled the PTAB’s regulation and practice that allowed it to issue partial institution decisions, sending only some claims, but not necessarily all, when instituting an IPR trial. SAS Institute Inc. v. Iancu, No. 16-969 (April 24, 2018).

SAS Institute was a closer decision than Oil States, with Justice Gorsuch writing the 5-4 majority opinion that was joined by the other, traditionally conservative Justices (Roberts, Kennedy, Thomas, and Alito). The majority opinion rests generally on the fact that the language of the statute that implements IPR is quite clear and straightforward — thus, it is the Petitioner’s petition, and not the Director’s discretion, that guides the life of an IPR.

More seasoned Supreme Court commentators can better analyze the reasons for the conservative/liberal split on a typically apolitical patent matter, but it may boil down to the fact that the conservative justices saw no ambiguity in Congress’s intent, and issued a decision upholding that intent, while the liberal block sought to give this government agency more discretion and leeway. One certainly gets the sense that the justices were looking beyond this specific patent issue in framing their approaches to statutory interpretation. To that end, a larger potential impact of this decision, the abandonment of Chevron deference, as was argued by SAS Institute, was an issue the Court left for another day.

What does the future hold (in the IPR world, not the statutory construction world)? Certainly, we will no longer see decisions to institute whereby some claims are included in an IPR trial and some claims are left out. The Court’s opinion is clear that this practice is over. But, what is to be made of the PTAB’s practice of denying redundant grounds? In SAS Institute, the Court criticized 37 CFR § 42.108(a), which states that “[w]hen instituting inter partes review, the [Director] may authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim.” (emphasis added). The vast majority of the opinion discusses the fact that the restriction on the first underlined clause above to “some” of the claims is incorrect. The opinion found this error to be clear in light of the fact that it is the Petitioner’s petition, and not the Director’s discretion, that dictates the life of an IPR.

Shouldn’t that same rationale apply to the grounds set forth in a petition? There has been significant grumbling about the Board’s redundant grounds practice — that may be one of the next issues the Supremes consider as they closely monitor Inter Partes Reviews proceedings.