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Is The Federal Circuit Taking a “Hands Off” Approach to Reviewing the PTAB Trial Decisions?

The Federal Circuit has been charged with oversight of the USPTO, including oversight of PTAB trials.  However, given the large number of AIA review petitions that have been filed[1] and that are being instituted,[2] there is some question as to the court’s ability to provide that oversight, even if only a fraction of the AIA reviews go to final decision.[3]  The Federal Circuit has undoubtedly recognized its dilemma and appears to be taking a “hands off” approach where possible to manage its docket.

One tool the court is using to dispose of cases expeditiously is liberal use of Rule 36.[4]  Relevant to the review of PTAB decisions, Rule 36 provides that a judgment of affirmance may be entered without opinion if “the decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review” or “a judgment or decision has been entered without an error of law.”[5]  Such a decision has no precedential value and does not provide any guidance or even support a conclusion that the PTAB’s analysis was correct.  While such a practice may be justified when reviewing ex parte determinations, it may not be when reviewing those made during AIA reviews.  Unlike the situation with ex parte cases, AIA reviews are almost always of important patent rights – at least those important enough to support a lawsuit.[6]  Further AIA reviews are part of a relatively new area of the law where there is scant precedent to guide the PTAB and practitioners handling the cases.

A second tool the court is using to expeditiously dispose of cases is liberal application of 35 U.S.C. § 314(d).[7]  Based on this statute, in a series of early decisions, the court decided that it has no jurisdiction to hear (1) an interlocutory appeal from either an institution decision or a non-institution decision;[8]  (2) an institution decision, even after a PTAB final decision;[9] or,  finally, (3) with limited exceptions,[10] an appeal of any determination underlying the institution decision, such as identification of the real party in interest or a determination of whether § 315(b) bars AIA review.[11]

The court in Cuozzo suggested that “mandamus may be available to challenge” the grant of a petition to institute “where the PTO has clearly and indisputably exceeded its authority.”  However, in order to be entitled to mandamus the court noted that three conditions must be satisfied:

Even if § 314 does not bar mandamus after a final decision, at least “three conditions must be satisfied before [a writ of mandamus] may issue.” Cheney v. U.S. Dist. Court for the D.C., 542 U.S. 367, 380, 124 S. Ct. 2576, 159 L. Ed. 2d 459 (2004). “First, ‘the party seeking issuance of the writ [must] have no other adequate means to attain the relief he desires.'” Id. (quoting Kerr v. U.S. Dist. Court for the N. Dist. of Cal., 426 U.S. 394, 403, 96 S. Ct. 2119, 48 L. Ed. 2d 725 (1976) (alteration in original)). That condition appears to be satisfied since review by appeal is unavailable. “Second, the petitioner must satisfy ‘the burden of showing that his right to issuance of the writ is clear and indisputable.'” Id. at 381 (internal quotations, citation, and alterations omitted). “Third, the issuing court, in the exercise of its discretion, must be satisfied that the writ is appropriate under the circumstances.” Id. (citations omitted).

Unsurprisingly, the court has never granted a mandamus petition to review such action in an AIA review proceeding.[12]  Thus, it appears that the court’s “hands off” approach may well permit the PTAB to wrongly decide a number of issues underlying its institution decisions and thereby act ultra vires, i.e., beyond the power granted to it by Congress.   Query whether the Federal Circuit’s docket management should outweigh its responsibility to provide oversight of the PTAB, particularly when legal issues are implicated.

[1] Over 4800 as of publication of this article.  http://www.uspto.gov/sites/default/files/documents/2016-3-31%20PTAB.pdfSee also PTAB Challenge Navigator (BNA May 1, 2016).

[2] While statistics vary, at least 60% are instituted. http://www.uspto.gov/sites/default/files/documents/2016-3-31%20PTAB.pdf.

[3] The settlement rate is estimated to be more than 40%, with approximately half of the settlements prior to institution. That still leaves approximately 1700 of the 4800 cases to be finally decided and likely appealed by the losing party to the Federal Circuit, given that more than 90% of these cases are in litigation.

[4] Roughly 54% of the 80 cases decided through March 2016 were decided under Rule 36.  D. Dahlgren presentation, BIO IPCC meeting (April 1, 2016).

[5] Rule 36, Federal Circuit Rules of Practice (June 1, 2011).

[6] Some statistics show that more than 90% of AIA reviews are coupled to litigation.

[7] 35 U.S.C. § 314(d)provides:  “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”  Identical language is found in 35 U.S.C. § 324(e) which governs post-grant reviews.

[8] St. Jude Medical, Cardiology Div. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014) (holding only the PTAB’s “final written decision” on the merits under § 318(a) resulting from the conduct of the proceeding after institution was appealable but not deciding  whether the statute precluded all review)).

[9] In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015) (substitute opinion) (holding that an IPR proceeds in two phases – the first is whether to institute and the second is the trial – and that only the second phase is reviewable).  Judge Newman dissented.  In her opinion, § 314(d) only bars review of interlocutory proceedings, not review after a final decision by the agency.

[10] See Versata Dev. v. SAP AG, 793 F.3d 1292 (Fed. Cir. 2015) (holding that when a determination gives the PTAB’s its “invalidity authority”, such as the determination whether the claims are CBM claims subject to a CBM review, then that determination is reviewable).

[11] See, e.g., Achates Ref. Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) (summarizing the statutory background and its legal precedent); Click to Call v. Oracle, 622 Fed. Appx. 907 (Fed. Cir. 2015) (nonprecedential).

[12] See, e.g., In re Redline Detection, LLC, 547 Fed. Appx. 994 (Fed. Cir. 2013) (non-precedential); In re MCM Portfolio, LLC, 554 Fed. Appx. 944 (Fed. Cir. 2014) (non-precedential) (allegation that §315(b) barred review); In re Dominion Dealer Sol’ns, LLC, 749 F.3d 1379 (Fed. Cir. 2014); The Procter & Gamble Co., LLC, 749 F.3d 1376 (Fed. Cir. 2014) (allegation that § 315(a) barred review).