Moderna, one of the global leaders in developing a safe and effective vaccine to combat COVID-19, appears poised to get through clinical trials with a vaccine that is based on mRNA technology. As was recently announced, Pfizer demonstrated a 90% effectiveness with its vaccine, which is also based on mRNA technology. If all stays on course, Pfizer and Moderna may be the first two market entrants with vaccines, using the non-traditional mRNA technology.

But in order for at least Moderna’s mRNA technology to function properly, it needs a “delivery system.” Specifically, Moderna’s COVID-19 vaccine introduces “mRNA-1273” molecules into the recipient via a delivery system that protects the mRNA in the bloodstream and allows for entry into cells. Once inside the cells, the mRNA-1273 molecules act like computer code and instruct the cells to produce the characteristic COVID-19 spike proteins. The immune system identifies the spike proteins as antigens and builds its defenses against those antigens in preparation for the potential exposure to the actual COVID-19 virus.

Arbutus Biopharma owns certain patents relating to lipid-nanoparticle “delivery systems” for mRNA molecules. These delivery systems essentially wrap the molecules in balls of fat to both disguise them, thereby preventing attack by the immune system, and to allow the target cells to readily ingest the mRNA molecules. Moderna lost its sublicense to those disputed patents in 2016 and then (before the pandemic) sought to invalidate the patents through three USPTO inter partes review (IPR) proceedings that were decided earlier this year.

This post examines the procedural history and status of those proceedings.

On July 23, 2020, the Patent Trial and Appeal Board (“PTAB”) for the United States Patent and Trademark Office issued a final written decision upholding the claims of Arbutus Biopharma Corporation’s U.S. Patent No. 8,058,069 (“the ’069 patent”) from a challenge by Petitioner Moderna Therapeutics, Inc.[1]

The PTAB specifically determined that Moderna failed to show, by a preponderance of the evidence, that claims 1-22 of the ’069 patent were unpatentable under 35 U.S.C. § 103. The ’069 patent’s claims relate to “stable nucleic acid-lipid particles (SNALP) comprising a nucleic acid (such as one or more interfering RNA), methods of making the SNALP, and methods of delivering and/or administering the SNALP.”[2]

Moderna sought to invalidate the ’069 patent on two grounds, each of which the PTAB rejected. On the first ground, Moderna argued claims 1-22 were anticipated or obvious by International Application Publication No. 2005/007196 (“the ’196 PCT”) and United States Application Publication No. 2006/0134189 (“the ’189 Publication”). On the second ground, Moderna contended claims 1-22 were anticipated or obvious by Arbutus’s prior disclosures in light of two pieces of non-patent literature.[3][4]

This is the third final written decision in a series of IPRs brought by Moderna against Arbutus patents, and it is also the first final written decision with an entirely negative result for Moderna. Moderna’s first IPR ended in success, with the PTAB invalidating Arbutus’s US Patent No. 9,404,127 (“the ’127 patent”)[5]; but Moderna’s second IPR, concluded with mixed results, with the PTAB invalidating some claims of Arbutus’s US Patent No. 9,364,435 (“the ’435 patent”) and upholding others.[6]

Importantly, Arbutus’s ’127, ’435, and ’069 patents are similar to the extent they claim stable nucleic acid-lipid particles (SNALP) and methods of delivery. These patents appear to cover liquid nanoparticle (LNP) technology, which can be used to deliver messenger ribonucleic acid (mRNA) to cells. In the past, Moderna has indirectly licensed such LNP technology from Arbutus, but it has recently begun to develop its own proprietary LNP technology.

After the PTAB’s ruling on the ’069 patent, Moderna stated it “is not aware of any significant intellectual property impediments” toward products it intends to commercialize, including mRNA-1273. Indeed, whether Moderna is infringing Arbutus’s patents during its development of a COVID-19 vaccine is unknown, but it is worth noting that Arbutus has not brought any patent infringement actions against Moderna.

The IPRs for the ’127, ’435, and ’069 patents have each been appealed to the Court of Appeals for the Federal Circuit (CAFC), and Moderna’s appeal brief for the case involving the ’069 patent is due this month. In an event that could be viewed as related to its failed challenge to the ’069 patent, Moderna stated last month it will not enforce its COVID-19 related patents against “those making vaccines intended to combat the pandemic” while the pandemic continues.[7] However, it remains to be seen whether another company could – or would – enforce its COVID-19 related patents against Moderna during this pandemic or otherwise.

[1] Moderna Therapeutics, Inc. v. Arbutus Biopharma Corp., No. IPR2019-00554, 2020 WL 4237232 (P.T.A.B. July 23, 2020).


[3] Lin et al., Three-Dimensional Imaging of Lipid Gene-Carriers: Membrane Charge Density Controls Universal Transfection Behavior in Lamellar Cationic Liposome-DNA Complexes, 84 BIOPHYSICAL J. 3307–16 (2003) (“Lin”).

[4] Ahmad et al., New Multivalent Cationic Lipids Reveal Bell Curve for Transfection Efficiency Versus Membrane Charge Density: Lipid-DNA Complexes for Gene Delivery, 7 J. GENE MED. 739–48 (2005) (“Ahmad”). Ex. 1007.

[5] Moderna Therapeutics, Inc. v. Protiva Biotherapeutics, Inc., No. IPR2018-00680, 2018 WL 4362415 (P.T.A.B. Sept. 12, 2018). [Note: Protiva was a wholly-owned subsidiary of Arbutus.]

[6] Moderna Therapeutics, Inc. v. Protiva Biotherapeutics, Inc., IPR2018-00739 (P.T.A.B. Sept. 11, 2019).


A motion recently filed by US Inventor, Inc. in the United States District Court for the Northern District of California seeks a temporary restraining order and a preliminary injunction to prevent the United States Patent and Trademark Office (“USPTO” or “Patent Office”) from instituting any new reviews of any patent until it solves the debate over the “NHK-Fintiv rule” by promulgating a rule under the proper notice-and-comment procedure of the American Procedure Act (“APA”).  US Inventor, Inc. is a non-profit association of inventors devoted to protecting the intellectual property of individuals and small companies.

Declaring the current situation “an emergency,” US Inventor argued that the relief requested – a restraining order and preliminary injunction – is “the only way to preserve the status quo for inventors” and “protect the availability of a lawful remedy” for the trial at hand.  The motion was filed in the lawsuit Apple, Inc., et al. v. Iancu,[1] in which a number of tech companies have challenged the NHK-Fintiv rule and the USPTO’s authority.  US Inventor intervened, arguing instead that the rule should be promulgated through the proper channel.

The NHK-Fintiv rule stems from a line of cases where the USPTO’s Patent Trial and Appeal Board (“PTAB”) declared its discretionary authority to deny institution of American Invents Act (“AIA”) review trials based on parallel proceedings in federal district courts.  In the two precedential opinions from which the rule takes its name, the PTAB outlined a number of factors that would weigh against instituting review of a patent whose validity is already at issue in a pending district court trial.  Although the Patent Act gives the PTAB discretion to deny AIA review for any reason, it also requires that the Director prescribe regulations setting forth the standards to show sufficient grounds to institute review.  US Inventor points to the latter as its basis for arguing that the Patent Office may not develop standards like the NHK-Fintiv rule in an ad hoc adjudicative decision, and instead must promulgate regulations through the statutory process of notice-and-comment rulemaking.

US Inventor pointed to “traditional preliminary injunction factors,” such as public interest weighing in favor of granting its relief.  Specifically, US Inventor identified the harm of patentees being “deprived of a procedural protection to which they are entitled,” where the current rules lack the clarity and balance that only notice-and-comment rulemaking can provide; and that US Inventor’s members are irreparably harmed by having to formulate arguments and responses under deadlines without proper guidance as to the discretionary facts, where an adverse decision would mean a loss of their property.

The parties stipulated to and the court granted a deadline of October 12, 2020, for the USPTO to respond to US Inventor’s motion.

[1] No. 5:20-cv-06128 (N.D. Cal. Sept. 29, 2020).

On October 6, 2020, the United States Patent and Trademark office (USPTO) released a report titled “Public Views on Artificial Intelligence and Intellectual property Policy.”  The report follows the USPTO’s August 2019 request for comments on patenting AI inventions, and the USPTO’s October 2019 request for comments related to the impact of AI on other IP policy areas.

A few general themes emerged from the nearly 200 submissions, including “the fact that AI has no universally recognized definition,” “the current state of the art is limited to ‘narrow’ AI”, as opposed to artificial general intelligence akin to human intelligence, and “a general sense that existing U.S. intellectual property laws are calibrated correctly to address the evolution of AI.”  Report pp. ii-iii.

With respect to patent protection, the consensus remains that inventors must be human, but some differences arose as to what human activities should qualify as a contribution to the conception of an invention.  The Report notes that “activities such as designing the architecture of the AI system, choosing the specific data to provide to the AI system, developing the algorithm to permit the AI system to process that data, and other activities not expressly listed here may be adequate to qualify as a contribution to the conception of the invention.”  Report, p. 5.  But perhaps the USPTO will need to revisit the question of whether machines can be inventors when and if science agrees that machines can “think” on their own.

On data and new forms of IP protection, the Report acknowledges that data “is a foundational component of AI,” and “data and datasets, including their collection and compiling, have value.”  Report p. 15.  Commentators, however, were divided between the view that new IP rights were necessary and the belief that the current US IP framework was adequate to address AI inventions.  No concrete proposals were submitted on how any newly created IP right for AI and data should function, and many called upon the USPTO to further consult the public on the issue.

On the copyright front, the Report notes that existing “statutory and case law should adequately address the legality of machine ‘ingestion’ in AI scenarios,” and that mass digitization and text and data mining “may be considered copyright infringement or fair use, depending on the facts and circumstances at issue.”  Report p. 23.  Critically, however, “mass digitization for purposes of machine learning (ML) ‘ingestion’ processes-and large-scale ingestion of already-digitized works-has not yet been tested by the courts.”  Id. p. 25.  Additionally, commentators mostly found that existing laws are adequate to continue to protect AI-related databases and datasets—including copyright protection as a compilation, trade secret, contract law, and tort law—and there is no need for a sui generis database protection law, such as exists in Europe.

In view of these comments and the areas of greatest divergence, there are a few practical takeaways to keep in mind.  First, there are numerous ways a human can contribute to the conception of an AI invention—from curation of the input data to practical application of the output—and innovators should document and evaluate who was involved at every step of the AI development process as part of the inventorship inquiry for patent protection.  Second, datasets used for AI can have tremendous value, and there are multiple ways to preserve the value of datasets, such as with copyright, trade secret, and contractual/licensing protection.  As each form of protection has its strengths, it is important to choose the right avenues of protection for the right datasets and applications.  Finally, we will likely see further developments in the case law on the issue of copyright infringement through machine ingestion of data, and the applicability (or not) of the fair use defense.  The Oracle v. Google Supreme Court case on fair use may potentially touch these issues, as well as the numerous data scraping cases making their way through the courts.

Stay tuned!

The Federal Circuit reconfirmed its interpretation of the IPR joinder rules of 35 U.S.C. § 315(c) after the panel’s rehearing in Facebook, Inc. v. Windy City Innovations, LLC, No. 2018-1400, 2020 WL 5267975 (Fed. Cir. Sept. 4, 2020).  Appellant Facebook, Inc. had filed a combined request for panel rehearing and rehearing en banc.  The rehearing en banc was denied, but the panel granted the panel rehearing to the extent that it replaced its original precedential opinion with a revised opinion on September 4, 2020.  The conclusions of the Federal Circuit remained unchanged: § 315(c) does not permit either same-party joinder or joinder of new issues.

For more details on the Federal Circuit’s reasoning for reversing the Patent Trial and Appeal Board’s interpretation of the statute, see our previous article on the Federal Circuit original Facebook v. Windy City Innovations decision here.

Last week, Microsoft got tripped up at oral argument on the blocking and tackling of IPR practice:  making sure your prior art is prior art.

The specific error was eminently avoidable, though perhaps also eminently understandable. Under Federal Circuit law, a reference generally does not count as prior art unless it was “indexed.” (Think Dewey Decimal system, or the USPTO’s classification system). To clear this “indexing” hurdle, Microsoft found a document that helpfully titled itself an “index” and linked to the reference-in-question. A good start, no doubt, but it turns out the document had padded its resume:  it was more “list” than “index.” And, under Federal Circuit law, a “list” may not be good enough.

This List Wants You to Believe It Is an Index

The patent owner, Uniloc, sagely caught the error, citing Samsung Elecs. Co. v. Infobridge Pte. Ltd., 929 F.3d 1363 (Fed. Cir. 2019) for the relevant point of law.

When a reference is uploaded to a website or deposited in a library, the fact that the reference is indexed or cataloged in some way can indicate that it is publicly accessible. In Acceleration Bay, for example, the reference at issue was uploaded to a university website. 908 F.3d at 773. While this made the work technically accessible—someone could theoretically find it on the Internet—we explained that “public accessibility requires more than technical accessibility.” Id. (internal quotation marks omitted). And while the website indexed references “by author and year,” we agreed with the Board that this did not mean the reference at issue had been “meaningfully indexed such that an interested artisan exercising reasonable diligence would have found it.” Id. at 774; see also SRI, 511 F.3d at 1196 (“[T]he FTP server did not contain an index or catalogue or other tools for customary and meaningful research.”). On this record, we affirmed the Board’s finding that the reference was not publicly accessible even though it had been uploaded to a website.

Id. at 1369 (emphasis added). In other words, you need an index—not a list. This makes sense when you consider that public accessibility law is based on cases from the 1980’s dealing with PhD theses that were physically printed and shelved in library stacks. If not for the Dewey Decimal system, how could anything be found?

At the oral hearing, Microsoft added a new wrinkle to its argument, submitting that a skilled artisan would have plodded unguided through the whole of the 20-page list because the artisan would already have been familiar with a reference that was located on the same website as both the list and the reference-in-question.

The PTAB panel seemed unimpressed with Microsoft’s argument, as Administrative Patent Judge Jameson Lee pointedly noted:  “I mean, you’re just making it up right now. That story wasn’t in your petition.”

Moral of the story: when you’re filing an IPR petition that relies on non-patent literature, it pays to double- and triple-check that all of the technical requirements for prior art status are met. This includes having a cogent explanation for why a skilled artisan would have found the reference-in-question. These technicalities, when overlooked, are often case-dispositive and impossible to fix post-institution.

The case is IPR2019-01116.

Last week, four major technology companies – Apple, Cisco, Google, and Intel – brought suit against the United States Patent and Trademark Office (“USPTO”), challenging its authority to reject petitions for inter partes review (“IPR”) based on two precedential decisions by its Patent Trial and Appeal Board (“PTAB”).  The decisions, Apple Inc. v. Fintiv, Inc.,[1] and NHK Spring v. Intri-Plex Techs.,[2] allow the PTAB to deny institution of IPRs based on a number of factors related to the existence of a parallel United States district court proceeding on the same challenged patents.  The tech companies have sued in the District Court for the Northern District of California, arguing that the rule violates both the Leahy-Smith America Invents Act (“AIA”), which created the IPR procedure, and the Administrative Procedure Act (“APA”), which created the system of organization and procedures that all administrative agencies of the federal government must follow.

The three arguments of the complaint are that (1) the NHK-Fintiv rule is contrary to the policy and text of the AIA; (2) the rule is arbitrary and capricious as the factors are vague and have already led to unjustifiable and unpredictable disparities among similarly-situated IPR petitioners; and (3) the rule is otherwise procedurally invalid because it was not adopted through notice-and-comment rulemaking required by both the AIA and the APA.  The tech companies are seeking to have the rule set aside and have the USPTO enjoined from relying on the rule to deny institution of IPRs.

While the arguments certainly have merit, Federal Circuit and Supreme Court precedent supports the USPTO’s discretion both to deny petitions and to formulate policy.  The Supreme Court recently stated in Cuozzo Speed Tech., LLLC v. Lee that an “agency’s decision to deny a petition is a matter committed to the Patent Office’s discretion.”[3]  The Court has also long acknowledged that notice-and-comment is not the only method of lawmaking available to agencies.[4]  Thus, while the challenges may make sense from a policy standpoint, it may not be enough to prove the USPTO has acted unlawfully.

[1] No. IPR2020-00019, Paper 11 (Mar. 20, 2020).

[2] No. IPR2018-00752, Paper 8 (Sept. 12, 2018).

[3] 136 S. Ct. 2131, 2140 (2016).

[4] N.L.R.B. v. Bell Aerospace Co., Div. of Textron, Inc., 416 U.S. 267, 293 (1974) (“‘the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.’”) (quoting SEC v. Chenery Corp., 332 U.S. 194, 203 (1947)).

In Uniloc 2017 LLC v. Hulu, LLC, Netflix, Inc. (July 22, 2020), the Federal Circuit held that the Patent Trial and Appeal Board (“the PTAB”) may consider, in its review of substitute claims proposed in an inter partes review (“IPR”), the patentability of the claims under 35 U.S.C. § 101.

Hulu, LLC and Netflix, Inc. (together “Hulu”) filed a petition for an IPR, challenging claims 1-25 of U.S. Patent No. 8,566,960 (“the ’960 patent”) owned by Uniloc 2017 LLC (“Uniloc”). During the IPR proceeding, Uniloc filed a motion to amend the ’960 patent, asking the PTAB to enter the substitute claims 26-28 if the PTAB found claims 1, 22, and 25 of the ’960 patent unpatentable. Hulu opposed the motion by arguing, inter alia, that the substitute claims are patent ineligible under § 101. Uniloc replied to the opposition, arguing that Hulu was not permitted to raise § 101 in opposition to the substitute claims. Uniloc, however, did not make any substantive arguments that the substitute claims are patent-eligible under § 101. The PTAB issued its final written decision (i) finding that the challenged claims are unpatentable and (ii) denying Uniloc’s motion to amend solely on the ground that Hulu had shown by a preponderance evidence that the substitute claims are directed to non-statutory subject matter under § 101. Uniloc requested a rehearing of the PTAB’s denial of its motion to amend. The PTAB denied Uniloc’s request for rehearing, concluding that, in determining patent eligibility of substitute claims submitted during the IPR proceeding, the PTAB may consider patent eligibility under § 101. Uniloc appealed.

35 U.S.C. § 311(a) allows any person who is not the owner of a patent to file a petition to institute an IPR of the patent, and 35 U.S.C. § 311(b) allows the petitioner to request cancelling one or more claims as being unpatentable “only on a ground that could be raised under section 102 or 103.”

Uniloc argued that the PTAB is limited in its review of substitute claims proposed in an IPR to anticipation or obviousness, as disclosed in § 311(b). The Federal Circuit disagreed and held that the text, structure, and legislative history of the IPR Statutes confirm that the PTAB may review substitute claims proposed during an IPR under § 101.

First, the Federal Circuit pointed out that “[t]he IPR Statutes plainly and repeatedly require the PTAB to determine the ‘patentability’ of proposed substitute claims,” and that “a § 101 analysis constitutes a ‘patentability’ determination.” The Federal Circuit also held that “section 311 is confined to review of existing patent claims, not proposed ones” as it limits a request to cancel as unpatentable one or more claims of a patent to ‘a ground that could be raised under sections 102 and 103,’” and that substitute claims are not claims of a patent.

Second, the Federal Circuit held that the legislative history of the IPR Statues confirms that the PTAB is allowed to review proposed substitute claims for patentability outside of anticipation and obviousness. The Federal Circuit pointed out that the scope of reexamination proceedings is limited to substantial new question of patentability, and “[p]roposed substitute claims in an IPR proceeding have not undergone a patentability review by the USPTO.” The Federal Circuit concluded that “[p]rohibiting the PTAB from reviewing patent eligibility would indeed ‘strip … [the PTAB] of a critical legal tool[.]’”.

Third, the Federal Circuit agreed with the comment the USPTO made as intervenor — that “‘if a patent owner seeking amendments in an IPR were not bound by § 101 and § 112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification[,]’ … allowing patents with otherwise invalidated claims ‘to return from the dead as IPR amendments.’”

It is clear from this opinion that the PTAB’s review of patentability of substitute claims proposed during an IPR proceeding is not bound by § 102 and § 103. Thus, while the owner of a patent that is subject to an IPR may avoid, by submitting substitute claims, the possibility of having its patent invalidated under § 102 and/or § 103, it should bear in mind that the substitute claims will need to withstand scrutiny under § 101 (and probably § 112), not just § 102 and § 103.

With an unusual fact pattern, and a Federal Circuit opinion that touches on standing to appeal, joinder of parties, and agency obligations, Fitbit, Inc. v. Valencell, Inc., 964 F.3d 1112 (Fed. Cir. 2020), seems closer to a law school teaching aid than an actual inter partes review (“IPR”) appeal. Without addressing the asserted grounds of unpatentability, the Patent Trial and Appeal Board (“the Board”) issued a Final Written Decision finding no unpatentability, resulting in a petitioner appealing claims its IPR petition never challenged.

At the PTAB

Valencell, Inc. owns U.S. Patent No. 8,923,941 (“the ’941 patent”) directed to systems for obtaining and monitoring information such as blood oxygen level, heart rate, and physical activity.  Apple, Inc. challenged the validity of claims 1–13 of the ’941 patent by IPR in IPR2017-00319.  On June 6, 2017, the Board instituted the IPR of the ’941 patent on claims 1, 2, and 6–13.  After institution Fitbit, Inc. filed its own IPR petition challenging claim 1, 2, and 6–13 of the ’941 patent, along with a motion to grant joinder to the instituted Apple IPR.  The Board granted the motion and joined Fitbit as a party.

Between the time of the PTAB trial and the Board’s Final Written Decision, the Supreme Court decided SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018), holding all patent claims challenged in an IPR petition must be reviewed by the Board.  The Board re-instituted the IPR, adding claims 3–5 of the ’941 patent.  In its Final Written Decision, the Board found claims 1, 2, and 6–13 unpatentable, and claims 3–5 not unpatentable.  Following the decision, Apple withdrew from the proceeding and Fitbit appealed the decision on claims 3–5.

Appeal to the Federal Circuit

At the Federal Circuit, Fitbit found itself in the unusual position of appealing the Board’s decision on three claims that it did not challenge in its IPR petition.  This provided the basis for Valencell’s challenge to Fitbit’s standing to appeal.  According to Valencell, Fitbit only sought IPR for claims 1, 2, and 6–13, and therefore, Fitbit did not have standing to challenge the Board’s decision that relates to claims 3–5.

The Federal Circuit rejected the lack of standing argument based on the statutory language granting the right to appeal. Under 35 U.S.C. § 315(c), the Board exercised its discretion to “join as a party to that inter partes review any person who properly files a petition…” when it joined Fitbit to Apple’s IPR.  Similarly, “[a] party dissatisfied with the final written decision” may appeal it in accordance with 35 U.S.C. § 319.  The court rejected Valencell’s arguments, noting Fitbit’s rights as a joined party applies to the entirety of the proceedings, including the right of appeal.

On the merits of the appeal, the Federal Circuit vacated and remanded the Board’s decision on claims 3–5 because the Board performed an incomplete analysis.  For claim 3, the Board rejected Fitbit’s proposed claim construction and deemed the patentability inquiry over based on its construction.  The Federal Circuit remanded for the Board to fulfill its duty to address the asserted grounds of obviousness after claim construction.

The court held the Board similarly erred when it failed to apply the cited prior art references to claims 4 and 5.  For these claims, the Board declined to analyze the prior art because it could not determine the meanings of the claims when one of the claim terms lacked antecedent basis.  Both Fitbit and Valencell agreed that there was an error in claim dependency during an amendment in the prosecution of the patent that neither the examiner nor patentee had noticed.  The Board declined to accept the parties’ shared view of the correct antecedent.

The Federal Circuit found error with the Board’s refusal to accept the parties’ uniform position, a position that was not subject to reasonable debate.  The court noted there is authority for the Board to correct errors and that the Board is the preferable agency to resolve the merits of patentability.  On remand, the Board should seek a reasonable resolution that comports with the agency’s assignment to resolve patentability issues.

Thanks to a decision handed down by the Patent Office’s Patent Trial and Appeal Board (“PTAB”) last month, patent owners may find some difficulty in having petitions to institute inter partes review (“IPR”) dismissed based on the PTAB’s discretion under Section 314(a) of the patent act.  In Sand Revolution II, LLC v. Continental Intermodal Group,[1] the PTAB changed course on rehearing and reversed its denial to institute review based on supplementary briefing and new precedent.  Relying on the recent precedential decision Apple Inc. v. Fintiv, Inc.,[2] the PTAB identified six factors that considered together warranted modifying its original order and granting institution of IPR.

In the original institution decision, the PTAB had determined that another precedential decision – NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc.[3] – controlled the outcome of the case based on the preliminary record.  In NHK Spring Co., the PTAB denied institution partly under its Section 314(a) discretion on the basis that institution of IPR would be an inefficient use of its resources in light of the “advanced state” of the parallel district court with the same parties, patent, and invalidity contentions.[4]   In the decision denying institution, the Sand Revolution II panel found that the same facts supporting the NHK panel’s inefficient use decision were present: the district court litigation involved the same parties, the jury trial would begin before the requested IPR proceeding would issue a final written decision, the claim language at issue in the litigation was asserted in the petition and was interpreted similarly between the two, and the grounds asserted in the petition were asserted for invalidity in the litigation.

However, in between that decision and the decision last month, the panel in Fintiv issued its precedential decision elaborating on the application of NHK and laying out the six factors relevant in deciding whether to use the PTAB’s discretion to deny institution based on a parallel district court action:

  1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
  2. proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;
  3. investment in the parallel proceeding by the court and the parties;
  4. overlap between the issues raised in the petition and in the parallel proceeding;
  5. whether the petitioner and the defendant in the parallel proceeding are the same party; and
  6. other circumstances that impact the Board’s exercise of the merits.

These factors, as stated by the Fintiv panel, would help determine whether efficiency, fairness, and the merits would support the PTAB’s exercise of authority to deny institution in view of an earlier trial date in a parallel proceeding.

After supplemental briefing on these factors on rehearing, the panel in Sand Revolution II concluded that “a holistic view” of the evidence submitted on the Fintiv factors pointed to not invoking its §314(a) discretion and granting institution.  While it was a close call, the panel found that proximity of the court’s trial date, overlap of issues between proceedings, and other circumstances including merits favored granting institution more so than the amount of investment in the parallel proceeding and the fact that the petitioner was the defendant in the parallel proceeding weighed against it.  In particular, the panel paid attention to the fact that, although trial had been scheduled to occur at least five months before any final decision would be due, the scheduled deadlines were extended three times since the PTAB’s initial denial decision and once since supplemental briefing for the rehearing had concluded.  All three extensions were in response to joint motions from the parties.  The panel also noted that the language the court used in conjunction with its scheduled deadlines for the trial indicated a degree of recognized uncertainty, in stark contrast to the PTAB’s one-year statutory deadline for entry of final decisions.  These findings, coupled with the additional fact that the PTAB has been fully operational and on normal schedule despite the impact of COVID-19, led the panel to award the factor “marginally” in favor of granting institution.

The panel acknowledged the fact that petitioner and defendant were the same party, and that the court and parties have invested in the district court litigation.  However, despite the patent owner’s assertions that the investment had been substantial, the panel concluded that the court’s investments had been related to ancillary matters not tied to the validity issue; and the district court’s Markman Order, which was only two pages long, did not suggest a different conclusion.  Though the case had exchanged infringement and invalidity contentions, conducted a Markman hearing and entered the order, repeatedly set and amended the case’s schedule, granted several pro hac vice motions, heard and denied a motion to dismiss, and transferred the case between judges; the panel found the factor only marginally weighed in favor of exercising §314(a) discretion, if at all.

PTAB data over the past few years suggest that institution rate of IPRs has been falling, while denials based on §314(a) discretion has been rising, and that both will continue to do so.[5]  However, given the impact COVID-19 has had on litigation proceedings throughout the country, the PTAB may be more inclined to let defendants in delayed district court cases bring their fight into IPRs, especially when the invalidity contentions and the record present a strong case against the patent.

[1] No. IPR2019-01393, Paper No. 24 (PTAB June 16, 2020).

[2] No. IPR2020-00019, Paper No. 11 (PTAB Mar. 20, 2020).

[3] No. IPR2018-00752, Paper No. 8 (PTAB Sept. 12, 2018).

[4] The PTAB also denied institution based on its discretion under Section 325(d) based on similar arguments/prior art in a previous proceeding before the PTAB.

[5] PTAB Procedural Denials and the Rise of §314, Unified Patents (May 13, 2020),

On June 18, 2020, the Federal Circuit granted JHO Intellectual Property Holdings, LLC’s (“JHO”) motion to vacate the PTAB’s final written decision and remand the case in light of the court’s decision in Arthrex. In an ex parte reexamination proceeding, the PTAB denied JHO’s request for rehearing of its decision affirming the Examiner’s rejections of all pending claims of JHO’s U.S. Patent No. 8,445,466.

In its motion, JHO argued that Arthrex applies because the duties of administrative patent judges (“APJs”) are similar in both inter partes review (“IPR”) and ex parte reexamination proceedings. JHO argued that in both proceedings APJs hear oral argument, review pro hac admissions and issue final written decisions containing fact findings and legal conclusions relating to the patentability of the claims at issue. JHO also argued that in ex parte reexamination when the APJs issue a final written decision the only recourse available is to appeal the decision to the Federal Circuit.

The USPTO argued that the issue of constitutional appointment of APJs is not present for ex parte reexamination proceedings because the Director has substantially greater control over such proceedings and may make unilateral decisions concerning the examination of the claims at issue. The Federal Circuit rejected the USPTO’s argument and relying on its reasoning in VirnetX Inc. v. Cisco Systems, Inc., instead held that Arthrex applied in the context of ex parte reexaminations.

Last month, in VirnetX Inc. v. Cisco Systems, Inc., 958 F.3d 1333 (Fed. Cir. May 13, 2020), the Federal Circuit denied the USPTO and Cisco Systems, Inc.’s petitions for rehearing and again held that Arthrex applied to inter partes reexaminations. The USPTO had argued that APJs should at least be considered constitutionally appointed officers when it comes to hearing appeals of inter partes reexaminations. Relying on Freytag v. Commissioner, 501 U.S. 868 (1991), the Federal Circuit held that they “look not only to the authority exercised in [an appellant]’s case but to all of that appointee’s duties when assessing an Appointments Clause challenge.” See id. at 1335.  According to the Federal Circuit, if in light of Arthrex, APJs are unconstitutionally appointed principal officers with respect to their duties in IPRs, then under Freytag, “vacatur would be appropriate for all agency actions rendered by those APJs regardless of the specific type of review proceeding on appeal.” Id.  However, the Federal Circuit noted that although Freytag would appear to apply to all Board proceedings, it declines to go that far. The Federal Circuit held that the analysis applies here to appeals of inter partes reexaminations because they are similar to IPRs in that both involve “third-party challenges to the claims of an issued patent” and in both “APJs exercise significant authority on behalf of the government by issuing final decisions that decide the patentability of the challenged claims.” Id.

Applying this reasoning to the present case, the Federal Circuit held that although the appeal arises out of an ex parte reexamination, there is no relevant distinction between that proceeding and an inter partes reexamination proceeding such that the reasoning of Virnetx should not apply.


The Federal Circuit’s decision here joins a long line of recent decisions issued in response to Arthrex. We previously reported on some of these decisions here. We can expect to see more Federal Circuit decisions analyzing the boundaries and applications of Arthrex in the near future. However, because the PTAB issued an order suspending all activity in the remanded cases, the PTAB will not be issuing any decisions until the Supreme Court decides the issue.

Earlier this month, the U.S. government, Smith & Nephew, Inc. and ArthroCare Corp. filed briefs in opposition to Arthrex’s petition for certiorari. Arthrex submitted its reply brief on June 19, 2020. The Supreme Court is set to discuss the briefs at conference on September 29, 2020.

The Supreme Court also already considered three other petitions for certiorari raising the same issue: Collabo Innovations, Inc. v. Sony Corp., No. 19-601 (filed Nov. 4, 2019); Celgene Corp. v. Peter, No. 19-1074 (filed Feb. 26, 2020); and Enzo Life Sciences, Inc. v. Becton, Dickinson & Co., No. 19-1097 (filed Mar. 3, 2020). On June 22, 2020, the Supreme Court denied all three petitions. It is worth noting that the questions presented in each of these petitions did not directly address the constitutional appointment of APJs. Rather, the appointment issue was merely hinted at or noted somewhere in the petition. As such, the Supreme Court may not have analyzed the merits of the issue when deciding those three petitions.

Thus, until the Supreme Court makes a decision in September, the Federal Circuit will have to continue to navigate the minefield of appeals left behind by Arthrex while the rest of the patent world waits.