Basic background of inter partes review
An IPR refers to an inter partes review. The IPR is an administrative proceeding before the Patent Trial and Appeal Board (PTAB) of the USPTO in which a petitioner can request claims of a patent be invalidated to avoid patent infringement liability. The petitioner is normally a business competitor to the patent owner wherein the patent owner has alleged patent infringement. Under SAS Institute, Inc. v. Iancu (S. Ct. 2018), all challenged patent claims by petitioner must be included in the IPR if the single claim threshold is met.
Benefits of IPR
In a federal court where patent infringement is litigated, the alleged infringer would have to litigate multiple issues such as validity and noninfringement at the same time. The IPR allows the alleged infringer to focus their resources to first attack the validity of the challenged patent claims before having to spend the time and money on arguing noninfringement.
In my opinion, the IPR is a preferred venue to challenge the validity of the patent. One reason is that the IPR allows the alleged infringer to argue for the “broad reasonable interpretation” of the terms of the patent claims. With the broadest reasonable interpretation (BRI), the claims are read broadly, and thus the prior art references are more likely to invalidate the patent claims based on a lack of novelty and obviousness.
If the challenged patent claims survive the IPR, then the alleged infringer can argue for the “ordinary meaning” of the challenged patent claims during litigation in federal court. The ordinary meaning of a claim term is a narrower than the broadest reasonable interpretation, and thus, the alleged infringer would be less likely to infringe the patent claims. The alleged infringer can have claim construction beneficially construed in their favor in both stages of the litigation by taking advantage of the IPR.
All challenged patent claims must be instituted in IPR, no partial institution
In SAS, the issue before the Supreme Court was whether the PTAB could institute an IPR on some but not all of the claims identified in the petition for IPR by the petitioner. Before SAS, PTAB would be able to pick and choose which claims would be considered in the IPR under the power of a USPTO regulation “partial institution.” In SAS, the Supreme Court held that the PTAB did not have the power of “partial institution.” The USPTO has already issued its Guidance on the impact of SAS on AIA trial proceedings.
Before SAS, the alleged infringer could only take advantage of the IPR proceeding for those patent claims that the Board instituted. The petitioner would petition the Board to cancel as unpatentable 1 or more claims of the patent by identifying the claims, providing grounds that the identified claims are not novel or obvious and submitting the evidence supporting the challenge. The patent owner would then argue why no IPR should be instituted. If the petitioner was successful in convincing the Board that at least 1 claim (i.e., single claim threshold) would be invalidated, then the Board could pick and choose which claims of the patent should be a part of the IPR. “The Director did all this on the strength of a Patent Office regulation that purported to recognize a power of “partial institution.”
In SAS, the Director of the USPTO argued that the power of “partial institution” was found in the language of the statute. In particular, the Director pointed to various sections of the IPR statute which gives the Director discretion and authority to institute the IPR. The Director construed those sections to say that they allowed the Director to institute the IPR on a claim by claim basis and was not forced to institute the IPR as a group as chosen by the petitioner. Also, the Director made policy arguments based on efficiency and stare decisis that the courts should give deference to agency regulations under Chevron. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
The majority opinion written by Justice Gorsuch disagreed. In fact, the majority opinion stated that proper statutory construction begins with the language of the statute. Based on the language of the IPR statute, partial institution was not found anywhere. As for the efficiency argument, the majority opinion indicated that the agencies should make regulations based on the statute as written and not based on policy. Congress makes the laws based on policy and that the policy making discretion is not within the purview of the agency. Also, agency deference under Chevron is given only if the meaning of the statute cannot be discerned after employing traditional tools of statutory construction. As discussed in the opinion, the meaning of the statute was easily discerned.
Before SAS, the Board was allowed to resolve less than all challenged patent claims chosen by the petitioner under the USPTO’s regulation of “partial institution.” In SAS, the U.S. Supreme Court held that the Board must resolve every challenged patent claim raised by the petitioner once the IPR is instituted by the Board. They cannot pick and choose which patent claim to resolve. Patentability on some of the challenged patent claims cannot be decided by the Board while the rest are litigated in federal courts. The division is not for the Board to make. The petitioner has the power to choose which claims should be included in the IPR, not the Board.
Ramifications of SAS opinion
The SAS opinion makes an IPR an even more attractive vehicle for challenging the validity of a patent. Before SAS, the alleged infringer had to hope that the Board would institute the IPR for the claims (i.e., problematic claims) they thought they were most likely to infringe. After SAS, the alleged infringer is given complete control over which claims are considered in the IPR so long as the single claim threshold is met.
This brings us to another benefit of an IPR to alleged infringers. Before SAS, the alleged infringer had to spend the time and money to focus on all claims, especially the problematic claims to make sure that the problematic claims would be included in the IPR, if the IPR was instituted.
Now, the burden on the alleged infringers appear to have been lowered. In particular, the alleged infringer can focus on one or more claims that is likely to meet the single claim threshold, while spending less time and money on the other claims that they want included in the IPR because the PTAB must institute the IPR on all challenged patent claims as long as the single claim threshold is met. Presumably, this should reduce the cost to alleged infringers for preparing a petition for an IPR.
I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.