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IP Alert: Supreme Court Ruling in SAS Causes Significant Changes to PTAB Practice

May 4, 2018

As previously reported, on April 24, the Supreme Court issued a decision in SAS Institute Inc. v. Iancu in which a 5–4 majority of the Court reversed the Federal Circuit and held that the Patent Trial and Appeal Board (PTAB) must decide the patentability of all claims challenged by a petitioner when it institutes an inter partes review. Accordingly, the Court struck down the PTAB’s practice of “partial institution,” wherein the PTAB institutes trial and subsequently issues a final written decision determining the patentability of only a subset of claims challenged in the petition. The majority reasoned that, upon institution, the pertinent statute unambiguously requires the USPTO to determine the patentability of each claim challenged by the petitioner in a final written decision. The Court analyzed other related statutory provisions, finding that Congress intended the petitioner, rather than the USPTO, to determine which claims would be reviewed. Finding the statutory scheme unambiguous, the Court determined the USPTO’s regulations allowing partial institution were not entitled to Chevron deference.

The SAS decision raises a number of immediate issues for those currently engaged in inter partes review proceedings, which until the SAS decision have frequently involved partial institution decisions. On April 26, the PTAB issued “Guidance on the Impact of SAS on AIA Trial Proceedings,” in which the PTAB addressed how it would handle currently pending trials involving partial institution decisions. In such cases, panels “may” issue an order supplementing the decision on institution to include all challenges raised in the petition. In addition, panels may grant the parties additional time for briefing, discovery, and oral argument to address challenges added to the proceeding, including extending the 12-month statutory deadline as needed.

To provide further guidance to practitioners, the Chief Judge of the PTAB hosted a webinar on April 30 to address the impact of the SAS decision. The PTAB leadership explained that all challenged claims and, at least temporarily, all unpatentability grounds challenging the claims would now become part of an instituted trial, regardless of whether the individual grounds meet the minimum standard for instituting trial, i.e., “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” The decision to include all patentability challenges by the PTAB is interesting because the SAS decision does not hold that all grounds must be addressed in a final written decision. Often petitioners challenge the same claims according to multiple alternate grounds, and the PTAB has used its discretion in some cases to deny institution of such alternate grounds to simplify the issues for trial. By including all challenged claims and grounds in a trial, the number of issues to be addressed by the parties and resolved by the PTAB during trial, as well as by the Federal Circuit on any appeal of a final decision, will increase.

The PTAB leadership also suggested that PTAB panels could exercise their discretion to not institute trial at all on a petition that contains relatively weak challenges, even though the petition meets the “reasonable likelihood” standard. For example, the PTAB may decline to institute trial when only 1 out of 20 challenged claims meets the institution standard, to preserve the resources of the PTAB and the parties. 

SAS Institute will have a great impact on PTAB practice and beyond. For instance, estoppel will be a larger concern for petitioners. Previously, petitioners were not estopped from raising noninstituted grounds in another proceeding. Now, assuming trial is instituted, estoppel will apply to all grounds raised in a petition. This may counsel petitioners to consider filing a more focused petition with fewer challenged claims or fewer alternate invalidity grounds for the PTAB to consider. In addition, a panel may be less willing to institute trial on a petition that contains a plurality of weak challenges now that partial institution is no longer an option.

For patent owners, it remains in their best interest to avoid institution of trial. When possible, a comprehensive preliminary response that shows the entire petition to be weak will be the best course. On the other hand, when faced with strong challenges and institution of trial is likely, addressing each claim and challenge in a preliminary response may unnecessarily give the petitioner and the PTAB a preview of the patent owner’s arguments. Similarly, in cases where the challenges are strong, submitting an expert declaration with the preliminary response might be of less utility, particularly since fact disputes raised by testimonial evidence are resolved in favor of the petitioner in an institution decision.    

In addition, stays of parallel litigation will likely increase. Courts have been more likely to decline staying a case when some claims came out of an institution decision unscathed. This will no longer happen, thus providing a court with more incentive to stay a lawsuit. This gives defendants yet another reason to challenge an asserted patent at the PTAB.   

For more information on the SAS case, please contact Fitch Even partner Paul B. Henkelmann, author of this alert.

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