Supreme Court: IPR Proceedings Must Resolve All Challenged Claims
The Patent Trial and Appeal Board (PTAB) must issue a final written decision on every claim challenged by a petitioner in an inter partes review (IPR) proceeding, the Supreme Court held recently.
In SAS Institute, Inc. v. Iancu, the Court not only overruled the U.S. Court of Appeals for the Federal Circuit, but also struck down the PTAB’s long-standing practice of only issuing decisions on claims for which it instituted an IPR – not necessarily all claims challenged in a petition.
Now that the PTAB must issue a final written decision on every challenged claim in a petition that is instituted, it may change its institution decision-making process when faced with, for example, long petitions that contain a multitude of challenges, says Arthur Bobel, a member in Leydig’s San Francisco Bay Area office.
“Prior to the Court’s decision, petitioners typically would throw everything against the PTAB wall to see what would stick, with the hope that at least one viable challenge would get them to an instituted IPR,” Bobel says. “But if the PTAB now must issue decisions on all of those weaker challenges, as opposed to being able to summarily set them aside, it may be inclined to reject such petitions and refuse to institute. That could happen even when petitions contain challenged claims that have a reasonable likelihood of being invalid.”
35 USC § 318(a) states, “If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).”
In its 5-4 decision, the Court held that the plain language of §318(a) requires that the PTAB decide “every claim the petitioner has challenged.” Noting that neither §318(a), nor any other section of the America Invents Act gives the PTAB the power to partially institute an IPR in response to a petition, the Court concluded that Congress intended for the petitioner – not the PTAB – “to define the contours of the proceeding.” While the PTAB has wide discretion as to whether to initiate an IPR, “nothing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design.”
Since all challenged claims in a petition will now receive a final written decision in an instituted IPR, petitioners should be judicious in deciding whether to include weak challenges with ones more likely to result in the institution of an IPR, says Gregory Bays, a member in Leydig’s Chicago office.
“Previously, petitioners could feel fairly confident that their weaker challenges would simply be carved out and set aside by the PTAB when it instituted an IPR, leaving the petitioner with a potential second bite of the apple down the road,” Bays says. “Now that the PTAB must issue a final written decision on all submitted challenges, estoppel will attach to everything included in the petition if an IPR is instituted. This may incentivize petitioners to more cautiously choose which claims to challenge and, in some circumstances, to focus their petitions on the claims for which they have the strongest arguments.”
Supreme Court Holds That Foreign Lost Profits Are Recoverable For Domestic Patent Infringement
The lost profits recoverable for patent infringement do not stop at the water’s edge, the Supreme Court held recently. In its 7-2 decision in WesternGeco, LLC v. ION Geophysical, the Court ruled that a patent owner may recover lost foreign profits for domestic acts of infringement under 35 U.S.C. §271(f)(2).
The case arrived at the Court after a divided U.S. Court of Appeals for the Federal Circuit reversed a district court jury award of $93.4 million in lost profits to WesternGeco, based on 10 contracts for marine seismic surveys performed by ION’s customers in international waters.
Writing for the Court, Justice Clarence Thomas said the exportation from the U.S. of components of a patented invention, to be assembled abroad, involves “domestic” conduct that §271(f)(2) seeks to regulate. Having established domestic infringement in this way, the patentee’s remedy flows from §284 in any appropriate form, including lost profits.
“The overseas events were merely incidental to the infringement,” Thomas wrote.
The majority emphasized that its decision was a narrow one, and it did not address ancillary issues, such as the availability of lost profits damages due to extraterritorial inducement, or "the extent to which other doctrines, such as proximate cause, could limit or preclude damages in [this or other] cases.”
Supreme Court Issues Narrow Ruling Upholding Constitutionality of IPRs
The Supreme Court has rejected an attack on the constitutionality of inter partes review (IPR) proceedings. In its 7-2 decision in Oil States Energy Services v. Greene’s Energy, the Court reaffirmed that patent rights are “public rights” and, as such, it is not a violation of the Seventh Amendment to adjudicate those rights in a forum other than an Article III court.
The closely watched case, which attracted many amicus briefs, had the potential to upend the entire system of post-grant patent adjudication established under the America Invents Act (AIA). While litigants continue to challenge various aspects of IPRs, the Court’s decision means that patent holders and challengers will be participating in these proceedings in some form for the foreseeable future, says Erik Swanson, a member in Leydig’s Frankfurt am Main, Germany office.
“Oil States was an unsuccessful effort to swing for the fences by attacking the legitimacy of the IPR process,” Swanson says. “While the Court left open the possibility of other constitutional challenges, for now, efforts to address the perceived flaws of IPRs will have to continue on a more granular level.”
In its petition for certiorari, Oil States asserted that a patent constitutes a private property right, and therefore, the Constitution requires that patentees be allowed to have a jury trial in an Article III court when their claims are challenged. The U.S. Court of Appeals for the Federal Circuit had consistently held that post-grant proceedings before the U.S. Patent and Trademark Office (PTO) are constitutional and do not violate the Seventh Amendment because patent rights are “public rights” that do not need to be adjudicated before a jury. They did so again in rejecting Oil States’ argument.
In the majority decision written by Justice Clarence Thomas, the Court held that “[i]nter partes review falls squarely within the public-rights doctrine,” and as public rights, Congress has “significant latitude to assign adjudication … to entities other than Article III courts.” That’s exactly what Congress did with the AIA, the Court said. As such, IPRs presided over by non-Article III administrative law judges are a proper and constitutional forum for adjudicating patent rights.
The Court did not close the door on other potential constitutional challenges, however. Thomas emphasized that the decision was a narrow one, specifically noting that it should not be interpreted as holding that patents are not property subject to the constitutional protections of the Due Process Clause or the Takings Clause.
While Oil States doesn’t necessarily alter the IPR status quo, the carefully tailored scope of the decision, a strong dissent by Justice Neil Gorsuch, and leadership changes at the PTO may represent the leading edge of changes to how IPRs are conducted in the months and years ahead, says John Conklin, a member in Leydig’s Chicago office.
“I’m seeing indications that the courts and the Patent Trial and Appeal Board (PTAB) are recognizing that the AIA and the IPR system were born with an anti-patent bias that has manifested itself accordingly,” Conklin says. “I think PTAB will be increasingly focused on ensuring that IPRs are more equitable and that they can survive the additional constitutional challenges the Oil States majority virtually invited with the explicit narrowness of their decision.”
Leydig Opens Boulder, Colorado Office To Serve Growing Technology Hub
Leydig, Voit & Mayer, Ltd. opened an office in Boulder, Colorado on May 7. The location complements Leydig’s offices in Chicago, Washington, D.C., the San Francisco Bay Area, and Frankfurt, Germany, and allows it to better serve clients’ interests in a rapidly growing technology hub.
Leydig members Stephen Barone and Gary Chapman; counsel Sally Sullivan, Mary Breen Smith, and Michael Curtis; associate Neal Vickery; and scientific advisor Boris Chernomordik work in Boulder.
“We could not be more excited about welcoming Steve, Gary, Sally, and the entire Boulder team to the firm,” says Leydig President John Kilyk, Jr. “They are an exceptional group of intellectual property lawyers with deep roots in the area. Their talents and shared commitment to exceptional representation and service make them a perfect fit for Leydig and our clients. With our Boulder location, Leydig now has offices to serve clients in each of the continental U.S. time zones, in addition to our presence in Europe.”
Barone, Chapman, and Sullivan focus on intellectual property strategy, technology commercialization, patent prosecution, and portfolio management.
Barone, who holds a Ph.D. in chemistry, believes the new Leydig office brings powerful synergies for Boulder and Denver-area clients.
“Our chemistry and chemical engineering practice complements the strong interdisciplinary teams at Leydig,” Barone says. “The combination is strategically positioned toward diverse industries, including pharma, medical devices, green tech, and chemical manufacturing, all of which are seeing growth nationally and in the Boulder/Denver area.”
Colorado is home to an estimated 11,000 technology companies, and Boulder ranked No. 1 in Bloomberg’s 2017 Brain Concentration Index, a national analysis that measures business growth and the concentration of workers in the science, technology, engineering, and math fields.
Barone says that Boulder’s growth and its institutional strengths make it a natural home for Leydig.
“Boulder makes a great beachhead for Leydig in the emerging technology space, given the strong university and government lab presence and uniquely pioneering incubator and accelerator ecosystem we have here,” he says.
Chapman, who earned a Ph.D. in biophysics, has vast experience with complex technologies that arise from the intersection of life sciences, physics, and chemistry. He says the increasingly multidisciplinary nature of emerging technologies makes it crucial that lawyers from different fields work together.
“Being able to leverage Leydig’s deep bench of diverse talent and bring it to Boulder offers a wonderful opportunity to provide better value and service to our clients,” he says.
Holding a Ph.D. in chemistry, Sullivan uses her extensive background in the field to serve pharmaceutical and biotechnology clients. She and her Boulder colleagues are enthusiastic about joining a firm that not only has Leydig’s depth of experience, but also shares their philosophy.
“We all think the same way in terms of high-quality work, exceptional technical proficiency, and a commitment to client service,” Sullivan says.
Smith is a patent attorney whose technical focus includes small molecule pharmaceuticals, biological therapeutics, food technology, high-tech materials, clean technology, polymers, and therapeutic and diagnostic methods.
Curtis is a patent attorney whose practice includes a wide range of diversified technologies, such as biochemical compounds, scientific instrumentation, pharmaceuticals, plant patent applications, and medical devices.
Vickery is a patent attorney whose technical background includes chemistry, engineering, biotechnology, petroleum exploration, and materials science.
Chernomordik, Ph.D., focuses on chemical engineering, materials science, chemistry, and nanotechnology, and has written 18 scientific manuscripts in his areas of expertise.
- Chambers USA has recognized Leydig as a top intellectual property law firm and Michael Hartmann among the top IP professionals.
- The Legal 500 has recognized Leydig as a leading intellectual property law firm in patent prosecution and named Charles Mottier and John Kilyk Jr. as leading lawyers.