US Supreme Court Seems Poised To Allow Patent Holders More Judicial Review Options

In case that could impact challenges of biopharma patents, Supreme Court questioned the consequences of not allowing courts to review PTAB institution decisions when petition may be time barred.

The US Supreme Court grappled with the question of whether courts can review decisions by the US Patent and Trademark Office's Patent Trial and Appeal Board to institute review of  inter partes review (IPR) petitions when the Board finds the time bar on filing the petitions does not apply.

During 9 December oral argument in Thryv Inc. v. Click-To-Call Technologies LP, the justices seemed inclined to find that such decisions are subject to judicial review. The case drew the attention of the biopharmaceutical industry as the outcome could impact whether certain IPR petitions challenging drug patents are granted.

The Association for Accessible Medicines (AAM) filed an amicus brief in support of Thryv's certiorari petition, arguing that permitting judicial review of PTAB institution decisions will constrain the rights of generic and biosimilar companies to use the IPR process. The Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Innovation Organization (BIO) submitted amicus briefs in support of judicial review.

In 2012, Click-To-Call filed a patent infringement suit against several companies, including YellowPages.com, now part of Thryv. One of the entities filed an IPR petition challenging the phone call system patent and Click-To-Call responded that the petition was time-barred under the America Invents Act because YellowPages.com's predecessor company had been sued over the same patent in 2001. Under the AIA, a party sued for infringement must request inter partes review within one year of being sued.

PTAB found that the 2001 complaint did not bar IPR review of the patent.

In January 2018, the Federal Circuit issued a divided en banc decision in Wi-Fi One LLC v. Broadcom Corp. holding that time-bar decisions are appealable. In light of that decision, the Federal Circuit reheard Click-To-Call's case and ruled en banc that the time bar is triggered by the service of any complaint, even if that complaint was later dismissed without prejudice, meaning it was not dismissed permanently.

Justice Neil Gorsuch asked Thyrov's attorney Adam Charnes, of Kilpatrick Townsend & Stockton,  about a hypothetical situation in which a petition was clearly time-barred and the director of the US Patent and Trademark Office instituted review anyway. "I believe you're saying that is a shenanigan this court cannot review," Gorsuch said.

Charnes agreed that it would not be reviewable and suggested that such a situation be dealt with through mandamus, a court order directing an entity to do something it is obliged to do under the law.

Conflict With SAS Institute Decision?

Justice Ruth Bader Ginsburg asked how Charnes would deal with a sentence in the court's decision in SAS Institute  v. Iancu, which says that a provision of the statute precludes judicial review only of the Board's initial determination that there is a reasonable likelihood that the claims are unpatentable. Charnes replied that the rationale for judicial review was completely different in that case. The court ruled last year in SAS that PTAB must issue a decision on whether to institute review of all of the patent claims raised in the petition and not just some of them. (Also see "Inter Partes Patent Challenges Are Constitutional, US Supreme Court Rules" - Pink Sheet, 24 Apr, 2018.)

Justice Samuel Alito Jr. also asked Jonathan Ellis, assistant to the Solicitor General who argued for reversal of the Federal Circuit's decision permitting judicial review, how he would reconcile his position with SAS. Ellis said the question now before the court was not at issue in SAS.

But Justice Stephen Breyer said the fact that this case only speaks to institution of an IPR "isn't quite catching the point." The point, he said, is "how general and important" institution is above and beyond this particular claim.

'What's The Big Deal?' Gorsuch Asks

The justices also had tough questions for Thryv's attorney Daniel Geyser, of Geyser PC.

Justice Ginsberg questioned the impact of nullifying a Board's decision that a patent is unpatentable. If "we wipe that out [and] then you get another challenger where the Board has already made the decision that the patent is no good, there's something unseemly about nullifying the determination on the merits," she said.

Justice Elena Kagan told Geyser that he is saying that "Congress wrote that silliest provision that the bar on appeals applies only to something that nobody would raise because it's been totally mooted out."

"I do have some sympathy for your argument that a petitioner should be given an avenue of judicial review on a legal question, like the timeliness of the application," Justice Sotomayor said. "But some amici point out a potential problem under your view, which is if the PTO agrees with you on the legal question and throws this complaint out, that the other side won't have an opportunity to challenge that because the only power to appeal is under [Section] 319" of the patent statute.

Justice Gorsuch questioned the importance of the issue at stake in the case.

"I guess the question, though, that we're struggling with is, so what's the big deal?" he said. "If you're stuck going to ex parte review anyway, why should we care?"

Geyser replied that the inter partes review is a very different process than ex parte reexamination.

Impact On Biopharma Industry

In its amicus brief, AAM said that the Federal Circuit's decision will be harmful to generic and biosimilar companies.

"The anticompetitive and unintended consequences of this decision are manifest," AAM stated. The decision "provides and obvious mechanism for manipulation. That is, patent owners are now incentivized to file suit and voluntarily dismiss the complaint after service in order to start the one-year clock, which continues to tick even when the litigation is no longer pending. This, in turn, forces the defendant to use its IPR rights or forfeit them forever."

AAM added that in the event of a voluntary dismissal, "a generic or biosimilar company must now decide whether to file an IPR against the dismissed patents to avoid losing that option altogether – not only for the medicine at issue in that particular case, but for all future products that might be covered by those patents, including products not yet in development."

The Biotechnology Innovation Organization argued that judicial review of the PTAB's time-bar determination is necessary to curb abuses against patent holders. It cites other instances in which the PTO's construction of provisions of the patent statute have been harmful to patent owners, such as its permitting time-barred parties to "join" another proceeding.

PhRMA made a similar argument in its amicus brief in support of Click-To-Call, saying judicial review of whether the PTO violated the time bar in conducting inter partes review would provide predictability for stakeholders in the patent system.

If the agency "is unchecked in exercising its authority over petitions that are filed past that one-year bar, adjudication of pending infringement actions will be undermined," PhRMA stated.

This is the fifth case the Supreme Court has taken up involving interpretation of the America Invents Act of 2011, which created the IPR process. In its first decision, the court unanimously ruled in 2016 in Cuozzo Speed Technologies v. Lee that Congress had not established what claim construction standard to apply in IPR proceedings and that the PTO had the authority to set the standard. (Also see "Supreme Court Upholds IPR Standard Making Patent Invalidation Easier; Will Congress Reverse?" - Pink Sheet, 20 Jun, 2016.)

In June, the court ruled in Return Mail Inc. v. United States Postal Service that the government is not a "person" capable of instituting patent challenges under the AIA's post-grant review proceedings. (Also see "Patent Owners Have One Less Adversary As Supreme Court Bars Government From Filing IPR Petitions " - Pink Sheet, 10 Jun, 2019.)