Patent Day At The Supreme Court: A Split Decision On Split Decisions?

US justices appear divided on whether Patent Trial and Appeal Board can issue a final decision on only some of patent claims challenged. Justice Sotomayor said petitioner is trying to get around the court's Cuozzo decision, but others cited ambiguity in the statute and efficiency of tackling all claims.

The second of the two patent cases the Supreme Court heard on Nov. 27 played out in front of a much smaller audience, but it was no less lively a performance by the justices and lawyers. The petitioner challenging the scope of inter partes review (IPR) decisions seemed to be facing a losing battle when questioned by Supreme Court justices Sonia Sotomayor and Elena Kagan. But other justices pointed to the ambiguity of the statute and the goal of the proceeding, suggesting the court may reach a split decision. 

The case, SAS Institute Inc. v. Matal, asks the court to determine whether final written decisions by the US Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) must decide the patentability of every claim that a petitioner challenges in an inter partes review (IPR) petition or only those for which it institutes review.

Prior to taking up the case, the court heard same day oral arguments in another IPR dispute, Oil States Energy Services LLC v. Greene's Energy Group LLC, which addressed the constitutionality of the proceeding. The justices seemed divided in that case as well. (Also see "Supreme Court Seems Likely To Keep Inter Partes Review Despite Problems" - Pink Sheet, 27 Nov, 2017.) After the arguments in that case, many left the gallery, leaving far fewer patent lawyers and journalists to witness the SAS fireworks. 

Even though its getting less attention, attorneys say a ruling for SAS Institute could impact the way PTAB handles IPR petitions as it would require the Board to write longer and more detailed decisions.

Justice Sotomayor suggested that SAS Institute was trying to get around the Supreme Court's decision in Cuozzo Speed Technologies LLC v. Lee, in which the court ruled 6-2 that PTAB decisions to institute review are not appealable.

While 58 amicus briefs were filed in the Oil States case, only two were submitted in the SAS Institute case, one of which was by the Intellectual Property Owners Association, which includes several major pharmaceutical companies. It argued that AIA's provision barring a petitioner from asserting an invalidity claim in district court litigation that it raised or reasonably could have raised during the IPR proceeding is circumvented when PTAB does not address all the claims challenged in a petition. (Also see "How Comprehensive Do IPR Decisions Have To Be?" - Pink Sheet, 17 Nov, 2017.)

SAS Institute's lawyer Gregory Castanias told the court that one of the reasons there had not been a lot of amicus briefs on either side of this case is that SAS Institute is saying it would like to have appellate review and be bound by an adverse decision regarding claims that the Patent Office did not think met the standard for institution.

During oral arguments, Justice Sotomayor asked the most questions of Castanias, a partner at Jones Day. She asserted that it is not clear what SAS Institute is challenging.

"Are you challenging the Board's right to initiate partial adjudications or are you challenging the fact that they are not addressing all of the claims in their final decision?" she asked. Castanias replied that it was the latter.

"So, what is it exactly that you want the Board to do with respect to the claims that it didn't grant adjudication of?" she then asked. Castanias responded that the petitioner is asking the Board to specify that it did not find them unpatentable so that decision can be appealed.

Sotomayor replied that he was trying to get around the Supreme Court's decision in Cuozzo Speed Technologies LLC v. Lee, in which the court ruled 6-2 that PTAB decisions to institute review are not appealable. Justices Sotomayor and Samuel Alito Jr. dissented. (Also see "Supreme Court Upholds IPR Standard Making Patent Invalidation Easier; Will Congress Reverse?" - Pink Sheet, 20 Jun, 2016.)

Castanias denied that this was the petitioner's goal.

"Well, I don’t see what else you're trying to do, because what will you do? You will come up on appeal and say the Board was wrong in not instituting review of those other claims? That's what Cuozzo was about, us saying you can't do that," Sotomayor stated.

Why Carve Out One Thing From PTAB's Discretion?

Sotomayor said the petitioner really wants to say that the Board shouldn't institute partial reviews and she noted that the America Invents Act, the statute that created the IPR proceeding, has no direct prohibition of partial institution.

Justice Kagan said the statute seems to give great discretion to the Board with respect to its decision to institute review of a patent's claims.

"So, it's a little bit odd to say, well, here's the one thing you don't have discretion over when it comes to institution: you can't say these claims but not those claims," Kagan stated. "In a context in which Congress said the institution decision is really for the Board, it's a discretionary decision that lies in its bailiwick, why should we carve out that one thing?"

Castanias replied that the Board has discretion to grant or deny review and "there is not a further secret grant of selective review at that point."

Justice Stephen Breyer told Castanias he was having trouble imaging what the purpose would be of writing the statute the way he wants it, adding that he finds it "very practical to think of the statute as your opponents want it." However, he added that there is a lot of ambiguity in the law.

Is The Statute Ambiguous?

The America Invents Act (AIA) says that if an inter partes review is instituted, the PTAB "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner."

"Would it be crazy to suppose that Congress might have wanted" PTAB to issue a final decision on all claims brought to it "to achieve maximum efficiency?" – Justice Gorsuch

Breyer cited the ambiguity of the word "any" in questioning Assistant to the Solicitor General Jonathan Bond, who argued on behalf of the respondent, PTO interim director Joseph Matal. He said using a word like "any" and "any claim" is "filled with ambiguity, so that the agency can decide which way it wants to go."

But Justice Alito questioned what was ambiguous about that language. He asked why Congress, if it had intended the statute to be read as the government does, wouldn't have specified that "patentability of any patent claim" referred to any claim found by the director to have at least some likelihood of success or any claim on which review was granted.

Chief Justice John Roberts Jr. and Justices Anthony Kennedy and Neil Gorsuch also questioned PTAB's policy of issuing decisions on only some of the claims challenged by the petitioner.

Roberts pointed to the Board's decision to institute review of one of two claims that the petitioner said were nearly identical. Bond said the Board in its discretion decided one claim was a close question and the other was not.

That doesn't seem very helpful "in terms of what the whole process was supposed to accomplish," Roberts replied.

Justice Kennedy asked why the Board couldn't decline to institute review unless the petitioner reduced the claims. Bond said the Board could do so and get to the same result through a more cumbersome, multistage process.

Would Review Of All Claims Be More Economically Efficient?

Justice Gorsuch questioned how the statute gives the Board authority to decide which claims to review to weed out the process.

He also noted that the Court's attention in the Oil States case was on Congress's putative intention to move patent challenges to an expert agency to speed things along and make it more efficient from the economy's perspective.

"Could that be a reason here why Congress might have wanted the Patent Office to review any, and issue a final decision on any and all claims brought to it?" he asked. "Would it be crazy to suppose that Congress might have wanted that as a way to achieve maximum efficiency through this administrative process?"

Bond responded that it's "baked into the scheme that there will be this potential for some claims to be reviewed by the PTO and others in court."