Federal Circuit to Review the Reviewability of the IPR Time Bar

By: Tammy Dunn

Inter partes review proceedings (IPRs) have become an increasingly popular avenue for those who seek to invalidate claims in a patent.  Created by Congress through the America Invents Act, IPRs offer a more streamlined and relatively cost-effective way to invalidate patents than historically has been available in United States district court proceedings.  Unlike district court, where judges and juries make decisions regarding invalidity, panels of technically trained patent judges of the United States Patent & Trademark Office’s Patent Trial and Appeal Board (PTAB or “the Board”) decide patentability in IPRs.

Typically, the motivation for seeking an IPR is that the challenger has become the target of a district court lawsuit alleging patent infringement.  One of the reasons IPRs have become so popular is because the odds are high that at least some of the challenged claims in an IPR will be found to be unpatentable and therefore cancelled.  In fact, PTAB has invalidated at least some of the instituted claims in 80 percent of IPRs that have reached final decision.  Since invalid patent claims cannot be enforced, litigants facing potential liability for patent infringement have significant incentive to avail themselves of these proceedings.

As advantageous as IPRs are for patent challengers, Congress also imposed a statutory limit on when a challenger who has been sued for patent infringement can seek an IPR.  According to 35 U.S.C. 315(b),

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

In most cases, litigants decide to file an IPR request soon after being served with a complaint.  Thus, the time bar often does not become a significant issue of dispute.  Where the time bar becomes increasingly important is in situations where petitioners either have a history of working with other companies who already were sued, or where petitions wait until much closer to the one-year deadline to make a decision to file an IPR petition.  For a petitioner, one day can literally make the difference between being able to challenge a patent in an IPR or not.  For a patent owner, one day can make the difference between life and death for a patent.

So, the timeliness of a petition is critically important and is decided in the institution decision.  If a petition is timely, then, provided all other requirements are met, an IPR trial can be instituted.  If a petition is not timely, however, then the Board may not institute an IPR.

What happens, then, if the Board’s decision on timeliness is “wrong”?  Last year, in Cuozzo Speed Technologies LLC v. Lee, 136 S. Ct. 2131 (June 20, 2016), the Supreme Court addressed, among other things, the issue of reviewability of institution decisions.  A majority of the Supreme Court in Cuozzo agreed with the United States Court of Appeals for the Federal Circuit that at least some aspects of the PTO’s decision to institute an IPR are not subject to judicial review — even after the PTO renders its final decision.

The majority in Cuozzo appeared to be influenced by the view that the institution-related violation alleged in that case concerned a “minor statutory technicality” that should not have unwound the final decision.  Thus, the majority read a “no appeal” provision in the AIA to foreclose more than just “interlocutory” appeals (i.e., appeals filed prior to final judgment or final decision) of institution decisions.  The majority cautioned, however, that the ruling did not “categorically preclude review of a final decision” or “enable the agency to act outside its statutory limits.”  The Court warned if PTAB exceeds its statutory authority or violates due process, “such ‘shenanigans’ may be properly reviewable.”

The dissent, on the other hand, believed the same “no appeal” provision should have precluded only interlocutory appeals, and in appeals from a final decision, any alleged improper conduct by the Board, including those reflected in an institution decision, should be subject to review.  The dissent also warned that the majority opinion failed to explain “how to determine which ‘statutory limits’ we should enforce and which we should not.”

The Court in Cuozzo did not address the reviewability of the statutory one-year time bar.  That question had been addressed in another case, Achates Reference Publishing Inc. v. Apple Inc., Case No. 14-1767, where the Federal Circuit held that PTAB decisions on the time bar are part of the institution decision and are, therefore, not appealable.

Since Cuozzo, the Federal Circuit has largely continued to deny judicial review based on its pre-Cuozzo precedent.  At the same time, however, a number of Federal Circuit judges have questioned whether these subsequent decisions comport with Cuozzo.  Out of this concern, the Federal Circuit has begun calling for en banc review (i.e., review by the full Federal Circuit Court rather than a panel of three of its judges) of some of these cases, including one that again brings to the forefront the question of the reviewability of the time bar.

In Wi-Fi One LLC v. Broadcom Corp., Case No. 2015-1944, Broadcom filed an IPR petition challenging the validity of Wi-Fi One’s patent in the underlying IPR.  In response, Wi-Fi One argued the petition was time-barred because although Broadcom was not itself sued, it worked with other companies that were sued over the same patent more than one year before Broadcom filed its petition.  Wi-Fi One requested discovery on the issue, but the PTAB refused the request and ultimately invalidated the patent.  On appeal, the Federal Circuit affirmed, citing its prior ruling in Achates, that PTAB decisions on the time bar are part of the institution decision and are not appealable.

Wi-Fi One sought en banc review of that decision and argued that Cuozzo threw the Achates holding into question.  Quoting Cuozzo, Wi-Fi One argued that instituting an IPR that may be time-barred is “precisely the type of ‘shenanigans’ that the Supreme Court indicated are subject to appellate review.”

On January 4, the Federal Circuit agreed to review the issue of whether patent owners can appeal PTAB decisions that IPR petitions were timely and whether the ruling in Achates should be overruled.  In a concurring opinion, Judge Reyna expressed concern that without appellate review of these decisions, the time bar is rendered “toothless,” because PTAB can potentially ignore the time bar without appellate oversight.  Although it is difficult to predict what the Federal Circuit will ultimately do, one thing is certain – if the Federal Circuit overrules Achates, more appeals in cases where the time-bar was an issue can certainly be expected.

Briefing in Wi-Fi One is currently scheduled to be completed by March 29.  Oral arguments will be scheduled at a later date.

Osha Liang will continue to monitor this case and will report on future developments.