Final and Unappealable: Federal Circuit Will Not Review PTAB IPR Decisions
What is inter partes review?
Inter partes review (IPR) is a new procedure under the America Invents Act (AIA) for challenging the validity of one or more claims of a patent on § 102 (novelty) or § 103 (obviousness) grounds, while considering only prior art existing in patents or printed publications. The review is a trial proceeding before the Patent Trial and Appeal Board (“the Board”). Once the petition is filed, the Board decides whether or not to institute an IPR proceeding. To be instituted, the petition must show a reasonable likelihood that the challenged claims are unpatentable on the grounds asserted. If instituted, a proceeding is conducted before a panel of administrative patent judges that then reaches a conclusion and issues a final written decision.
Since the AIA was enacted, the Federal Circuit has barred review of institution decisions in several cases under the “no appeal” provision of 35 U.S.C. § 314(d), which states that a “determination by the Director [of the Patent Office] whether to institute an IPR under this section shall be final and non-appealable.” The Supreme Court addressed the issue of appealability in IPR proceedings in Cuozzo Speed Technologies, LLC v. Lee. The Court held that it was precluded from deciding whether the patent office wrongly instituted an IPR because any decision whether to institute an IPR is “final and non-appealable” under § 314(d). In Medtronic, Inc. v. Robert Bosch Healthcare Systems, Inc., the Federal Circuit addressed whether the PTAB’s decision to discontinue IPR proceedings is reviewable under § 314(d) in light of Cuozzo.
Background on the Medtronic Case
In 2013, Robert Bosch Healthcare, Inc. (“Bosch”) sued Cardiocom, Inc. (“Cardiocom”), a Medtronic, Inc. (“Medtronic”) subsidiary, in the Eastern District of Texas for infringement of two of its patents (U.S. Patent Nos. 7,769,605 and 7,870,249). Cardiocom petitioned for an IPR of the two patents, which the Board denied in January of 2014. Medtronic subsequently filed three petitions for IPR of the same two patents, specifying Medtronic as the only real party in interest. Bosch urged the Board to deny the petitions because Medtronic failed to list Cardiocom as a real party in interest under 35 U.S.C. § 312(a)(2). The Board held that Bosch had not established Cardiocom’s status as a real party in interest and went forward with the institution of IPR proceedings.
After a grant-in-part of additional discovery as to Cardiocom’s status, Bosch moved to terminate the proceedings again, alleging that Medtronic had failed to name all the real parties in interest. The Board, convinced by collective evidence that Medtronic was acting as a proxy for Cardiocom, vacated the institution decisions and discontinued the proceedings. Medtronic appealed, and Bosch moved to dismiss for lack of jurisdiction under § 314(d) on the grounds that the Board’s decisions were not appealable. Judges Lourie, Hughes, and Dyk, the original Federal Circuit panel, issued an unprecedented order on November 17, 2015 dismissing Medtronic’s appeal for lack of jurisdiction and denying mandamus relief. The panel held that the Board’s decision to terminate IPR proceedings was not reviewable on appeal under § 314(d).
The Federal Circuit issued a mandate the same day as the decision and Medtronic filed a petition for rehearing. Following the Supreme Court’s decision in Cuozzo in June, the Court recalled the mandate and requested supplemental briefing on the appealability issue in light of the decision.
The Federal Circuit’s Denial of Rehearing
In denying Medtronic’s rehearing petition, the Federal Circuit found that whether to institute an IPR proceeding and whether to reconsider that decision, the issue in Medtronic, are both barred by § 314(d). The Court, relying on the Supreme Court’s language in Cuozzo, held that both of these decisions are “closely related” to the application and interpretation of statutes that relate to the Patent Office’s decisions to institute IPR proceedings. Thus, the Court reasoned it would be nonsensical to deny a review of decisions to institute IPR proceedings but allow appeals from reconsideration of those very decisions. Reconsideration can be properly categorized as a decision whether to institute an IPR proceeding and review of such a decision is barred by § 314(d).
The Court specified, as the Supreme Court did in Cuozzo, that there remains the possibility of review on constitutional issues or claims that the Patent Office exceeded its statutory authority. As for Medtronic’s constitutional claim, the Court found that there was no colorable constitutional issue because the Patent Office has inherent authority to reconsider its decisions and the authority to dismiss its institution decisions. The Court also found that Medtronic was not entitled to a writ of mandamus.
The decision makes clear that the Federal Circuit will not restrict the language of § 314(d) to initial decisions to institute IPR proceedings. Instead, the Court reads § 314(d) to cover all “closely related” decisions, including a reconsideration of institution decisions. This is consistent with a series of cases where the Federal Circuit has denied review under § 314(d), see, e.g., Husky Injection Molding Systems, Inc. v. Athena Automation Ltd.; Wi-Fi One, LLC. v. Broadcom Corp. Following Cuozzo, the Federal Circuit has found nearly every issue related to instituting IPR proceedings to be unreviewable by the Court. The result is that Congress has given the Patent Office decision-making authority in instituting IPRs and has insulated that authority from judicial review.
Though most IPR decisions will fail in the final and non-appealable category, the Court does leave some paths open for judicial review. Review may be available, as Cuozzo instructs, for decisions that (1) raise constitutional issues, (2) depend on other statutes less closely related, or (3) raise issues of interpretation that reach well beyond § 314(d). The Federal Circuit indicates that a challenge to an institution decision may be appealable if the issue involves the agency acting outside its statutorily authorized limits. Absent these circumstances, an IPR decision is unreviewable.
Caroline Herald is a J.D. candidate, 2018, at NYU School of Law.