"Closely Tied" Language of Cuozzo & Institution-Centric Statutes

The en banc opinion on the scope of the AIA's appeal bar (35 U.S.C. §§ 324(e)/314(d)) remains outstanding in WiFi One. Still, we have seen a few opinions from the Federal Circuit as of late that nibble around the edges of this issue. From these decisions, we see the Court focusing on the statute underlying the appealed issue, and whether or not that statute is tied, in timing or substance, to the institution stage. The most recent, Credit Acceptance Corp. v. Westlake Services, found another exception to the appeal bar for CBM estoppel. 35 U.S.C. 325(e)(1).

In Credit, (here) the Court emphasized the potential for estoppel at any stage of the proceeding as a factor that tended to show that the estoppel statute was not "closely related" to institution. The Court also emphasized that 325(e)(1) estoppel would extend to non-AIA proceedings such as patent reexamination, and that estoppel also impacted Article III proceedings.

As to the underlying facts of Credit, petitioner filed two CBM proceedings against different groups of claims of a same patent. The first CBM concluded before the second on March 24, 2015. In the first CBM decision the Board found claims 1-9, 13, and 34-42 to be unpatentable under §101. In light of this final written decision, Patentee moved to terminate the second CBM asserting that petitioner was "estopped from challenging claims 10-12 and 14-33 under §325(e)(1)”. (pg 5 of the opinion). The Board denied CAC’s motion, explaining that estoppel under §325(e)(1) applies on a claim-by-claim basis and that the final decision in the first CBM was only relevant to claims 1-9, 13, and 34-42; therefore, Westlake was not estopped from maintaining its challenged in the second CBM.

The Board then issued a final decision in the second CBM finding claims 10-12 and 14-33 unpatentable under §101. Patentee appealed the second CBM decision arguing that petitioner should have been estopped from maintaining its challenge (as well as the holding under §101).

After the Supreme Court’s Decision in Cuozzo, the Federal Circuit first had to explain why the Board’s decision to allow Petitioner to maintain its second CBM was not barred under 35 USC §314(d).
The Federal Circuit distinguished the case from Cuozzo by honing in on the word “maintain” in §325(e)(1) as opposed to the word “institute” in §314(d):

The estoppel provision at issue here, § 325(e)(1) (like the comparable IPR provision, § 315(e)(1)), is distinct from the issues addressed in Cuozzo. Specifically, § 325(e)(1) does not refer to “institution” decision and in fact is not limited to institution decisions.

Of course, the statute of interest in WiFi One (315(b)) specifically references institution: [a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date. . . . (emphasis added). If the "closely tied" language were the only guidance provided by Cuozzo, this might be the end of the road for WiFi One. But, Cuozzo (as explained in Credit) provided a host of additional, potential carve outs:

[W]e need not, and do not, decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.” Thus, . . . we do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under § 112” in inter partes review.

WiFi One would not seem to present a constitutional issue. Further, the one-year bar directly references institution, and is therefore a "closely related statute" consistent with Credit. Left to be answered in Wifi One is when the agency's institution decision may be challenged as being beyond statutory limits of the AIA. Such statutory limits cannot be for every AIA statute or the appeal bar would be rendered toothless (and would directly contradict Cuozzo's holding on 312(a)(3)). So, are we left deciding which AIA statutes are more fundamental to ultimate agency authority than others? If so, it would seem that a statute such as 315(b) that while closely tied to institution defines what the agency "may not" do, might still be a question of statutory limits under Cuozzo.

We will find out soon enough.

Scott A. McKeown is an author of the Patents Post Grant.