Written by Brenden Gringrich and Jane Xia

On October 20, 2016, the Federal Circuit issued yet another opinion finding that the Patent Trial and Appeal Board’s decisions related to the institution of an inter partes review (IPR) are not subject to judicial review. This decision aligns with a series of cases in which the Federal Circuit has barred review of institution decisions under 35 U.S.C. § 314(d), which states that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”

Background of the case

IPR proceedings involve two distinct phases: (1) the institution phase, beginning with the filing of an IPR petition and culminating in the decision of whether to institute an IPR proceeding (“institution decision”); and, if instituted, (2) the merits phase, beginning after the Board’s institution decision and culminating in the Board’s determination of patentability in light of the instituted ground(s) (“final written decision”). Avid Technology, Inc. v. Harmonic, Inc. 812 F.3d 1356, 1365 (Fed. Cir. 2016).

In June, 2016, the Supreme Court issued the Cuzzo opinion, affirming the decision of the Federal Circuit barring judicial review of challenges to the Board’s institution decision. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016). The Court held that the text of 35 U.S.C. § 314(d) forbids most appeals regarding the Board’s institution decision. Id. at 2141-42.

In Medtronic, a subsidiary of Medtronic, Cardiocom, LLC, filed IPR petitions against two Bosch patents, which petitions were denied for failure to show a reasonable likelihood that the challenged claims were unpatentable. Just before expiration of the one-year statutory period in which Cardiocom could file an additional IPR petition, Medtronic filed three IPR petitions against the same two patents. Bosch argued that the petitions should be denied because Medtronic failed to name Cardiocom as a real party in interest as required by 35 U.S.C. § 312(a)(2). The Board instituted IPR proceedings, holding that Bosch had not established that Cardiocom was a real party in interest, but granted Bosch’s request for additional discovery on the issue. Following discovery, Bosch moved to terminate the IPR, again arguing that Medtronic had failed to name all real parties in interest. The Board was persuaded by the evidence, and vacated the institution decisions, terminating the proceedings. Medtronic appealed to the Federal Circuit. The Federal Circuit initially issued a mandate dismissing Medtronic’s appeal for lack of jurisdiction under 35 U.S.C. § 314(d), but following a petition for rehearing, the Federal Circuit requested supplemental briefing to address the issue in light of the Supreme Court’s Cuozzo decision.

Following briefing, the Federal Circuit denied Medtronic’s petition for rehearing on the ground that under Cuozzo, § 314(d) operates to bar review in cases where the challenge “consist[s] of questions that are closely tied” or “closely related” to “the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” The Federal Circuit interpreted the Board’s decision to terminate IPR as a reconsideration of the institution decision, which is “closely related” to the institution decision and therefore is barred from review under § 314(d).

Federal Circuit and Supreme Court Decisions Regarding Review of IPR Institution

Since Cuzzo, the Federal Circuit has continued to find nearly all decisions related to the institution of IPR proceeding to be unreviewable by the court. The cases listed in the table below summarize these decisions.

As the table above indicates, the only decision found to be subject to judicial review is whether a patent qualifies as a Covered Business Method under § 18 of the AIA.&

Husky’s Two-Part Analysis of Reviewability – a possible path to judicial review?

While Medtronic continues the Federal Circuit’s trend of finding institution decisions non-reviewable, Husky Injection Molding Systems, Inc. v. Athena Automation Ltd, a post-Cuzzo decision, may provide a possible path to judicial review. In Husky, the Federal Circuit provided a two-part analysis for determining whether it may review a challenge to an institution decision. Husky Injection Molding Systems, Inc. v. Athena Automation Ltd, No. 2015-1726 (Fed. Cir. Sep. 23, 2016). The first part is to determine whether the challenge at issue is “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to institute inter partes review,” or if it falls within one of the three reviewable categories mentioned in Cuozzo: the decision (1) implicates constitutional questions, (2) depends on other less closely related statutes, (3) or presents other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.” Id. at p. 14. If the former is true, then the decision is not reviewable, subject to the carve-out in part two of the inquiry. In the second part, if the challenge is based on a “statute closely related to that decision to institute,” but is nevertheless directed to the Board’s ultimate invalidation authority with respect to a specific patent, then the Federal Circuit can review the institution decision. Id.

Applying this two-part test, the Husky court held that it lacked jurisdiction to review the Board’s decision to institute the IPR proceeding on the ground that the doctrine of assignor estoppel does not fall into one of the three categories authorizing review and the determination of whether assignor estoppel precludes institution does not relate to the Board’s ultimate invalidation authority.

Conclusion

Medtronic provides yet another example that statutory requirements such as a real party in interest are considered to be “closely related” to the decision to institute IPR proceeding and are therefore not reviewable on appeal. While the door to requesting judicial review of an IPR institution decision appears to be closed in most cases, the two-part test provided in Husky suggests that it may not be completely closed. There may still be an opening for challenges to institution decisions if the challenged issue implicates the Board's ultimate authority to invalidate a patent.