SAS No Help to Patent Owners

Since the Supreme Court’s decision in SAS Institute there has been much speculation over its practical impact on stakeholders. That is, does SAS favor petitioners or patent owners? I’ve participated in a number of CLE panels on this topic and have been shocked by those interpreting SAS as somehow beneficial to Patent Owners.

Make no mistake about it, SAS hurts Patent Owners…bigly.

Those seeing a positive for Patent Owners in SAS will often cite to two potential benefits. First, that SAS will now enable statutory estoppel to be applied to what otherwise would have been (Pre-SAS) non-instituted claims. While it is no doubt true that SAS has a benefit in clarifying the estoppel landscape post-Shaw Industries, this benefit should be taken with a grain of salt.

Prior to SAS a failed petitioner could, in theory, raise petition art in court that was applied to claims that the PTAB had rejected at institution. This is because since there was no Final Written Decision (FWD) as to the non-instituted claims on this art, statutory estoppel did not apply. That said, practically speaking, having been rejected under the PTAB’s more favorable challenger standards, this art is of little value under a clear and convincing standard. Indeed, courts have been known to reject such recycled invalidity arguments on summary judgment. So, given the marginal statutory estoppel benefit on the one hand, with increased prosecution history and trial expense for otherwise non-instituted claims post-SAS on the other, I would hardly label estoppel clarification a meaningful benefit.

Second, it is argued that the Board is now more likely to exercise its discretion to deny petitions. The argument being that in an attempt to avoid petitions with numerous grounds to write up at FWD, the Board will simplify its exercise discretion to deny petitions. There are a number of problems with this theory, not the least of which is that it assumes the PTAB will use discretion to put itself out of business. Nonsense.

The Board has always had discretion to deny petitions, and has used this discretion judiciously to combat abuses such as follow-on petitions. See General Plastics. In other circumstances, the Board has exercised its discretion to deny petitions stuffed with unexplained and numerous grounds Zetec v. Westinghouse IPR2014-00384, Paper 10 (Jul. 23, 2014), but over-stuffed petitions are exceedingly rare. Typical petition practice pre-SAS was to include a reasonable number of grounds. In most petitions, this was 2-3 grounds given the word count constraint. Any argument that the Board would somehow suddenly deny such petitions is misguided. If anything, the work that would otherwise be done at institution pre-SAS — writing up a denial of grounds/claims — has now been shifted, post-SAS, to the FWD. With the exception of cases that were instituted pre-SAS, steady-state cases going forward will not include “additional work.”

Neither of the above benefits withstands serious scrutiny.

On the patent owner side, I have previously discussed that SAS introduces a host of strategic obstacles. With patent owner preliminary responses (POPR) needing to win on all claims to be successful, it seems that going forward such filings are unlikely to touch upon the merits. There is no reason to preview arguments given the low likelihood of success. It is likely that going forward POPRs address only 325(d) other procedural issues, or perhaps claim construction. With the PTAB left with a one-sided record at the time of institution, it is hard to imagine the institution rate going anywhere but up.

Pre-SAS it was much easier for the Board to find for Patent Owners with a two-sided preliminary proceeding record, and the ability to prune some issues from the proceeding. Post-SAS, given the shift of work to the back end of the proceeding, it seems unlikely that the Board will look to find winning arguments on behalf of patent owners when the more attractive option is to simply accept the one-sided petitioner record and author a far shorter decision on one claim.

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