Issue Twenty: PTAB Trial Tracker

Should POP “Precedential Decisions” Be Afforded Chevron Deference?

On August 12, 2019, the Federal Circuit made a rare request after hearing oral argument in Facebook, Inc. v. Windy City Innovations, LLC (No. 18-1400): the Court invited the Director of the USPTO to file a brief expressing his views on “what, if any, deference should be afforded to decisions of a Patent Trial and Appeal Board Precedential Opinion Panel (“POP”), and specifically to the POP opinion in Proppant Express Investments, LLC v. Oren Technologies, LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019).” The parties were also invited to file a brief expressing their views on the same question.

In its brief in response to the Federal Circuit’s request, the USPTO argued that POP decisions, including the POP opinion in Proppant Express Investments, are entitled to Chevron deference. The USPTO said that Congress had expressly delegated authority to adjudicate IPRs, as well as authority to enact regulations governing IPRs. Moreover, according to the USPTO, the POP uses a highly structured process in issuing precedential decisions, including notice to the public (via solicitation of amicus briefs), written briefing by parties and amici, and an oral hearing. The USPTO argued that this process is comparable to other adjudicative bodies that are regularly afforded Chevron deference. Moreover, the USPTO stated that the POP “plainly ‘sets out with a lawmaking’ purpose.” Finally, the USPTO argued that the fact that Congress had also authorized the USPTO to issue “regulations” did not abrogate the USPTO’s authority to also announce new principles in adjudicative proceedings.

Windy City also filed a supplemental brief, arguing that POP decisions do not warrant Chevron deference because Congress had not delegated general rulemaking authority to the USPTO. Windy City pointed out that to the extent Congress had authorized the USPTO to issue regulations, Congress expressly required that such regulations be made subject to notice and comment procedures, which the POP does not follow when issuing precedential decisions.

The Federal Circuit’s decision on this issue will impact the scope and import of POP decisions. Both the ultimate opinion and the court’s reasoning in reaching a decision will guide how the POP operates going forward. Whatever Federal Circuit’s decision, it will likely lead to further appeal seeking guidance from the Supreme Court on this important question.

Additional Discovery Granted Where Necessary to Establish Date of Public Accessibility

In Canon, Inc. v. Avigilon Fortress Corp., IPR Nos. 2019-00311, 2019-00314, Paper 24 (Sept. 6, 2019), the Board granted Petitioner’s motions to compel testimony from the Massachusetts Institute of Technology (“MIT”) and the Library of Congress concerning the public accessibility of prior art references. Patent Owner argued that Petitioner did not establish that certain references were accessible to the public because it did not provide testimony from a librarian with personal knowledge of the accessibility of the references. In response, Petitioner sought authorization to subpoena the production of documents and testimony regarding the public accessibility of the references.

The Board analyzed the motion under two frameworks: first under 37 C.F.R. § 42.52 as a motion to compel testimony, and second under 37 C.F.R § 42.51 as a motion for additional discovery. The Board held that Petitioner’s identification of “a librarian” at MIT and the Library of Congress was sufficiently precise to support authorization. The Board then addressed the Garmin factors, finding, for the most part, that each of the factors favored Petitioner’s request. In authorizing the discovery, the Board acknowledged and accepted Petitioner’s assertions that attempts to obtain discovery from MIT and the Library of Congress without a subpoena had been unsuccessful.

Takeaway: Although the PTAB Practice Guide July 2019 Update notes that two areas where parties frequently seek additional discovery is identifying real-parties-in-interest and secondary evidence of non-obviousness, public accessibility is an area that might benefit from additional discovery. A party seeking discovery on this issue should base its case on the Garmin factors, bearing in mind that the more straightforward and targeted the request, the higher likelihood such discovery will be permitted.

“Exceptional” Patent Trial and Appeal Board Proceedings

Can conduct before the PTAB support an award of attorney fees under § 285? A recent decision from a Magistrate Judge in the Eastern District of Michigan suggests the answer is yes.

In American Vehicular Sciences LLC v. Autoliv, Inc., defendants sought attorney's fees under § 285 for what it alleged was “untenable, legally incorrect, and baseless theories” in a related IPR proceeding. No. 5:16-cv-11529, D.I. 57 at 8 (E.D. Mich. Aug. 30, 2019). While the magistrate judge concluded that Defendants failed to establish that the facts surrounding this particular case were “exceptional,” the decision acknowledged that attorney’s fees for exceptional conduct before the PTAB could give rise to attorney’s fees in district court. Id. at 16. The magistrate judge stated, “if Defendants could establish that these are ‘exceptional’ cases, they would be allowed to seek fees attributable to the work before the PTO here.” Id. at 17.

Takeaway: Parties should remain mindful that not only can conduct in a district court litigation give rise to attorney’s fees, so too can “exceptional” conduct in a related PTAB proceeding.

Institution Decision Subject to Review on Remand

In BioDelivery Sciences Int’l v. Aquestive Therapeutics, Inc., Case No. 19-1643, 19-1644, 19-1645, (Fed. Cir. Aug. 29, 2019), the Federal Circuit confirmed that the Board’s decision to deny institution of an IPR is not appealable, even if that decision is after remand.

BioDelivery challenged 22 claims of a patent in a series of inter partes reviews that asserted 17 different grounds of invalidity. In a decision issued before the Supreme Court decided SAS, the Board instituted trial on a sub-set of challenged claims on a single ground and issued a final written decision that the petitioner had failed to prove invalidity. The Supreme Court decided SAS Institute v. Iancu, and the Federal Circuit remanded BioDelivery’s appeal to allow the Board to address all claims and grounds raised in the petitions. On remand, the Board revisited its institution decision and decided to deny institution because the “overwhelming majority of unpatentability grounds presented by Petitioner fail to meet the standard for institution.” The Federal Circuit confirmed the Board’s right to deny institution and that such a decision is final and non-appealable. Notably, in her dissenting opinion, Judge Newman wrote that the majority’s holding allowed the Board to “negate [the] remand order” and “depart[ed] from principles of appellate review.”

Takeaway: While this case was remanded to the Board in light of the intervening SAS decision, the Federal Circuit’s language indicates that the Board’s authority to review its institution decision is not limited to only such a situation Parties should be aware that the Board has this authority and consider the risk, and possible strategic opportunities, it may present.

The Pop Adds Two Precedential Decisions

In General Electric Co. v. United Techs. Corp. et al., IPR2017-00491, Paper 9 (Jul. 6, 2017), the Board confirmed that it will not institute an IPR of claims subject to a statutory disclaimer that is properly filed and recorded.

In Infiltrator Water Techs., LLC v. Presby Patent Trust, IPR2018-00224, Paper 18 (Oct. 1, 2018), the Board vacated institution and terminated proceedings because the petition was barred under § 315(b). In line with the GoPro decision, the Board’s decision confirmed that the § 315(b) one-year bar applies even if the complaint is voluntarily dismissed (with or without prejudice). Because Petitioner “received notice through official delivery of a complaint more than one year prior to the filing of the Petition,” § 315(b) barred the petition.