Why SAS Institute Matters More Than Oil States

By David Thibodeau
November 8, 2017

Supreme Court BuildingOil States Energy Services LLC v. Greene’s Energy Group, LLC, now scheduled for oral argument before the Supreme Court on November 27, is clearly receiving all the attention this fall. The possibility of finding Patent Trial and Appeal Board (PTAB) post grant proceedings unconstitutional cannot be understated. But oral arguments will also be heard on that same day in the less-noticed SAS Institute v. Matal.   That case involves 35 U.S.C. § 318(a), which requires PTAB to “issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” Despite the plain meaning of the statute, current PTAB practice is to only issue a final decision on some of the claims.

For example, if a post-grant petition only meets the “reasonably likely to succeed” standard on some claims, the PTAB trial only goes forward on those claims and the PTAB does not make any formal rulings on the patentability of the other claims. This practice was seen as proper by the Court of Appeals for the Federal Circuit (CAFC) in SAS Institute and in their prior decision in Synopsis v. Mentor Graphics , to enable the Patent Office to “secure the just, speedy, and inexpensive resolution” of post-grant proceedings. If the Supreme Court reverses the CAFC, the PTAB will be forced to address both the reasonable and unreasonable grounds in writing in every case.

Curiously, the patent bar seems conflicted as to whether a reversal would be good or bad for patentees. As to the potential downside for patent owners, a reversal by the Supreme Court may encourage petitioners to make as many arguments as possible. The patent owner then must respond to even the weak arguments, with the resulting waste of the parties’ resources on possibly irrelevant issues. Some patent owners also believe the current practice of partial institution is of significant value for other reasons. Patent owners are often anxious to get to trial in the parallel civil lawsuit. They can avoid a stay of such concurrent litigation, since at least some other claims will remain on the table even after the PTAB’s decision. Furthermore, some believe the need to address all claims in a PTAB trial will undermine early settlement opportunities.

Others see an upside for patent owners if the Supreme Court reverses. They see the PTAB’s current practice as eliminating one of the originally envisioned benefits of the AIA. At the present time, the parties are left with unaddressed claims that must still be litigated as if no post-grant proceeding had ever occurred. More importantly perhaps, the PTAB does not authorize an IPR to move forward unless there is a reasonable likelihood that the petitioner will prevail. When there is a decision to move forward on only some of the claims, that MUST mean that the PTAB would have decided against the petitioner on the other claims. Coupled with the presumption of validity that attaches to issued patent claims, such a decision could only mean the petitioner will be estopped from ever challenging those patent claims again.

Regardless of you or your patent counsel’s opinion on this, should any form of IPRs survive Oil States, the following SAS Institute decision should be watched with equal anticipation. A reversal in SAS Institute will no doubt have you rethinking your PTAB strategy.

The Author

David Thibodeau

David Thibodeau is a Partner in VLP’s Intellectual Property Practice Group. His practice emphasizes the building and refining of patent portfolios, strategic advice concerning competitive IP rights, and due diligence for technology-based financial, merger/acquisition and other business transactions. David most often handles prosecution matters before the United States’ and foreign patent offices, but he has also successfully concluded litigations and other disputed matters. He regularly works with company founders, investors, engineers and scientists across the information technology industry in areas such as data storage, database systems, financial services, social media, network security, medical devices, semiconductors, optics, signal processing, and antennas.

For more information or to contact David, please visit his Firm Profile Page.

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Discuss this

There are currently 11 Comments comments. Join the discussion.

  1. Curious November 8, 2017 7:28 pm

    Sorry — I have to disagree with you.

    If Oil States comes out with a holding that the IPR system is unconstitutional, then SAS Institute becomes moot. That point aside, Oil States is still FAR MORE important. The PTAB/IPR system has been used as a tool to bludgeon any owner of a patent (of any value) into submission. It can be used ad infinitum to bring serial IPRs against any patent holder. However, challengers do not have to go to that extreme because (i) the system has been set up by the USPTO to be patentee-unfriendly, and (ii) the PTAB is intent on killing patents regardless. The PTAB hasn’t been called the patent-killing fields for nothing.

    As for SAS Institute, the PTAB not issuing a final decision on all of the claims is probably good for patent holders. Odds are pretty good that if the PTAB were to issue a final decision that these additional claims would also be found to be unpatentable. As such, the PTAB’s silence on them is probably a good thing. You may think that the PTAB is incapable of finding claims unpatentable based upon “unreasonable” grounds. Let me assure you (after reviewing far more than my fair share of decisions from the PTAB) that the PTAB is more than capable of finding claims unpatentable even based upon the most unreasonable grounds.

    At the present time, the parties are left with unaddressed claims that must still be litigated as if no post-grant proceeding had ever occurred
    They are going to be litigated regardless. The defendant isn’t going to roll over and play dead even in the unlikely event that they don’t prevail at the PTAB.

    such a decision could only mean the petitioner will be estopped from ever challenging those patent claims again
    Like that is any big deal — we already know that petitioners can get around that by having other parties file for IPRs.

    Oil States is where the real action is at — SAS Institute is side issue. Also, the benefits of a reversal in SAS Institute are a mixed bag, as admitted by your article, which may or may not help the patentee.

  2. David Thibodeau November 9, 2017 7:47 am

    If Oil States finds the IPR system unconstitutional, we return to the simpler world of pre-AIA strategies where IPRs are no longer an option to bludgeon patentees.

    However, if Oil States retains the status quo, we’ll be faced with a new challenge in figuring out the impact of SAS Institute. That’s the point.

  3. Gene Quinn November 9, 2017 9:33 am

    Curious-

    You say: “Oil States is where the real action is at — SAS Institute is side issue.”

    I personally believe there is a very real chance that the Supreme Court will find IPRs unconstitutional. Having said that, it seems to me that many (if not most) of the pro-patent community is placing all eggs into the Oil States basket.

    Conventional wisdom would suggest that SAS is more important because the likelihood that the Supreme Court will completely toss IPRs is low.

    SAS and the estoppel issue is a very big one.

  4. Anon November 9, 2017 10:14 am

    Two small possible nits:

    1) “Despite the plain meaning of the statute, current PTAB practice is to only issue a final decision on some of the claims.

    Past conversations call into question the rather presumptive assertion that the “plain meaning of the statute” is what the author here claims it to be.

    2) “Coupled with the presumption of validity that attaches to issued patent claims, such a decision could only mean the petitioner will be estopped from ever challenging those patent claims again” I do not see how the conclusion was reached from the offered premises. Further, any reliance on presumption of validity is itself logically infirm, as that is one of the sticks in the bundle of patent property rights that is taken at the initiation decision point. Once back in the Office, the patentee does NOT have that presumption (presence AND level) any more. Thus, the logic of trying to draw any conclusions on the merits of what happens in the PTAB after the initiation decision point is infirm.

  5. Paul F. Morgan November 9, 2017 12:10 pm

    Good article. Have any good amicus briefs for either side, in your opinion, been filed in SAS?

  6. David Thibodeau November 9, 2017 12:40 pm

    Paul, in my opinion the IPO’s amicus brief has a great explanation of the problem (and potential unfairness to patentees) with the PTO’s current practice. “..[I]ssuing final decisions only addressing some of the claims in the petition is inconsistent with the estoppel provisions of the AIA…”

  7. Curious November 9, 2017 6:09 pm

    SAS and the estoppel issue is a very big one.
    And easily gotten around.

    Moreover, having all patent claims decided doesn’t really matter when the claims that were previously not addressed don’t have any commercial value. There are plenty of dependent claims out there that have little to no value because they are written so narrowly such that they’ll never be infringed or that it is extremely easy to design around.

    Losing Oil States but winning SAS would mean little relief to patent owners and the benefits of winning SAS is even debatable.

    If Oil States is not reversed, independent inventors and small-time business owners of patents are effectively precluding from enjoying the benefits of the United States patent system. In today’s environment, it is very unlikely for any marginally-funded patent holder to prevail in a patent lawsuit. In fact, owning a patent of valuable technology is far more likely to be an asset of negative value because of the cost in defending the patent and how unlikely the patent will be licensed and/or used in a successful litigation. An affirmance of Oil States preserves the status quo, and I don’t see any relief forthcoming from Congress in the near (or distant) future.

  8. Gene Quinn November 9, 2017 8:12 pm

    Curious-

    You say: “Losing Oil States but winning SAS would mean little relief to patent owners and the benefits of winning SAS is even debatable.”

    We will have to agree to disagree I suppose. SAS is no side show. Estoppel as the statute is written is intended to be very real.

    You say: “There are plenty of dependent claims out there that have little to no value …”

    And there are plenty of dependent claims are are extremely valuable.

    You say: “If Oil States is not reversed, independent inventors and small-time business owners of patents are effectively precluding from enjoying the benefits of the United States patent system.”

    I understand why you say that, and based on past history there is no reason to disagree. I will still hold out hope if that happens and continue to argue, fight and educate. That’s all I can do.

  9. Curious November 10, 2017 12:32 pm

    Estoppel as the statute is written is intended to be very real.
    And one doesn’t have to search far in your archives to find articles that say estoppel is very narrow.

    And there are plenty of dependent claims are are extremely valuable.
    Which will be still be subject to additional IPRs (by other parties) if Oil States doesn’t reverse. As I mentioned above, the PTAB passing on more (all) claims is very unlikely to be positive for the patentee. It means more work for the PTAB (in order to meet their 1 year deadline) so they’ll do what most Patent Office employees do when faced with a time crunch — summarily reject the claims with little analysis.

    SAS is a side show — if the case matters it means that we lost Oil States. If we lost Oil States, I cannot tell any company (absent those with many of millions of dollars in the bank) with a straight face that their intellectual property likely has any positive value. In fact, if they try to assert their patent rights, they’ll likely have less money in the long run because the cost of defending IPRs.

    If we “win” SAS (whatever “win” means), it means that PTAB has to issue a decision on all claims challenged. Considering that that the PTAB decides that most claims reviewed are unpatentable, the ultimate result is that even more claims will be deemed unpatentable. I don’t see the value there. OK, on the off chance that the PTAB throws patentee a bone on some dependent claims (and on the off chance that this claim has some value), there is some estoppel but the scope of estoppel is still narrow and can be gotten around.

    Rome is burning — we were able to put on the fire on a single building but the conflagration still rages on — it may be a victory to some, but not to me.

  10. Gene Quinn November 10, 2017 12:49 pm

    Curious-

    You say: “And one doesn’t have to search far in your archives to find articles that say estoppel is very narrow.”

    Look, if you are going to intentionally mislead there is absolutely no reason for me to have a discussion with you. So that being the case I will just respond to this and then let it go…

    Yes, the estoppel has been VERY narrow (if not non-existent) BECAUSE the PTAB has not issued final written decisions on claims that have been refused institution. That, however, changes if the Supreme Court gets SAS correct.

    Please try and keep up, and please try in the future not to egregiously misrepresent. It is unbecoming and just gets in the way of an interesting discussion.

  11. Curious November 12, 2017 3:06 pm

    Please try and keep up, and please try in the future not to egregiously misrepresent.
    What am I misrepresenting?

    Am I misrepresenting that Oil States is, by far, the more important case (contrary to the title of this article)?
    Am I misrepresenting that in the current state of the IPR regime, that most patents get eviscerated at the PTAB?
    Am I misrepresenting that many patents receive multiple IPRs such that a patent can survive “n” IPRs and still be invalidated after the “nth +1” IPR.
    Do you disagree, should the PTAB be forced to pass on ALL claims, that the likely outcome is that the PTAB will reject claims at the same high percentage that currently do?

    SAS is of value to patent owners that WIN at the PTAB. Considering that the vast majority of patent owners LOSE at the PTAB, the value of SAS is much less than the value of Oil States.

    That, however, changes if the Supreme Court gets SAS correct
    Here is article talking about estoppel and how to avoid it:
    https://www.law360.com/articles/956728/8-ways-to-avoid-inter-partes-review-estoppel

    From reading this article, even if the PTAB issued a final written decision on all claims, there are still LOTS of ways to avoid estoppel.

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