“Granting a decision for Thryv would undermine the predictability in the patent system that is required by its stakeholders, PhRMA argues in its amicus brief. Allowing unauthorized PTAB proceedings adds legal risk to patent owners because the PTAB has been more favorable to validity challengers than the federal courts have been.”
On Monday, December 9, the U.S. Supreme Court will hear oral arguments in Thryv, Inc. v. Click-to-Call Technologies, LP. The case, which has gone through multiple name changes since its original appeal from the Patent Trial and Appeal Board (PTAB), will ask the nation’s highest court whether 35 U.S.C. § 314(d), which states that decisions to institute inter partes review (IPR) proceedings shall not be appealable, permits appeals of PTAB institution decisions based upon 35 U.S.C. § 315(b). Section 315(b) states that IPRs won’t be instituted if the patent owner served the petitioner with a complaint for patent infringement more than one year prior to the petition.
To summarize the lower court proceedings in this case, the patent-at-issue was first asserted against Keen Inc. by Inforocket.com in 2001 in a case that was voluntarily dismissed. Click-to-Call acquired the patent and asserted it in 2012 against Ingenio, a company formed through a merger of Keen and Inforocket.com. Ingenio filed for an IPR petition and Click-to-Call challenged it based on the Section 315(b) time-bar and the former suit against Ingenio’s predecessor. The appeal reached the Supreme Court, where it was remanded in June 2016 in light of Cuozzo Speed Technologies v. Lee. Most recently, the U.S. Court of Appeals for the Federal Circuit rendered a decision last August where all 12 Federal Circuit judges joined a footnote finding that the Section 315(b) time bar applies even when the earlier infringement action had been voluntarily dismissed without prejudice. A fuller summary of the lower proceedings can be found here.
Depending on how the Supreme Court comes down on its decision in Click-to-Call, the cost structure of PTAB proceedings could change by about six figures, according to David Donoghue, IP lawyer and head of the Intellectual Property Group at Holland & Knight. “If the time bar is not appealable, you have a narrower process,” he said. “It changes the timing for these proceedings by cutting off an appeal that takes 18 months to two years. It might lack some thoroughness, but what is gained is speed and reduced costs.” He added that there are implications beyond the time bar as well, as Section 315(b) review could also let a patent owner challenge determinations on real parties in interest.
If the Supreme Court finds that Section 315(b) time-bar decisions are appealable, Donoghue said that there would likely be an increase in appeals following the decision. Although the facts in Click-to-Call would make such judicial review beneficial for the patent owner, there are instances where IPR petitioners would also choose to review time bar decisions. “For example, if you have a case where the one-year date falls on a Saturday, but the petition gets filed on Monday, the PTAB has taken a narrow view of the time bar and required filings on Friday, not Monday,” Donoghue said. Further, there have been some cases where a petition was filed a few minutes from the statutory deadline and errors in payment processing push payment to a few minutes after the statutory deadline. Either of those examples could wind up with the petitioner appealing a Section 315(b) time-bar determination instead of the patent owner, if such judicial review were warranted, although patent owner appeals are still likely to be more common in practice.
Whatever the Supreme Court decides, Donoghue believes that it will likely come down to the statutory interpretation of the phrase “under this section” in Section 314(d)’s prohibition on institution decision appeals. While Cuozzo read that language to indicate that all institution decisions were unappealable even when raising objections based on other sections of the Patent Act, Donoghue noted that Justice Samuel Alito’s partial dissent in that case, which Justice Sonia Sotomayor joined, indicated that there was some Supreme Court interest in enabling broader review than what Cuozzo indicated. It’s possible that the needle may have moved further in that direction with two new Justices on the Supreme Court since Cuozzo was decided in 2016. “There’s a solid chance that the Supreme Court will take a real focus on statutory language and what it means combined with principles of law about narrowly construing the powers of administrative patent judges (APJs),” Donoghue said.
Karen Sebaski of Holwell Shuster & Goldberg LLP pointed out that the recent decision in Arthrex, Inc. v. Smith & Nephew, Inc could also have implications for the case. “Scope of authority may be of particular interest in light of [Arthrex],” Sebaski said.
Here’s a look at a few of the briefs filed in the case. More than 15 amici have weighed in.
Reply Brief for the Federal Respondent
The office of U.S. Solicitor General Noel Francisco filed a reply brief for the federal respondent which argues that Section 314(d)’s prohibition against appeals of institution decision bars judicial reviews of those decisions based on Section 315(b)’s time bar. This conclusion is reinforced by the history and text of the America Invents Act (AIA), the legislation that codified these statutes into law. Contrary to Click-to-Call’s assertion that 314(d)’s prohibition of appeals “under this section” is limited to Section 314, the Solicitor General argues that Congress used general language throughout the AIA to refer to other sections in the Act. The Solicitor General also contends that Section 315(b) decisions are discretionary, as the agency has to determine whether an entity is a “real party in interest” or “privy of the petitioner” under that section. While broader judicial review may provide greater accuracy in PTAB decisions “[a]t the margins,” that greater accuracy would potentially extend PTAB determinations beyond their one-year limit by forcing the agency to revisit preliminary decisions in cases.
Further, the Solicitor General also argues that the government’s reading of Section 314(d) strongly comports with Supreme Court precedent. In Cuozzo, which contains SCOTUS’ most extensive discussion of Section 314(d), the Court determined that Section 314(d) barred judicial review of statutory claims “closely related to [the] decision to institute inter partes review.” Click-to-Call’s Section 315(b) argument, the Solicitor General claims, falls within that category. This reading isn’t contrary to the Supreme Court’s decision in SAS Institute v. Iancu (2018), which dealt not with whether the PTAB should institute IPR but to what extent an IPR should be instituted.
Finally, the Solicitor General stated that barring Section 315(b) determination reviews furthers the purpose of the AIA by focusing judicial review on the final patentability determination. Congress’ objective in passing the AIA was to “limit unnecessary and counterproductive litigation costs” like those that would be incurred by appeals of institution decisions. While Click-to-Call argues that Section 315(b) review will produce greater clarity as to the rules governing institution decisions, the Solicitor General points out that the PTAB has a Precedential Opinion Panel that can rehear institution decisions and police the agency’s conduct.
Brief of Professors of Patent and Administration Law in Support of Respondent Click-to-Call
An amicus brief signed by 13 patent and administrative law professors argues that judicial review of Section 315(b) determinations is “foundational to safeguarding the court-agency balance of patent powers.” The professors argue that the current appeal isn’t immunized by Cuozzo because it presents a question of interpretation of appropriate IPR institutions which is well beyond the limits prescribed by Section 314(d). Section 315(b) subjects an alleged infringer to a binary choice between district courts or the PTAB as to where to litigate patent validity, a fact supported by Section 315(a)(2)’s mandatory stay of a civil action involving a patent upon which an IPR review has been instituted. The professors contend that the boundary between judicial review and IPR proceedings created by the AIA, which requires that the PTAB doesn’t encroach upon the federal courts, doesn’t allow the PTAB to rely on Section 314(d) when it acts outside of its statutory limits.
The professors also raise empirical evidence on PTAB petitions to show the broad impact that court-agency substitution embodied in Section 315(b) has on legal strategies beyond the PTAB. About 30 percent of PTAB petitioners are nonstandard petitioners, parties that challenge patents which haven’t been asserted against them in district court. In the drug and medical-related invention context, nonstandard petitioners contribute 51.5 percent of IPR petitions. The professors also point out substantial disparities between the share of IPR petitioners who were previously sued and the share of IPR petitions including at least one petitioner challenged as a defendant for infringing the patent. This suggests high rates of joinder of nonstandard petitioners to standard petitioners. Looked at in the context of the rate of lag between civil actions and IPR petitions, the professors contend that weakening the Section 315(b) time bar will have an effect on party practice that goes against Congressional statutory authority.
Brief of the Pharmaceutical Research and Manufacturers of America (PhRMA) in Support of Respondent Click-to-Call
The amicus brief filed by pharmaceutical research trade association PhRMA argues that the text and structure of applicable statutes permit judicial review of PTAB time-bar determinations under Section 315(b). While Section 314(d) includes permissive language on “whether to institute review,” indicating some agency discretion in making institution decisions, Section 315(b) sets forth mandatory requirements on when an institution decision may not be made. “If Congress had meant to sweep every determination relating to instituting [IPR] into the scope of the Section 314(d) no-appeal provision, as Petitioner suggests, it could have instead referred to the agency’s determination whether to institute an [IPR] ‘under this chapter’ as it did elsewhere in the AIA,” PhRMA contends. Further, the focal point of Section 314 is the PTAB’s discretion in instituting IPRs whereas Section 315 addresses the interaction between agency action and court proceedings, an area that shouldn’t be insulated from judicial review.
Limiting Section 314(d) appeal prohibitions to the agency’s threshold determinations on a petitioner’s likelihood of prevailing and not extending that prohibition to the statutory limits on agency authority in Section 315(b) accords with both general principles of administrative law and court precedent on the reviewability of agency action. Judicial review of agency actions beyond the scope of their statutory authority have been presumed to be available by the U.S. Court of Appeals for the D.C. Circuit in Chamber of Commerce of U.S. v. Reich (1996) and the Supreme Court in its 1958 decision in Leedom v. Kyne, which involved the judicial reviewability of National Labor Relation Board decisions. Further, SAS Institute limited the scope of Section 314(d) review prohibitions and, like in that case, Click-to-Call doesn’t challenge the PTAB’s determination of a petitioner’s reasonable likelihood of prevailing as required by Section 314.
Granting a decision for Thryv would undermine the predictability in the patent system that is required by its stakeholders, PhRMA argues. Allowing unauthorized PTAB proceedings adds legal risk to patent owners because the PTAB has been more favorable to validity challengers than the federal courts have been. Preventing ultra vires institutions of IPRs “would provide repose to patent owners and far greater certainty to all stakeholders.”
Brief of Intel Corporation in Support of Petitioner Thryv
The amicus brief of semiconductor designer and manufacturer Intel adheres tightly to the Supreme Court’s holding in Cuozzo to argue that Section 315(b) time-bar determinations are not reviewable. While Section 314(a) provides the substantive standard for instituting IPRs, that determination requires application of many other sections including Section 102 novelty, Section 103 obviousness and Sections 311 through 315, which outline procedural requirements for IPR institutions. Any of these determinations leading to an institution decision are unable to be appealed under the reading of Section 314(d) and the Court’s decision in Cuozzo. Further, Sections 318 and 319 limit Federal Circuit review to final patentability determinations, which clearly preclude the review of institution decisions, Intel argues.
Intel also contends that Section 315(b), unlike other traditional limitations periods, doesn’t exist to protect a private right of the patentee. “While inter partes review is in some respects an adversarial proceeding between the petitioner and the patent owner, its primary purpose is not to adjudicate private rights, but to undo invalid patents that impede the innovation-encouraging policies of the patent system,” Intel writes. The Section 315(b) time bar itself exists rather to regulate the relationship between IPR and district court proceedings.
Intel also criticizes the Federal Circuit’s 2018 decision in Wi-Fi One v. Broadcom, which Intel believes improperly limits the Section 314(d) appeal prohibition in a way that can’t be reconciled with statutory text and structure. Intel argues that the Federal Circuit improperly read Cuozzo to limit Section 314(d)’s preclusive effect to “reasonable likelihood” determinations. The Federal Circuit’s presumption of judicial review was also misplaced, Intel contends, because of clear indications in the statute of Congressional intent to foreclose judicial review except for final decisions on patentability. In Intel’s view, SAS Institute doesn’t help Click-to-Call’s argument because that case reaffirmed Cuozzo’s distinction between unreviewable challenges to institution decisions applying statutes governing institution and reviewable challenges based on the agency acting outside of its statutory limits. Because Click-to-Call challenged the PTAB’s individualized application of Section 315(b) to its case and doesn’t contend that the PTAB has systematically exceeded its authority under the time bar, this isn’t a case like SAS Institute where the challenger seeks to ensure that IPR proceedings accord with the law’s demands.
Allowing appellate review of timeliness decisions would undermine the cost-effective nature of IPR as an alternative to district court litigation to clear out invalid patents, Intel claims. “At the same time, there is no reason to think that the PTO institutes review too frequently,” Intel writes, citing agency statistics which show an IPR institution rate of 65%. Not only would appeals of timeliness determinations, which are fact-intensive, increase the length and cost of appeals, “permitting judicial review of timeliness determinations may have the perverse effect of enabling the most litigious patent holders, including non-practicing entities, to make inter partes review more costly and more susceptible to being dismissed on a technicality.”
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