PTAB at a Crossroads: IPR Survives, but Supreme Court’s Bar of Partial Institution Decisions Brings New Challenges

The US Supreme Court has issued its long-awaited decisions in Oil States Energy Services v. Greene’s Energy Group and SAS Institute v. Iancu, bringing the Patent Trial and Appeal Board’s (PTAB’s) inter partes review (IPR) procedure to a key inflection point. While the Court found that the IPR program itself was constitutional in Oil States, its decision in SAS Institute that the Board may not issue partial institution decisions may have a far-reaching impact on the Board and parties alike.

Given that IPR’s continued existence was at issue in Oil States, it is understandable that the case generated more interest, in recent months, of the two just decided. Frequent IPR filers and defendants are undoubtedly heartened by the Court’s ruling, which largely maintained the status quo. The majority held that patents are public franchises—rather than exclusively private property, as argued by petitioner Oil States—but emphasized that patents still have the attributes of property with respect to due process and the Takings Clause.

The Oil States majority noted that the executive branch has the power to grant and revoke patents, as imparted by Congress, before holding that IPR is a proper extension of that authority as a mere revisit of a patent grant. As a result, IPR does not violate Article III of the Constitution by adjudicating patent validity outside of a federal court. Nor does IPR violate the Seventh Amendment right to jury trial, which does not apply to proceedings involving non-jury factfinders like the PTAB.

While IPR survived Oil States, it is the Court’s decision in SAS Institute that will likely have a greater impact. In SAS Institute, the majority ruled that the Patent Office regulation allowing its director to issue partial institution decisions, under which trial is instituted only for a subset of claims challenged in an IPR petition, was not supported by the applicable statutes from the Patent Act.

• Longer Time to Decision. As to the PTAB itself, the decision may materially affect the Board’s ability to adjudicate IPRs in a timely manner due to resource constraints. Forcing administrative patent judges to address every claim raised in an instituted petition may make it more difficult for them to provide reasoning and evidence, leading to final written decisions more vulnerable to attack as too conclusory.
• Estoppel. Perhaps more importantly, the decision may also have a significant impact on litigant petitioners due to estoppel, which in this context means that an IPR petitioner is barred from raising any invalidity arguments in a district court lawsuit that the petitioner “raised or reasonably could have raised during” an IPR. Petitioners may need to reconsider which claims they target in a petition in view of potentially broader estoppel attaching to final written decisions. For example, targeting claims beyond those at issue in a district court infringement case and getting an adverse final written decision may create opportunities for downstream patent owners asserting different claims and/or other patents within the same families.
• Litigation Stays. Finally, SAS Institute may also make it easier for defendants to get district court litigation stayed. This is because there will be fewer discrepancies between the set of claims asserted and those under consideration by the PTAB, as the decision practically makes it a requirement that the PTAB institute trial as to a larger percentage of challenged claims.

The PTAB has already issued a new guidance confirming how it will comply with SAS Institute. Just yesterday, on April 26, the Board released a memorandum in which it stated that it “will institute as to all claims or none”. The PTAB also confirmed that final decisions going forward will address “all patent claims challenged by the petitioner and all new claims added through the amendment process”. In addition, the Board revealed that for pending IPRs that previously received partial institution decisions, it will issue supplemental orders instituting trial for all petitioned claims.

As SAS Institute begins to have an impact in the weeks and months ahead, RPX will monitor how the decision affects existing proceedings and alters the filing behavior and success rates of petitioners. Meanwhile, for an overview of merits-based IPR success rates prior to SAS Institute, see RPX’s latest study, also published today.