Supreme Court Holds That IPR Time Bar Decisions Cannot Be Appealed

The US Supreme Court has ruled that appellate review is not available for applications of the inter partes review (IPR) statutory time bar, under which a defendant may not file an IPR petition more than one year after being served with a patent infringement complaint. On April 20, a majority of the Court held in Thryv v. Click-to-Call Technologies that because the time bar establishes a key threshold for the Patent Trial and Appeal Board’s (PTAB’s) decision to institute trial, it falls within the Court’s 2016 opinion in Cuozzo Speed Technologies v. Lee, which blocked the appeal of institution decisions and any matters “closely tied to” institution.

The Long, Winding Litigation Below

The litigation below took a variety of twists and turns as the patent-in-suit (5,818,836) changed hands. In 2001, exclusive licensee InfoRocket.com asserted the patent against Keen, a predecessor of current Supreme Court petitioner Thryv, which resolved the litigation by acquiring the plaintiff—relevantly, resulting in a voluntary dismissal without prejudice. Keen then changed its name to Ingenio two years later. Following a series of mergers and divestitures (AT&T would acquire and later sell an interest in Ingenio), the ‘836 patent was subsequently acquired in reexamined form by NPE Click-to-Call Technologies LP, which asserted the patent against AT&T, Ingenio, and YellowPages.com in May 2012, with another suit also filed against Oracle.

Ingenio then challenged the ‘836 patent in a May 2013 IPR, triggering a dispute over whether the petition was time-barred, since Ingenio (as Keen) had been served with a complaint asserting the ‘836 patent in 2001—well outside the one-year statutory time limit. This argument was rejected by the PTAB, which held that a voluntary dismissal without prejudice “nullifies the effect of the service of the complaint” such that the petitioners were not barred from filing an IPR against the ‘836 patent.

The ensuing appellate battle in Click-to-Call turned at first on the issue of whether IPR time-bar decisions could be appealed at all. However, in January 2018, as that appeal was pending, the Federal Circuit ruled en banc in Wi-Fi One v. Broadcom that time-bar decisions are appealable, construing the time-bar statute as focused more on Section 314(a)’s likelihood of success on the merits requirement and as “not ‘closely related’ to the institution decision addressed in §314(a)”. (For the latter, a contrary decision—that the statute was “closely related” to institution—would have precluded appellate review under the Supreme Court’s 2016 decision in Cuozzo Speed Technologies v. Lee; as discussed below, this was a central factor in the Court’s April 20 majority opinion.) As a result of Wi-Fi One, the court’s ensuing decision in Click-to-Call, issued in August 2018, focused on the effect of dismissals without prejudice, concluding that the one-year time bar period begins to toll regardless of whether a dismissal was voluntary.

The Supreme Court then took on the appealability issue alone in its June 2019 decision partially granting a certiorari petition filed by Dex Media, the successor entity resulting from the merger of YellowPages.com and Ingenio, declining to revisit the Federal Circuit’s conclusion as to the effect of dismissals without prejudice.

See here for an overview of Supreme Court briefing in Click-to-Call.

The Supreme Court’s Majority Opinion

The Supreme Court ruled on April 20, 2020 with Justice Ruth Bader Ginsburg writing for the majority, joined by Chief Justice John Roberts and Justices Stephen Breyer, Elena Kagan, and Brett Kavanaugh. Justices Clarence Thomas and Samuel Alito joined the majority except as to Part III–C (addressing Congressional intent behind the IPR regime, as detailed below).

Time-Bar Rulings May Not Be Appealed Under Cuozzo

The majority began by addressing the scope of 35 USC Section 314(d), which “renders ‘final and nonappealable’ the ‘determination by the Director whether to institute an inter partes review under this section’” (emphasis added by the Click-to-Call majority)—a bar against appellate review largely confirmed in Cuozzo. While that decision did not preclude farther-reaching challenges against institution decisions, such as those raising Constitutional issues, the majority noted that Cuozzo precludes appeals based on “questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review” (quoting Cuozzo).

As a result, the majority stated, the central question here is whether a challenge based on the time-bar statute amounts to an appeal of the PTAB’s institution decision. Here, the majority held that it does under Cuozzo, which precludes the review of matters “closely tied to” the institution decision, ruling that “a §315(b) challenge easily meets that measurement”. “Section 315(b)’s time limitation is integral to, indeed a condition on, institution” and “sets forth a circumstance in which ‘[a]n inter partes review may not be instituted’”. Since Section 315(b) “expressly governs institution and nothing more”, a ruling that a petition is time-barred amounts to “a contention that the agency should have refused ‘to institute an inter partes review’”, and so—as in Cuozzo—the presumption favoring judicial review is overcome. However, the majority declined to “decide whether mandamus would be available in an extraordinary case”.

Congressional Intent Precludes a Contrary Conclusion

Turning next to Congressional intent (in Part III-C, the section not joined by Justices Thomas and Alito), the majority held that the above ruling is consistent with “[t]he AIA’s purpose and design”. “By providing for inter partes review, Congress, concerned about overpatenting and its diminishment of competition, sought to weed out bad patent claims efficiently.” Allowing appellate review of time bar decisions “would tug against that objective, wasting the resources spent resolving patentability and leaving bad patents enforceable”. Indeed, continued the majority, a “successful §315(b) appeal would terminate in vacatur of the agency’s decision; in lieu of enabling judicial review of patentability, vacatur would unwind the agency’s merits decision”. The effect would be to “save bad patent claims”, as a patent owner would need to appeal a time bar decision “only if she could not prevail on patentability”.

Other features of the IPR system, the majority argued, further support a conclusion that “Congress prioritized patentability over §315(b)’s timeliness requirement.” These include the PTAB’s ability to conduct an IPR of the challenged claims through another petitioner if the original one is time-barred, the opportunity for the original petitioner to still participate on the merits through joinder, and the Board’s authority to issue a final written decision even when no IPR petitioners remain active.

The majority then addressed various counterarguments, most notably rejecting a narrower, contrary reading of Section 314(d), which bars appeals of institution decisions “under this section”. Click-to-Call and the dissent argued that “the bar on judicial review applies only to the agency’s threshold determination under §314(a) of the question whether the petitioner has a reasonable likelihood of prevailing”, since that is the only “‘substantive determination referenced in’ the same section as §314(d)”—with “under this section” construed as referring to Section 314 alone. Cuozzo is “fatal” to that argument, countered the majority, because in that case the Court extended the bar on appellate review “to challenges grounded in ‘statutes related to’ the institution decision” (emphasis added). A proper reading of the statute, continued the majority, recognizes that “every decision to institute is made ‘under’ §314 but must take account of specifications in other provisions—such as the §312(a)(3) particularity requirement at issue in Cuozzo and the §315(b) timeliness requirement at issue here”. Congress could have chosen narrower language from related precursor statutes, but here it is telling that no such decision was made, the majority underscored.

Also unsatisfactory, held the majority, was Click-to-Call’s alternative argument that time-bar decisions are appealable under the section authorizing appeals of final written decisions, Section 319. This still amounts to an argument that the PTAB “should have refused to institute inter partes review”, a determination that may not be appealed.

Justice Gorsuch’s Dissent

Justice Neil Gorsuch dissented, joined by Justice Sonia Sotomayor for sections related to the facts of the case, statutory interpretation, the presumption of judicial review, and the application of Cuozzo. The dissent in some ways echoed Justice Gorsuch’s dissent in Oil States, in both cases warning against the erosion of judicial review and lamenting the growth of the administrative state.

In Click-to-Call, Justice Gorsuch began by asserting that the majority “takes a flawed premise—that the Constitution permits a politically guided agency to revoke an inventor’s property right in an issued patent—and bends it further, allowing the agency’s decision to stand immune from judicial review”. This “strange result”—that a patent owner is barred from appealing not the merits of the decision, but the proceeding’s very legality—was not one “clearly ordained by Congress”, argued Justice Gorsuch, and is contradicted not just by the statute itself but by the presumption of judicial review and Supreme Court precedent. Furthermore, he criticized the majority as rewarding the purportedly unscrupulous tactics of a petitioner (Thryv) that has “done just about everything one can do to a patent except invent it” (citing Click-to-Call’s characterization) by filing an ex parte reexamination, ceasing the payment of royalties, and then filing an IPR over the course of a drawn-out infringement dispute.

Turning to the merits of the case, Justice Gorsuch argued that the text of Section 314 insulates only the institution decision itself from judicial review, as the text “under this section” refers to Section 314 alone (contrary to the majority’s interpretation). Barring the appeal of institution decisions makes sense, continued Justice Gorsuch, because it allows the Board to proceed to “summarily affirm patent invalidity” for a weak petition, channeling judicial review toward the final decision on the merits. Justice Gorsuch compares this feature to a “ready analogue” in criminal law: how a defendant unhappy with a grand jury’s indictment may not appeal that “preliminary assessment”, “but may instead move the court for acquittal after the government has presented all its evidence”.

With the bar on appellate review thus cabined to Section 314, the result—according to Justice Gorsuch—is that none of the language governing the time bar in Section 315 renders a time bar ruling “final and nonappealable”. “Much like a statute of limitations, this provision supplies an argument a party can continue to press throughout the life of the administrative proceeding and on appeal”. To extend Section 314’s prohibition on appellate review to other provisions “scattered throughout the chapter . . . makes a nullity of the very language it purports to explain”, as Section 314 is “the only section that authorizes the Director to institute inter partes review, making it pointless for Congress to tell us that we’re talking about the Director’s § 314 inter partes review authority as opposed to some other inter partes review institution authority” (emphasis in original). Justice Gorsuch also rejected arguments that Congress could have included more specific language that limited the appellate review bar to Section 314(a), asserting that this reading would extend that limitation to any provision of the America Invents Act (AIA). “That’s sort of like reading ‘my next-door neighbor to the west’ to include ‘anyone in town.’”

More broadly, Justice Gorsuch argued, the reading of Section 314(d) adopted by the majority “wouldn’t be enough to overcome the ‘well-settled presumption favoring interpretations of statutes that allow judicial review of administrative action’” (citation omitted). “The presumption of judicial review is deeply rooted in our history and separation of powers” and guards against “arbitrary government”. The majority decision runs counter to this principle by effectively allowing the PTAB to both “decide the rights of individuals” and giving it “the sole power to enforce the limits of its own authority”. “We do not normally rush to a conclusion that Congress has issued such ‘blank checks drawn to the credit of some administrative officer’” (citations omitted). “The implacable fact is that nothing in the AIA gives the Director or the Board freewheeling authority to conduct inter partes review.” Justice Gorsuch also rejected contrary arguments rooted in the interpretation of Congressional intent and policy as inadequate: “The historic presumption of judicial review has never before folded before a couple stray pieces of legislative history and naked policy appeals.” “If adopted, Thryv’s vision of an administrative regime singularly focused on the efficient canceling of patents could become self-fulfilling.”

Additionally, Justice Gorsuch dismissed arguments reliant on other precedent—in particular, the majority’s reliance on language from Cuozzo that extends the prohibition on appellate review to statutes “closely related to” institution. In the context of the Cuozzo opinion, Justice Gorsuch asserts, this language is “nothing more than dicta entirely unnecessary to the decision”—a reading that, he argues, is supported by SAS Institute, in which the Court ruled that in light of the presumption in favor of judicial review, Section 314(d) “precludes judicial review only of the Director’s ‘initial determination’ under §314(a)” (emphasis added by Justice Gorsuch).

Justice Gorsuch then concluded by framing the majority’s decision as “tak[ing] us further down the road of handing over judicial powers involving the disposition of individual rights to executive agency officials” (the only section not joined by Justice Sotomayor). This “wrong turn”, he argued, started with Oil States, in which the majority “acquiesced to the AIA’s provisions allowing agency officials to withdraw already-issued patents subject to very limited judicial review”; the majority here “compounds that error by abandoning a good part of what little judicial review even the AIA left behind”. The price of this “abdication of our judicial duty”, Justice Gorsuch warned, is to vest the USPTO Director, a political appointee, with unreviewable institution authority with no safeguards against bias and self-dealing—a regime that “favors those with political clout, the powerful and the popular”, over those without sufficient resources or influence.

For a more detailed look at this case, including the litigation below and appellate history, see RPX’s prior coverage: “In ‘Long-Marooned’ Case, Federal Circuit Holds That Voluntarily Dismissed Complaints Trigger IPR’s One-Year Time Bar” (August 2018).