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IP Alert: No Standing to Appeal IPR Decision on Claim Canceled in Reexamination

September 14, 2022

On August 26, in Best Medical International, Inc. v. Elekta Inc., the Federal Circuit held that a patent owner lacked standing to appeal an inter partes review (IPR) decision as to a claim the patent owner had previously canceled in a separate ex parte reexamination proceeding. This unusual scenario resulted when petitioner Varian filed both a request for ex parte reexamination and a petition for IPR, each challenging patent owner Best Medical International’s 6,393,096 patent.

In October 2019, Varian filed IPR petitions at the Patent Trial and Appeal Board (PTAB) for review of claims 1, 18, 43–44, and 46 of the ’096 patent. Two months later, in December, Varian filed a separate request for ex parte reexamination that also asserted invalidity of claims 1 and 18.

The PTAB instituted trial in Varian’s IPR, and, in June 2020, joined Elekta in the instituted IPR proceeding. Later, in August 2020, after ordering reexamination, the examiner rejected claim 1 based on statutory and obviousness-type double patenting. In response to the examiner’s rejection, Best Medical opted to cancel Claim 1 “without prejudice or disclaimer,” rather than argue the merits of the rejection.

In the IPRs, the PTAB issued a final written decision in April 2021, finding that Best Medical’s cancellation of claim 1 was not final, and further finding that it was obligated by the Supreme Court’s precedent in SAS Institute to review claim 1. The PTAB accordingly considered the merits of claim 1 in its final written decision, ultimately finding claim 1 unpatentable along with claims 43–44 and 46 of Best Medical’s ’096 patent.

Later, in the reexamination, Best Medical filed a notice of appeal to the PTAB after receiving a final rejection. But Best Medical’s notice of appeal did not challenge the examiner’s double-patenting rejection. Claim 1 had therefore been cancelled and declared unpatentable.

Best Medical appealed to the Federal Circuit from the IPR decisions. This is where the case took an interesting turn. The Federal Circuit first considered whether its cancellation of claim 1 mooted patentability before the PTAB’s final written decision. The court held that Best Medical’s cancellation “without prejudice or disclaimer” was not a “final” cancellation of claim 1, leaving the PTAB with authority to review claim 1 at the time of its final written decision. The Federal Circuit also considered whether Best Medical—the patent owner—had standing to appeal the PTAB’s final written decision. Evaluating Best Medical’s standing under the “case or controversy” requirement imposed by Article III of the constitution, the court concluded that Best Medical’s failure to appeal the examiner’s double-patenting rejection rendered claim 1’s cancellation “final” before it appealed. Best Medical´s cancellation of claim 1 in the reexamination therefore effectively forfeited their right to appellate review.

Best Medical argued, alternatively, that it had suffered an actual injury sufficient to confer standing—because of collateral estoppel effects of the PTAB’s unpatentability decision on claim 1. In a separate reexamination proceeding involving another of Best Medical’s patents, the examiner had cited the PTAB’s claim 1 unpatentability decision and stated that they were bound by the PTAB’s reasoning. The Federal Circuit rejected Best Medical’s collateral estoppel argument, characterizing the PTAB’s decision against claim 1 as “non-appealable” and therefore without preclusive effect. Citing prior cases where IPR estoppel or collateral estoppel had been insufficient to confer standing on appeal, the Federal Circuit reasoned that the potential for collateral consequences, on its own, was insufficient to confer standing.

This case highlights the importance for parties engaged in multiple agency proceedings to consider how a decision made in one proceeding may have unanticipated effects in other proceedings. Preclusionary outcomes such as the one described above have become more common as IPRs, ex parte reexaminations, and district court proceedings operate in parallel.

For more information on this holding, please contact Fitch Even partner David A. Gosse, author of this alert.

Fitch Even law clerk Alvaro Cure Dominguez contributed to this alert.

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