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IP Alert: Finding “Shenanigans” at the PTAB, Federal Circuit Says Time-Bar Rulings Can Be Appealed

January 12, 2018

On January 8, 2018, in Wi-Fi One, LLC v. Broadcom Corp., the Federal Circuit ruled en banc that decisions by the Patent Trial and Appeal Board (PTAB) on whether the one-year statutory bar of 35 U.S.C. § 315(b) applies can be appealed.

Specifically, the court had been tasked with interpreting the relationship between three statutory provisions: (1) section 315(b), which prohibits institution of inter partes review (IPR) petitions filed more than one year after a defendant is served with a patent infringement complaint; (2) section 314(a), which identifies the USPTO Director’s discretion to institute or deny institution of IPR proceedings based on the determination of whether there is a reasonable likelihood of unpatentability of at least one challenged claim after weighing arguments articulated in the petition and preliminary response; and (3) section 314(d), which provides that the determination by the Director whether to institute or deny institution of IPR is final and nonappealable. In Cuozzo Speed Technologies, LLC v. Lee, the Supreme Court held that section 314(d) precludes appeal of the PTAB’s discretion articulated in section 314(a). In WiFi One, the Federal Circuit addressed whether section 314(d) extends to the PTAB’s decision regarding section 315(b).

The majority opinion explicitly holds that the decision of the PTAB as to whether the one-year statutory bar prevents institution of IPR is appealable. The opinion interprets Cuozzo narrowly and leaves the door open for additional appeals related to institution decisions of IPR.

The patents-at-issue were the subject of a district court proceeding in 2010 involving a predecessor-in-interest to appellant Wi-Fi One and several third parties. In the earlier district court litigation, the Eastern District of Texas found the patents valid and infringed. In 2013, appellee Broadcom filed three petitions seeking IPR of the same patents from the prior district court litigation. Wi-Fi responded that institution was prohibited because Broadcom was in privity with the third-party defendants served in the prior litigation, and the IPR petitions were therefore barred by the one-year time bar of section 315(b).

The PTAB instituted IPR and found the challenged claims unpatentable, holding that Wi-Fi failed to show Broadcom was in privity with the earlier defendants. Wi-Fi appealed, arguing that the Federal Circuit should reverse or vacate the PTAB’s time-bar determinations. A panel of the Federal Circuit concluded that Cuozzo precluded the appealability of Wi-Fi’s time-bar challenge. Wi-Fi then sought and received a rehearing en banc.

The majority found that the Supreme Court’s holding that the Director’s decision to institute is nonreviewable in Cuozzo is limited to the “reasonable likelihood” criteria of section 314(a) and matters “closely related” to the reasonable likelihood decision. The opinion explains that the one-year time bar of section 315(b) is unrelated to the Director’s ability to weigh the merits of the petition and preliminary response, and therefore outside the category of preliminary procedural requirements more “closely related” to the Director’s section 314(a) decision. According to the majority, this falls into the category of “shenanigans” that are properly reviewable.

Judge O’Malley’s concurrence reflects that the distinction between Cuozzo and the matter at hand is much simpler: “it turns on the distinction between the Director’s authority to exercise discretion when reviewing the adequacy of a petition to institute inter partes review . . . and authority to undertake such a review in the first instance.” Meanwhile, Judge Hughes’s dissent reflects the belief that the court interprets Cuozzo and Congress’s intent for section 314(d) too narrowly.

This decision may receive attention from the Supreme Court. At least for the time being, the case provides both petitioners and respondents a foothold to appeal institution decisions to the Federal Circuit on grounds unrelated to the Director’s discretion to weigh the merits of the petition and preliminary response in reaching an institution decision.

For more information on this ruling, please contact Fitch Even partner Nicholas T. Peters.

--Written by Fitch Even attorney Andrew C. Wood

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