January 11, 2019
On January 9, in AC Technologies S.A. v. Amazon.com, Inc., the Federal Circuit held that the Patent Trial and Appeal Board (PTAB) did not exceed its statutory authority or violate due process when it ordered a rehearing to consider a previously non-instituted ground of unpatentability.
In its petition for inter partes review, Amazon raised three grounds for unpatentability. The PTAB instituted review of Grounds 1 and 2, but declined to institute Ground 3. Grounds 1 and 3 relied on alternative constructions of the phrase “computer unit.” The PTAB adopted a broad construction of that phrase in the institution decision, which favored Ground 1 and rendered Ground 3 moot. The PTAB’s final decision, however, construed “computer unit” differently.
Under this revised construction, the PTAB held that Ground 1 did not invalidate the claims, but did not consider Ground 3. Amazon moved for reconsideration, pointing to the omission of Ground 3. On reconsideration, the PTAB addressed Ground 3 and invalidated the remaining claims. The patent owner, AC Techs, appealed to the Federal Circuit, arguing that by reconsidering Ground 3 the PTAB exceeded its statutory authority and fell short of its obligation to provide due process.
The Federal Circuit held that precedent mandates that the PTAB consider all grounds of unpatentability raised in an instituted petition, citing SAS Institute Inc. v. Iancu. Notably, each of the PTAB’s decisions in this case came before the Supreme Court issued the SAS decision. Applying SAS, the Federal Circuit held that the PTAB did not exceed its statutory authority when it addressed non-instituted Ground 3. To the contrary, the Federal Circuit explained that the PTAB would have violated the statutory scheme if it did not address the non-instituted ground when it reconsidered its final written decision.
Furthermore, the Federal Circuit held that the PTAB did not violate due process on the facts of this case. After ordering reconsideration of Ground 3, the PTAB permitted AC Techs to take discovery and to submit additional briefing and evidence on Ground 3. Although AC Techs did not receive a hearing on Ground 3, it had never requested one.
As noted above, the circumstances of this case are somewhat unique because each of the PTAB’s decisions was issued prior to the Supreme Court’s SAS decision. Post-SAS, if the PTAB institutes trial it must include every ground asserted in the petition. This decision reiterates that the PTAB must consider every ground in an instituted IPR and emphasizes that due process concerns are mitigated if the parties have the opportunity to address issues raised after institution. Specifically, if a patent owner wants a hearing on a ground that was not instituted but is later considered, it should request one.
For more information on this holding, please contact Fitch Even partner David A. Gosse, author of this alert.
Fitch Even law clerk Jacqueline L. Thompson contributed to this alert.
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