When an Inter Partes Review is Instituted the USPTO is Required to Decide the Patentability of All Claims Challenged By Petitioner

May 9th, 2018

In SAS Institute Inc. v. Iancu, No. 16-969 (Apr. 24, 2018), the Supreme Court of the United States ruled that when the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) institutes an inter partes review, 35 U.S.C. § 318(a) (2011) requires the PTAB to decide the patentability of all claims challenged by the petitioner. The Supreme Court’s 5-4 majority opinion, written by Justice Gorsuch, held that the plain language of the statute “confirms that [the petitioner] is entitled to a final written decision addressing all of the claims it has challenged.” Id., slip op. at 14. The ruling puts an end to the PTAB’s past practice of so-called “partial institution,” in which the PTAB could institute an inter partes review proceeding and render a final patentability decision on only a subset of the claims challenged by the petitioner. Id. at 4-5, 10-12.

The Leahy-Smith America Invents Act (“AIA”) introduced a new post-grant review proceeding known as “inter partes review,” which permits parties to challenge previously issued patent claims in an adversarial process before the USPTO. The Director of the USPTO may institute inter partes review if the Director determines “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in [a] petition” filed by a petitioner. 35 U.S.C. § 314(a) (2011). In practice, the PTAB exercises this authority on behalf of the Director. See 37 CFR § 42.4(a) (2017). Further, “[i]f an inter partes review is instituted and not dismissed,” at the end of the procedure the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner . . . .” 35 U.S.C. § 318(a) (2017).

In 2012, the USPTO promulgated federal regulations to implement the inter partes review process, including 37 C.F.R. § 42.108(a) (2017), which states that “[w]hen instituting inter partes review, the Board may authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim.” Thus, as described in § 42.108(a), the PTAB was operating under a system in which it could decide to review only some of the challenged claims but to deny review of the other challenged claims. In such a case, the review would proceed to a final decision in which the PTAB decided the validity of only the subset of claims on which the review was instituted. See SAS Institute, slip op. at 2, 4.

In September 2012, ComplementSoft, LLC sued SAS Institute Inc. in the Northern District of Illinois alleging infringement of ComplementSoft’s U.S. Patent No. 7,110,936 (the ’936 Patent). See Complaint, ComplementSoft, LLC v. SAS Institute Inc., No. 1:12-cv-07372 (N.D. Ill. Sept. 14, 2012) (ECF No. 1). In response, SAS Institute petitioned the USPTO for inter partes review of the ’936 Patent. See Brief for Petitioner at 8, SAS Institute Inc. v. Iancu, No. 16-969 (Apr. 24, 2018). In particular, SAS Institute challenged the patentability of all 16 claims of the ’936 Patent. Id. However, the PTAB instituted inter partes review only as to claims 1 and 3-10. Id. Following conclusion of the inter partes review, SAS Institute appealed to the United States Court of Appeals for the Federal Circuit, arguing that the PTAB erred by not addressing in the final written decision the claims petitioned against but not instituted as part of the proceeding. See SAS Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1343 (Fed. Cir. 2016). At the Federal Circuit, a split-panel held that the PTAB did not need to address in its final written decision claims upon which it did not institute inter partes review. Id. Following denial of its petition for rehearing en banc, SAS Institute appealed to the Supreme Court. See Brief for Petitioner at 8.

In its ruling, the Supreme Court majority focused on the plain language of 35 U.S.C. § 318(a) (2017). In particular, the Court emphasized the language of § 318(a), which states that the Board “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” SAS Institute, slip op. at 4 (quoting 35 U.S.C. § 318(a)) (emphasis supplied by Supreme Court). The Court reasoned that “[i]n this context, as in so many others, ‘any’ means ‘every.’” Id. at 1. Therefore, “when § 318(a) says the Board’s final written decision ‘shall’ resolve the patentability of ‘any patent claim challenged by the petitioner,’ it means the Board must address every claim the petitioner has challenged.” Id. at 5 (quoting § 318(a)).

In front of the Supreme Court, the USPTO argued that the relevant sections of Chapter 31 of Title 35 required the Board to decide every claim challenged by the petitioner in an inter partes review, but that the statutes did not require that every challenged claim gains admission to the review process. Id. However, the Court noted that this interpretation was inconsistent with the plain language of § 318. Id.

Referring to 35 U.S.C. § 311(a) (2013) and 35 U.S.C. § 312(a)(3) (2011), the Court noted that inter partes review is a process that is largely guided by the petitioner, rather than by the Director. Id. at 6. Further, the Court contrasted the petitioner-led inter partes review structure with the ex parte reexamination statute in which the Director is given significant authority to investigate a question of patentability “[o]n his own initiative, and at any time.” Id. (quoting 35 U.S.C. § 303(a) (2011)). This distinction indicated to the Court that, if Congress wished to imbue the Director with similar authority over the institution of inter partes review, then it knew how to so do. Id.

Furthermore, looking at the point of institution of the proceeding, the Court noted that the statute says the Director must decide “whether to institute an inter partes review . . . pursuant to the petition.” Id. (quoting 35 U.S.C. § 314(b) (2011)). On the basis of this language, the Court elaborated that the Director “is given only the choice ‘whether’ to institute an inter partes review,” which is “a binary choice—either institute review or don’t.” Id. at 6-7. In response to this interpretation, the USPTO had pointed to the fact that § 314(a) does not require the Director to institute an inter partes review even after he finds the “reasonable likelihood” threshold has been met. Id. at 8. However, the Court held that this discretion on whether to institute review does not afford the Director the discretion to decide which claims the review will encompass, noting that “[t]he text says only that the Director can decide ‘whether’ to institute the requested review— not ‘whether and to what extent’ review should proceed.” Id.

Finally, the USPTO had suggested that the Supreme Court lacked the authority to forbid the partial institution practice, pointing to 35 U.S.C. § 314(d) (2011), which states that that the “determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” Id. at 12. However, the Supreme Court found that § 314(d) prohibited only judicial review of a decision by the USPTO regarding whether the information presented in a petition showed that there is a reasonable likelihood of success with respect to at least one of the claims challenged. Id. at 12-14. In contrast, § 314(d) does nothing to prevent judicial review of USPTO actions that are “not in accordance with law” or “in excess of statutory jurisdiction, authority, or limitations.” Id. (quoting 5 U.S.C. §§ 706(2)(A), (C) (1966)).

TAKEAWAY: If an inter partes review is instituted in response to a petition, the final decision rendered by the PTAB at the conclusion of the inter partes review must address the patentability of each and every claim challenged in the petition. How the SAS Institute ruling affects pending or concluded inter partes reviews remains an open question likely to be resolved in future decisions.