In Synopsys, Inc. v. Mentor Graphics Corporation, Appeal Nos. 2014-1516, 2015-1530 (Fed. Cir. Feb. 10, 2016), the Federal Circuit affirmed the PTAB’s judgment that two of the challenged claims were not invalid as anticipated. The court also held that (1) the final order of the Board need not address every claim raised in the petition for review, and (2) the Board did not err in denying Mentor’s motion to amend. This post focuses on the court’s holding that the Board need not address every claim raised in the petition for review. We further explore the Board’s denial of Mentor’s motion here.
On September 26, 2012, Petitioner Synopsys filed a petition for inter partes review of U.S. Patent No. 6,240,376 (the ’376 patent), owned by Mentor Graphics, alleging that 29 claims were invalid as anticipated or obvious in light of U.S. Patent No. 6,132,109 (the Gregory patent), among others. The ’376 patent relates to a method of tracing computer bugs in the design of computer chips. The method allows a chip designer to trace back errors discovered during testing to the original source code used to program the chip, thus making it easier for a designer to correct the errors. The Gregory patent also relates to debugging and provides a designer with the ability to mark the source code in places the designer wants to debug. See Synopsys, Inc. v. Mentor Graphics Corp., IPR2012-00042, Paper 60, p. 28 (Feb. 19, 2014).
The Board instituted IPR on 12 of the challenged claims, on the ground of anticipation by Gregory, denying the petition on other grounds, and later issued a final written decision that of the instituted claims, only three were unpatentable. The Board also denied the patent owner’s motion to substitute claims for those the Board determined were unpatentable.
The parties filed cross appeals. Petitioner Synopsis appealed, arguing that the Board erred in finding that two of the instituted claims were not anticipated, and that the Board erred in issuing a final decision that did not address the validity of all claims raised in the petition. Patent Owner Mentor cross-appealed, arguing that the Board erred in finding that the petition was not time barred and that the Board erred in denying its motion to amend. The PTO intervened as an interested party to defend its procedures.
Claims Challenged vs. Claims Instituted vs. Claims Decided
Petitioner Synopsis argued that after the Director institutes a trial, the Board must issue a final written decision on every claim identified as “challenged” in the petition. The current procedures, however, permit the Board to issue a final written decision on only the instituted claims, which may not include all claims challenged in the petition. The applicable sections of the statute and regulations provide as follows:
Section 314(a) of the AIA states that the Director may institute an inter partes review when “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” 35 U.S.C. § 314(a).
Section 318(a) of the AIA states that “If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board 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).
37 C.F.R. 42.108(a) states that “When 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.”
Judge Newman, writing in dissent, agreed with Synopsis that the Board improperly interprets the phrase “challenged claims” inconsistently in these three sections. The majority, however, reconciles the three sections as follows:
When the Petitioner files a petition and identifies claims it is challenging, those are initially the “challenged claims” (i.e. proposed challenged claims). Once the Director decides to institute the inter partes review, the definition of “challenged claims” changes. The “challenged claims” are only those claims for which the IPR has been instituted (i.e. instituted challenged claims). Then, when the Board issues a final written decision, it decides the patentability for all of the instituted challenged claims and, as a result, those claims become the claims decided.
The court reviewed the statutory sections above and concluded that the conditional phrase “if an inter partes review is instituted” in § 318(a) strongly suggests that the challenged claims referenced are the claims for which inter partes review was instituted, not every claim challenged in the petition. Continuing, the court stated that it would make “very little sense” to interpret these sections to require the Board to issue final written decisions addressing claims for which it did not institute inter partes review and, thus, lacks the benefit of a complete record and briefing. Slip Op. 9-10.
The court was not persuaded by Synopsys’s argument that “the Board’s practice of issuing final decisions only addressing some of the claims in the petition is inconsistent with the estoppel provisions of the AIA because final decisions that do not address all the claims ‘will have limited estoppel effect’ and thus do not ‘force a party to bring all of its claims in one forum.’” Slip Op. 11. The court dismissed the argument by addressing for the first time the scope of IPR estoppel, stating, “[t]he validity of claims for which the Board did not institute inter partes review can still be litigated in district court.” Slip Op. 11-12.
In dissent, Judge Newman stated, among other things, that 37 C.F.R. 42.108(a) is not in accordance with the AIA statute. Dis. 15. Her opinion is that once the review is instituted, § 318(a) requires that the Board issue a final written decision on all claims challenged in the petition (that is, the claims referred to as “proposed challenged claims” above). Dis. 14.
The Federal Circuit also issued an opinion in a companion case, Synopsys, Inc. v. Lee, Appeal No. 2015-1183 (Fed. Cir. Feb. 10, 2015), vacating the district court’s opinion and dismissing the appeal as moot, because “our opinion in the [Synopsis v. Mentor] case resolves all of the substantive issues presented in this case; nothing remains to be decided.” In the underlying district court case, Synopsys sought to invalidate the PTO’s regulation, 37 C.F.R. 42.108 (referenced above), and challenged the PTO’s practice of issuing final decisions on fewer than all of the claims identified in a petition.