IPR and Estoppel after SAS Institute -  All or Nothing

The Supreme Court held on April 24, 2018 that if the Patent Office institutes and inter partes review (IPR) proceeding, it must issue a final written decision with respect to the patentability of every patent claim challenged by the petitioner. SAS Institute, Inc. v. Iancu, (discussed in greater detail here). Within days, the Patent Office issued Guidance on the impact of SAS on AIA Trial Proceedings explaining the procedures it intends to implement in view of the Court’s decision. The resulting changes are likely to be extensive, both in IPR practice and in the scope of estoppel that litigations in parallel proceedings will need to consider.

The patent office Guidance states that the PTAB will institute as to all claims or none. If trial is instituted, the PTAB will institute on all “challenges” raised in the petition. The Board has confirmed that, at this time, this reference to “challenges” means that if institution is granted, it will be granted not only as to all claims challenged, but also all invalidity grounds raised in the petition. This guidance broadens the holding in SAS which focused merely on the patent claims challenged.

As far as previously instituted trials, the panel “may” issue an order supplementing the previous institution decision to encompass all challenges. It is important to note that the Board also contemplates the possibility that a petition may be retroactively denied in whole. However, I don’t expect the Board to take that route. The panel “may” also permit additional time, briefing, discovery, and/or oral argument. The memo is more explicit that this is discretionary. Upon receipt of an order supplementing the institution decision, the parties shall discuss the need for briefing or schedule changes. The final written decision will address all patent claims challenged by the petitioner and all amended claims.

In terms of practical effects on the proceedings, many expect that this change will result in a significantly increased workload for the PTAB and that the PTAB will seek ways to minimize that workload. Whether that will be by writing shorter institution decisions or denying institution in cases in which only a small number of challenges had a likelihood of succeeding, it is too soon to tell. However, the Administrative Procedures Act will require some rationale in the institution decisions, so it is unlikely that decisions will be bare bones.

For petitioners, estoppel now becomes an even greater concern. As discussed in our summary of estoppel cases, the Federal Circuit’s Shaw case provided one of the only clear rules of estoppel – non-instituted grounds are not estopped. See Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir.), cert. denied, 137 S. Ct. 374 (2016). The Shaw decision held that, when the PTAB chooses not to institute on a particular ground, that ground “could not have been raised during the IPR,” and is therefore not subject to estoppel.  Several district courts read Shaw as limiting estoppel to only the art on which IPR had been instituted. At least one of those courts recognized that such a reading confounds the very purposes of IPR, but felt bound by Shaw to limit estoppel only to that art raised in the IPR petition and for which institution was granted. Intellectual Ventures I LLC v. Toshiba Corp., Case No. 13-cv-453, 2016 WL 7341713 at *38 (D. Del. Dec. 19, 2016). With partial institution, parties in litigation could expect that prior art for the non-instituted grounds would remain usable in the district court. SAS will undoubtedly curtail that ability. Without the prospect of partial institution that prevents a party from raising some grounds on which institution was denied, the focus of the estoppel statute is likely to turn more to the interpretation of grounds that “reasonably could have raised during the IPR” even for those courts that previously limited the scope of estoppel in view of Shaw.

In the short term, parties involved in pending proceeding will see an increased workload in addressing previously denied grounds. In the long term, Petitioners will need to be even more deliberate and thorough in identifying grounds of invalidity in the Petition and deciding if IPR is the right choice.