Our article on this case in the firm”™s Fall Newsletter 2017 discussed the case”™s procedural history and presented arguments from both sides. On April 24, 2018, the Supreme Court of the United States (“Supreme Court”) released a split 5-4 decision, holding that when the United States Patent and Trademark Office (“USPTO”) institutes an inter partes review (“IPR”), the Patent Trial and Appeal Board (“PTAB”) must decide the patentability of all the claims the petitioner has challenged.
With Justice Neil Gorsuch writing for the majority, the opinion bases its holding on the plain reading of the statute at issue, 35 U.S.C. §318(a). §318(a) states that the USPTO must “issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” The opinion starts with an explanation of the IPR process, describing each statute that corresponds to each step of the process. The opinion then begins its analysis, providing that the “plain text of §318(a)” simply directs the USPTO to “issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”
The opinion then disclaims Director Iancu”™s argument that he “retains discretion to decide which claims make it into an inter partes review,” stating that nothing in §318(a) allows him such discretion. The opinion then looks at other statutes laying out the rules of post-grant proceedings to see if the Director has discretion in those proceedings, specifically probing at the differences in language. §311(a) authorizes the petitioner, not the Director, to start IPR proceedings. §303(a) states that the petitioner initiates the ex parte reexamination process. §314(b) provides that the Director gets to institute an IPR petition “pursuant to a petition.” As a result, no statute allows the Director to “institute a different [IPR] of his own design.” The opinion then rejects the Director”™s argument that §314(a) “requires him to ”˜evaluate claims individually”™ and so must allow him to institute review on a claim-by-claim basis,” concluding that the §314(a) “simply requires him to decide whether the petitioner is likely to succeed on ”˜at least 1”™ claim.”
The opinion again disclaims the Director”™s policy argument that partial institution is more efficient “because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others.” The opinion simply stated that the Director should go take his case to Congress. The opinion then addresses the Director”™s argument that the statute contains ambiguity and thus should be given deference to the USPTO. With Gorsuch being a critic of Chevron deference, the majority opinion found no ambiguity and thus gave no deference to the USPTO. Finally, the opinion disagreed with the Director”™s argument that the question in this case is a challenge to the USPTO”™s petition decision and that decision is unappealable pursuant to §314(d), the Cuozzo rule. The opinion concluded that the case here involves “exactly the sort of question” that serves as an exception to the Cuozzo rule.
It is worthy to note that the Justice Ginsberg”™s dissent, supported by the three other justices of the Court, criticized Gorsuch”™s lack of analysis of congressional intent. Additionally, Justice Breyer”™s dissent provided that §318(a) has a big enough gap to be filled and should be afforded Chevron deference.
Although SAS Institute Inc., the patent infringer, may win in this particular case, the SAS decision will change the strategies used by both parties in IPR proceedings, but should help patent owners overall. The PTAB is now required to opine on which claims are patentable and which are not, giving the patentable claims strength at district court. As a result, patent owners will likely focus on arguments on the broadest claims. This decision will also raise estoppel issues for patent infringers at district court, forcing patent infringers to think about what arguments to raise at the PTAB and at the district court.