Unsuccessful IPR Petitioner Urges Expansive PTAB Estoppel

In a strange twist, an unsuccessful IPR petitioner is currently urging the CAFC to adopt an expansive interpretation of statutory estoppel for Inter Partes Review (IPR). That is, the petitioner argues where only a subset of claims challenged in an IPR petition are actually instituted for trial, the Patent Trial & Appeal Board (PTAB) should nonetheless carry non-instituted claims through trial to the final written decision. In such a case, estoppel would necessarily attach to the non-instituted claims by virtue of their inclusion in the written decision. 35 U.S.C. § 315(e)

Why on earth would a petitioner argue for such a thing?

In IPR2012-00042, petitioner Synopsys asserted unpatentability of claims 1-15 and 20-33 of Mentor Graphics patent 6,240,376. The PTAB trial order indicated that IPR would only be instituted as to claims 1-9, 11 and 28-29. In other words, claims 10, 12-15 and 20-27 were denied trial. As their 2013 trial order could not be appealed (35 U.S.C. § 314(d)), Synopsys recently sued the USPTO under the Administrative Procedure Act (APA) for allegedly failing to follow 35 U.S.C. § 318(a). Synopsys insists that the language of 318(a): “. . .shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,” obligates the PTAB to address all claims challenged in the original petition in its final written decision. In this way, Synopsys would have an opportunity to appeal the PTAB final written decision not to institute review claims 10, 12-15 and 21-27 after all. 
While creative, such a read of section 318(a) is inconsistent with the statutory framework and would result in a disjointed statutory estoppel scheme that would grind IPR filings to an abrupt halt.
Since the time of the APA lawsuit against the USPTO, the Synopsys IPR has concluded. The 318(a) dispute has been briefed to the Court of Appeals for the Federal Circuit (CAFC). In its brief (here), Synopsys focuses on the highlighted language of 318(a) below. 

35 U.S. Code § 318 – Decision of the Board
(a) Final Written Decision.— 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 and any new claim added under section 316 (d)

Read alone, the highlighted language of 318 (a) might be construed as requiring all “challenged claims of an IPR petition” to be explained in the final written decision. But, when read in view of the remainder of the statutory framework that interpretation is implausible. Section 318(a) explains what happens at the end of an IPR trial. That is, if the trial does not settle and claims remain “challenged” and/or new claims added, those claims are addressed in a final written decision.

On the other hand, section § 314 (Institution of Inter Partes Review) is, as the title implies, directed to institution of an IPR trial, and § 316 (Conduct of Inter Partes Review) the IPR trial itself. An IPR trial is conducted and instituted on the enumerated “grounds” presented in the petition, not “challenged claims”— this is a critical distinction. Insufficient grounds are denied, as are the “challenged claims” embraced by those grounds. Section 314 explicitly provides the Director discretion in setting forth standards for “sufficient grounds.” 316(a)(2);and (b). This discretion must consider the effect of such regulation on the “economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings.” Including claims throughout an IPR proceeding that are embraced by insufficient grounds is contrary to 316, and would greatly impact the efficiency of trials that are statutorily mandated to complete within 12 months time.

The PTAB’s established practice of proceeding to trial on a claim-by-claim basis builds on a decade of patent reexamination history. See Sony Computer Entertainment America Inc. v. Dudas, 85 USPQ2d 1594 (E.D. Va 2006). Congress was well aware of this practice when drafting the AIA, in fact, they modified the controlling inter partes reexamination statute without disturbing the Sony holding, shortly therafter, IPR replaced inter partes patent reexamination.

Setting aside the statutory framework, consider the practical realities of that would result from such a narrow read of 318(a).

Petitioner A files an IPR against claims 1-5.  In a first outcome, the entire petition is denied. In that case, no statutory estoppel can apply as there will never be a written decision (i.e., no trial).  

In a second outcome, trial is instituted on claim 1, but not claims 2-5. In this case, under the Synopsys interpretation, claims 2-5 would be carried forward to written decision and estoppel would apply despite the fact that the trial would be directed to claim 1 only. So, there would be no opportunity for a second petition (assuming there was time) to target claims 2-5. This is because estoppel from the first proceeding would shut down any second filing at the time of the first written decision. Moreover, those petitioners seeking to stay the district court litigation (as is usually the case) would not only have claims uncovered by a pending ground, but the claims would be in a holding pattern awaiting the attachment of estoppel. Essentially, these uncovered claims would force the district court to deny the stay given the added bonus of estoppel attaching in 12 months time to preclude any invalidity theory touching patents and printed publications.

Such an interpretation would destroy IPR as a viable alternative to patent litigation.