Efficiency Considerations Determined at the Time of Institution

Since the unraveling of partial institution practices in SAS Institute, stakeholders have speculated that the Patent Trial & Appeal Board may begin denying petitions that present administrative inefficiencies. For example, where a petition attacking 30 claims is assessed as failing to meet the threshold standard for 29 of the 30 claims, the Board may exercise its discretion to deny the petition in the interest of efficiency.

Such a situation was recently presented in Chevron Oronite Company LLC v. Infineum USA L.P. (here).

In Chevron, the Board denied institution for a petition challenging 20 claims, where only two claims were deemed to meet the threshold. The Board explained that even with a “reasonable likelihood of prevailing with respect to one or more claims . . . institution of review remains discretionary.” And, that in this scenario, institution of a trial with respect to all claims is “not an efficient use of the Board’s time and resources.” Accordingly, the Board denied the institution of IPR proceedings.

Still, Chevron is a very unique set of circumstances (only two dependent claims were found amenable to trial).  Since that decision, other Patent Owner’s have attempted to force the inefficiency consideration on the Board post-institution.

In LG Electronics, Inc., et al. v. Wi-Lan Inc., et al. (here), the Board instituted an IPR of U.S. Patent No. 9,497,743. At institution, the Board indicated that claims 6-9 did not appear to meet the threshold showing for trial, but, post-SAS, would be included nonetheless.

In a unique attempt to leverage the ruling in SAS, Patent Owner sought to undo the institution of proceedings by disclaiming those claims that the PTAB had found likely to be proven unpatentable. Arguably, this eliminated the “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims” required by §314(a). Given that part of the ruling in SAS noted that “the language [of §314(a)] anticipates a regime where a reasonable prospect of success on a single claim justifies review of all,” one could read the decision to find that the absence of such a prospect justifies denying review. Indeed, while not invoking this language specifically, Patent Owner argued that trial on claims 6-9 would be a waste of resources, and that the PTAB should exercise its discretion to dismiss the IPR.

However, the PTAB denied these arguments. Observing that SAS found that Title 35 requires the PTAB’s final decision “to address every claim the petitioner presents for review,” the PTAB found that LG was entitled to review of the remaining claims, despite initially being deemed unfavorable. While never specifically addressing 314(a), the PTAB found that “[b]ecause claims 1–4 were disclaimed after our Institution Decision, our Institution Decision remains correct based on the facts that existed at the time it was decided.” Therefore, although the remaining claims may not have met the standard under 314(a), institution had already occurred, making Patent Owner’s disclaimer post-institution ineffective.

The Board also noted that “dismissal is not appropriate here where the record on claim construction is not yet fully developed,” noting that, since the Institution Decision “is a preliminary finding based on an incomplete record . . . [the trial] should proceed to a final written decision ‘so that neither party is deprived of a full and fair opportunity to develop the record.’” Apparently, then, institution is an independent event whose requirements must only be met once – party activity, including disclaimer, post-institution cannot impact the prior determination to leverage SAS.