Dispute Over Reexamination Vacatur Sent Back to VA Court
The recent trend of denying PTAB trial petitions on discretionary grounds has been argued to frustrate the purpose of the America Invents Act (AIA). Indeed, patent reexamination filings — the clunky mechanism the AIA was supposed to supplant — surged by 60+% last year. With stakeholders unhappy with how the PTAB is operating, interesting questions are being raised on when/how a reexamination remains viable after a failed AIA trial petition.
Last year, the Federal Circuit considered the timing of a Patent Owner 325(d) challenge to a follow-on reexamination after a failed IPR petition. This week, the Federal Circuit considered whether a petitioner that has been denied a reexamination can seek further review via an APA action of the district court.
In Alarm.com Inc., v. Hirshfeld, after Final Written Decisions (FWD) had issued in IPRs upholding claims of certain patents, those same patents were challenged by Alarm in later-filed reexaminations. Of course, estoppel flows from the failed IPRs under 35 U.S.C. § 315(e)(1). As such, when filed, the USPTO found that the art submitted in the reexaminations could have reasonably been raised in the IPRs, and vacated the filings. Thereafter, Alarm sought review of the Director’s vacatur decisions in district court under the Administrative Procedure Act (APA), 5 U.S.C. §§ 706(2)(A), (C). But, the district court dismissed Alarm’s complaint on the ground that APA review of the Director’s decision was precluded by the ex parte reexamination scheme viewed as a whole.
In reversing and remanding the dispute back to the EDVA, the Court explained (here):
The text, statutory scheme, and legislative history pertaining to ex parte reexamination do not evince a fairly discernable intent to preclude judicial review of these decisions.
The only portion of the ex parte reexamination statutory scheme that expressly precludes judicial review is § 303(c), but the preclusion established by that text is narrowly defined. The provision states: “A determination by the Director pursuant to subsection (a) of this section that no substantial new question of patentability has been raised will be final and nonappealable.” § 303(c). The government agrees that “section 303(c) . . . concededly does not expressly bar Alarm.com’s challenge.” The Director’s estoppel determinations did not include any determination that no substantial new question of patentability had been raised. The estoppel determinations made under § 315(e)(1) here are outside the scope of § 303(c). The sole express textual preclusion in the ex parte reexamination scheme does not support preclusion here.
The Court noted the difference between reexamination and AIA appeal bars, explaining:
The Supreme Court has called attention to the fact that § 303(c) is limited in scope, contrasting it with the broader preclusion provision of the IPR scheme. In Thryv, Inc. v. Click-to-Call Technologies, LP, the Court addressed whether § 314(d)—which states that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable”—bars judicial review of the Director’s decision to institute an IPR when that decision is challenged as contrary to § 315(b)’s time prescription. 140 S. Ct. 1367, 1370 (2020). The Court held that § 314(d) does preclude such review, because the timing issue comes within the standard previously adopted in Cuozzo—that an issue be “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” Id. at 1373 (quoting Cuozzo, 579 U.S. at 275). In so holding, the Court relied on the contrast between § 314(d)’s broad language and the narrower language of § 303(c).
While interesting, it would seem unlikely that the typical reexamination denial would warrant the expense of a district court APA suit.
Still, the decision’s reasoning is interesting relative to the ongoing APA suit against the PTO on Fintiv practices. That dispute is currently being appealed to the Ninth Circuit.