The Supreme Court Changes the Rules for IPRs: The Implications for Partial Denials, Indefinite Claims and Redundant Grounds Robert M. Asher

By Robert Asher. Chair of our Patent Office Litigation Group

Last week’s Supreme Court decision in SAS Institute Inc. v. Iancu is a game-changer, rewriting the procedures applicable to an inter partes review (“IPR”) before the Patent Trial and Appeal Board (“PTAB”). Let’s take a brief look at the decision and then explore its implications. In a nutshell, the Supreme Court’s holding requires the PTAB to institute an IPR against all challenged claims or, otherwise, to deny institution. The PTAB now has an all-or-nothing choice to make in response to a petition requesting an IPR.

The Supreme Court’s decision is based entirely on statutory analysis. The statute gives the Director of the USPTO (who has delegated that responsibility to the PTAB) the authority to “determine whether to institute an inter partes review” §314(b). The five-justice majority agreed with Justice Gorsuch’s conclusion that the discretion is with respect to whether to institute, not which claims that review will encompass.

Further, the statute requires the PTAB to “issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” §318(a). The majority finds it unmistakable that “any” means every claim the petitioner has presented for review. So they conclude that the final written decision in an IPR must address every challenged claim.

The dissenting justices sided with the government’s reading of the statute, which allows institution of an IPR on fewer than all the challenged claims. The dissenters find the statute ambiguous as to whether all claims need to be addressed in the final written decision and so would apply deference to the administrative agency’s interpretation in accordance with Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984).

As a result of the 5-4 decision, all claims challenged in a petition must be addressed in the PTAB’s final written decision for any IPR that is instituted. As a result, all of the challenges raised in the petition will be subject to appellate review. Now that the PTAB will be instituting on claim challenges it previously excluded from an IPR, strategies will undergo dramatic changes for all concerned.

Petitioners Should Take Care in Challenging All Claims

Under prior practice, the PTAB was free to institute challenges to some claims, while excluding challenges to other of the patent claims from the instituted IPR trial proceeding. Because institution decisions are not appealable, such a partial denial was depriving petitioners of an opportunity to dispute partial denials on appeal to a court of law. On the other hand, challenges denied institution were not subject to an estoppel and the petitioner could try them again in a litigation in district court.

Now that the PTAB no longer has the authority to exclude some of the challenges to a patent’s claims from an IPR trial proceeding, petitioners should take great care before challenging all claims, especially those for which it has yet to uncover adequate prior art. A couple of problems may now arise from an inadequate challenge as to one or more claims:

1. Now that all challenged claims will be addressed in the final written decision, any losing challenge will result in estoppel against the petitioner. In other words, petitioners will not get a second chance to assert a prior art defense against those claims in a later court proceeding.
2. Given the burdens on the PTAB of needing to address all claims in an IPR proceeding, the PTAB may choose instead to simply deny the petition in its entirety to relieve itself from the burden of working on non-meritorious challenges.

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