Thursday, October 01, 2015

CAFC in Achates v. Apple: PTAB determinations as to petitions are final and nonappealable

The key point:

Achates contends that the Board’s decisions
were outside of the Board’s statutory authority because
the underlying petitions for IPR were time-barred under
35 U.S.C. § 315(b). As part of its appeal, Achates also
challenges the Board’s denial of Achates’ motion for
discovery. See Apple Inc. v. Achates Reference Publ’g, Inc.,
2013 WL 6514049 (P.T.A.B. Apr. 3, 2013) (“Discovery
Decision”). Because the Board’s determinations to institute
IPRs in this case are final and nonappealable under
35 U.S.C. § 314(d), this court lacks jurisdiction and dismisses
the appeals.

The CAFC discussed the relevant law:

Both IPR and CBMR proceed in two stages. In the
first stage, the Director determines whether to institute
IPR or CBMR. By regulation, “[t]he Board institutes the
trial on behalf of the Director.” 37 C.F.R. § 42.4; see also
37 C.F.R. §§ 42.100(a) (explaining that IPR proceedings
are subject to these trial procedures); 42.300(a) (same for
CBMR). In the second phase, the Board conducts the IPR
or CBMR proceedings on the merits and issues a final
written decision.
Based on the petitions and any responses, the Board
decides whether there are sufficient grounds to institute
the proceedings—in IPR petitions there must be a “reasonable
likelihood” that the petition will prevail, 35
U.S.C. § 314(a), and in CBMR petitions it must be “more
likely than not,” 35 U.S.C. § 324(a). An IPR proceeding
“may not be instituted if the petition requesting the
proceeding is filed more than 1 year after the date on
which the petitioner, real party in interest, or privy of the
petitioner is served with a complaint alleging infringement
of the patent.” § 315(b). No analogous time-bar
exists for CBMR proceedings. IPR proceedings are not
limited to specific types of patents. On the other hand,
CBMR proceedings are only permitted “for a patent that
is a covered business method patent.” AIA § 18(a)(1)(E).
Importantly, identically worded statutory provisions
make explicit that “[t]he determination by the Director
whether to institute [IPR or CBMR] under th[ese] section[s]
shall be final and nonappealable.” See § 314(d)
and § 324(e), respectively.

If a proceeding is instituted, the Board considers the
merits and “issue[s] a final written decision with respect
to the patentability of any patent claim challenged by the
petitioner and any new claim added” during the proceedings.
35 U.S.C. §§ 318(a) (IPR), 328(a) (CBMR).
“[P]art[ies] dissatisfied with the final written decision of
the Patent Trial and Appeal Board under section[s]
[318(a) or 328(a)] may appeal the decision pursuant to
sections 141 through 144.” Id. §§ 319 (IPR), 329 (CBMR).
Sections 141 through 144 of title 35 generally explain that
Board decisions are appealable to this court. Of particular
relevance, 35 U.S.C. § 141(c) states, with emphasis

A party to an inter partes review or a post-grant
review who is dissatisfied with the final written
decision of the Patent Trial and Appeal Board under
section 318(a) or 328(a) (as the case may be)
may appeal the Board’s decision only to the United
States Court of Appeals for the Federal Circuit.

The Cuozzo case was mentioned:

This court also has considered whether the Director’s
institution decision is subject to review after a final
written decision by the Board. In In re Cuozzo Speed
Techs., LLC, 793 F.3d 1268 (Fed. Cir. 2015), the Director
instituted an IPR of certain claims relying in part on
references not cited in the petition. On appeal, Cuozzo
argued that the IPR was improperly instituted because
the petition-as-filed did not provide “a reasonable likelihood
that the petition would prevail” as required
by § 314(a). Id. at 1273. Cuozzo argued that the reviewability
prohibition of § 314(d) applied only to interlocutory
appeals, and that the initiation decision becomes available
for review once the Board issues a final written decision.
The court disagreed with Cuozzo and declined to
review the initiation decision, remarking that § 314(d) “is
not directed to precluding review only before a final
decision” and cannot be directed only to precluding interlocutory
appeals because §§ 319 and 141(c) already serve
that role. Id. The court then recognized that “the IPR
statute [does not] expressly limit the Board’s authority at
the final decision stage to the grounds alleged in the IPR
petition” and that “the failure to cite those references in
the petition provides no ground for setting aside the final
decision.” Id. at 1273 and 1274.

As to CBM review

The court first recognized the distinction between the
final merits decision and the initiation decision: “institution
and invalidation are two distinct actions.” Id. at
1319. “[I]t is the merits of the final written decision that
are on appeal; we are not here called upon to review the
determination by the [Board] whether to institute a CBM
review, and indeed [35 U.S.C. § 324(e)] expressly instructs
that we may not.” Id. at 1315. The court went on to
point out that although the issue of whether a patent is a
CBM was first determined by the Director at the initiation
stage, the same issue was necessarily implicated in
the final merits determination and was appropriate for
review because of the fundamental limitation of the
Board’s “ultimate invalidation authority” in a CBMR to
those patents that meet the CBM definition:
[O]ne of the limits on § 18 invalidation authority
is that the patent at issue be a CBM patent. . . . If
a particular patent is not a CBM patent, there is
no proper pleading that could be filed to bring it
within the [Board’s] § 18 authority.
Id. at 1320. Compare Cuozzo, 793 F.3d at 1274 (“The fact
that the petition was defective is irrelevant because a
proper petition could have been drafted.”)

Cuozzo-like arguments appear:

Just as the pleading in Cuozzo could have been sufficient by
the inclusion of the missing prior art reference, see 793
F.3d at 1274 (“The fact that the petition was defective is
irrelevant because a proper petition could have been
drafted.”), the timeliness issue here could have been
avoided if Apple’s petition had been filed a year earlier or
if a petition identical to Apple’s were filed by another
party. This is in contrast to the issue in Versata II, where
“no proper pleading [] could be filed to bring it within the
[Board’s] § 18 authority.” 793 F.3d at 1320.

The words "too crabbed" appear:

Finally, Achates also contends that § 314(d) does not
limit this court’s review of the timeliness of Apple’s petition
under § 315, because § 314(d) says “[t]he determination
by the Director whether to institute an inter partes
review under this section shall be final and nonappealable”
(emphasis added). Achates’ reading is too crabbed
and is contradicted by this court’s precedent. The words
“under this section” in § 314 modify the word “institute”
and proscribe review of the institution determination for
whatever reason.


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