Existing IPR Procedure Will Likely Stay the SameJune 23, 2016

The Federal Circuit yesterday, in a ten-to-one decision, rejected Ethicon’s petition for en banc rehearing on the question of whether the USPTO Director improperly delegated decision-making authority for the institution of inter partes review (IPR) to a PTAB panel. This decision confirms another existing USPTO practice, the function of PTAB panels to both institute and hold a trial to make final decision on merit for an IPR. This descision is not a surprise, following  the Supreme Court opinion in the case of In re Cuozzo Speed Technologies, LLC., which held that the USPTO’s application of Broadest Reasonable Interpretation (BRI) standard for claim construction is appropriate, and that the decision by the Patent Trial and Appeals Board (PTAB) of whether or not to institute an IPR is not appeal-able.

An IPR is a two steps process, with an initial decision of whether the procedure should be instituted in a particular case, followed by a trial step once the IPR is instituted. Under 35 U.S.C. §314, the Patent Office Director is tasked with determining whether to institute an IPR. The trial step has a distinct statutory basis in 35 U.S.C. §316(c), wherein the PTAB is tasked with holding a trial and making a final determination on merit. Despite the role separation by statutory language, the Director has delegated her institution authority to the PTAB.

Covidien LP petitioned the PTO for institution of an IPR on a patent owned by Ethicon. A PTAB panel granted the petition and the same panel found all challenged claims invalid as obvious over the prior art. Ethicon appealed, asserting the PTAB’s decision is invalid because the same PTAB panel made both the institution and final decision. Federal Circuit holds that neither the statute nor the Constitution precludes the same panel of the Board that make the decision to institute IPR review from making the final determination. Ethicon filed a petition for en banc rehearing, which was denied by a ten judge majority. Only Judge Newman dissented.

Ethicon may appeal to the Supreme Court. In light of the In re Cuozzo Speed Technologies, LLC. decision, however, its chances of obtaining a different result at the Supreme Court may be very slim. The existing practice at the USPTO of using the same panel for both an IPR institution and final decision will stay the same, unless USPTO itself decides to change it.

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