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Supreme Court Limits Appeals to Prevent More Bad Patents

Posted in IP, Patent Law

A party accused of infringing a patent may challenge the validity of the patent in the federal court infringement litigation or in separate administrative proceedings in the Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB). One of the methods available in the PTAB is an inter partes review (IPR), which was created by the America Invents Act.

In order to file a petition for IPR, the challenger must argue that some or all of the claims of the patent are invalid on certain grounds, including novelty and nonobviousness, and must show that there is a “reasonable likelihood” that they will prevail on at least one claim.  The statutes require that a petition for IPR be filed within one year of the challenger being served with a complaint for patent infringement.  35 USC section 315(b).   The PTAB reviews the petition and decides whether to institute IPR.  The decision whether to institute IPR is not appealable.  35 USC section 314(d). 

If IPR is instituted, the proceeding is held between the patent owner and the challenger, and the PTAB issues a final written decision confirming the patentability of, or finding invalid, each challenged claim.  That decision is appealable to the Federal Circuit.

This week, on April 20, 2020, the Supreme Court vacated a Federal Circuit decision that had dismissed an IPR as time-barred, holding that the time-bar issue is nonappealable.

The case is Thryv, Inc. v. Click-to-Call Technologies, L.P.  Click-to-Call owned a patent related to telephone technology.  In 2013, Thryv filed a petition for IPR, challenging a number of the patent’s claims on novelty and nonobviousness grounds.  Click-to-Call opposed the petition, contending that it was time-barred because a predecessor of Thryv had been sued on the patent in 2001, more than one year before the petition was filed.

The PTAB found that the 2001 suit did not bar the IPR and instituted the proceeding.  After the IPR was conducted, the PTAB issued a decision invalidating 13 of the patent’s claims.  Click-to-Call appealed to the Federal Circuit.  The court initially held that the time-bar determination was not appealable, but on rehearing, then held that the petition was untimely. The court vacated the PTAB’s decision and ordered the IPR dismissed. Thryv appealed to the Supreme Court.

The Supreme Court ruled in favor of Thryv, reversing the Federal Circuit’s decision and ordering the appeal dismissed. The Court held that section 314(d) was clear, and meant that any aspect of the PTAB’s decision to institute IPR, including the time-bar issue, is nonappealable.

The Court stated that, in establishing the IPR procedure, Congress wanted to address “overpatenting and its diminishment of competition,” and intended for IPRs to “weed out bad patents efficiently” and reduce unnecessary litigation expense.  According to the Court, the entire focus of IPRs is to reach the merits of patentability.  The Court further said that permitting appeals of the time-bar issue “would tug against that objective, wasting the resources spent resolving patentability and leaving bad patents enforceable.”

The Court explained that patent owners can still appeal the merits of the PTAB’s final decision on patentability, so the only reason to allow appeals from the time-bar issue would be to “save bad patent claims.”  The Court pointed to the PTAB’s final decision on Click-to-Call’s patent, which found 13 claims invalid, as evidence that Click-to-Call had “bad patent claims” that could not withstand challenge on the merits.  As such, the Court said that the PTAB’s work should not be “undone” and the bad claims should not be “resurrected” by an appeal of the time-bar issue.

The Court emphasized that their decision was consistent with the statutory scheme of IPRs.  Even if one challenger is time-barred, other parties can file a petition for IPR of the same patent and the time-barred challenger can join in.  Even if the parties settle their dispute, the PTAB can continue the proceeding to reach a final decision on patentability.

This decision gives the PTAB more power in the determination of whether to institute IPR.  Thus, patent owners who have any grounds to oppose a petition to institute an IPR must make those arguments fully at the first opportunity, as they will not have a second chance.