The IP Law Blog Focusing on legal trends in data security, cloud computing, data privacy, and anything E

No Right to Appeal Even When IPR Institution Denied on Non-Substantive Grounds

Posted in IP, Patent Law

One way to challenge the validity of a patent at the United States Patent and Trademark Office (“USPTO”) is through a petition for inter partes review (“IPR”).  The USPTO Director has delegated responsibility to the Patent Trial and Appeal Board (“PTAB”) to evaluate such petitions to determine whether to institute review of the challenged patent.  The PTAB will only institute review of petitions that show a reasonable likelihood of success on the merits.  However, even if the petition meets that threshold for review, the PTAB may still deny institution.  In fact, the PTAB did just that when denying Cisco Systems Inc.’s (“Cisco”) petitions for IPR challenging the validity of two U.S. Patents owned by Ramot at Tel Aviv University (“Ramot”).  Cisco appealed the denial to the Court of Appeals for the Federal Circuit.

In June 2019, Ramot sued Cisco in the Eastern District of Texas for allegedly infringing its patents.  The case is set to go to trial in December 2020.  Cisco filed petitions for IPR of the asserted patents in November 2019.

A series of precedential PTAB decisions “set forth factors for determining whether efficiency, fairness, and the merits support the exercise of authority to deny institution in view of an earlier trial date in the parallel [district court] proceeding.”  Applying these factors in the case of Cisco’s petitions, the PTAB noted 1) the quickly approaching district court trial date, 2) the PTAB’s decision would follow the district court trial by about six months, 3) the parties had already briefed claim construction in the district court, 4) expert discovery was almost complete in the district court, and 4) substantially the same validity challenges were before the district court.  Therefore, the PTAB determined that “instituting would be an inefficient use of [PTAB], party, and judicial resources.  Therefore, the PTAB denied Cisco’s petitions.  The PTAB further cited “its discretion under 35 U.S.C. § 314(a) not to institute review regardless of whether Cisco has met the threshold limitation of showing a reasonable likelihood of success on the merits.”

Cisco then appealed the PTAB’s decision and, in the alternative, petitioned the Federal Circuit for a writ of mandamus arguing the PTAB’s decisions are unlawful violations of the Administrative Procedure Act and the America Invents Act.

First, let’s consider Cisco’s appeals.  “Section 314(d) of title 35 of the U.S. Code specifically provides that ‘[t]he determination by the Director whether to institute an inter partes review … shall be final and nonappealable.’”  So, when the Director, or the PTAB acting on behalf of the Director, “decides not to institute, for whatever reason, there is not review.”  That is the case even when the institution decision is made on grounds other than merit.

While the Supreme Court has “left open the possibility that § 314(d) may not bar appeals that implicate constitutional questions or concerns that the agency acted outside its statutory limits, it made clear that §  314(d) bars review of matters ‘closely tied to the application and interpretation of statues related to the Patent Office’s decision to initiate inter partes review.’”  Here, the Federal Circuit found that Cisco was essentially challenging whether the PTAB could consider the status of parallel district court proceedings in determining whether to deny institution.  “Such challenges, both procedural and substantive, rank as questions closely tied to the application and interpretation of statutes relating to the Patent Office’s decision whether to initiate review.” Thus, they are outside the jurisdiction of the Federal Circuit.  Therefore, the Federal Circuit ruled it lacked jurisdiction over Cisco’s appeals.

Alternatively, Cisco petitioned for a writ of mandamus.  If successful, a writ of mandamus would order the PTAB to perform an act required by law (e.g., institute review of the patents).  However, while leaving the door open for mandamus jurisdiction under other facts, the Federal Circuit found that Cisco had “not met the high standard for mandamus relief.”  For such relief, Cisco had to establish “a ‘clear and indisputable right that precludes’ the [PTAB’s] exercise of discretion to decline review.”  The Court also noted that Cisco had “alternative legal channels to raise its substantive and procedural arguments.”  “While Cisco prefers to raise those arguments before the [PTAB], it has no clear and indisputable right to do so.”  Therefore, the Federal Circuit also denied Cisco’s petition for a writ of mandamus.