An inter partes review (IPR) is a procedure in the Patent Trial and Appeal Board (PTAB) whereby a U.S. patent can be challenged in the Patent and Trademark Office (PTO). Although a patent can be challenged in federal district court, an IPR is an expedited and less costly procedure than federal court litigation. An IPR is like a mini-trial, as the Board must make a decision within one year. Thus, an IPR is a useful method for a defendant in a patent litigation lawsuit to invalidate the patent in issue.
Any person other than the patent owner may file a petition for an IPR, challenging the patentability of any claim of an issued patent. In general, a petition cannot be filed until at least nine months after the grant of the patent. If a defendant in a patent infringement suit wants to challenge the patent, the petition must be filed within one year of service of the complaint.
A petition for an IPR can only be based on the grounds of anticipation or obviousness and only on prior art consisting of patents and printed publications. The petitioner must show that they are reasonably likely to prevail on at least one of the challenged claims. If these requirements are met, the PTAB has the discretion to grant the petition (i.e., to institute an IPR) or deny the petition. This decision is non-appealable.
The IPR procedure was established by the America Invents Act. Pursuant to the AIA, the decision of whether to Institute an IPR is to be made by the Director of the PTO. The Director has delegated that power to the PTAB, although the Director may reverse the Board’s decision.
The statutes do not address how the process should be handled when the defendant in a patent infringement suit files a petition for an IPR challenging the patent. Defendants frequently file petitions for IPR and seek to stay the litigation pending the outcome of the IPR. In attempting to address this situation, in 2019 and 2020, the Director designated two PTAB decisions as precedential. One case held that the Board should deny instituting an IPR if the litigation was at an advanced stage. The other case provided six factors that the Board should consider in determining whether to institute an IPR while litigation was pending. Those factors, referred to as the Fintiv instructions, are: whether the court has granted, or may grant, a stay, the proximity of the trial date, the investment of the parties and the court in the litigation, the overlap between the issues raised in the IPR and in the litigation, whether the petitioner is the defendant in the litigation, and any other circumstances, including the merits of the case. In 2022, the Director modified the Fintiv instructions in several respects, including deemphasizing the advanced stage of the litigation.
In 2020, Apple, Cisco, Google, Intel, and Edwards Lifesciences sued the Director of the PTO under the Administrative Procedure Act. The plaintiffs alleged that the Director’s institution instructions were improper as contrary to statute, arbitrary and capricious, and not promulgated through a notice-and-comment rulemaking process. According to the plaintiffs, the Director’s institution instructions resulted in too many petitions for IPR being denied. The PTO moved to dismiss the complaint, contending that the plaintiffs lacked standing and that the Director’s decisions were not reviewable. The district court held that the plaintiffs had standing but granted the motion to dismiss.
In Apple v. Vidal (March 13, 2023), the Federal Circuit affirmed the district court’s dismissal of the plaintiffs’ first two claims, holding that the Director’s instructions delegating her authority were not reviewable. As to the third claim, the appellate court affirmed the decision that at least Apple had standing to bring the challenge. Apple had been a party to the Fintiv case, and its petition for IPR was denied on the grounds that are the subject of Fintiv instructions. The court found that “Apple is a repeat player…..on a very large scale” and had filed petitions for IPR that had been denied based on the Fintiv instructions. The court found that it was possible that the institution instructions could be changed, to Apple’s benefit, if the notice-and-comment rulemaking process was followed.
The appellate court reversed the dismissal of the third claim, holding that the plaintiffs’ challenge on the grounds that the Director failed to use a notice-and-comment rulemaking process was reviewable. The court ordered this claim remanded for the district court to decide the challenge on the merits.