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Federal Circuit’s Patent Power on the Line in Full Rehearing Bid

Aug. 10, 2022, 9:19 AM

A recent ruling opened the door for an administrative patent tribunal to wipe out certain Federal Circuit decisions, which may entice the full federal appeals court to grant a rare re-hearing request, attorneys said.

Atlanta Gas Light Co. is asking the full Federal Circuit to reconsider a split-panel ruling where the majority found that, based on timeliness considerations, it didn’t have the ability to review a Patent Trial and Appeal Board’s reversal of a decision to review contested patent. The Federal Circuit had originally remanded the suit back to the PTAB to reconsider a sanctions award on a separate issue, and the board instead found it shouldn’t have reviewed the patents in the first place.

While the case presents an unusual set of circumstances, it has the potential to “wreak havoc” on patent law, said Ryan Vacca, a law professor at the University of New Hampshire Franklin Pierce School of Law.

“The panel’s decision is odd in that the Federal Circuit is giving up some of its power to the PTO,” Vacca said. “The full court might take issue with that, and not be so willing to give up some of its power.”

A Federal Circuit decision on whether it’ll grant “en banc” review is expected in the coming months.

Third Trip

Bennett Regulator Guards Inc. accused Atlanta Gas of infringing its US Patent No. 5,810,029, which covers an anti-icing device to regulate gas pressure. The suit was dismissed in 2012, but Atlanta Gas challenged the validity of the patent at the US Patent and Trademark Office in 2015—despite companies accused of infringement having only one year from the start of the lawsuit to ask the board to review the patents.

The tribunal invalidated the patent, finding the claims would’ve been obvious based on the combination of previous inventions. The Federal Circuit overturned that decision in 2018 because the board never should’ve instituted “inter partes” review of the patent, saying the one-year rule applies regardless of whether the suit was dismissed.

The US Supreme Court unraveled that Federal Circuit decision in 2020 with a ruling that determined the appeals court can’t review the board’s determinations about the timeliness of validity challenges.

On remand from the Supreme Court, the Federal Circuit agreed that the patent should be canceled. In that decision, the Federal Circuit asked the board to redo its quantification of sanctions it levied against Atlanta gas for failing to disclose a change in ownership.

Instead of determining a new sanctions award, the PTAB undid the case, finding the board actually shouldn’t have reviewed the patent—like the Federal Circuit originally held. On a third appeal to the Federal Circuit, the majority ruled in May that it can’t review the new PTAB decision as the appeals court can’t review the board’s decisions on whether it will start a validity proceeding and is barred by the Supreme Court from reviewing timeliness issues.

Maintaining Power

The most recent Federal Circuit ruling drew a dissent from Judge Pauline Newman, who was concerned that the patent board would be able to “vacate PTAB final decisions at any time” and restore a patent’s validity despite the Federal Circuit saying it was invalid.

“What was remanded to the PTAB was a sanctions order, and the fact that it had the effect of wiping out an IPR proceeding that had already been reviewed by the Federal Circuit is a concern,” said Rachel J. Elsby, a partner at Akin Gump Strauss Hauer & Feld LLP. “The fact that this was issued as a precedential opinion that could be applied in other scenarios raises real questions about things like finality at the PTAB.”

The case shows the Federal Circuit and PTAB could come into conflict, Vacca said. The exact scenario isn’t likely to occur again, but there’s a broader institutional power struggle, he said.

The Federal Circuit views itself as the institution with the most and best expertise in patent law, and Newman’s dissent notes that a threat to that authority is lurking in the PTAB, Vacca said.

“If the Federal Circuit is really looking forward and trying to maintain its power over the patent system, it should seriously consider en banc review in this case,” Vacca said. “By allowing the PTAB to deinstitute and effectively vacate the Federal Circuit’s decisions, then the PTAB now plays a larger role because it effectively gets many final decisions.”

Fitting a Pattern

The panel majority May ruling fits into the overall trend of the Federal Circuit limiting its ability to review some PTAB decisions, said Nitika Gupta Fiorella, a principal at Fish & Richardson PC. The appeals court has been consistent in finding there aren’t any exceptions to a rule that it can’t revisit the PTAB’s institution decisions, she said.

The Federal Circuit’s signals on the issue are clear, Fiorella said. The majority noted that the appeals court can still review cases if there are “shenanigans” under the Administrative Procedure Act, which Fiorella said provides a safety net if “something truly goes wrong.”

Fiorella said she understands Newman’s caution for the court to not chip away too much at what cases are reviewable, but the facts that caused this situation are unique. The majority’s decision fits with the Federal Circuit’s previous case law that there aren’t any “escape hatches” for petitioners trying to get around reviewability rules, Fiorella said.

“We should all be aware that the Federal Circuit seems to be on this trend of limiting reviewability for PTAB decisions,” Fiorella said. “If there’s a new circumstance that a petitioner really wants to try to fight for, we should realize that the chances of the Federal Circuit agreeing will be pretty slim.”

Judge Kara F. Stoll, writing for the majority, said allowing PTAB to reverse a decision already approved by the appeals court would be “inappropriate in most cases” but this case was different because both the PTAB and the Federal Circuit ultimately agreed on the timeliness question.

Rare En Banc Review

At least seven of the 12 active Federal Circuit judges must vote in favor of a case to be heard en banc. Since May 2020, the Federal Circuit has taken only four cases en banc, none of them involving patents.

Several judges have decried the total number of en banc petitions they receive. Judge Todd M. Hughes told Bloomberg Law last year that most of the requests are a “waste of time.”

Atlanta Gas’s request could be successful, considering the potential importance for the court’s power, Vacca said. The specific nature of the case, though, may deter most judges from revisiting the decision, he said.

For the court to take a case en banc, there needs to be an identifiable problem and a solution that the court could provide, Elsby said. Most cases presented for the full court’s consideration don’t meet those criteria, she said.

“I hesitate to predict that the Federal Circuit would take en banc action because it’s been so reluctant to do so,” Elsby said. “I do think this is one of those cases where it’s procedural and specific to the court’s jurisdiction that, in my view, it’s a good candidate for the court to consider.”

To contact the reporter on this story: Samantha Handler in Washington at shandler@bloombergindustry.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Adam M. Taylor at ataylor@bloombergindustry.com