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High Court Patent Ruling Could Set Broader Appeal Limits (2)

April 20, 2020, 2:29 PM; Updated: April 20, 2020, 10:30 PM

Patent Trial and Appeal Board decisions on whether validity challenges were filed on time aren’t reviewable by an appellate court, the Supreme Court said in a decision that could shield a range of board actions from judicial review.

The Supreme Court in a 7-2 decision in Thryv, Inc. v. Click-To-Call Technologies, LP concluded that a federal patent law provision that the PTAB’s decision to institute inter partes review of a patent is unappealable precludes review of a time-bar determination.

The ruling could curb the Federal Circuit’s ability to assess other issues arising in the initial stages of patent reviews, such as whether a company named all parties with an interest in a board challenge.

“The reasoning in this decision opens the door to a more expansive reading of the appeal bar, which could lead to further limitations on the range of issues that can be appealed,” Pauline Pelletier, a director at Sterne Kessler Goldstein & Fox PLLC, said.

Thryv had appealed a U.S. Court of Appeals for the Federal Circuit decision finding that the Patent and Trademark Office tribunal wrongly decided to review the validity of Click-to-Call’s anonymous voice communication patent because the challenge wasn’t filed in time.

‘Purpose and Design’

The court pointed to its decision in Cuozzo Speed Technologies, LLC v. Lee, in which it found that the no-appeal provision precludes judicial review, at least when “grounds for attacking” the institution decision “are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”

Justice Ruth Bader Ginsburg wrote in the majority opinion that the time bar is “integral to, indeed a condition on institution.”

A PTAB petitioner, or a real party in interest or privy, facing infringement lawsuits has one year from being served with a complaint to challenge a patent at the board. The board allowed the challenge to the Click-to-Call patent because the infringement suit was dismissed without prejudice.

The Supreme Court vacated the Federal Circuit judgment and remanded for that court to dismiss the appeal for lack of appellate jurisdiction. The ruling gives the PTAB unchecked power to determine whether the time-bar has been triggered, attorneys said.

Ginsburg wrote that the “purpose and design” of the America Invents Act, which created inter partes review and the PTAB, reinforces the court’s conclusion.

“By providing for inter partes review, Congress, concerned about overpatenting and its diminishment of competition, sought to weed out bad patent claims efficiently,” Ginsburg said. Allowing time bar appeals “would tug against that objective, wasting the resources spent resolving patentability and leaving bad patents enforceable.”

Curbing the Court

The ruling could affect the Federal Circuit’s assessment of patent reviews.

“To me this answers the question that pretty much nothing having to do with institution is reviewable by a court,” Kevin Noonan, a partner at McDonnell Boehnen Hulbert & Berghoff LLP, said.

The Federal Circuit has weighed various issues in the context of time-bar decisions, including providing guidance for the PTAB about real parties in interest. It has also overruled the board and found voluntarily dismissed lawsuits trigger the time-bar.

The court will be constrained from issuing those types of decisions in the future, and some attorneys expect additional fights over the scope of the appeal ban. Others said there could be arguments among litigants about whether the PTAB has to follow the court’s precedent on questions related to the time-bar.

“I think in trying to make the court’s job easier, the Supreme Court might have made things harder,” Thomas King, a partner at Haynes and Boone LLP,said.

Justice Neil Gorsuch wrote in a dissent that the Thryv decision marks another step in “ceding core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy.”

Gorsuch said the decision furthered a “flawed premise—that the Constitution permits a politically guided agency to revoke an inventor’s property right in an issued patent—and bends it further, allowing the agency’s decision to stand immune from judicial review.”

The decision could have a significant impact on patent owners, preventing them from arguing the PTAB should never have reviewed their patent in the first place.

“IPR challenges to patents that should have never gone forward will proceed without any recourse to patent owners on appeal,Irena Royzman, a partner at Kramer Levin Naftalis & Frankel LLP, said in an emailed statement.

Decisions from the Precedential Opinion Panel, a panel of top agency officials created in 2018 to set precedent at the PTAB, could take on increased importance when it comes to institution decisions, attorneys said.

“If there’s not a check on institution decisions by the Federal Circuit, it becomes more important for the PTAB to implement its own check system,” Troutman Sanders LLP partner Dustin Weeks said.

The case is Thryv, Inc. v. Click-To-Call Technologies, LP, U.S., No 18–916, 4/20/20.

(Updated with additional reporting.)

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com and Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com.
To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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