The Supreme Court recently issued an opinion that will increase the certainty for parties to a patent dispute of whether the validity of challenged claims will be decided in a post-grant review process or federal court. SAS Institute v. Iancu involved review of an inter partes review (IPR) proceeding, which is a post-grant review proceeding that is often used as a less costly and quicker alternative to challenging patent claims in federal court. An IPR proceeding is a process under which a third party, such as a competitor or an accused infringer in a concurrent patent litigation case, can ask the director of the Patent and Trademark Office (PTO) to reconsider an issued patent by filing a petition that challenges the validity of some or all of the patent claims. If the director agrees to reconsider the patent, the Patent Trial and Appeal Board (PTAB) then conducts a trial-like proceeding adjudicating the validity of some or all of patent claims and issues a final decision regarding those claims. If the petitioner is not successful in convincing the PTAB that one or more of the challenged claims are invalid, the petitioner is then prevented from later making similar invalidity arguments in federal court for those claims in the final decision.
Petitioner SAS Institute filed an IPR petition challenging all 16 of the claims in Iancu’s patent. However, the PTAB said it would only review some, but not all, of the claims challenged in the petition. The Federal Circuit affirmed the PTAB’s view of its authority to review only some of the claims, but the Supreme Court reversed. The Supreme Court held that the plain text of 35 U.S.C. §318(a) requires the PTAB to institute review all of the patent claims challenged. Previously, the validity of the challenged claims that were not reviewed by the PTAB would likely then be later considered in federal court. With this Supreme Court decision, however, the PTAB’s practice of partial review is no longer allowed and the PTAB will be required to review all of the claims challenged in an IPR petition. While the PTAB still has discretion as to whether to institute review (which requires the petitioner to show a reasonable likelihood that at least one claim of the patent may be invalid), once the PTAB finds such reasonable likelihood, it now must institute review of all of the patent claims challenged by the petitioner.
This decision is generally viewed as bad news for patent owners. IPR proceedings often occur in parallel with district court patent litigation on the same patent, and district courts must decide whether to proceed or stay the case when the patent-in-suit becomes the subject of an IPR proceeding. Patent owners generally prefer that the district court case not be stayed as this delays the infringement suit and reduces leverage in settlement negotiations. This decision is likely to increase stays of concurrent litigation as the final decision in the IPR proceeding will likely simplify the issues in question and trial of the district court case. On the other hand, once the PTAB issues a final decision and some of the challenged claims survive, patent owners will benefit from the petitioner/defendant being estopped from making similar invalidity arguments in the district court case for all challenged claims.