IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
Inter Partes Review (IPR)
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Hypothetical Device Doesn’t Meet Domestic Industry Requirement

by | Mar 17, 2022 |

In a consolidated appeal from the International Trade Commission (Commission) and two inter partes review (IPR) proceedings before the Patent Trial & Appeal Board (Board), the US Court of Appeals for the Federal Circuit affirmed the Commission’s findings that a hypothetical device does not meet the domestic industry requirement, as well as findings by the Board and the Commission that asserted claims of the involved patents were invalid as obvious. Broadcom Corp. v. ITC, Case Nos. 20-2008; 21-1260, -1362, -1511 (Mar. 8, 2022) (Lourie, Hughes, Stoll, JJ.)

Broadcom filed a complaint at the Commission alleging a violation of 19 U.S.C. § 1337 based on products imported by many respondents, including Renesas Electronics, that allegedly infringed two patents. The first patent is directed to reducing power consumption in computer systems, and the second patent is directed to a memory access unit that improves upon conventional methods of requesting data located at different addresses within a shared memory. The Commission’s administrative law judge issued an initial determination that Broadcom failed to satisfy the technical prong of the domestic industry requirement for the power consumption patent and that one of the asserted claims of the memory access patent was obvious over the prior art. The Commission affirmed both findings.

During the course of the Commission investigation, Renesas petitioned for IPR of both patents. The Board found that two asserted claims of the power consumption patent were obvious but Renesas failed to show that six other asserted claims would have been obvious. The Board also found that all petitioned claims of the memory access patent would have been obvious over the cited art.

Both parties appealed. Renesas appealed the Board’s ruling that six claims of the power consumption patent would not have been obvious in light of the cited art, and Broadcom appealed the Board’s ruling that two claims of the power consumption patent and five claims of the memory access unit patent would have been obvious. Broadcom also appealed the Commission’s decision that there was no violation with respect to the power consumption patent and that the asserted claims of the memory access unit patent would have been obvious.

The Federal Circuit first addressed the Commission’s decision that there was no domestic industry for the power consumption patent. Citing its 2013 decision in Microsoft Corp. v. ITC, the Court explained that a complainant must show that a domestic industry product exists that actually practices at least one claim of the asserted patent. Broadcom identified its System on a Chip (SoC) as a domestic industry article, but there was no dispute that the SoC did not contain a “clock tree driver” required by the asserted claims. To overcome this admitted deficiency, Broadcom argued that a domestic industry existed because Broadcom collaborates with customers to integrate the SoC with external memory to enable retrieval and execution of the clock tree driver feature. The Court rejected this argument, finding that Broadcom posited only a hypothetical device and failed to identify a specific integration [...]

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Too Much to Say? Word Limits Don’t Prevent Estoppel

by | Feb 24, 2022 |

The US Court of Appeals for the Federal Circuit found that the Patent Trial & Appeal Board (Board) did not err in finding that a petitioner was estopped from maintaining a third inter partes review (IPR) of a patent claim after a final determination of two other IPRs challenging the same claim on different grounds. The Federal Circuit also found that it did not have jurisdiction to review the merits decision of the third IPR because the petitioner lacked statutory authorization to appeal as of the issuance of the prior two final written decisions. Intuitive Surgical, Inc. v. Ethicon LLC, Case No. 20-1481 (Fed. Cir. Feb 11, 2022) (O’Malley, Clevenger, Stoll, JJ.)

Intuitive Surgical concurrently filed three separate IPR petitions for a patent owned by Ethicon relating to a robotically controlled endoscopic surgical instrument. All three petitions challenged a single claim of the patent, relying on different combinations of prior art references. The Board instituted on two of the petitions at the same time and on the third petition one month later. The Board issued simultaneous final written decisions in the first two IPRs, upholding the patentability of the challenged claim. As the third IPR remained ongoing, Ethicon filed a motion to terminate Intuitive as a party to the IPR, arguing that it was estopped from proceeding under 35 U.S.C. § 315(e)(1). The Board agreed, terminating Intuitive as a party and issuing a decision upholding the patentability of the challenged claim. Intuitive appealed.

Intuitive argued that § 315(e)(1) should not apply to simultaneously filed petitions. Section § 315(e)(1) precludes a petitioner from maintaining a proceeding before the Board on any ground that it “raised or reasonably could have raised during that inter partes review.” Intuitive argued that it could not have reasonably raised all of its grounds in one petition because of the 14,000-word limit, and that simultaneously filed petitions do not conflict with the purpose of § 315(e)(1)—to prevent abusive IPR conduct. The Federal Circuit disagreed, finding that § 315(e)(1) estops a petitioner as to grounds it reasonably could have raised in another IPR, even if the petitions are filed on the same day. The Court went on to note multiple ways around the word limit issue, none of which Intuitive attempted. Intuitive could have sought to consolidate the proceedings or divided its petitions on a claim-by-claim basis instead of by grounds (something which the Court noted is not prohibited by § 315(e)(1)). Intuitive also argued that, under the Court’s decision in Shaw, it was only estopped from raising instituted grounds, but the Court cited its recent decision in California Institute of Technology v. Broadcom Limited, which overruled Shaw, explaining that estoppel applies to all grounds that could have been reasonably included in the petition.

The Federal Circuit also considered whether Intuitive was authorized to pursue an appeal given the termination. Intuitive argued that it had the right to appeal the Board’s decision in the third IPR because it was once a party to the IPR. [...]

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Bargained-Away Rights to File for IPR May Not Be Recovered

by | Feb 17, 2022 |

In a precedential opinion, the US Court of Appeals for the Federal Circuit reversed a district court’s denial of a plaintiff’s requested injunction seeking to force a patent challenger to abandon its petitions for inter partes review (IPR). Nippon Shinyaku Co. Ltd. v. Sarepta Therapeutics, Inc., Case No. 2021-2369 (Fed. Cir. Feb. 8, 2022) (Newman, Lourie, Stoll, JJ.)

Nippon Shinyaku and Sarepta Therapeutics executed a mutual confidentiality agreement (MCA) to facilitate discussion of “a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy.” The MCA established a mutual covenant not to sue for “any legal or equitable cause of action, suit or claim or otherwise initiate any litigation or other form of legal or administrative proceeding against the other Party . . . in any jurisdiction in the United States or Japan of or concerning intellectual property in the field of Duchenne Muscular Dystrophy” during a covenant term. The mutual covenant explicitly “include[d], but [wa]s not limited to, patent infringement litigations, declaratory judgment actions, patent validity challenges before the U.S. Patent and Trademark Office or Japanese Patent Office, and reexamination proceedings before the U.S. Patent and Trademark Office” (emphasis added). The MCA also included a forum selection clause to govern post-term intellectual property disputes between the parties, which stipulated:

that all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware and that neither Party will contest personal jurisdiction or venue in the District of Delaware and that neither Party will seek to transfer the Potential Actions on the ground of forum non conveniens (emphasis added).

“Potential actions” were defined as:

any patent or other intellectual property disputes between [Nippon Shinyaku] and Sarepta, or their Affiliates, other than the EP Oppositions or JP Actions, filed with a court or administrative agency prior to or after the Effective Date in the United States, Europe, Japan or other countries in connection with the Parties’ development and commercialization of therapies for Duchenne Muscular Dystrophy (emphasis added).

The day the covenant term ended, Sarepta filed seven petitions for IPR at the Patent Trial & Appeal Board (Board). Nippon Shinyaku filed suit in the US District Court for the District of Delaware for breach of contract, declaratory judgment of noninfringement and invalidity and patent infringement. Nippon Shinyaku motioned for a preliminary injunction to enjoin Sarepta from proceeding with the IPR petitions and to force Sarepta to withdraw them. The district court denied Nippon Shinyaku under each of the preliminary injunction factors (likelihood of success on the merits, irreparable harm in the absence of extraordinary preliminary relief, balance of harms in its favor and relief being in the public interest).

The district court explained that any irreparable harm arguments fell within Nippon Shinyaku’s contract interpretation arguments, and that Nippon Shinyaku’s balance of hardships and public interest arguments relied on Sarepta’s ability to file [...]

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Federal Circuit Tosses Shaw: IPR Estoppel Applies to All Grounds That Reasonably Could Have Been Raised

by | Feb 17, 2022 |

March 2022 Update: The Federal Circuit has issued an errata to this decision. Read about it here.

Addressing inter partes review (IPR) estoppel after the Supreme Court of the United States’ 2018 decision in SAS Institute, Inc. v. Iancu, the US Court of Appeals for the Federal Circuit overruled its decision in Shaw Industries Group v. Automated Creel Systems, stating that the only plausible reading of 35 U.S.C. § 315(e)(2) estops a party from raising all claims and grounds that reasonably could have been included in the party’s petition for IPR. The Court also rejected the district court’s two-tier damages model as contrary to customary patent damages calculations. California Institute of Technology v. Broadcom Limited, Case Nos. 20-2222; 21-1527 (Fed. Cir. Feb. 4, 2022) (Lourie, Linn, Dyk, JJ.) (Dyk, J., dissenting in part).

Background

California Institute of Technology (Caltech) filed suit against Broadcom and Apple, alleging patent infringement directed to the generation and repetition of information in a wireless data transmission system. Wireless transmission systems generally use data repetition so that the transmitted information may be decoded even when data loss occurs. The patented circuitry discloses a form of irregular data repetition in which portions of the information bits may be repeated a varying number of times.

Apple filed multiple IPR petitions challenging the validity of the claims at issue. The Patent Trial & Appeal Board (Board) concluded in all cases that Apple failed to show that the challenged claims were unpatentable as obvious. At the district court, Apple and Broadcom raised new arguments of obviousness not asserted in the IPR proceedings. The district court granted Caltech’s motion for summary judgment of no invalidity, precluding Apple and Broadcom from raising arguments at trial that they reasonably could have raised in their IPR petitions.

At trial, the district court instructed the jury that “repeat” means “generation of additional bits, where generation can include, for example, duplication or reuse of bits.” Apple and Broadcom argued that the Broadcom chips (which were integrated into Apple devices) did not infringe the asserted claims because they did not repeat information at all. With respect to one of the asserted patents, the district court did not provide a jury instruction relating to its construction that the claim language “information bits appear in a variable number of subsets” requires irregular information bit repetition. The jury found infringement of all asserted claims. Apple and Broadcom filed post-trial motions for judgment as a matter of law (JMOL) and a new trial, both of which the district court denied.

The district court adopted Caltech’s proposed two-tier damages theory, explaining that Broadcom and Apple’s products were different and therefore possessed different values simply because they were “different companies at different levels in the supply chain.” The district court ultimately entered judgment against Broadcom for $288 million and against Apple for $885 million. Broadcom and Apple appealed.

The Appeal

Broadcom and Apple argued that the district court’s construction of “repeat” was inconsistent with the claim language and specification. The Federal Circuit [...]

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IPR Petition Cannot Be Based on Applicant Admitted Prior Art

by | Feb 10, 2022 |

Addressing the type of prior art that may form the basis of an inter partes review (IPR) proceeding, the US Court of Appeals for the Federal Circuit vacated an unpatentability finding based on “applicant admitted prior art” in the challenged patent. Qualcomm Inc. v. Apple Inc., Case Nos. 20-1558, -1559 (Fed. Cir. Feb. 1, 2022) (Taranto, Bryson, Chen, JJ.)

Qualcomm owns a patent directed to integrated circuit devices having power detection circuits for systems with multiple supply voltages. The patent seeks to solve problems associated with stray currents causing level shifters in integrated circuits to trigger input/output devices for transmission, which results in erroneous output signals from the circuit. The patent describes various prior art methods for solving the stray current problem.

Apple filed IPR petitions based on two grounds. The first was based on the combination of four prior art references. In its final written decision, the Patent Trial & Appeal Board (Board) found that the combination of these four references did not render the challenged claims invalid. The second ground relied on the applicant admitted prior art disclosed in the specification of the challenged patent in combination with another prior art reference (Majcherczak). During the IPR proceedings, Qualcomm admitted that the combination of the applicant admitted prior art and Majcherczak taught every element of the challenged claims but argued that Apple’s use of the applicant admitted prior art as the basis for an invalidity ground is barred in an IPR proceeding. The Board disagreed with Qualcomm and found the challenged claims unpatentable based on Apple’s second ground. Qualcomm appealed.

Qualcomm argued on appeal that IPR proceedings may only be based on “prior art patents or prior art printed publications” and that 35 U.S.C. § 311(b), which governs IPR proceedings, does not allow for the use of “a patent owner’s admissions” that is contained in non-prior art documents. Apple countered, arguing that any prior art that is contained in “any patent or printed publication, regardless of whether the document itself is prior art, can be used as a basis for [an invalidity] challenge.”

The Federal Circuit agreed with Qualcomm, finding that applicant admitted prior art in a challenged patent may not form the “basis” for an invalidity claim in an IPR proceeding. The Court explained that invalidity grounds advanced in an IPR must be based on patents or printed publications that are themselves prior art to the challenged patent. In reaching this conclusion, the Court relied on the 2019 Supreme Court opinion in Return Mail, Inc. v. U.S. Postal Serv., which referred to “patents and printed publications” in the context of § 311(b) as “existing at the time of the patent application.” The Court also looked to its own interpretations of “prior art consisting of patents or printed publications” in the context of ex parte reexamination proceedings under 35 U.S.C. §§ 301 and 303, which “permits the Director to institute a reexamination after ‘consideration of other patents or printed publications.’” Accordingly, the Court vacated the unpatentability [...]

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Improper Claim Construction Requires Partial Remand of Obviousness Determination

by | Jan 6, 2022 |

The US Court of Appeals for the Federal Circuit issued decisions in two separate inter partes reviews (IPRs), one involving a patent related to radio frequency communication systems and the other involving a patent related to multi-processor systems. Intel Corporation v. Qualcomm Incorporated, Case No. 20-1664 (Fed. Cir. Dec. 28, 2021) (Prost, Taranto, Hughes, JJ.); Intel Corporation v. Qualcomm Incorporated, Case Nos. 20-1828, -1867 (Fed. Cir. Dec. 28, 2021) (Prost, Taranto, Hughes, JJ). Based on issues of claim construction and obviousness, the Court affirmed in part and vacated in part the Patent Trial and Appeal Board’s (Board) decision in the radio frequency communication systems patent IPR and vacated the Board’s decision in the multi-processor systems patent IPR.

Radio Frequency Communication System Patent IPR (1664)

In the IPR related to the radio frequency communication systems patent, Intel proposed that the claim term “radio frequency input signal” should take its ordinary meaning of an input signal having a radio frequency. Qualcomm argued that a person of skill in the art reading the patent would understand the phrase to reference the radio frequency signal that is received before down-conversion, and thus proposed that the term should mean “a signal centered at a carrier frequency at which the signal was transmitted/received.” The Board agreed with Qualcomm based on the intrinsic evidence.

Intel argued before the Board that certain claims of the radio frequency communication systems patent would have been obvious in light of the Der reference and the Valla reference. Qualcomm argued that a skilled artisan would not have been motivated to combine Der and Valla, because Der’s transistor would defeat the intended purpose of Valla’s amplifier. The Board agreed with Qualcomm. Qualcomm also submitted substitute claims. The Board accepted the substitute claims after finding that a skilled artisan would have lacked reason to combine Der and the Burgener reference to achieve the substitute claims. Intel appealed.

The Federal Circuit first addressed the threshold question of whether it had jurisdiction since no lawsuit had been filed against Intel. Despite the absence of any lawsuit against Intel itself, the Court found that Intel had standing because it had engaged in acts that previously resulted in assertion of the patent against one of Intel’s customers. Because Intel continues to sell the relevant products to that customer and others, it must address the risk of an infringement suit by Qualcomm. Qualcomm also refused to offer a covenant not to sue or stipulate that it would not reassert its prior infringement allegations involving the Intel products. The Court found that this refusal made Intel’s risk more than “mere conjecture or hypothesis.” Therefore, the Court found that Intel had standing to pursue the appeal.

Turning to the merits, the Federal Circuit affirmed the Board’s construction of “radio frequency input signal.” The Court explained that while both parties’ proposed constructions had appeal when considered in a vacuum, the proper inquiry required analysis of the surrounding claim language and specification. The Court found that linguistic clues in the claims suggested that [...]

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Shots Fired: Challenger Must Have Requisite Standing Before Appealing Unfavorable IPR Decisions

by | Dec 16, 2021 |

The US Court of Appeals for the Federal Circuit found, in the context of an appeal from an inter partes review (IPR) decision, that the appellant had Article III standing and affirmed a Patent Trial & Appeal Board (Board) decision, holding the challenged claims unpatentable as obvious. ModernaTX, Inc. v. Arbutus Biopharma Corporation, Case No. 20-2329 (Fed. Cir. Dec 2, 2021) (Lourie, J.)

Arbutus owns a patent pertaining to “stable nucleic acid-lipid particles (SNALP) comprising a nucleic acid (such as one or more interfering RNA), methods of making the SNALP, and methods of delivering and/or administering the SNALP.” Moderna petitioned for IPR of the patent, asserting three grounds:

  1. Moderna alleged that all claims of the challenged patent would have been anticipated and/or obvious in light of International Pat. Publ. WO 2005/007196 (‘196 PCT) or US Pat. Publ. 2006/0134189 (‘189 publication).
  2. Moderna alleged that all claims of the challenged patent would have been obvious over a combination of the ‘196 PCT, the ‘189 publication, Lin and Ahmad.
  3. Moderna alleged that all claims of the challenged patent were anticipated by US Pat. Publ. 2006/0240554 (‘554 publication), and alternatively that the claims would have been obvious over the ‘554 publication.

The Board rejected each of Moderna’s allegations, finding that the claims were not unpatentable as obvious. Moderna appealed.

Before addressing Moderna’s appeal on its merits, the Federal Circuit addressed whether Moderna had proper standing to challenge the Board’s decision. The Court stated that well-established precedent dictates that an appellant seeking review of a Board decision in an IPR must have suffered an injury in fact that is fairly traceable to the challenged conduct of the appellee and is likely to be redressed by a favorable judicial decision. The Court underscored that under IPR statute, there is no standing requirement for petitioners to request institution of IPR by the Board, meaning that a requester need not have a concrete stake in the outcome. Additionally, where the statue itself grants judicial review (such as in the case of an IPR), standing criteria of immediacy and redressability may be “relaxed.” Nonetheless, the Court explained that a party’s participation in the underlying IPR alone does not confer standing on that party to appeal the Board decision before an Article III court such as the Federal Circuit. The party seeking review (in this case Moderna) must show that it possesses requisite injury for standing to appeal.

Moderna asserted that substantial risk existed that Arbutus would bring an infringement suit against Moderna based on Moderna’s COVID-19 vaccine if the challenged patent was to remain valid. In support, Moderna submitted a declaration from its senior vice president and deputy general counsel that Moderna was working to harness proprietary mRNA technology and planned on releasing and applying for emergency use authorization for a COVID-19 vaccine in December 2020. The declaration also described how Arbutus’s conduct created a substantial risk that it would bring subsequent infringement action against Moderna. An example of such conduct was a series of public statements [...]

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IPR on Written Description? Claims Found Unpatentable Based on Lack of Entitlement to Priority Date

by | Dec 9, 2021 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) ruling, based on a written description analysis, that certain claims were invalid as anticipated by an earlier priority application from the same family. Indivior UK Ltd. v. Dr. Reddy’s Labs. S.A., Case Nos. 20-2073, -2142 (Fed. Cir. Nov. 24, 2021) (Lourie, J.) (Linn, J., concurring in part and dissenting in part).

Indivior’s patent, which issued from a fifth continuation application claiming priority back to 2009, claimed orally dissolvable films with therapeutic agents. Some of the claims recited numeric ranges, such as “about 40% wt to about 60% wt of a water-soluble polymeric matrix.” Instead of a range, one claim recited a specific amount of “about 48.2% wt” of the polymeric matrix. The patent’s specification did not expressly mention the claimed ranges or the specific 48.2% amount, but it did contain tables comprising quantities of polymer from which Indivior contended a person of ordinary skill in the art could calculate the percentage of polymer by weight.

Indivior argued that the polymer weight percentage limitations were supported by the priority application and, therefore, the patent was entitled to that priority date. Dr. Reddy’s contended that since the polymer weight percentage limitations were added later, an intervening patent publication (Myers) was prior art and anticipated the claims. Indivior did not contest that if Myers was prior art, it anticipated the claims. As a result, the Board’s decision on anticipation under 35 U.S.C. §102 turned on the priority analysis which, in turn, hinged on written description. The Board found that the tables disclosed formulations from which the “48.2% wt” could be calculated and, thus, claims reciting that limitation were not anticipated by Myers. However, the Board found that the claimed ranges (i.e., about 40% wt to about 60% wt) were not disclosed in the specification, and those claims were therefore anticipated by Meyers. Indivior appealed the Board’s anticipation finding, and Dr. Reddy’s appealed the no anticipation finding.

The Federal Circuit first analyzed the specification and concluded that there was no written description support for the broader range of “about 40% wt to about 60% wt.” The Court explained that the range was not disclosed in the specification, the specific values of 40% and 60% were not disclosed and there was another “inconsistent” teaching for weights of “at least 25%.” The Court noted that two specific tables in the specification “do not constitute ranges; they are only specific, particular examples. For written description support of a claimed range, more clarity is required.” The Court explained that “[h]ere, one must select several components, add up the individual values, determine the aggregate percentages, and then couple those aggregate percentages with other examples in the [] application to create an otherwise unstated range. That is not a written description of the claimed range.” The Court applied similar analysis in finding lack of written description for other claims reciting a slightly different range. Ultimately, the Court agreed that there was no written [...]

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NDA Forum Selection Clause Doesn’t Bar IPR in Response to Subsequent Infringement Suit

by | Oct 21, 2021 |

The US Court of Appeals for the Federal Circuit affirmed the denial of a preliminary injunction that would have forced the accused infringer to seek dismissal of its petitions for inter partes review (IPR) based on a forum-selection clause in an earlier nondisclosure agreement (NDA). Kannuu Pty Ltd. v. Samsung Elects. Co, Ltd., Case No. 21-1638 (Fed. Cir. Oct. 7, 2021) (Chen, J.) (Newman, J., dissenting).

Kannuu is a start-up that develops media-related products, including certain remote control search-and-navigation technology. Samsung explored licensing the technology and entered into an NDA with Kannuu. The NDA included a forum-selection clause, which stated that any legal action “arising out of or relating to this Agreement or the transactions contemplated hereby must be instituted exclusively” in a New York state or federal court. The negotiations were unsuccessful. Several years later, Kannuu sued Samsung for alleged infringement of five patents relating to the same technology and alleged breach of the NDA. Samsung petitioned for IPR of the five patents, and two of the petitions resulted in institution. Kannuu filed for a preliminary injunction to force Samsung to dismiss the IPRs that had been instituted. The district court denied the preliminary injunction. Kannuu appealed.

The Federal Circuit determined that the district court had not abused its discretion in denying the preliminary injunction, distinguishing between an NDA (which relates to confidentiality) and a patent license agreement (which relates to patent rights). The Court explained that because the forum selection clause was in an NDA, patent infringement defenses did not “arise out of or relate to this Agreement or the transactions contemplated thereby.” In other words, the patent infringement defenses were too attenuated from the subject matter of the NDA to be governed by the forum selection clause therein. The Court noted that whether any patent claim was held invalid would not affect Kannuu’s breach of contract claim arising from an alleged breach of the NDA.

In dissent, Judge Pauline Newman reasoned that a patent license was one of the “transactions contemplated” by the NDA. Therefore, she would have found that the patent infringement defenses were within the scope of the forum selection provision of the NDA.

Practice Note: The Federal Circuit noted how a failed licensing negotiation commonly leads to a subsequent infringement suit. Parties should craft provisions of the NDA regarding forum selection and related issues (e.g., choice of laws) to explicitly include or exclude potential infringement litigation from their scope.



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PTO’s Financial Benefits from IPR Don’t Render PTAB Unconstitutional

by | Oct 21, 2021 |

A split panel of the US Court of Appeals for the Federal Circuit concluded that the structure and functions of the Patent Trial & Appeal Board (PTAB) survived yet another constitutional challenge, this time based on the PTAB’s fee and compensation structure, lack of director review over the institution decision and applicability of the Takings Clause. Mobility WorkX, LLC v. Unified Patents LLC, Case No. 20-1441 (Fed. Cir.) (Dyk, J.) (Newman, J., dissenting).

With the dust barely settled after the Supreme Court’s ruling in US v. Arthrex, Inc. that the PTAB’s rendering of final written decisions without director review violated the Appointments Clause, this case presented a whole new slate of potential deficiencies with the PTAB. Although none of these deficiencies were initially raised with the PTAB, the Court exercised its discretion to nonetheless consider the challenges based on publicly available records that it could judicially notice.

The first challenge, already made in many other cases, was that the Federal Circuit remand for the director to consider a rehearing petition in view of Arthrex. This remedy, already afforded in other post-Arthrex challenges, was a simple grant. Yet, here, Mobility asked for something more, arguing that because the director did not resolve the inter partes review (IPR) within the 12-month statutory period, the director must confirm the claims or dismiss the IPR. The Court declined to rule on this issue, instructing Mobility to raise the issue on remand.

The issue receiving the most attention by the Federal Circuit was Mobility’s claims that the PTAB’s fee structure and bonus payments to administrative patent judges (APJs) based on their workload violated the Due Process Clause. According to Mobility, the APJs have a financial incentive to institute IPRs (i.e., significant fees), which provide a significant benefit to the agency. But the Court concluded that the APJs (even the leadership APJs) have only an attenuated role in budget control and thus have an insignificant interest in the financial health of the US Patent & Trademark Office as a whole. Because Congress holds the purse strings and the more significant budget responsibilities fall on the director and the president, the majority held that little connection existed between institution decisions and the agency’s overall financial health, which was consistent with the Court’s own precedent regarding reexaminations and other circuits’ precedents regarding executive agency fee collection. This attenuated connection differentiated the PTAB’s collected fees from Supreme Court cases that found due process violations based on the structure of certain executive courts presided over by a mayor who also held concomitant budget responsibilities.

Similarly, the Federal Circuit held that the APJs’ incentive to render a certain number of decisions—i.e., APJs receive bonus payments if they earn at least 84 decisional units, and the number of decisions is part of performance evaluation—did not provide an unconstitutional incentive to institute. The majority reasoned that ample alternative means existed for the APJs to earn their bonuses, namely, the ability to volunteer for non-America Invents Act (AIA) decisions (such as [...]

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