Federal Circuit Mostly Affirming Patent Board Validity Rulings

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May 18 — The Federal Circuit has overwhelmingly affirmed the rulings of the Patent Trial and Appeal Board on the validity of patents, webinar speakers said May 18.

“The odds are clearly against success when you bring a PTAB case to the Federal Circuit,” said Andrew Williams of McDonnell, Boehnen, Hulbert & Berghoff LLP, which sponsored the webinar.

Williams noted that more than half of the decisions by the U.S. Court of Appeals for the Federal Circuit on PTAB cases were Rule 36 affirmations, which are orders in which the court doesn't provide a written opinion explaining why the PTAB's judgment is affirmed.

“For the precedential opinions, the rulings were more evenly divided between affirmed and denied,” Williams said.

The webinar was titled “The PTAB Front and Center at the Federal Circuit and the Supreme Court: The First Year of Appellate Review.”

Life Sciences Groups, PTAB

The webinar and the data it presented spanned all industry sectors. But the life sciences industry has been concerned that at least initially it appeared that the majority of rulings invalidated life sciences patents, confusion existed about the board's purpose and scope and the board's proceedings were inconsistent.

The Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) separately filed amicus briefs in a challenge to the Federal Circuit's decision in In re Cuozzo Speed Techs., LLC, which in part addresses the different standards currently used by the PTAB and federal district courts to assess patent validity. The Supreme Court is expected to issue a ruling in the case by the end of June.

BIO and PhRMA supported the position that, rather than the PTAB using the broadest reasonable interpretation (BRI) standard in analyzing the construction of a patent claims, it should employ the same “plain and ordinary meaning” standard used by federal district courts (10 LSLR 09, 4/29/16).

Overwhelming Affirmations So Far

Williams said that the Cuozzo decision on Feb. 4, 2015, was the first ruling by the Federal Circuit on a challenge to a PTAB decision. Since then, he said, it has decided more than 93 inter partes review (IPR) and covered business method patent appeals.

He presented the following McDonnell, Boehnen, Hulbert & Berghoff analysis of the Federal Circuit's rulings on PTAB decision appeals since Cuozzo: Out of 27 precedential opinions, 15 affirmed the PTAB decision and 12 affirmed in part or reversed in part; there were 11 non-precedential opinions, of which seven affirmed the PTAB decision and four affirmed/reversed in part/vacated-in-part/remanded; and there were 55 Rule 36 affirmations.

“The latest decisions show more reversals-in-part among the precedential opinions,” Williams said. “So it's clear that the Federal Circuit isn't rubber-stamping the PTAB's rulings.”

The IPR has been much more popular than expected, and the PTAB has been struggling with a “tsunami of cases,” Williams said. “There have been concerns that the PTAB has had to hire so many more APJs [administrative patent judges] that there has been a lack of consistency in decisions, and there have been so many nonprecedential decisions that this has sparked consistency concerns as well,” Williams said.

Insights From Cuozzo

In Cuozzo, Williams said, the high court will address two of the more controversial aspects of these PTAB proceedings: the use of the BRI standard in construing claims, and the final and non-appealable nature of the decision to institute a PTAB trial.

Williams and his McDonnell, Boehnen, Hulbert & Berghoff colleague James Lovsin offered some insights derived from the Cuozzo oral argument.

Williams said, “The justices appeared to fall into two camps: one headed by Chief Justice John G. Roberts Jr., who asked why should the PTAB be able to use the BRI just because they use it in their other proceedings, and Justice Stephen Breyer who seemed overly worried about the ‘patent troll' problem [referring to those who acquire patent ownership, not to make products, but to make money from threatening other patent owners with infringement litigation]. Breyer was following what he said was another purpose of the America Invents Act [which created the PTAB and the IPR]: to undo the harm that the PTO has been doing by issuing so many unjustified patents.”

Lovsin said that the Cuozzo oral argument seemed dominated by the BRI discussion and that there were only a few questions about reviewability.

He predicted, however, that the Supreme Court may rule that, when the Federal Circuit reviews an appeal of a PTAB final decision, the review could be allowed to consider the PTAB's authority to invalidate the claims that are at stake.

“The practical effect of this would be that the court would likely apply deference to the PTAB's fact-finding related to” its decision on whether to institute trial, Lovsin said.

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at rkubetin@bna.com