Federal Circuit Clarifies Scope of 35 U.S.C. § 314(d) post-Cuozzo
The Federal Circuit’s decision on October 20, 2016 in Medtronic Inc. v. Robert Bosch Healthcare Systems reaffirms that it lacks the authority to review Patent Trial and Appeal Board (“PTAB”) vacaturs of PTAB institution decisions in inter partes reviews (“IPRs”).1 In so doing, the Federal Circuit relied on the Supreme Court’s recent language in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016).2
In Medtronic, patent challenger Medtronic, Inc. (“Medtronic”) petitioned the PTAB to institute an IPR against patents owned by Robert Bosch Healthcare Systems, Inc. (“Bosch”).3 Bosch’s reply argued that the petitions should be denied because Medtronic failed to name a real-party-in-interest, a statutory requirement.4 The PTAB nonetheless instituted the IPR, finding that Bosch had not established such non-disclosure by Medtronic.5
The PTAB subsequently granted-in-part Bosch’s motions seeking additional discovery regarding the real-party-in-interest issue.6 Based on this discovery, Bosch persuaded the PTAB that Medtronic was acting as a proxy for its subsidiary—a subsidiary that had already unsuccessfully attempted to invalidate the same patents at the PTAB.7 Accordingly, the PTAB vacated its institution decision and terminated the proceedings because of Medtronic’s failure to comply with the statutory disclosure requirement.8 The issue before the Federal Circuit, then, was whether the appellate court had jurisdiction to review the PTAB’s vacatur of its decision to institute the IPR.9
The U.S. Patent Act states that the PTAB’s determination “whether to institute an [IPR] shall be final and nonappealable.”10 Recently, the Supreme Court held that this language “bar[s] review in cases where the challenge ‘consist[s] of question that are closely tied’ or ‘closely related’ to ‘the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.’”11
Interpreting the language from the statute and the Supreme Court’s Cuozzo opinion, the Federal Circuit concluded that it was not permitted to review a reconsideration of a PTAB decision to institute IPR proceedings.12 Indeed, the Federal Circuit noted that “[i]t is difficult to conceive of a case more ‘closely related’ to a decision to institute proceedings than a reconsideration of that very decision.”13 Ultimately, the appellate court held that the PTAB’s vacatur in this case “is fairly characterized as a decision whether to institute proceedings, the review of which is barred by § 314(d).”14
The Federal Circuit also noted that the Supreme Court in Cuozzo did not categorically bar review of constitutional challenges to an IPR institution decision by the PTAB.15 Seizing this exception, Medtronic argued that the PTAB lacked statutory authority to reconsider its earlier decision instituting the IPR, thus implicating a constitutional question.16 However, the Federal Circuit rejected this argument, quoting a previous Federal Circuit case which held that “administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit statutory authority to do so.”17
The Federal Circuit’s Medtronic decision, while unsurprising in light of the Supreme Court’s Cuozzo holding, fans the flames of an already-contentious debate as to when (if ever) an IPR institution should be reviewable by the Federal Circuit. Congress has been actively attempting to legislate patent reform since passage of the America Invents Act in 2011. It will therefore be interesting to see whether—in the near future—Congress amends the unyielding language of § 314(d).