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On November 27, 2017, the Supreme Court heard oral argument in SAS Institute Inc. v. Matal, No. 16-969. At issue is whether in inter partes reviews (“IPRs”), the Patent Trial and Appeal Board (“PTAB”) is required to issue a final written decision as to every patent claim challenged by the petitioner, or whether the PTAB instead can issue a final written decision as to some (but not all) claims challenged in the petition.
SAS focused on the language of 35 U.S.C. § 318(a), which provides, in relevant part, that the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” That language, SAS argued, clearly requires the PTAB to issue a final written decision on all claims challenged in the original petition, not just on the claims on which IPR has been instituted. Justices Ginsburg and Sotomayor recognized that this argument implicitly requires a conclusion that the PTAB has a binary choice: It can either institute an IPR on all claims challenged by the IPR petition or decline to institute an IPR at all, but it cannot institute an IPR on only some of the claims challenged in the petition (i.e., a “partial institution”). However, Justice Ginsburg questioned SAS’s entitlement to raise this argument, since 35 U.S.C. § 314(d) bars an appeal from the PTAB’s institution decision. Assuming that SAS was not challenging the propriety of the partial-institution decision itself, Justice Sotomayor questioned the practicality of requiring a final written decision with respect to claims that were not part of the instituted IPR. SAS pointed out that the institution decision explained in detail the reasons for not instituting IPR on some of the claims, and that the PTAB easily could have incorporated that reasoning into the final written decision. By incorporating the reasoning into the final written decision, SAS then would have been entitled to judicial review of the PTAB’s rejection of SAS’s challenge to those claims.
Justices Sotomayor and Kagan appeared concerned with the consequences that they believed would follow from a ruling in SAS’s favor. For example, Justice Sotomayor expressed concern that adoption of SAS’s position would lead to IPR petitioners explaining in detail the basis for its challenge only with respect to one claim, and then tacking on a request for IPR with respect to other claims in the patent. Justice Kagan questioned whether SAS’s position would additionally require the PTAB to adjudicate the patentability of claims that are cancelled after the submission of the IPR petition. Justice Kagan further remarked that a ruling in favor of SAS would be incongruous with the significant deference that the statute gives to the PTO with respect to IPR procedure. Additionally, Justice Kennedy questioned whether the PTAB could get around a ruling in favor of SAS simply by calling the parties and informing the IPR petitioner that IPR would be instituted only if the petitioner dropped its challenge to certain claims. Finally, Justice Breyer suggested that while there was support in the statutory language for SAS’s position, the PTAB’s policy of issuing final written decisions only with respect to claims on which IPR was instituted is more practical.
Defending the PTAB’s policy was Jonathan Bond from the U.S. Solicitor General’s Office. Justice Alito seemed skeptical of the policy, pointing to the plain language of § 318(a) and expressing doubt that this language leaves room for the PTAB to issue a final written decision on only a subset of the claims challenged in the IPR petition. Justice Gorsuch also seemed skeptical of the Government’s position with respect to partial-institution decisions, suggesting that the statute envisions IPR to be instituted on all challenged claims as long as there is a reasonable likelihood that at least one of those challenged claims is unpatentable. Justice Breyer, in contrast, suggested that the language of the statute could reasonably be interpreted to require a final written decision only with respect to the claims on which IPR was instituted. Justice Sotomayor seemed to agree with Justice Breyer’s reading, and additionally pointed out that the language of § 318(a) (“any patent claim challenged by the petitioner”) differed from language in § 314 (“claims challenged in the petition”), and that § 318(a) therefore is reasonably read to refer only to claims that are part of the instituted IPR.
Although the Court appears to be divided, it seemed likely that a majority of the Court will vote to uphold the PTAB’s current practice. Only Justices Alito and Gorsuch expressed true skepticism of the PTO’s reading of § 318(a). Therefore, the most likely outcome is that a majority of the Court will give deference to the PTO’s interpretation of the statute.