By Shaun R. Snader[1] & George C. Beck
The post-grant proceedings established by the America Invents Act – inter partes review (IPR), covered business method (CBM) review, and post-grant review (PGR) –promise faster, less expensive results as compared to district court litigation, and an adjudicative body with expertise in patent law. A significant tradeoff to these new post-grant proceedings is the risk of estoppel.
The estoppel provisions provide that a petitioner in a post-grant proceeding that results in a final written decision as to any claim of a patent cannot assert in district court or International Trade Commission Section 337 litigation an invalidity argument as to the claim “that the petitioner raised or reasonably could have raised during that post-grant review.” 35 U.S.C. §§ 315(e)(2)[2] and 325(e)(2). Thus, an accused infringer may choose to raise invalidity defenses at the USPTO, but risks being precluded from raising the same defenses in district court or the ITC.
In view of the risk of estoppel, a petitioner often wishes to raise all available grounds for invalidity. However, faced with a large number of petitions presenting multiple grounds of invalidity, the Patent Trial and Appeal Board (PTAB or Board) has declined to institute review on grounds the Board deems to be “redundant.” See Liberty Mutual Insurance Co., v. Progressive Casualty Insurance Co., CBM-2012-00003, Order (Redundant Grounds), (Oct. 25, 2013) (“Liberty Mutual Order”). As a result, some grounds of invalidity may not be considered by the PTAB, even if timely raised and regardless of merit. It remains unclear whether this exercise of the Board’s discretion may result in a petitioner entirely losing the ability to assert non-adopted grounds in defense of a subsequent patent infringement claim in district court or the ITC.
The Board’s Discretion to Institute Review
The Board has designated the Liberty Mutual Order as “representative.” Relying on 37 C.F.R. §42.20(c), the Liberty Mutual Order held that the petitioner must show that a ground of invalidity must be not be redundant to other grounds presented. The Board has designated the Order as “representative” and has found grounds to be “redundant” in many proceedings. Consequently, while instituting trial in the proceeding, it has declined to institute on all asserted grounds for reasons of “administrative necessity.” See United States Postal Service v. Return Mail, Inc., CBM2014-00116, Paper 24, p. 33 (Feb. 20, 2015) (“USPS”); HTC Corp. v. Flashpoint Tech., Inc., IPR 2014-01249, Paper 12, March 10, 2015) (“HTC”). The Board’s decisions in USPS and HTC illustrate the Board’s approach to multiple grounds of invalidity and further clarify the Board’s justification for refusing to grounds deemed to impose an administrative burden.
In USPS, the Board instituted a covered business method review of certain claims of a Return Mail, Inc. patent based on the U.S. Postal Service’s and United States’ petition, but the Board did not institute trial on all grounds of invalidity raised by the petitioner. See CBM2014-00116, Paper 11. The Board denied certain grounds for institution “for reasons of administrative necessity to ensure timely completion of the instituted proceeding.” Paper 11 at 32-33. In response, the petitioner requested hearing and argued that the Board lacked authority to deny grounds based on administrative necessity.
The Board denied the request for rehearing and held that it has discretion to institute or not institute review as to each ground of review raised in the petition, regardless of merits, based on § 324(a), which sets forth the standard for instituting a post-grant review. According to the Board, section 324(a) “is written in permissive terms—identifying when the USPTO is authorized to institute a post-grant review, but not requiring a review to be instituted. Thus, Congress has given the [USPTO] discretion whether to institute a review or not institute a review.” Paper 24 at 3. The Board also relied on its own rules permitting the PTAB...
