Daiichi Sankyo, Inc. v. Vidal

681 F.Supp.3d 490

DAIICHI SANKYO, INC., et al., Plaintiffs, v. Katherine K. VIDAL, Director of the United States Patent and Trademark Office, et al., Defendants.

1:21-cv-899 (LMB/JFA)

United States District Court, E.D. Virginia, Alexandria Division

Signed July 11, 2023

Igor Victor Timofeyev, Pro Hac Vice, Jeffrey Arthur Pade, Paul, Hastings, Janofsky & Walker LLP, Washington, DC, for Plaintiff Daiichi Sankyo, Inc.

Edward John Bennett, Williams & Connolly, Washington, DC, Joshua David Tully, United States Department of Justice, Washington, DC, for Plaintiff AstraZeneca Pharmaceuticals, LP.

Hugham Chan, Rebecca S. Levenson, United States Attorney's Office, Alexandria, VA, for Defendants.

MEMORANDUM OPINION

Leonie M. Brinkema, United States District Judge

In this civil action, plaintiffs Daiichi Sankyo, Inc. ("Daiichi Sankyo") and AstraZeneca Pharmaceuticals, LP ("AstraZeneca") (collectively, "plaintiffs") challenge the Fintiv instructions, a set of non-exclusive factors adopted by the United States Patent and Trademark Office ("PTO") and its Director ("Director") (collectively, "defendants") to aid in deciding whether to institute post-grant review of a recently issued patent when parallel litigation involving the same patent is ongoing in a federal district court. Before the Court are defendants' Motion to Dismiss for Lack of Jurisdiction [Dkt. No. 15] and Motion to Dismiss for Failure to State a Claim [Dkt. No. 16]. For the reasons that follow, the Motion to Dismiss for Lack of Jurisdiction will be granted, the Motion to Dismiss for Failure to State a Claim will be denied as moot, and this civil action will be dismissed without prejudice.

I. BACKGROUND

A. Statutory and Regulatory Background

1. Post-Grant Review

An inventor or other interested party has long been able to challenge the validity of existing patent claims in federal court. SAS Inst., Inc. v. Iancu, — U.S. —, 138 S. Ct. 1348, 1353, 200 L.Ed.2d 695 (2018). To provide an alternative to the costly, protracted litigation often involved in challenging patents in federal court, Congress enacted various administrative procedures for obtaining review of an existing patent by the PTO. See id. (discussing the development of the PTO's administrative remedies); Cuozzo Speed Techs., LLC v. Lee, 579 U.S. 261, 267, 136 S.Ct. 2131, 195 L.Ed.2d 423 (2016). These remedies include two adversarial, adjudicatory proceedings known as inter partes review, 35 U.S.C. § 311, et seq., and post-grant review, 35 U.S.C. § 321, et seq., which Congress created as part of the Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29, 125 Stat. 284 (2011). Post-grant review is the focus of this civil action.

Compared to inter partes review, which applies to patents that have been issued for some time, post-grant review was designed to "enable early challenges to patents, while still protecting the rights of inventors and patent owners against new patent challenges unbounded in time and scope," and was intended to "make the patent system more efficient" by providing a "meaningful opportunity to improve patent quality and restore confidence in the presumption of validity[.]" H.R. Rep. No. 112-98, at 47-48 (2011). Accordingly, a party seeking to challenge a patent via post-grant review must file a petition for post-grant review within nine months of the patent's issuance. 35 U.S.C. § 321(c). By contrast, a petition for inter partes review cannot be filed until at least nine months after a patent is granted. Id. § 311 (c). Post-grant review also permits broad challenges to a patent on almost any basis of unpatentability, id. § 321(b), whereas inter partes review is limited to challenges on the basis of prior art, id. § 311(b).

The Patent Trial and Appeal Board ("the Board"), an executive adjudicatory body within the PTO, is responsible for conducting both post-grant and inter partes review. The Board sits in three-member panels designated by the Director, and panel members are drawn from the Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and more than 200 administrative patent judges ("APJs").¹ 35 U.S.C. § 6(a), (c); see United States v. Arthrex, Inc., 594 U.S. 1, 141 S. Ct. 1970, 1977, 210 L.Ed.2d 268 (2021).

Post-grant and inter partes review are advantageous over district court litigation because they are conducted by Board panels of APJs who have relevant subject matter expertise for adjudicating complex scientific disputes compared to federal judges or lay jurors. And, whereas a patent challenger in federal court must prove patent invalidity by clear and convincing evidence, see Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91, 102, 131 S.Ct. 2238, 180 L.Ed.2d 131 (2011), the challenger in post-grant or inter partes review is required to prove unpatentability only by a preponderance of the evidence. 35 U.S.C. §§ 316(e), 326(e),

Like inter partes review, post-grant review begins with a petition filed by the party challenging the validity of a patent. Id. §§ 311(a), 321(a). After the petition is filed, the patent owner has three months in which to file a preliminary response. 37 C.F.R. §§ 42.107, 42.207. The Director then has three months in which to determine whether to institute review. 35 U.S.C. §§ 314(b), 324(c). The Director has delegated her authority to determine whether to institute review to the Board, see 37 C.F.R. §§ 42.4(a), 42.108, 42.208, and it is the Board's process of deciding whether to institute post-grant review that plaintiffs seek to challenge in this civil action.

Although the Director (and, by delegation, the Board) has the discretion to institute post-grant review, the threshold for institution is a finding by the Director that "it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable" or that the "petition raises a novel or unsettled legal question that is important to other patents or patent applications." 35 U.S.C. § 324(a)-(b). A petition must also satisfy several other filing requirements. See id. §§ 321-322. Even if these prerequisites are met, the Director is not required to institute review and retains the discretion to deny a petition. See Cuozzo, 579 U.S. at 273, 136 S.Ct. 2131.

In certain cases, the AIA dictates whether post-grant review can be instituted if there are ongoing administrative proceedings or parallel civil actions involving the same patent. Specifically, if the petitioner has previously filed a civil action in federal court challenging the validity of a patent claim before filing a petition for post-grant review of that patent, review "may not be instituted[.]" 35 U.S.C. § 325(a)(1). If the challenger has petitioned for post-grant review and subsequently files a civil action in federal court challenging the validity of a patent, the civil action must be stayed.² Id. § 325(a)(2). In other words, a challenger can use either post-grant review or a civil suit in federal court to seek review of a patent's validity but not both at the same time; however, filing a counterclaim in federal court that challenges the validity of a patent claim—for example, as a defense to a patent infringement suit—does not preclude the challenger from filing a simultaneous petition for post-grant review. Id. § 325(a)(3).

The AIA also explicitly authorizes the Director to determine how to manage concurrent "proceeding[s] or matter[s] involving the patent" that are before the PTO, including "providing for the stay, transfer, consolidation, or termination of any such matter or proceeding." Id. § 325(d). Other than these considerations, the AIA neither requires nor prohibits the Director from considering parallel proceedings, whether before the PTO or in federal court, in her decision whether to institute post-grant review. As relevant here, the statute is silent as to situations in which a party challenges patent validity as a defense to an infringement action in district court and also seeks post-grant review by the PTO.

Once the Director determines whether to institute post-grant review, her decision is "final and nonappealable," id. § 324(e); however, a dissatisfied party is permitted to "request rehearing on a decision by the Board," which is reviewed for an abuse of discretion. 37 C.F.R. § 42.71.

If post-grant review is instituted, the Board conducts a trial on the merits and must issue a final written decision, generally within one year, confirming or rejecting patentability of the claim or claims at issue, 35 U.S.C. §§ 326(a)(11), 328(a). Once this process begins, the petitioner is estopped from asserting in a civil action or administrative proceeding the invalidity of the same patent on "any ground that . . . [was] raised or reasonably could have [been] raised" during the Board's review. Id. § 325(e). A party who is dissatisfied with the Board's final written decision on patentability is permitted to appeal the decision to the United States Court of Appeals for the Federal Circuit. Id. § 329. The party may also seek rehearing of the decision by the Board. 37 C.F.R. § 42.71(d).

2. Director Review of Board Decisions

Although the AIA authorizes only the Board to grant a rehearing of its decision, 35 U.S.C. § 6(c), the PTO has established an interim process in which any party to a proceeding may request that the Director review a Board decision. See Interim Process for Director Review, United States Patent and Trademark Office, https://www.uspto.gov/patents/patent-trial-and-appeal-board/interim-process-director-review (last updated Sept. 22, 2022). The PTO created this interim Director review process in response to the Supreme Court's decision in United States v. Arthrex, 594 U.S. 1, 141 S. Ct. 1970, 210 L.Ed.2d 268 (2021), which found that the "unreviewable authority wielded by APJs," who were removable by the Director only for cause, in inter partes review is "incompatible with their appointment by the Secretary to an inferior office." Id. at 1985. Even though the...