Locke Lord QuickStudy: PTAB Issues Guidance on the Impact of SAS Institute on IPRs

May 2, 2018

The Patent Trial and Appeal Board (“PTAB”) recently issued guidance on the effects the Supreme Court of the United States’ decision in SAS Institute Inc. v. Iancu, No. 16-969 (U.S. Apr. 24, 2018) will have on the inter partes review (“IPR”) process. Locke Lord has previously written about the SAS Institute decision, as well as the Supreme Court’s companion decision in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712 (U.S. Apr. 24, 2018), upholding the constitutionality of IPRs.

A petitioner can challenge the validity of the claims of a patent by requesting the PTAB institute an IPR. Before SAS Institute, the PTAB could institute an IPR with respect to all or some of the claims the petitioner had challenged if “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition,” or deny institution of the IPR petition. 35 U.S.C. § 314(a). After SAS Institute, however, the PTAB—if it decides to institute an IPR at all—must decide the validity of all claims challenged by the petitioner. Given this significant change, the PTAB issued its guidance. We briefly summarize the guidance below.

Logically, if the PTAB has already instituted an IPR on all claims challenged by a petitioner, then it will proceed normally. For IPR petitions already filed but awaiting institution decision, the PTAB must decide to institute on all of the claims or decide not to institute the IPR at all.

If the PTAB has already instituted an IPR on only some of the challenged claims, however, then it may issue an order amending the institution decision to include all challenges raised in the petition. In this situation, the PTAB will have significant leeway in managing the proceeding. Additional time can be allotted for briefing, discovery, and oral argument with respect to the newly instituted claims. Further, because IPRs have a statutory twelve-month deadline for resolving the proceeding, extensions can now be granted on a case-by-case basis.

If parties to an IPR receive an order instituting additional claims, then the parties must meet and confer to discuss appropriate adjustments to the schedule. Parties must keep the PTAB apprised of any such changes, and any disputes between the parties must be presented to the PTAB during a conference call.

When the PTAB eventually issues its final written decision in the IPR, the validity of all challenged claims (those instituted originally and those added by amendment post-SAS Institute) will be decided.

The guidance provided by the PTAB shows a flexible approach in navigating the fallout from SAS Institute. Given that there must be a “reasonable likelihood that the petitioner would prevail” under 35 U.S.C. § 314(a), it is likely that there will be a renewed focus on the initial stages of the process. Petitioners should concentrate on filing the petition most likely to be granted; patentees should concentrate on preventing an IPR from ever being instituted in the first place.

Petitioners will also need to consider in their IPR strategy the possibility that an IPR petition will result in a decision confirming the validity of at least some of the patent claims and the effect that will have on their litigation strategy due to statutory estoppel effects. Previously, claims on which the PTAB did not institute an IPR were not subject to estoppel. Now, with the requirement that IPRs must address all claims that are the subject of the petition, the PTAB may institute on claims for which they do not believe there is “reasonable likelihood that the petitioner would prevail.” Those claims may be more likely to survive the IPR proceedings and petitioners would be subject to IPR estoppel effects. Likewise, patentees may also need to focus their IPR strategy toward claims that will be useful in litigation and more likely to survive the IPR.

Another interesting issue the SAS Institute decision raises is its effect on the appeal of PTAB decisions that do not address all claims challenged in the initial petition. During the oral argument on April 30, 2018 in Jazz Pharmaceuticals, Inc. v. Amneal Pharmaceuticals, LLC, No. 17-1671, the Federal Circuit devoted about five minutes before hearing the merits of the argument to hear the parties discuss whether the matter should be sent back to the PTAB for determination of non-instituted claims. We will have to wait for a decision in the Jazz v. Amneal appeal to hear what the Federal Circuit has to say about this issue, if anything at all.