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IP Alert: Federal Circuit Finds PTAB's Determination That a Patent Qualifies for CBM Review Is Not Appealable

November 24, 2020

On November 17, in SIPCO, LLC v. Emerson Electric Co., the Federal Circuit held that the Supreme Court’s decision in Thryv, Inc. v. Click-to-Call Technologies, LP makes clear that the Patent Trial and Appeal Board’s (PTAB’s) threshold determination of whether a patent qualifies for covered business method (CBM) review is a decision that is nonappealable. The Federal Circuit thus extended the Supreme Court’s decision in Thryv regarding appeals from inter partes review (IPR) proceedings to CBM proceedings.

The SIPCO case was before the Federal Circuit for a second time, after the Supreme Court reversed the Federal Circuit’s earlier decision and remanded in light of the Court’s decision in Thryv.

In Thryv, the Supreme Court held that challenges based on 35 U.S.C. § 315(b)’s time-bar provisions are nonappealable in IPRs. Under section 315(b), an “inter partes review may not be instituted if the petition . . . is filed more than 1 year after the date on which the petitioner . . . is served with a complaint alleging infringement.” Relatedly, however, section 314(d) provides that “[t]he determination . . . to institute an inter partes review under this section shall be final and nonappealable.” Reasoning that the time-bar provisions of section 315(b) expressly relate to the PTAB’s decision to institute an IPR and that the PTAB’s institution decisions are nonappealable under section 314(d), the Supreme Court held that appeals based on section 315(b) are barred under section 314(d).

In SIPCO, the Federal Circuit held that the Supreme Court’s decision in Thryv makes clear that the determination of whether a patent qualifies for CBM review is nonappealable. The statute governing CBM review includes a similar “no appeal” provision in section 324(e) that prohibits appeals regarding the determination to institute the CBM review proceeding. The Federal Circuit held that the PTAB’s decision on whether a patent qualifies for CBM review is expressly and exclusively tied to the decision to institute. Consequently the Federal Circuit, finding Thryv to be indistinguishable, held that the “no appeal” provision of section 324(e) prohibits appeals regarding whether a patent qualifies for CBM review. Thus, the Federal Circuit found it was precluded from reviewing SIPCO’s challenge to the PTAB’s determination that SIPCO’s patent was eligible for CBM review, being nothing more than a contention that the PTAB should have declined to institute CBM review.

The SIPCO decision is yet another Federal Circuit case following Thryv that expands the PTAB’s nonreviewable discretion in making determinations in post-grant proceedings. For example, in ESIP Series 2, LLC v. Puzhen Life USA, LLC, the Federal Circuit held that section 314(d) precludes review of the PTAB’s real party-in-interest determinations under section 312(a)(2). The Federal Circuit further held in Fall Line Patents, LLC v. Unified Patents, LLC that mandamus review is unavailable to address real party-in-interest determinations. In Fitbit, Inc. v. Valencell, Inc., the Federal Circuit also held that the PTAB’s acceptance of a “tardy” petition and request for joinder at the institution phase is not reviewable on appeal. The Federal Circuit has applied this reasoning in several other nonpublished cases.

The Federal Circuit has differentiated Thryv in a single case, holding in Facebook, Inc. v. Windy City Innovations, LLC that section 314(d) does not preclude review of the PTAB’s discretion to join a follow-on petition filed by the same PTAB petitioner “as a party” under section 315(c). There, the Federal Circuit reasoned that “Windy City's cross-appeal does not challenge the Board’s decision to institute Facebook's follow-on petitions, but challenges whether the Board’s joinder decisions had exceeded the statutory authority provided by § 315(c)” as to the manner in which the already-instituted IPR proceeded.

Even though petitions for CBM review can no longer be filed, the SIPCO decision is significant because it shows the breadth of unreviewable discretion that the PTAB has in making decisions that are related to the institution decision. This decision not only expands the Supreme Court’s decision in Thryv to other post-grant proceedings such as CBM review, but also holds that the PTAB’s decisions regarding whether a patent is even eligible for the post-grant review proceeding may not be appealed.

The ongoing expansion of the PTAB’s unreviewable authority to institute should give both petitioners and patent owners reason for concern. Under this body of precedent, dissatisfied parties before the PTAB are left to request reconsideration of the institution decision in front of the very same panel that issued the decision. This lessens the likelihood that legitimate errors will be corrected. In Cuozzo Speed Technologies, LLC v. Lee, the Supreme Court allowed that certain cases might be reviewable, if the PTAB engaged in “shenanigans” by depriving a party of due process or by exceeding its statutory limits. Post-Thryv, the Federal Circuit has not yet applied Cuozzo’s exception to the section 314(d) no-appeal rule.  

For more information on this ruling, please contact Fitch Even attorneys David A. Gosse or Zachary Van Engen, coauthors of this alert. 
 

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