PTAB / Federal Circuit / PTAB Procedures and Rules

Federal Circuit maps out two-step approach, decides not to dance: Split panel refuses to review applicability of assignor estoppel to IPRs

Published September 30, 2016

In Husky Injection Molding Sys. v. Athena Automation Ltd., a split panel of the Federal Circuit dismissed a patent owner’s appeal of the PTAB’s final written decision in an IPR where patent owner asserted that institution should have been denied based on assignor estoppel.

The majority’s opinion cites the Supreme Court’s Cuozzo decision as setting up a two-step analysis for determining whether a PTAB IPR institution decision is reviewable:

First, the Federal Circuit must determine whether the challenge is “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review” – thus foreclosing review – or if it instead “implicate[s] constitutional questions,” “depend[s] on other less closely related statutes,” or “present[s] other questions of interpretation that reach, in terms of scope and impact,” “well beyond ‘this section,’” in which case its “authority to review the decision to institute appears unfettered.”

Second, even in decisions grounded in a closely related statute, the Federal Circuit must determine if the challenge is “directed to the Board’s ultimate invalidation authority with respect to a specific patent,” in which case the decision is also reviewable.

In the underlying IPR proceeding, Husky had argued that the doctrine of assignee estoppel barred institution of an IPR brought by petitioner Athena, a company formed by a co-inventor and assignor of the challenged patent (also a former owner and president of Husky itself). In instituting the IPR, the Board found that in light of the broad language of 35 USC § 311 – providing that “a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent” – assignors are not estopped from petitioning for IPR review. In its final written decision, the Board went on to reject most, but not all, challenged claims. Husky appealed to the Federal Circuit, and Athena across-appealed.

On appeal, under the first step of its analysis, the panel majority held that the Board’s institution decision rested on its interpretation of 35 USC § 311, and that § 311 is “closely related” to any decision to initiate inter partes review, foreclosing Federal Circuit review. Under the second step of its analysis, the majority held that, as in the previous Achates decision, the question of assignor estoppel is not “directed to the Board’s ultimate invalidation authority.” Rather, it is limited to “who may petition for review,” a question that “falls outside of the narrow exceptions to the otherwise broad ban on our review of the decision whether to institute.” Thus, the panel found that it lacked jurisdiction to review the Board’s institution decision, resulting in dismissal of Husky’s appeal.

Judge Plager dissented from the dismissal, warning against limiting the reviewability of a Board decision “simply because the Board may attribute its decision to an interpretation of a ‘related’ statute.” He questioned the majority’s characterization of the Board’s decision as interpreting a “related statute,” pointing out first that assignor estoppel is a common law doctrine. He further argued that “[t]he decision to institute inter partes review is governed primarily by the specifics of § 314(a)–(c),” so even if the Board’s decision was based on an interpretation of 35 USC § 111, “[i]It would not be beyond reason to consider § 311 … a ‘less closely related statute.’” He further argued that in view of the questions related to assignor estoppel and its interplay with 35 USC § 111, the institution decision “present[ed] other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Finally, he cited  Judge Reyna’s concurring opinion in the recent WiFi v Broadcom case, stating that in applying Cuozzo, “there is a range of reviewable issues that this court is obligated to consider. Examples may include, among others, filing deadlines and joinder and estoppel issues.”

Because Athena prevailed in its cross appeal on substantive validity issues, the case was remanded to the Board for further proceeding. So, any challenge to the majority’s decision vis-à-vis assignor estoppel – or to its broader “two-step” approach to determining jurisdiction over challenges to IPR institution decisions –­ will have to wait.


Posted on 09/30/2016 by Derrick W. Toddy