Last Week in the Federal Circuit (August 17-21): Can Patent Owners Set Aside Adverse PTAB Decisions in District Court APA Challenges? (Nope)

Last week, the Court did not have many precedential decisions as Washington, D.C., COVID‑19 or not, was in its usual August slowdown. Unlike the previous two weeks where we touched upon non-patent issues, we return (kind of, sort of) to patent law. So below we give our usual week’s statistics and case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 6

Non-precedential opinions: 3

Rule 36: 0

Longest pending case from argument: Bennett Regulator Guards, Inc. v. Atlanta Gas Light Co., No. 17-1555 (Aug. 17, 2020) (805) (after vacate and remand from the Supreme Court)

Shortest pending case from argument (non-Rule 36): Burkhart v. Wilkie, No. 19-1667 (Aug. 21, 2020) (80)

Case of the week: Security People, Inc. v. Iancu, No. 19-2118 (Aug. 20, 2020)

Panel: Judges Lourie, Wallach, and Hughes, with Judge Hughes authoring the opinion

Read this case if: you’re trying to be creative in setting aside a PTAB final written decision from an IPR.

Our return to patent law is a little tangential this week. There’s no discussion of 101, 102, 103, 112, or infringement. We make no mention of damages, fees, or inequitable conduct. We instead address a patent owner’s district court Administrative Procedure Act (APA) challenge to a PTAB final written decision cancelling its patent claims in an IPR.

By now you’ve heard this story before. Patent owner (Security People) sues accused infringer. Accused infringer challenges patent in IPR. PTAB finds patent claims unpatentable. The Federal Circuit affirms in a Rule 36. And the Supreme Court denies a petition for a writ of certiorari. Usually our story ends there (if not before the filing of a cert. petition), but in last week’s case, things took a bit of a turn.

Undeterred by the Federal Circuit’s affirmance of the PTAB’s decision to cancel its claims, Security People brought an APA action against the PTO in district court. It asserted that the IPR cancelling its patent claims violated its constitutional rights. Unfortunately for Security People, its goal of prevailing in a lofty constitutional challenge went unrealized. The district court dismissed the suit for lack of subject matter jurisdiction. It held that because the AIA confers exclusive jurisdiction for the Federal Circuit to review IPR decisions Congress precluded district court collateral review of those same decisions. And the district court explained that the Federal Circuit could have addressed Security People’s constitutional challenge on the direct appeal from the PTAB’s decision (of course, that would have required Security People to raise such a challenge).

On appeal, the Federal Circuit brushed aside Security People’s argument that the PTAB could not decide the constitutional issues. Even if the PTAB could not, the Federal Circuit held that it could have on direct appeal from the PTAB. The Court explained that there’s nothing unusual about a court reviewing the decision of an administrative agency to consider a constitutional challenge that the agency concluded the agency could not decide. Nor did the possibility of disputed factual questions tilt the analysis in favor of district court review. The Federal Circuit noted that it could take judicial notice of any necessary facts and the PTAB could resolve factual disputes even if it could not decide the ultimate constitutional question.

The Federal Circuit also rejected Security People’s suggestion that it could only raise a constitutional challenge after the Court had affirmed the PTAB’s final written decision and the PTO had issued the certificate cancelling the patent. The Court explained that this “assertion misapprehends the law defining when an agency action becomes final for judicial review.” For IPRs, the Court held that the “PTO’s decision-making process in an IPR is complete after issuance of the final written decision.” And even though judicial review may set aside that agency action, that possibility has no effect on finality. The Court held: “a judicially mandated outcome occurring because of judicial review intrinsically is not agency decision-making.” Nor did the absence of the PTO’s certificate cancelling the patent matter. “Issuing the certificate of cancellation is a non-discretionary formality: the PTO is statutorily compelled to ‘publish a certificate canceling any claim of the patent finally determined to be unpatentable’ in a final written decision.” (quoting 35 U.S.C. § 318(b).) (As an aside, the Court’s statements regarding finality and the purely ministerial function of the PTO issuing a certificate cancelling a patent could have relevance when parties dispute the effect of a final written decision in parallel proceedings, such as those before the ITC. But that’s perhaps a discussion for another case, or another day.)

“More generally,” the Court agreed with the district court that the Federal Circuit’s exclusive review of PTAB final written decisions precluded district courts from exercising jurisdiction over APA challenges to the constitutionality of such decisions. Not only did Congress provide the Federal Circuit with exclusive jurisdiction, it also “carefully considered the availability of judicial review in the AIA, opting to foreclose all judicial review of certain PTAB decision in IPRs.” And for the specific constitutional challenge that Security People raised, the Court held that it would have been fully capable of providing meaningful review had that challenge been raised in the appeal from the PTAB’s final written decision. Given that, the APA does not authorize “a collateral attack on an agency decision for which [a party] has already had the opportunity for comprehensive review.”