Last Week in the Federal Circuit (September 27-October 1): IPRs, Ex Parte Reexams, and the APA

Last week the Federal Circuit judges geared up for their October argument session and perhaps enjoyed the beautiful fall weather in Washington. But the Court still found time to issue a dozen decisions in a wide range of patent and non-patent cases. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 4

Non-precedential opinions: 8

Rule 36: 0

Longest pending case from argument: Tie between Modern Sportsman, LLC v. United States, No. 20-1107, and McCutchen v. United States, No. 20-1188 (297 days each)

Shortest (non-Rule 36) pending case from argument: AMC Multi-Cinema, Inc. v. Fall Line Patents, LLC, No. 21-1051 (30 days)

Case of the week: In re Vivint, Inc., No. 20-1992

Panel: Chief Judge Moore and Judges Schall and O’Malley, with Chief Judge Moore writing the opinion

You should read this case if: you have a matter involving serial IPR petitions or ex parte reexamination requests

Fans of statutory interpretation or administrative law will find our latest case of the week to be an interesting read. In this case, a company filed three IPR petitions challenging one of Vivint’s patents. The PTAB declined to institute review on all three petitions. For two of the petitions, the Board determined that the petitioner had not shown a reasonable likelihood that it would prevail on at least one challenged claim. As for the third petition, the Board did not address the merits of the petition’s patentability arguments, but instead exercised its discretion to deny institution based on the petition’s similarity to the petitioner’s other IPR petitions.

The petitioner then requested ex parte reexamination of Vivint’s patent, asserting some of the same prior art and arguments that it had raised in its third IPR petition. The Board granted the reexamination request, concluding that the request raised a “substantial new question of patentability,” as required by 35 U.S.C. § 303(a), despite its overlap with the previously denied IPR petitions. Vivint responded by asking the Patent Office to dismiss the reexamination under 35 U.S.C. § 325(d), which permits the Patent Office to deny reexamination when “the same or substantially the same prior art or arguments previously were presented to the Office.” Vivint contended that Board’s rationale for denying the third IPR petition—its similarity to the previous IPR petitions—applied equally to the reexamination request and compelled dismissal of the reexamination under § 325(d). The Patent Office declined to dismiss the reexamination based primarily on its view that § 325(d) authorizes the Office only to reject a request for reexamination, not to terminate a reexamination once it has been ordered. An examiner ultimately determined that all of the challenged claims in Vivint’s patent were unpatentable, and the Board affirmed the examiner’s decision.

The Federal Circuit vacated and remanded with instructions for the Patent Office to dismiss the reexamination. To start, the Court rejected Vivint’s argument that the ex parte reexamination request did not raise a substantial new question of patentability because it “repackaged” the arguments advanced in the third IPR petition. The Court explained that a question of patentability does not cease to be “new” merely because it has been presented to the Patent Office. Rather, “a question of patentability is new until it has been considered and decided on the merits” by the Patent Office. And under that standard, all of the questions of patentability raised in the reexamination request were new, including two that were identical to grounds asserted in the third IPR petition. The Court reasoned that the Patent Office denied that petition based on its similarity to other previously filed petitions and did not “address the merits of the patentability arguments” in the third petition.

But the Federal Circuit went on to hold that the Patent Office’s decision to order ex parte reexamination was arbitrary and capricious in violation of the APA. As an initial matter, the Court rejected the Patent Office’s argument that § 325(d) decisions are “committed to agency discretion” and thus unreviewable under the APA. That provision’s “permissive language” was not enough to overcome the presumption of judicial review. (In IPRs, by contrast, statutory questions related to the Patent Office’s institution decision are generally unreviewable under the AIA’s no-appeal bar, as we have previously noted in The NeverEnding Story of the AIA’s No-Appeal Bar.) The Federal Circuit also disagreed with the Patent Office’s position that it lacked authority under § 325(d) to terminate an already-ordered reexamination. The Court explained that an agency generally has the inherent power to reconsider its own decisions, and nothing in the statutes and regulations governing ex parte reexaminations deprives the Patent Office of that authority. Finally, the Federal Circuit concluded that the Patent Office inconsistently applied § 325(d) by denying the third IPR petition based on its similarity to the petitioner’s other IPR petitions, but then granting an ex parte reexamination request that was also similar to those previous petitions.

The Court emphasized that this holding was “limited”: it noted that § 303(a) authorizes the Patent Office’s Director to order ex parte reexamination “[o]n his own initiative,” and that § 325(d) does not apply to this “own initiative” authority. Thus, the Court left open the possibility that the Director could order reexamination under this authority even when a challenger has previously filed similar requests or petitions. But because the Director did not invoke this “own initiative” authority in this case, the Court concluded that “the Patent Office should not have ordered reexamination, or, at minimum, should have terminated the reexamination once Vivint requested that it do so.”