January 5, 2020
The year 2020 brought significant change to many sectors of life, and patent law was no exception. Throughout the year, the U.S. Supreme Court and the Federal Circuit handed down several notable decisions that have and will continue to create significant impact on patent litigation. A selection of these decisions is discussed below:
Supreme Court Reinforces PTAB’s Authority for Matters Closely Tied to IPR Institution: Thryv Inc. v. Click-To-Call Technologies LP & ESIP Series 2 LLC v. Puzhen Life USA LLC
On April 20, 2020, the U.S. Supreme Court held that the Patent Trial and Appeal Board (PTAB)’s time-bar determination for inter partes review is not reviewable on appeal.
Section 315(b) of the United States Code prohibits institution of inter partes review “if the petition requesting the proceeding is filed more than 1 year after … the petitioner … is served with a complaint alleging infringement of the patent.” 35 U.S.C. § 315(b). Although the PTAB had concluded that a petition for inter partes review filed by Thryv, Inc. was not time-barred under § 315(b) (and subsequently canceled a number of the patent owner’s claims), the Federal Circuit vacated that decision—holding that the petition was in fact time-barred. However, the Supreme Court reversed the decision of the Federal Circuit, holding that the PTAB’s application of § 315(b) is not reviewable under 35 U.S.C. § 314(d).
Justice Ginsburg, writing for the 7-2 majority, drew support from the language of § 314(d), which provides that “[t]he determination by the [USPTO] whether to institute an inter partes review under this section shall be final and nonappealable.” Thryv, Inc v. Click-To-Call Techs., 140 S. Ct. 1367, 1370 (2020). The Court also relied on its decision in Cuozzo Speed Technologies, LLC v. Lee, which interpreted Section 314(d) as precluding the PTAB’s institution decisions at least “where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” Thryv, 140 S. Ct. at 1373 (citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2141 (2016)) (emphasis added). The Court further relied on the statute’s “purpose and design,” which is “to weed out bad patent claims efficiently,” not “to save bad patent claims.” Id. at 1375.
The decision has and will likely continue to enlarge the PTAB’s decision-making authority with respect to matters “closely tied” to institution of inter partes review. For example, in May, the Federal Circuit affirmed a PTAB decision expanding on the Supreme Court’s precedent in Thryv. The PTAB canceled challenged claims as obvious over an argument that the petitioner did not properly satisfy the requirement of 35 U.S.C. § 312(a)(2) to identify all real parties-in-interest. ESIP Series 2 LLC v. Puzhen Life USA LLC, 958 F.3d 1378, 1383 (Fed. Cir. 2020). Because the Court found that the real-party-in-interest dispute involved “an ordinary dispute about the application of an institution-related statute,” the Court agreed that appellate review was barred by § 314(d). Id. at 1386 (quoting Thryv, Inc v. Click-To-Call Techs., LP, 140 S. Ct. 1367, 1373-74 (2020) (internal quotations omitted)).
Federal Circuit Clarifies Scope of IPR Proceedings: Samsung Electronics America v. Prisua Engineering Corp., Uniloc 2017 LLC v. Hulu LLC & Fanduel, Inc. v. Interactive Games, LLC
The Federal Circuit has also continued to clarify the scope of issues that may be raised, and by whom, in IPR proceedings before the PTAB.
For example, in February, the Federal Circuit affirmed the commonly understood principle that 35 U.S.C. § 311(b) permits a petitioner for IPR to raise patent challenges only for anticipation under 35 U.S.C. § 102 or obviousness under 35 U.S.C. § 103. Samsung Electronics Am. v. Prisua Eng’g Corp., 948 F.3d 1342, 1345 (Fed. Cir. 2020). In so doing, the Court directly rejected the assertion that the PTAB could invalidate patents for being indefinite under § 112. Although the conclusion creates tension with the PTAB’s obligation to construe the challenged claims (as claims that cannot be construed are indefinite), the Court instructed that the PTAB could alleviate this tension by “declin[ing] to institute the IPR, or if the indefiniteness issue affects only certain claims, [by concluding] that it could not reach a decision on the merits with respect to whether petitioner had established the unpatentability of those claims under section 102 or 103.” Id. at 1353. In such instances, the Court clarified that “the petitioner would not be estopped by 35 U.S.C. § 315(e) from challenging [the indefinite] claims under sections 102 or 103 in other proceedings.” Id. at 1353, n.3.
However, in July, the Court took opportunity to clarify that the PTAB’s authority to consider patentability issues is not limited to §§ 102 or 103 during an IPR involving substitute claims. Uniloc 2017 LLC v. Hulu LLC, 966 F.3d 1295 (Fed. Cir. 2020). In affirming the PTAB’s decision to reject substitute claims as not patent eligible under § 101, the Court looked to the plain language of the IPR statutes, which “plainly and repeatedly require the PTAB to determine the ‘patentability’ of proposed substitute claims.” Id. at 1304 (discussing 35 U.S.C. § 318(a)-(c)). The Court also distinguished between § 311, which is “confined to the review of existing patent claims” as opposed to § 316, which is a “separate adjudication-stage provision.” Id. at 1305. Thus, the Court affirmed the PTAB’s ability to determine patent eligibility of substitute claims under § 101.
Additionally, the Court this year shed light on the Board’s authority to evaluate an IPR petition, clarifying that the Board need not be restricted by the scope of the patent owner’s response. Fanduel, Inc. v. Interactive Games, LLC, 966 F.3d 1334 (Fed. Cir. 2020). By contrast, the Court emphasized that “it is the Board’s duty to independently assess the strength of a petitioner’s argument and evidence.” Id. at 1344 (emphasis added). To hold otherwise, the Court reasoned, “would effectively and impermissibly shift the burden to the patent owner to defend its claim’s patentability.” Id. at 1341 (citing, inter alia, In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1376 (Fed. Cir. 2016)).
Federal Circuit Narrows Venue Options for Certain Patent Litigants: Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc. & In re: Google LLC
On November 5, 2020, the Federal Circuit issued a decision that—if upheld1—will have significant consequences for venues available to Hatch-Waxman litigants. On appeal from the United States District Court for the District of New Jersey, the Federal Circuit ruled that “acts of infringement” under 28 U.S.C. § 1400(b) occur “only in districts where actions related to the submission of the ANDA occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated.” Valeant Pharmaceuticals North America LLC v. Mylan Pharmaceuticals Inc., 978 F.3d 1374, 1375 (Fed. Cir. 2020).
The decision arose roughly three years after the Supreme Court issued its landmark decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), where the Court held that the term “resides” in 28 U.S.C. § 1400(b) (the patent venue statute) refers only to a corporation’s state of incorporation.2 Judge O’Malley, writing on behalf of the panel in Valeant, criticized TC Heartland for “rais[ing] more questions than it answered”, among which was the question on appeal: “where ‘acts of infringement’ under § 1400(b) occur with respect to infringement claims brought pursuant to the Hatch-Waxman Act.” Valeant, 978 F.3d at 1375.
The dispute originated in the District of New Jersey, where defendant Mylan was sued under the Hatch-Waxman Act after submitting an ANDA to the FDA seeking approval to market a generic version of Jublia® (a fungal infection medication). Mylan—being neither incorporated nor having a principal place of business in New Jersey—moved to dismiss for lack of venue, arguing that, inter alia, venue was improper under § 1400(b) because the “only alleged act of infringement” (submission of the ANDA) did not occur in New Jersey. Id. at 1377. The district court agreed, concluding that planned future acts of infringement were not contemplated by § 1400(b).
On appeal, the Federal Circuit reasoned that the plain language of § 1400(b) (which contemplates venue where a defendant “has committed acts of infringement”) expressly “requires a past act of infringement”. Valeant, 978 F.3d at 1380 (emphasis in original). Thus, the Court held that “venue is not proper in all judicial districts where a generic product specified in an ANDA is likely to be distributed. It is proper only in those districts that are sufficiently related to the ANDA submission—in those districts where acts occurred that would suffice to categorize those taking them as a ‘submitter’ under § 271(e).” Id. at 1384. Of note, the Court expressly left unresolved the question of “what all relevant acts involved in the preparation and submission of an ANDA might be” for another day. Id. at 1384, n.8.
The decision is one of two decisions from the Federal Circuit in 2020 narrowing venue options for patent plaintiffs. In February, the Federal Circuit issued a mandamus order holding that venue was not proper for defendant Google in the Eastern District of Texas by virtue of Google-owned servers hosted within third-party datacenters. In re Google LLC, 949 F.3d 1338, 1340 (Fed. Cir. 2020). Relying on In re Cray, 871 F.3d 1355 (Fed. Cir. 2017), the Court rejected the contention that Google’s servers established a “place of business” as required by § 1400(b). The Court ruled that a “‘regular and established place of business’ requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged ‘place of business.’” Id. at 1345. Because the Court found that no agency relationship existed between Google and the datacenters storing the servers, the district court’s venue determination could not stand. Id. at 1346-47.
High Court to Determine Constitutionality of PTAB Judge Appointments: Arthrex Inc. v. Smith & Nephew Inc.
On October 13, 2020, the Supreme Court granted certiorari to review: (i) whether Administrative Patent Judges at the USPTO are principal officers within the meaning of the Appointments Clause; and (ii) if so, whether the Federal Circuit’s remedy of severing the application of 5 U.S.C. § 7513(a) with respect to the Administrative Patent Judges properly addresses the Appointments Clause violation. See Arthrex, Inc. v. Smith & Nephew, Inc., No. 19-1458, 2020 WL 6037208, at *1 (U.S. Oct. 13, 2020) (granting certiorari and consolidating cases). Although the case has not yet been set for oral argument, and a decision will not issue until 2021, the authors found the grant of certiorari in 2020 warranted inclusion in this summary.
1Valeant has filed a petition for rehearing en banc. Dkt. 75 at 15, 20.
2Thus, since TC Heartland, a corporation may be sued for patent infringement in only two categories of judicial districts: (i) those in the state in which it is incorporated and (ii) those in which it has a regular and established place of business and an act of infringement has occurred.