Intellectual Property

Putting The Review Back In Inter Partes Review

When a SCOTUS decision is rendered on a sexy patent topic, there is a good chance that the reaction will be both more intense and accelerated.

By Gaston Kroub on June 23, 2021 2:52 pm

Nothing stops the presses in the wild and wacky world of patent litigation with as much immediacy as two types of events. First, announcement of some huge verdict, usually in a patent case that got a lot of attention at some point in its lifecycle but whose trial may have gone relatively unnoticed by the larger patent community. A verdict in the billions, or even in the midnine figures, is often enough to get everyone snapped back into focus on the dispute forthwith. Second, a release of a Supreme Court opinion, even if the issue being decided is one that only a patent prosecutor and their mom could love. Any action by SCOTUS is enough to generate a flurry of immediate headlines, followed by a week or more of “instant” analysis and client alerts, trailed by a bevy of more developed thought pieces both commenting on the decision at hand as well as the ongoing implications of SCOTUS’ opinion for patent practice.

The foregoing is a good estimation of what happens post-SCOTUS patent opinion even for the narrowest of cases. When a SCOTUS decision is rendered on a sexy patent topic, there is a good chance that the reaction will be both more intense and accelerated. Which is precisely where we find ourselves in the wake of the SCOTUS opinion just yesterday in the closely watched United States v. Arthrex, Inc. case. (As usual, the SCOTUSblog offers great coverage of the case, both historically and with respect to a write-up summarizing the complicated decision.) As patent issues go, it is hard to imagine one as sexy as the constitutionality of the IPR system as currently constructed — which was precisely at issue in the Arthrex case. Since I assume that many of the readers of this column will have already either read the decision or at least some of the reporting on it, I will keep my immediate thoughts on the decision high-level. That said, I do think that many nuggets of interest are easily uncovered and worthy of our attention.

To start, while a clear majority of the court signed off on a way to address the alleged constitutional defect in the PTAB’s current setup, it is telling as well that there remains a split between the justices regarding the IPR system as a whole. For one, we have Chief Justice Roberts acknowledging the impact of IPR decisions right at the outset: “Billions of dollars can turn on a Board decision.” But while the majority of the court seemingly acknowledges that the current IPR system is the best way of having the executive branch deal with patent validity issues, there remains an undercurrent of disparate views of IPRs among the justices. Bookended of course by Justice Gorsuch, who believes the whole system needs to endure the wrecking ball’s bite.

The split in views is profound. While Roberts may represent the pragmatic end of the spectrum with respect to IPRs, we also have Justices Breyer and Gorsuch as polar opposites on the constitutionality of the system as a whole. For Gorsuch, Arthrex is the proverbial Band-Aid over the dissected aorta of due process concerns inherent in the IPR system put in place by Congress. In contrast, Breyer’s dissent for the liberal wing of the court highlights the fact that while he is on board with the remedy proposed by the majority — a remedy that preserves the status quo of the IPR process, but for the addition of an as-yet undefined layer of direct review by the PTO director — he would not even have found an unconstitutional issue in the first place. Quite a tangled web the justices weave with respect to their affection, or lack thereof, for the IPR system.

Let’s talk a bit about the “tailored approach” adopted by the majority of the court, directed as it was to fixing the constitutional issue (a smaller set of) the justices were willing to find in Arthrex. Since the majority held that the main fault of the IPR system as constructed was an improper cabining of the director’s authority — in that the director could not “review final PTAB decisions” or “upon review … issue decisions himself on behalf of the Board” — the proper remedy was thus to give the director that very power. In so doing, the court decided that it was better to make plain to everyone that IPRs are, at best, a quasijudicial process conducted under the auspices of a political appointee than it was to scrap the system as a whole.

Considering the importance of IP rights to the U.S. economy, it can’t be overstated how critical an appointment the role of PTO director will be going forward. At a minimum, we can and should hope that political candidates — particularly candidates for president or the Senate — will treat their approach to IP issues as important components of their platform, so that voters can know where they stand, just as we are given pre-election indications of a candidate’s view on taxes or health care. To illustrate how the focus on PTO director appointments may shift going forward, due to the blatant politicization of the role, we  can use an example of an entity potentially impacted by this SCOTUS ruling. Imagine a China-based technology company that finds itself a frequent filer of IPR petitions because of the onslaught of patent infringement claims lodged against the company in district courts nationwide. Imagine representing that company and now having to worry that favorable IPR decisions face reversal because of political considerations around U.S.-China relations. That’s just one simplified example, of course. The ramifications for both domestic and foreign companies operating in a variety of industries, from pharma to consumer products, are both significant and unique to each entity.

Ultimately, this decision is a great example of one that may seem limited at first glance, but actually portends significant change going forward. At a minimum, President Biden’s upcoming selection of a PTO director will come under heavier scrutiny relative to the level of attention it may have gotten pre-SCOTUS’ weigh-in here. In fact, there is an argument that the PTO director immediately becomes the political appointee capable of generating the most economic impact in the entire executive branch. Quite a hefty role and surely worthy of intensive lobbying effort regarding the nomination and confirmation by the usual suspects. Likewise, there promises to be intense attention on the procedures the PTAB puts in place to implement the new director reviews of final written decisions endorsed by the court. But for now, the selection of the next director is the main event. By putting the review back into IPRs, SCOTUS has at minimum bought us tickets to a firecracker of a nominations process.

Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.