Court Won't Review USPTO Denial of Inter Partes Review

21 April 2014 PharmaPatents Blog

In a decision issued on April 18, 2014, Judge Payne of the U.S. District Court for the Eastern District of Virginia granted the USPTO’s motion to dismiss the case brought by Dominion Dealer Solutions, LLC to challenge the USPTO’s decisions denying petitions to institute inter partes review of five patents granted to Autoalert, Inc. As I predicted in this article, the decision does not come as a surprise in view of  the statutory language of 35 USC § 314 and the court’s previous decision dismissing Versata’s challenge of the USPTO’s decision to institute post grant review of its patent.

Dominion’s Complaint

According to Dominion’s complaint, on October 1, 2012, Autoalert, Inc. sued Dominion for infringement of patents directed to “systems and methods for assessing and managing financial transactions.” On March 28, 2013, Dominion filed petitions for inter partes review of the five patents in suit. Dominion also sought a stay of the district court proceedings, which was granted on May 22, 2013. On August 12 and 15, 2013, the USPTO denied the petitions.

According to the complaint, the USPTO Patent Trial and Appeal Board (PTAB) improperly substituted its own judgment and its own understanding of the cited references for that provided by Dominion’s expert in the declarations submitted in support of the petitions. Dominion asserts that the USPTO violated the Administrative Procedures Act (5 USC § 706(2)(A) and (C)) by denying the petitions in the face of “unrebutted evidence.”

The District Court Decision

The district court cited 35 USC § 314(d) of the inter partes review statue, which  includes the following provision:

(d) No Appeal.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

The court rejected Dominion’s arguments that this case was not an “appeal” (e.g., not an appeal to the Federal Circuit), both because Dominion had characterized the proceeding as an “appeal” to the California court where the original patent litigation had been stayed and in its papers filed in the proceeding and because the case, at essence, was an appeal of the USPTO’s actions.

The court also rejected Dominion’s efforts to distinguish the Versata case, where the district court held that Versata could not challenge the USPTO’s decision to institute post grant review of its patents.

[T]he plain language of the statute, “the determination . . . whether to institute an inter partes review,” must necessarily encompass both potential determinations [e.g., decisions to grant and decisions denying inter partes review'].

Will The Federal Circuit Have The Final Say?

 

Perhaps ironically, the Federal Circuit is likely to have the final say in both this case and Versata, and likely will conclude that there is no judicial review of a USPTO PTAB decision to grant or deny a petition to institute inter partes review or post-grant review. Nevertheless, it will be interesting to see if the court leaves open the possibility for review in unusual circumstances.

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