SAS "Ground" Rules

In a quartet of recent decisions, the Federal Circuit has confirmed that SAS Institute extends beyond mandating the inclusion of all claims when trial is instituted, and extends to all grounds as well.  These decisions confirm that the Board’s “binary choice” is to institute (or not) on all claims challenged in a petition, as well as all grounds asserted in a petition.

In Polaris Indus. v. Arctic Cat, Inc., decided May 30, 2018, the patent owner appellant moved to terminate its own appeal and to remand for the Board to address non-instituted claims and grounds in light of SAS.  The appellee Arctic Cat objected, arguing that a patent owner had no right to request remand following SAS and that Polaris had waived its right to argue against partial institution by failing to preserve the argument in its briefing below.  The court disagreed with Artic Cat and granted the motion.  In a non-precedential decision, the court ruled that a patent owner may seek remand to obtain the benefit of a final written decision that addresses all challenged claims and all grounds.  The court also ruled that there was no waiver, finding that SAS was a significant change in the law that excused Polaris’ failure to contest the partial institution below.  Prior to SAS, “any attempt to argue against partial institution would have been futile under the Board’s regulations and our precedent.” Slip op. at 4.  Consequently, the court remanded “to allow the Board to consider the noninstituted portions” of the petition. Id.

In PGS Geophysical v. Iancu, decided June 7, 2018, the Board had partially instituted trial in three IPRs, on “only some of the grounds.”  Slip op. at 2.   Although both sides appealed, petitioner WesternGeco settled with patent owner PGS and withdrew.  The Director of the PTO intervened to defend the Board’s decision.  On the merits, the court affirmed the Board’s decisions on obviousness.  But before reaching the merits, the court considered its own jurisdiction in light of SAS, “which held that the IPR statute does not permit a partial institution on an IPR petition of the sort presented here.”  Slip op. at 7.  The court noted that neither PGS nor the Director, nor WesternGeco, asked for any SAS-based relief. Id.  Significantly, the court wrote that “[e]qual treatment of claims and grounds for institution purposes has pervasive support in SAS.”  Slip op. at 7.  The court read SAS “as interpreting the statute to require a simple yes-or-no institution choice respecting a petition, embracing all challenges in the petition.”  Slip op. at 8.  Nevertheless, the court concluded that the existence of non-instituted grounds “does not deprive us of jurisdiction” to decide the appeals, while expressly noting that “a different conclusion might be warranted in a case in which a party has sought SAS-based relief.”  Slip op. at 9, 11.

In Medtronic Inc. v. Barry, decided June 11, 2018, at issue were the Board’s final written decisions in IPR2015-00780 and -00783, which had not addressed every ground raised in the petitions.  On the several grounds that the Board did address and that were subject to the appeal, the court affirmed in part and vacated in part.  Slip op. at 2.  In a footnote, the court addressed the non-instituted grounds, and, acknowledging the Board’s April 26, 2018 Guidance on the impact of SAS on AIA trial proceedings, wrote that “we understand . . . that [the Board] will consider the previously non-considered grounds on remand.”  Slip op. at n.1. The court thus effectively blessed the Board’s guidance in reading SAS as extending to grounds as well as all claims.

The same day that Medtronic was decided, the court in a non-precedential decision decided Nestle Purina Petcare Co. v. Oil-Dri Corp. of America.  The Board had instituted trial on all challenged claims but only on one of five asserted grounds.  Slip op. at 1-2.  After appellate briefing on the merits was completed, and also after appellant Nestle had moved for remand in view of documents newly-produced in co-pending litigation which Nestle argued was relevant to the PTAB’s analysis, both parties filed Rule 28(j) letters of supplemental authority seeking remand in light of SAS and Polaris.  “Both parties agree that remand is appropriate to consider all petitioned grounds of unpatentability and the newly discovered evidence.”  Slip op. at 3.  The court agreed that “remand  is necessary and appropriate in light of SAS and Polaris.”  Slip op. at 3.  Accordingly, the court granted the joint request for remand pursuant to SAS and ordered the Board on remand to “take appropriate action consistent with SAS.”  Slip op. at 4.

Consequently, in four different cases the court has held that SAS extends to grounds asserted in an IPR petition and in three of those cases the court has remanded for the Board to address non-instituted grounds.

For further discussion on the developments described above, please join Foley & Lardner LLP for a web conference on Thursday, June 21. Click here for more information and to register.