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High Court To Scrutinize Appeals Of PTAB Time-Bar Decisions

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Law360

By Ryan Davis

Law360 (December 5, 2019, 4:27 PM EST) -- The U.S. Supreme Court will hear arguments Monday in a case that will determine the extent to which Patent Trial and Appeal Board decisions instituting review of a patent are subject to appellate review and puts a spotlight on the power of administrative agencies.

The justices will examine the Federal Circuit’s holding that appeals of PTAB decisions that inter partes review is not time-barred are permitted. The petitioner in the case argues that appeals of those rulings are clearly barred by the America Invents Act, while the patent owner says prohibiting review would give the board too much power.

The outcome of the case will set parameters for the types of arguments that can be made when PTAB decisions are appealed. If the justices were to block appeals of rulings on the time bar, patent owners "essentially end up with one less tool in the toolbox to use to challenge a PTAB decision," said Michael Joffre of Sterne Kessler Goldstein & Fox PLLC.

The court's decision could have an impact on the efficiency of inter partes review, said Stuart Duncan Smith of Wolf Greenfield & Sacks PC.

"If the Federal Circuit is correct that questions about the application of the time bar are appealable, that's going to in some instances drag out the IPR process and could increase costs," he said. 

The case could take on political dimensions at the high court. The patent owner's argument that the board shouldn’t be able to make decisions that no court can review may resonate with conservative members of the court, like the newest Justices Neil Gorsuch and Brett Kavanaugh, who have expressed skepticism of the power of administrative agencies.

"They have somewhat of a predisposition, by virtue of their writings, toward believing that judicial review of agency determinations is a favorable course," said Edwin Getz of Drinker Biddle & Reath LLP.

Thryv Inc. v. Click-To-Call Technologies LP is the fifth case the Supreme Court has taken involving the AIA since the law was passed in 2011. It will give the justices the opportunity to further explain comments they made about appellate review of the PTAB in a previous decision three years ago.

In that case, Cuozzo v. Lee, the justices said that the board's decisions to institute review can only be appealed in rare circumstances where it has exceeded its authority or engaged in other "shenanigans." The Federal Circuit later held that whether a petition is time-barred is one aspect of the PTAB's institution decision that can be appealed under that ruling.

The PTAB had permitted Thryv, the parent company of YellowPages.com, to challenge Click-To-Call’s patent on anonymous phone communications and found it invalid. However, the Federal Circuit threw out the board’s decision, finding that Thryv’s 2013 petition was filed too late.

The court held that since Thryv’s predecessor was sued over the patent in 2001, the company did not comply with a requirement that AIA petitions be filed within a year of the date the petitioner or an interested party is served with a complaint alleging infringement.

In its opening brief before the high court in September, Thryv pointed to a provision of the AIA that states the PTAB's decisions whether to institute inter partes review "shall be final and non-appealable." That language provides "clear and convincing indications that Congress intended to preclude judicial review of ... time-bar determinations," the company said.

Limiting appellate review of PTAB institution decisions is an important part of the AIA because it ensures that the board’s findings on whether a patent is valid will not be thrown out after years of litigation based on issues unrelated to patentability, Thryv argued.

"This is critical, because overturning an IPR decision based on tangential, nonmerits grounds decided at the institution stage would permit the patent owner to continue to enforce an invalid patent, thereby substantially harming the public interest," it said.

In Cuozzo, the justices provided examples of "shenanigans" by the board that would permit appellate review, but they all involved disregard of the law, Thryv argued. PTAB decisions that a petition is not time-barred are not a "shenanigan," it said, citing Merriam-Webster’s definition of the word as "a devious trick used especially for an underhand purpose.”

By contrast, Click-To-Call’s response brief in October framed the case as being about how much power administrative agencies like the U.S. Patent and Trademark Office, of which the PTAB is a part, can exercise free from oversight by the judiciary. The company said the Federal Circuit got it right and that the position advocated by Thryv is "extraordinary."

"It says the USPTO can assert authority that Congress never intended to give it; institute review over a time-barred petition contrary to Congress’s express directives; and avoid any judicial review, ever, even if the agency’s construction misreads the core limits on its power," the company said.

Such a reading would allow "the agency to supplant the judiciary’s traditional role in saying what the law is," Click-To-Call said. It argued that a proper reading of the “non-appealable” language in the AIA does not preclude judicial review of PTAB decisions about whether a petition is time-barred, since that issue is included in a different part of the statute.

"In the end, this is not a difficult case. Under the strong presumption favoring judicial review, the agency will not be permitted to act as the sole arbiter of the meaning of federal law without a clear and convincing showing in the AIA’s scheme," Click-To-Call said, adding that "every relevant factor" favors judicial review.

Part of Monday's hearing is likely to focus on whether the justices feel it is acceptable to overturn PTAB decisions finding a patent invalid based on timing issues that have nothing to do with invalidity.

"The argument is that it would allow the patent owner to get off, in essence, on a technicality, and therefore be in a position to enforce patents for which claims have been found in the expertise of the administrative patent judges to be invalid," said Getz of Drinker Biddle.

That will likely be weighed against the implications of letting the board make decisions that can't be reviewed.

"There will be more errors if the courts can't review those errors," Sterne Kessler's Joffre said. "You're looking at a time where there's more chance something will get messed up."

For the justices who have made no secret of their skepticism of their power of administrative agencies, the case could be seen as an opportunity to draw a line in the sand, said Smith of Wolf Greenfield.

"Just as nature abhors a vacuum, it seems likely that some justices will abhor the idea that no court has the power to tell an agency that what it's doing is not permitted," he said.

The Federal Circuit's recent ruling in an unrelated case that the way PTAB judges are appointed is unconstitutional may also weigh on the justices as they consider possibly insulating the board’s decisions from judicial review.

"You can imagine the court saying, Not only do these guys get unfettered decision-making not reviewed by any court, but just a month ago the Federal Circuit said their appointment was not authorized under the Constitution?" Joffe said.

The case attracted a raft of amicus briefs. The federal government and the USPTO, which the high court has permitted to argue on Monday, said in a brief that setting aside PTAB decisions based on the grounds that a petition was time-barred will have “significant adverse” effects on the patent system, as patents the board has found invalid would remain in effect.

Several companies have also urged the justices to disallow appeals of time-bar rulings, including Intel Corp., which argued that Congress did not intend to allow PTAB invalidity to be overturned "on the basis of procedural technicalities."

But other industry groups told the high court that the Federal Circuit got it right. The American Intellectual Property Law Association, for instance, said that the AIA put limits on when the PTAB can institute review, including when a petition is filed too late. The Pharmaceutical Research and Manufacturers of America told the court that insulating time-bar decisions from appellate review would give the PTAB an "unprecedented degree of independence.”

Daniel Geyser of Geyser PC, an attorney for Click-To-Call, said Thursday that the case "ultimately turns on administrative law and judicial power."

"In our system of divided government, courts traditionally get to say what the law is," he said. "There is no indication that Congress assigned that judicial function to the agency and left the agency alone as the sole arbiter of its own authority to force patent owners into inter partes review."

An attorney for Thryv declined to comment on the case. 

The patent-in-suit is U.S. Patent No. 5,818,836.

Thryv is represented by Adam Charnes, Mitchell Stockwell, Thurston Webb, Amanda Brouillette and Jason Steed of Kilpatrick Townsend & Stockton LLP and in-house counsel Shannon Straw.

Click-To-Call is represented by Daniel Geyser of Geyser PC, Peter Ayers of Law Office of Peter J. Ayers PLLC, and Craig J. Yudell of Yudell Isidore PLLC.

The case is Thryv Inc. v. Click-To-Call Technologies LP, case number 18-916, before the Supreme Court of the United States.

--Editing by Alanna Weissman.