Docket No. 2017-1239 (IPR2016-00917)
NEWMAN(D), DYK, O’MALLEY
January 24, 2018
Brief summary: FC panel affirmed Board decision as “§ 42.73(b) permits the Board to enter an adverse judgment when a patent owner cancels all claims at issue after an IPR petition has been filed, but before an institution decision.”
Summary: Anthrex appealed Board adverse judgment following Anthrex’s disclaimer of all the claims of US 8,821,541 subject to the IPR petition before the Board decided whether to institute IPR. Anthrex disclaimed claims 1-9 under 37 CFR § 42.107(e) which states that “[n]o inter partes review will be instituted based on disclaimed claims”. Section 42.73(b) states that “[a] party may request judgment against itself at any time during a proceeding” by, among other things, “[c]ancellation or disclaimer of a claim such that the party has no remaining claim in the trial”. However, “[i]n order to avoid the entering of an adverse judgment”, Anthrex’s “Preliminary Response stated that ‘[b]y filing the statutory disclaimer, Anthrex, Inc. is not requesting an adverse judgment.’” The Board concluded that its “rules permit [it] to construe a statutory disclaimer of all challenged claims as a request for adverse judgment” even before a decision on institution has been reached. Anthrex had three “pending continuation applications that this estoppel provision would impact.” The first question the FC panel considered here “is whether the adverse final judgment is appealable”, finding “the language of 28 U.S.C. § 1295 appears to provide for appeal” (§ 1295(a)(4)(A)) as “the decision is ‘with respect’ to an inter partes review proceeding” and is final as it “terminated the IPR proceeding” (In re Arunachalam, FC 2016). Further, the FC panel wrote that “a final decision that disposes of an IPR proceeding in the form of an adverse judgment is a ‘decision’ from the Board with respect to IPRs under title 35 and that § 1295 provides a right to appeal a final adverse judgment” and that this “is not a situation in which § 319” (which allows appeal only after a final written decision) “impliedly precludes review under § 1295”. The second question was whether the Board properly entered adverse judgment. Anthrex argued that § 42.73(b) “is inapplicable” because it “specifically stated it was not requesting an adverse judgment.” The FC panel explained that is this were the rule, “a patent owner could always avoid an adverse judgment by simply stating that it is not requesting one” which would “render the rule a nullity.” The FC panel noted that Anthrex “appeared to have backed away from” that argument and “alternatively points out that subsection 2” of §42.73(b) “only applies if an IPR proceeding has been instituted”. The FC panel disagreed, however, finding “no meaningful distinction between claims that are cancelled before an IPR proceeding is instituted and claims that are cancelled after an IPR proceeding is instituted”. It also explained that it “see[s] no reason why estoppel should apply if a patent owner disclaims an entire patent or application before an institution but should not apply if a patent owner merely disclaims some of the claims.” The FC panel therefore affirmed the Board decision. Judge O’Malley concurred, expressing “doubts about whether the Director had the authority under § 316 (or any other statutory provision) to issue” § 42.73(b). Judge Newman dissented, writing that the decision means “Anthrex would be subject to the same estoppel result as if there had been an IPR trial and Anthrex had lost on the merits” (a “flawed statutory and regulatory interpretation”).