The Federal Circuit is about to face a wave of appeals from final written decisions in post-grant proceedings. The Patent Office reports that, as of May 7, 2015, it has rendered final decisions for 347 inter partes review petitions and for 60 covered business method proceedings. Many more are on the way—over 1,000 IPR petitions have been filed already in 2015, which, at the present rates, will generate hundreds more appeals in 2016. Those that have already worked their way through Federal Circuit review often suffer an unenviable fate—summary affirmance without opinion under Federal Circuit Rule 36.
This is not surprising. The Federal Circuit’s affirmance rate for Patent Office appeals over the last 5 years, which involved review of rejections of initial applications and decisions in ex parte and inter partes reexaminations, has ranged from 86-92%, with most being Rule 36 affirmances. That will likely continue. Most PTO appeals involve predominately fact issues that are reviewed deferentially, and the Court generally doesn’t second-guess the agency on complex questions about what the prior art disclosed. The Court also does not seem to have the bandwidth to write opinions in all of these new cases it will face. In 2014, the Federal Circuit had 1,491 total appeals filed, with 566 being from district courts, 238 from the Patent Office, and the rest from other areas of its jurisdiction. If even a fraction of inter partes review decisions wind up at the Federal Circuit, the result will be a significant increase in the Court’s workload.
Given these realities, it will be difficult for litigants who lost at the Patent Office to win at the Federal Circuit. If you find yourself in that situation, though, here are a few suggestions to help you maximize your chances:
1.) Focus on the key issues. The Court has limited time to analyze each case, and it will only shrink over the next couple years as its workload increases. Appellants thus must pick their best issues and appeal only those. If your lead argument fails, it is highly unlikely that any of alternative arguments 2, 3, or 4 will carry the day either. Sometimes a certain amount of complexity is unavoidable—if the Board rejects the claims based on 3 different combinations of prior art, you have to appeal all of them. But even in those situations, an appellant should look for a common theme or error that pervades all the rejections, so that it can obtain reversal by prevailing on just that theme.
2.) Frame the errors as issues of law. When the appellant is searching for a unifying theme or error, it should, where possible, present it as an issue of law. Legal issues receive more rigorous review—the Federal Circuit considers them de novo without any deference to the PTO, while it reviews factual issues only for substantial evidence. It is difficult to win on a factual issue if there is any evidence on the other side, as there usually will be if your opponent submitted an expert declaration. So, for example, an appellant will want to frame the issue as a legal error in claim construction rather than a factual mistake about what a reference discloses. Or an appellant will want to challenge the Board’s legal methodology when arriving at a conclusion of anticipation or obviousness rather than its underlying factual findings. Maybe the Board’s anticipation rejection relied on improperly mixing and matching embodiments or used the wrong test for inherency. Maybe the Board’s obviousness rejection ignored the objective indicia or used impermissible speculation. Maybe the Board erred in finding something a “printed publication.”
Framing the argument as a legal issue can be tricky, as sometimes the line between legal methodology and fact-finding is blurry. Claim construction is also sometimes a murky area because the Board is applying “broadest reasonable construction,” so the appellee will argue that its construction need only be “reasonable.” Nevertheless, focusing on legal errors is almost always better than arguing your opponent’s expert made a mistake in interpreting the prior art, however tempting that may seem.
3.) But, if your case really does turn on a factual dispute, be up front about it. Sometimes, despite an appellant’s best efforts, it does need to argue at least one factual error to prevail on appeal. If that is the case, you should embrace it. It is always better to preserve your credibility by taking factual errors head on when you must, rather than trying to pretend the substantial evidence standard doesn’t exist or is inapplicable.
4.) Raise procedural errors where the agency may have overstepped its statutory authority. This is a corollary to point #2, because procedural errors tend to be legal in nature and thus may get less deferential review, especially where they concern the agency’s power to act. Examples of these types of errors that have been raised in pending cases include: (1) whether the agency has the power to declare certain proposed grounds “redundant” and refuse to consider whether they meet the substantive standard for instituting an IPR, and (2) whether the agency has the power to join an IPR on additional claims filed after the 1-year statutory deadline.
Not all procedural gripes will have the same force. The IPR statute gives the PTO discretion to set some procedures, so a complaint about not getting enough pages for a reply brief will get little traction on appeal. Likewise, even more “legal” sounding issues, such as the agency’s decision to apply “broadest reasonable construction” to IPR and to institute on grounds other than those stated in the petition, have not prevailed. See In re Cuozzo Speed Techs., LLC, 778 F.3d 1271, 1279-82 (Fed. Cir. 2015). Nevertheless, appellants should keep their eye out for these types of issues.
5.) Preserve key issues at all stages of the IPR. An appellant can only present issues it actually raised in the PTO—otherwise, the Federal Circuit will deem it forfeited and refuse to consider it on the merits, however strong it might otherwise be. Most judges are eager to find waiver where they can, as it is the simplest way to dispose of an appeal. Good appellate strategy, then, requires advance planning. Parties should litigate IPRs with an eye toward appeal. They should clearly articulate their legal issues for the PTO, including all key claim construction positions and the specific legal rules they want the PTO to apply. And they should reiterate their arguments throughout the proceedings—for example, if a party loses an issue as part of the institution decision, it should reiterate its objection in the briefing after institution to assure it is still in play at the time of the final written decision and is not forfeited.
6.) If multiple IPRs are involved, move to consolidate them into a single set of briefs. This is a specific example of how to focus on the key issues. Because of the PTO’s page limits and rules, many parties are now involved in multiple IPRs on overlapping subject matter—i.e., there are multiple petitions on different claims of the same patent, or different petitions against related patents from the same family. Each IPR generates a separate final written decision and thus a separate appeal that will have its own set of briefing. This can quickly increase complexity, an appellant’s enemy.
The Federal Circuit’s procedures for dealing with these types of overlapping appeals are still evolving. For some of the earlier ones, the parties submitted separate sets of briefs in each appeal, but the Court grouped them together for oral argument. Over time, the Court has started to sometimes consolidate the briefing as well. Appellants should embrace consolidate briefing and suggest it if the Court doesn’t already require it. This may seem counterintuitive—consolidation cuts the words you have to address each issue. But it also makes it easier to present a common theme across the appeals and it will force you to focus on the key issues. It is also much easier for the Court to handle a single set of briefs and a single appendix.
7.) Entice the PTO to Intervene. The statute gives the PTO the right to intervene in any IPR appeal, see 35 U.S.C. § 143, but the agency has been judicious about exercising this authority. There are a couple reasons why—(1) it is unnecessary for the agency to step into fact-intensive appeals, as the winning party is already defending the Board’s decision, and (2) trying to fully brief and defend every appeal would strain the agency’s resources. So, when the PTO does intervene, it is a signal to the Federal Circuit that the appeal is important. Intervention is thus good for the appellant, who has much to gain from separating its appeal from the wave of others, even though it will mean adding an adversary represented by highly skilled lawyers from the PTO Solicitor’s Office.
There are a couple ways to encourage intervention. First, the appellant should take seriously the provision of 37 C.F.R. § 90.2(a)(3)(ii) that requires it to include “sufficient information” in the Notice of Appeal to allow the PTO to assess whether to intervene. Second, the appellant should follow the advice above about how to pick and frame the issues for appeal—legal issues, particularly those that involve the agency’s power or procedures, are far more likely to warrant intervention.
8.) Use Federal Circuit specialists for the appeal. Appellants will also maximize their chances by using experienced appellate counsel who can effectively brief and argue the appeal. Many of the points above are easy to state but require specialized judgment to apply. Appellants should not assume that the lawyers that handled things at the PTO will be the most effective advocates at the Federal Circuit. Appellate specialists provide a fresh set of eyes and will avoid the temptation to reargue every point lost at the PTO. Specialists will also use their familiarity with the Federal Circuit to predict which issues are the strongest. Moreover, bringing in an appellate specialist will frequently (and perhaps surprisingly) save money on fees. Specialists are so accustomed to reviewing a record, selecting issues, and writing an effective brief, that the money saved on these tasks will more than compensate for any time they need to get up to speed.
Craig Countryman is a Principal in the Southern California office of Fish & Richardson and was named a 2016 Rising Star by Law360, and was named to the "Top 40 Under 40" lists in both the Daily Journal and the San Diego Daily Transcript. His practice...