CAFC: same judges can rule on IPR petition and patent validity

The US Court of Appeals for the Federal Circuit has ruled that the same three administrative patent law judges who determine whether to institute an inter partes review (IPR) can also rule on the validity of the patent at issue.

The ruling followed a challenge from Ethicon Endo-Surgery, a subsidiary of Johnson & Johnson, against the Patent Trial and Appeal Board’s (PTAB) decision to invalidate US patent number 8,317,070 in 2014.

The ‘070 patent, owned by Ethicon, covers a surgical device that seals skin tissue. Covidien claimed that the patent was obvious in an IPR petition filed in 2013.

Ethicon took exception to the same three judges deciding on whether to institute an IPR and also ruling on the patent’s validity.

It argued that because the judges are exposed to preliminary responses from both parties during the petition stage, there is a risk of prejudice against the patent owner during the trial.

But in a 2-1 decision, handed down on January 13, the federal circuit rejected Ethicon’s claims.

Judges Timothy Dyk and Judge Richard Taranto said that the process of the three judges ruling on both stages of the IPR is equivalent to a district court judge determining if a case has a likelihood of success before granting a trial.

Ethicon argued that the America Invents Act (AIA) enables the head of the US Patent and Trademark Office (USPTO) to institute a trial of a patent’s validity, but did not explicitly grant powers to delegate it to the PTAB.

But Dyk was not convinced. He said: “There is nothing in the statute or legislative history of the statute indicating a concern with separating the functions of initiation and final decision.

“Ethicon ignores the longstanding rule that agency heads have implied authority to delegate to officials within the agency, even without explicit statutory authority and even when agency officials have other statutory duties,” he added.

Judge Pauline Newman sympathised with Ethicon’s argument.

In a dissenting opinion, she said that the AIA requires different bodies to rule on the institution of an IPR and the validity of a patent.

She argued that biases emerge out of the process against a patent owner once an IPR is instituted.

Last year, LSIPR’s sister publication WIPR reported that the USPTO was considering changing the way judges rule on IPRs.

In a consultation launched on August 25, the USPTO said IPRs could be instituted by a single judge with an additional two judges then drafted in to determine the validity of the targeted patent.