The Supreme Court has declined to hear three cases that questioned the inter partes review (IPR) process for patent litigation, although the petition for cert for the Arthrex Inc. v. Smith & Nephew Inc.; Arthrocare Corp.; and the United States of America case is still pending. Should the Supreme Court pass on Arthrex, the remaining affected IPR cases will have to be relitigated at the Patent Trial and Appeal Board (PTAB), which may give those patent holders another chance to restore their patents.
Among the three declined petitions for cert was Enzo v. Becton Dickinson and Celgene v. Peter, both of which were heard at the Court of Appeals for the Federal Circuit. The litigants in these cases employed the Takings Clause of the Fifth Amendment in an effort to reverse the use of IPRs for patents that were issued prior to passage of the America Invents Act (AIA) in 2012. In July 2019, the Federal Circuit decreed in Celgene that the retroactive application of the IPR process was not unconstitutional inasmuch as the IPR process was not sufficiently different from the IPR’s predecessor, the inter partes reexamination process, to constitute an unconstitutional taking.
In Enzo, the Federal Circuit addressed yet another diagnostic patent lawsuit, this one for antibodies that bind to DNA in its native, double-stranded form. The court cited Celgene in advising Enzo Life Sciences Inc., of Farmingdale, N.Y., that its position was unchanged on the question of Fifth Amendment takings were permitted in IPRs for pre-AIA patents. The U.S. Solicitor General recommended that the Supreme Court pass on Enzo, arguing that the U.S. Patent and Trademark Office “had been authorized for decades” to undertake administrative reviews via the preponderance of evidence standard.
Minority opinion in Oil States would push PTAB aside
The Federal Circuit noted in Celgene, however, that decision that the Supreme Court had not entirely foreclosed the question in its April 2018 decision in the so-called Oil States case. In that decision, the seven-justice majority said its decision “should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.” Writing for the dissenting two-justice minority, Justice Neil Gorsuch raised the question of whether the Article III courts should serve as the sole venue for handling disputes regarding patent validity, a view which would exclude PTAB from such proceedings.
Aziz Burgy of the Washington, D.C. office of Axinn, Veltrop & Harkrider LLP, told BioWorld, that the Supreme Court’s decision to not grant cert to the non-Arthrex cases was not out of left field. “I didn’t think that was surprising given the past cases we’ve seen touching on this issue,” Burgy said. The Supreme Court apparently found no need to clarify the Federal Circuit’s decisions in these lawsuits, let alone a need to overturn those outcomes, he said.
Burgy said he has not heard a lot of discussion among other members of the patent bar about whether the IPR process should be applied to pre-AIA patents. He said there is a strong similarity between the IPR and the previous process, the inter partes reexamination process, adding, “I don’t think there’s enough [difference] there to have a strong argument to say one is unconstitutional.”
One might assume the Supreme Court will eventually jettison the Arthrex petition given that it deals with patents that were applied for prior to passage of the AIA, but issued afterward, Burgy said. The other petitions were applied for and granted pre-AIA, but Burgy noted that the Supreme Court might not have dismissed the Arthrex petition with the other three because Arthrex Inc., of Naples, Fla., had raised the question of whether an argument not made in the initial filing can be made on appeal in a fairly unique set of circumstances.
Burgy said, “that may be something the Supreme Court may want to expound on.” The company’s brief for the Supreme Court said that while an argument is typically forfeited if not raised on opening briefs, this is not necessarily applicable if there is an intervening change of law between the date of the patent application and the date of the grant of the patent, a reference to the AIA. The Federal Circuit had noted in its decision in Arthrex that challenges of the Appointments Clause cannot be waived at PTAB, but that the Federal Circuit is empowered to waive such a challenge on appeal when the argument was not previously made.
Burgy said many members of the patent bar were not surprised that Arthrex had raised the question of appointments to the PTAB. Conversely, the amount of time such a claim would add to a legal proceeding suggests a patent holder would not invoke that argument unless the underlying patent was quite valuable. An adverse lower court ruling might mean an alleged infringer would presumably be free to practice the underlying art even as a process of this type unfolds, however.
The question of whether the Patent and Trademark Office (PTO) would want to resolve the appointment question via rulemaking and comment hinges on whether PTO believes it can anticipate where the Supreme Court might land on Arthrex, should it grant cert. Burgy said it is his understanding that the PTO has been working through the cases that were affected by the Federal Circuit’s decision in Arthrex, and that there is not a large number of cases remaining for processing at PTAB. “If I were [PTO director Andrei] Iancu, I would let this play out,” given that the backlog of Arthrex-related cases is ebbing and the agency has amended its process for hiring PTAB judges.