Federal Circuit rules same PTAB panel can institute and decide an IPR

Federal Circuit rules same PTAB panel can institute and decide an IPR

The Federal Circuit has ruled that the same PTAB panel that institutes an inter partes review can also issue the final written decision, in Ethicon Endo-Surgery v Covidien. Judge Newman dissented, noting the statute requires institution to be made by the USPTO director and the final decision by the Board

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The Federal Circuit has affirmed that the same Patent Trial and Appeal Board (PTAB) panel can institute an inter partes review (IPR) and issue the final written decision, in Ethicon Endo-Surgery v Covidien.

“On the merits we hold that neither the statute nor the Constitution precludes the same panel of the Board that made the decision to institute inter partes review from making the final determination,” wrote Judge Dyk in the opinion. “We also find no error in the Board’s determination that the ’070 patent claims would have been obvious over the prior art.”

He was joined in the opinion by Judge Taranto, with Judge Newman writing a dissenting opinion.

Covidien petitioned for IPR of 14 claims of Ethicon Endo-Surgery’s surgical stapler patent, which was granted by the PTAB. The Board in June 2014 found all challenged claims invalid as obvious over the prior art. Ethicon, a subsidiary of Johnson & Johnson, appealed on the grounds that the decision was invalid because the same Board panel made both the decision to institute and the final decision. Ethicon also asserted that the Board was wrong to find the claims obvious.

Phil Johnson of Johnson and Johnson argued for Ethicon, which is also represented by Akin Gump Strauss Hauer & Feld. Kathleen Daley of Finnegan Henderson Farabow Garrett & Dunner argued for Covidien.

Ethicon maintained that the combination of functions of the PTAB panel is improper because the statutory text and structure, guided by constitutional principles, require that the decision to institute not be made by the same panel that makes the ultimate decision. It added that the statute does not authorise the USPTO director to delegate the institution decision to the Board at all.

The Federal Circuit disagreed: “In short, both as a matter of inherent authority and general rulemaking authority, the Director had authority to delegate the institution decision to the Board. There is nothing in the Constitution or the statute that precludes the same Board panel from making the decision to institute and then rendering the final decision.”

In her dissent, Judge Newman said the majority’s holdings are contrary to the America Invents Act, which established post-grant proceedings as quick and cost effective alternatives to litigation.

“The statute requires that these proceedings be separated, the first decision required to be made by the Director, and the second decision made by the Board,” she wrote. “This court has now endorsed proceedings in which the Board makes both decisions. This procedure cannot be reconciled with the statute.”

Newman noted the criticism from practitioners that having the same panel gives an actual or perceived bias because the judges are put in the positon of defending their previous decisions to institute the trial. 

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