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SAS Institute v. Matal

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Supreme Court of the United States
SAS Institute v. Matal
Term: 2017
Important Dates
Argument: November 27, 2017
Decided: April 24, 2018
Outcome
Federal Circuit reversed
Vote
5 - 4
Majority
Neil Gorsuch • Chief Justice John Roberts • Anthony Kennedy • Clarence Thomas • Samuel Alito
Dissenting
Ruth Bader Ginsburg • Stephen Breyer • Elena Kagan • Sonia Sotomayor


SAS Institute v. Matal is a case argued during the October 2017 term of the U.S. Supreme Court. Argument in the case was held on November 27, 2017. The case came on a writ of certiorari to the United States Court of Appeals for the Federal Circuit.

HIGHLIGHTS
  • The case: In 2011, Congress, under the Leahy-Smith America Invents Act, created an administrative tribunal within the Patent and Trademark Office called the Patent Trial and Appeal Board (PTAB), which hears reviews requested by an interested party regarding the validity of an existing patent through a process known as inter partes review. Though the PTAB is not a court, decisions of the PTAB can be appealed to the United States Court of Appeals for the Federal Circuit. SAS Institute sought inter partes review of a patent held by ComplementSoft LLC. The PTAB issued a final, written decision, as required by 35 U.S.C. §318, but only on some and not all of SAS Institute's claims. SAS Institute appealed the PTAB's decision, arguing that the plain text of the statute required a final, written decision on all of its claims and not just some of its claims. A three-judge panel of the Federal Circuit, citing its own precedent, upheld the PTAB's decision.
  • The issue: Does federal law require the Patent Trial and Appeal Board to issue a final, written decision on all claims raised during an inter partes review?
  • The outcome: The Supreme Court reversed the Federal Circuit's ruling.


    • You can review the lower court's opinion here.[1]

    Background

    This was a case about a procedure used by the U.S. Patent and Trademark Office to address challenges to the validity of existing patents. The process is known as inter partes review (IPR), and was instituted in 2011 by Congress under the Leahy-Smith America Invents Act (AIA). Under the AIA, an administrative tribunal within the Patent and Trademark Office called the Patent Trial and Appeal Board (PTAB), hears reviews requested by an interested party regarding the validity of a patent. Though the PTAB is not a court, decisions of the PTAB can be appealed to the United States Court of Appeals for the Federal Circuit. As Rochelle C. Dreyfuss noted in a column for Slate, "Reviews are quicker and cheaper than litigation because they are conducted under a special set of procedural rules with no right to a trial by jury. And because they are essentially a do-over, there is no presumption that the patent is valid, as there would be in court."[2]

    The issue in this case, however, was whether a provision of federal law requires the PTAB to issue a final written decision that addresses all of the challenged claims presented in inter partes review.

    ComplementSoft LLC was the holder of patent number 7,110,936 (the '936 patent). The patent was granted for a system and method for generating and maintaining computer code. SAS Institute, Inc., the petitioner, filed for inter partes review of ComplementSoft's patent, arguing that the patent should be invalidated because the ‘936 patent included "elements that were well known in the prior art before the filing date of the ‘936 patent."[3] Patents can be denied or invalidated if the patented designs are anticipated either by previous, similar designs or the design was so obvious in the marketplace that patent protection was not warranted. The PTAB instituted a review on some, but not all, of SAS Institute's '936 patent claims during inter partes review. The PTAB found all of the alleged claims with one exception, Claim 4, unpatentable.[1]

    On appeal before the United States Court of Appeals for the Federal Circuit, SAS Institute challenged the PTAB's decision to issue a final written decision on only some of its alleged claims during inter partes review. SAS Institute cited a provision of federal law, 35 U.S.C. §318, which states,[4]

    “

    If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).[5]

    		”

    SAS Institute argued that the statute required a final, written decision of any patent claim and, as the PTAB did not issue a final, written decision on all of its claims, the PTAB cannot partially institute an inter partes review proceeding.[1]

    A three-judge panel of the United States Court of Appeals for the Federal Circuit composed of Judges Kara Farnandez Stoll, Raymond Chen, and Pauline Newman upheld the PTAB's decision. Writing for the panel majority, Judge Stoll held that SAS Institute's argument was foreclosed by a 2016 Federal Circuit decision, Synopsys, Inc. v. Mentor Graphics Corp. Judge Stoll wrote,[1]

    “

    Synopsys presented the same question that SAS raises here: Must a final written decision by the Board address every patent claim challenged in an IPR petition? The petitioner argued, as does SAS, that the text of the final written decision statutory subsection, 35 U.S.C. § 318(a), compels the Board to address every petition challenged claim. We found, however, 'no statutory requirement that the Board’s final decision address every claim raised in a petition for inter partes review. Section 318(a) only requires the Board to address claims as to which review was granted.' ... We found it significant that § 318(a) describes claims challenged by the petitioner, whereas the institution decision statutory subsection, 35 U.S.C. § 314, describes 'claims challenged in the petition.' We reasoned that the differing language implies a distinction between the two subsections such that § 318(a) does not foreclose the claim-by-claim approach the Board adopted there and in this case. Further, we upheld the validity of a PTO-promulgated regulation authorizing the claim-by-claim approach. ... Accordingly, we reject SAS’s argument that the Board must address all claims challenged in an IPR petition in its final written decision.[5]

    		”

    Dissent in part

    Judge Pauline Newman dissented in part from the panel's decision. She disagreed with the panel, as she did in Synopsys, that the claim-by-claim approach used by the PTAB comported with Congress' intent in passing the America Invents Act. She wrote, "The statutory provisions and the legislative purpose of substituting an agency tribunal for district court proceedings on aspects of patent validity are defeated by the PTO’s position that it can leave some challenged claims untouched. The America Invents Act presents a new system of reviewing issued patents, providing for stays of district court proceedings, and estoppels in all tribunals, based on the PTO decision. Final determination of the validity of a challenged patent is not achieved when the PTO selects, at its sole and unreviewable choice, which claims it will review and which it will not touch. ... the AIA ... provides no support for the PTO’s practice of accepting consideration of some of the patent claims in the petition while ignoring others, when all challenged claims are fully documented and briefed in compliance with the statute."[1]

    Petitioner's challenge

    SAS Institute, the petitioner, challenged the holding of the Federal Circuit. SAS Institute argued that the plain text of 35 U.S.C. §318 required the PTAB to address all, not some, of the challenged claims raised during its inter partes review before the PTAB.

    Certiorari granted

    On January 31, 2017, SAS Institute, the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the Federal Circuit. The U.S. Supreme Court granted the request for certiorari on May 22, 2017. Argument in the case was held on November 27, 2017.[6]

    Question presented

    Question presented:

    "Whether 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review 'shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,' requires that Board to issue a final written decision as to every claim challenged by the petitioner, or whether it allows that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the U.S. Court of Appeals for the Federal Circuit held."[6]

    Audio

    • Audio of oral argument:[7]



    Transcript

    • Transcript of oral argument:[8]

    Outcome

    On a vote of 5 - 4, the Supreme Court reversed the ruling of the Federal Circuit.[9]

    Decision

    Justice Neil Gorsuch authored the opinion for the court majority, joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito. Discussing the question whether the PTAB was required to dispose of all claims in a decision, Gorsuch wrote, "The statute, we find, supplies a clear answer: the Patent Office must 'issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.' 35 U. S. C. §318(a) (emphasis added). In this context, as in so many others, 'any' means 'every.' The agency cannot curate the claims at issue but must decide them all."[9] He continued:

    “ This directive is both mandatory and comprehensive. The word ‘shall’ generally imposes a nondiscretionary duty. And the word ‘any’ naturally carries ‘an expansive meaning.’ … So when [the statute] says the Board’s written decision ‘shall’ resolve the patentability of ‘any patent claim challenged by the petitioner,’ it means the Board must address every claim the petitioner has challenged.[9][5] ”


    SAS had also argued that the court should not give Chevron deference to the PTAB's interpretation and in fact use the case to reverse the court's standing precedent establishing Chevron deference. Gorsuch wrote that deference did not apply in this case. He wrote, "Whether Chevron should remain is a question we may leave for another day."[9]

    Dissent by Justice Breyer

    Justice Stephen Breyer dissented, joined by Justices Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor. Breyer would have upheld the PTAB's interpretation. He wrote:

    “ This case requires us to engage in a typical judicial exercise, construing a statute that is technical, unclear, and constitutes a minor procedural part of a larger administrative scheme. I would follow an interpretive technique

    that judges often use in such cases. Initially . . . I would look to see whether the relevant statutory phrase is ambiguous or leaves a gap that Congress implicitly delegated authority to the agency to fill. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842–843 (1984). If so, I would look to see whether the agency’s interpretation is reasonable. Id., at 843. Because I believe there is such a gap and because the Patent Office’s interpretation of the ambiguous phrase is reasonable, I would conclude that the Patent Office’s interpretation is lawful.[9][5]

    		”

    Dissent by Justice Ginsburg

    Justice Ginsburg joined Justice Breyer's dissenting opinion but also wrote separately. Ginsburg's opinion was joined by Breyer, Kagan, and Sotomayor. Ginsburg criticized the majority's conclusion, arguing that the result would remove the Patent Office's ability to efficiently manage patent challenges:

    “ Given the Court’s wooden reading of 35 U. S. C. §318(a), and with no mandate to institute [inter partes] review at all, the Patent Trial and Appeal Board could simply deny a petition containing challenges having no reasonable likelihood” o' success, §314(a). Simultaneously, the Board might note that one or more specified claims warrant reexamination, while others challenged in the petition do not. Petitioners would then be free to file new or amended petitions shorn of challenges the Board finds unworthy of inter partes review. Why should the statute be read to preclude the Board’s more rational way to weed out insubstantial challenges? For the reasons stated by Justice Breyer, the Court’s opinion offers no persuasive answer to that question, and no cause to believe Congress wanted the Board to spend its time so uselessly.[9][5] ”

    The opinion

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 U.S. Court of Appeals for the Federal Circuit, SAS Institute, Inc., v. ComplementSoft LLC, June 10, 2016
    2. ↑ Slate.com, "Should the Patent and Trademark Office be allowed to change its mind?" June 21, 2017
    3. ↑ U.S. Patent Trial and Appeal Board, "In the Inter Partes Review of U.S. Patent No. 7,110,936," September 19, 2006
    4. ↑ Patentlyo.com, "SAS Institute v. Lee: Partial Institution of Inter Partes Review," May 22, 2017
    5. ↑ 5.0 5.1 5.2 5.3 5.4 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    6. ↑ 6.0 6.1 Supreme Court of the United States, SAS Institute Inc. v. Matal, May 22, 2017
    7. ↑ Supreme Court of the United States, SAS Institute v. Matal, argued November 27, 2017
    8. ↑ Supreme Court of the United States, SAS Institute v. Matal, argued November 27, 2017
    9. ↑ 9.0 9.1 9.2 9.3 9.4 9.5 United States Supreme Court, "SAS Institute v. Iancu Opinion," April 24, 2018
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