The issue boiled to prominence last week during oral argument at the Federal Circuit in Shaw Industries Group v. Automated Creel Systems, No. 2015-1116, which was an appeal of IPR2013-00132. Shaw, the Petitioner, had several of its grounds directed to certain claims denied in the interests of “efficiency” and then lost on the instituted grounds for those claims in the final decision. It was given no opportunity to revive the denied grounds and is prevented under the present statutory scheme from appealing the denial (more on that below). In discussing which grounds the PTAB had chosen to institute, Circuit Judge Moore stated that the PTAB “seems to be putting a blindfold on and throwing darts at the wall” (oral argument recording at 33:43). Circuit Judge Reyna then questioned the constitutionality of the Board’s conduct and accused it of “taking away causes of action.” Id. at 41:20.
Strong words from the bench! Both judges were talking about the Board’s practice of denying Petition grounds for reasons other than the merits. They took issue, in particular, with the Board’s practice of denying all but a handful of grounds without giving detailed reasons why. The Board sometimes cites “efficiency” or calls these extra grounds “redundant” or “unnecessary.” But they all mean essentially the same thing: the Board chooses not to institute on certain grounds and declines to give a specific reason.
A problem arises when the Petitioner loses its involuntarily pared-down case. By then, they’re often outside the one-year deadline imposed by 35 U.S.C. § 315(b) and cannot start a fresh petition on the denied grounds. And although they might not be legally estopped under 35 U.S.C. § 315(e)(2) from raising those challenges as invalidity defenses in court (though that’s an open question), they may face a steep hurdle convincing the court that they aren’t de facto estopped by the imprimatur of the PTAB’s expert determination that the grounds were “redundant.” Add to this the seemingly total insulation of the PTAB’s institution decisions from judicial review in 35 U.S.C. § 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”).
The practice of denying redundant grounds started early on, with Liberty Mutual Co. v. Progressive Casualty Insurance Co., CBM2012-00003. There, the Board counted 422 grounds of unpatentability asserted in the Petition for that case and gave the Petitioner an opportunity to cut down that set to eliminate redundancies among them. In doing so, the Board laid out in meticulous detail how the grounds were redundant and how the Petitioner should fix its case. Significantly, the Board gave the Petitioner some control over that decision.
But what a long way we’ve come! Now the Board routinely denies grounds without warning, even when there is only a handful of grounds. Recently the Board denied one of just two grounds asserted in the Petition for NVIDIA v. Samsung (IPR2015-01062) on the basis of efficiency. The Petitioner challenged six—only six—claims for anticipation by one reference, as well as for obviousness by that reference in combination with a second reference. The Board instituted on the anticipation ground and denied the obviousness ground “for reasons of administrative necessity to ensure timely completion of the instituted proceeding.” I find it hard to imagine a second ground that imposes less administrative burden than this. And what happens if NVIDIA loses the case on the anticipation ground for some reason that might have been cured by the obviousness ground? I don’t know, but it will make for an interesting appeal.
In the meantime, a Petitioner should consider including specific arguments addressing the non-redundancy of grounds relative to one another. To some extent, that may involve conceding (or at least alluding to) weaknesses in various grounds. Really, though, a Petitioner should make a firm decision, at the commencement of the case, about what minimal set of challenges will form the centerpiece of the argument case, and limit the Petition to those challenges only. Including anything else runs the risk that the Board will institute on a lesser ground.