__ U.S. __, 16-969, SAS Institute, Inc. v. Iancu

Docket Nº:16-969
Citation:__ U.S. __, 138 S.Ct. 1348, 200 L.Ed.2d 695, 126 U.S.P.Q.2d 1307, 86 U.S.L.W. 4252, 27 Fla.L.Weekly Fed. S 191
Opinion Judge:GORSUCH, Justice.
Party Name:SAS INSTITUTE INC., Petitioner v. Andrei IANCU, as Director, United States Patent and Trademark Office, et al.
Attorney:Gregory A. Castanias, Washington, DC, for Petitioner. Jonathan C. Bond, Washington, DC, for Respondents. Michael Kanovitz, Matthew V. Topic, Loevy & Loevy, Chicago, IL, for Respondent ComplementSoft, LLC. John A. Marlott, Jones Day, Chicago, IL, David B. Cochran, Jones Day, Cleveland, OH, Gregory...
Judge Panel:GORSUCH, J., delivered the opinion of the Court, in which ROBERTS, C.J., and KENNEDY, THOMAS, and ALITO, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined. BREYER, J., filed a dissenting opinion, in which GINSBURG and SOTOMAYOR, JJ., joined,...
Case Date:April 24, 2018
Court:United States Supreme Court
 
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138 S.Ct. 1348, 200 L.Ed.2d 695, 126 U.S.P.Q.2d 1307, 86 U.S.L.W. 4252, 27 Fla.L.Weekly Fed. S 191

SAS INSTITUTE INC., Petitioner

v.

Andrei IANCU, as Director, United States Patent and Trademark Office, et al.

No. 16-969

United States Supreme Court

April 24, 2018

Argued Nov. 27, 2017.

[138 S.Ct. 1350] Syllabus [*]

Inter partes review allows private parties to challenge previously issued patent [138 S.Ct. 1351] claims in an adversarial process before the Patent Office. At the outset, a party must file a petition to institute review, 35 U.S.C. § 311(a), that identifies the challenged claims and the grounds for challenge with particularity, § 312(a)(3). The patent owner, in turn, may file a response. § 313. If the Director of the Patent Office determines "there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition," § 314(a), he decides "whether to institute ... review ... pursuant to [the] petition," § 314(b). "If ... review is instituted and not dismissed," at the end of the litigation 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." § 318(a).

Petitioner SAS sought review of respondent ComplementSoft’s software patent, alleging that all 16 of the patent’s claims were unpatentable. Relying on a Patent Office regulation recognizing a power of "partial institution," 37 C.F.R. § 42.108(a), the Director instituted review on some of the claims and denied review on the rest. The Board’s final decision addressed only the claims on which the Director had instituted review. On appeal, the Federal Circuit rejected SAS’s argument that § 318(a) required the Board to decide the patentability of every claim challenged in the petition.

Held : When the Patent Office institutes an inter partes review, it must decide the patentability of all of the claims the petitioner has challenged. The plain text of § 318(a) resolves this case. Its directive is both mandatory and comprehensive. The word "shall" generally imposes a nondiscretionary duty, and the word "any" ordinarily implies every member of a group. Thus, § 318(a) means that the Board must address every claim the petitioner has challenged. The Director’s "partial institution" power appears nowhere in the statutory text. And both text and context strongly counsel against inferring such a power.

The statute envisions an inter partes review guided by the initial petition. See § 312(a)(3). Congress structured the process such that the petitioner, not the Director, defines the proceeding’s contours. The ex parte reexamination statute shows that Congress knew exactly how to authorize the Director to investigate patentability questions "[o]n his own initiative, and at any time," § 303(a). The inter partes review statute indicates that the Director’s decision "whether" to institute review "pursuant to [the] petition" is a yes-or-no choice. § 314(b).

Section 314(a)’s requirement that the Director find "a reasonable likelihood" that the petitioner will prevail on "at least 1 of the claims challenged in the petition" suggests, if anything, a regime where a reasonable prospect of success on a single claim justifies review of them all. Again, if Congress had wanted to adopt the Director’s claim-by-claim approach, it knew how to do so. See § 304. Nor does it follow that, because § 314(a) invests the Director with discretion on the question whether to institute review, it also invests him with discretion regarding what claims that review will encompass. The rest of the statute confirms, too, that the petitioner’s petition, not the Director’s discretion, should guide the life of the litigation. See, e.g., § 316(a)(8).

The Director suggests that a textual discrepancy between § 314(a)— which addresses whether to institute review based on claims found "in the petition"— and § 318(a)— which addresses the Board’s final resolution of the claims challenged "by the petitioner"— means that the Director enjoys the power to institute a review covering [138 S.Ct. 1352] fewer than all of the claims challenged in the petition. However, the statute’s winnowing mechanism— which allows a patent owner to concede one part of a petitioner’s challenge and "[c]ancel any challenged patent claim," § 316(d)(1)(A)— fully explains why Congress adopted the slightly different language.

The Director’s policy argument— that partial institution is efficient because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others— is properly addressed to Congress, not this Court. And the Director’s asserted "partial institution" power, which is wholly unmentioned in the statute, is not entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694. Finally, notwithstanding § 314(d)— which makes the Director’s determination whether to institute an inter partes review "final and nonappealable"— judicial review remains available consistent with the Administrative Procedure Act to ensure that the Patent Office does not exceed its statutory bounds. Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. __, 136 S.Ct. 2131, 195 L.Ed.2d 423, distinguished. Pp. 1354 - 1360.

825 F.3d 1341, reversed and remanded.

GORSUCH, J., delivered the opinion of the Court, in which ROBERTS, C.J., and KENNEDY, THOMAS, and ALITO, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined. BREYER, J., filed a dissenting opinion, in which GINSBURG and SOTOMAYOR, JJ., joined, and in which KAGAN, J., joined except as to Part III-A.

Gregory A. Castanias, Washington, DC, for Petitioner.

Jonathan C. Bond, Washington, DC, for Respondents.

Michael Kanovitz, Matthew V. Topic, Loevy & Loevy, Chicago, IL, for Respondent ComplementSoft, LLC.

John A. Marlott, Jones Day, Chicago, IL, David B. Cochran, Jones Day, Cleveland, OH, Gregory A. Castanias, Jones Day, Washington, DC, for Petitioner.

Nathan K. Kelley, Solicitor, Thomas W. Krause, Deputy Solicitor, Joseph G. Piccolo, Robert J. McManus, Associate Solicitors, United States Patent and Trademark Office, Alexandria, VA, Jeffrey B. Wall, Acting Solicitor General, Malcolm L. Stewart, Deputy Solicitor General, Jonathan C. Bond, Assistant to the Solicitor General, Mark R. Freeman, Joshua M. Salzman, Attorneys, Department of Justice, Washington, DC, for Federal Respondent.

OPINION

GORSUCH, Justice.

A few years ago Congress created "inter partes review." The new procedure allows private parties to challenge previously issued patent claims in an adversarial process before the Patent Office that mimics civil litigation. Recently, the Court upheld the inter partes review statute against a constitutional challenge. Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, __ U.S. __, __, 138 S.Ct. 1365, __, __ L.Ed.2d __, ante, p. __. Now we take up a question concerning the statute’s operation. When the Patent Office initiates an inter partes review, [138 S.Ct. 1353] must it resolve all of the claims in the case, or may it choose to limit its review to only some of them? 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.

"To promote the Progress of Science and useful Arts," Congress long ago created a patent system granting inventors rights over the manufacture, sale, and use of their inventions. U.S. Const., Art. I, § 8, cl. 8; see 35 U.S.C. § 154(a)(1). To win a patent, an applicant must (among other things) file "claims" that describe the invention and establish to the satisfaction of the Patent Office the invention’s novelty and nonobviousness. See § § 102, 103, 112(b), 131; Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. __, __ - __, 136 S.Ct. 2131, 2136-2137, 195 L.Ed.2d 423 (2016).

Sometimes, though, bad patents slip through. Maybe the invention wasn’t novel, or maybe it was obvious all along, and the patent owner shouldn’t enjoy the special privileges it has received. To remedy these sorts of problems, Congress has long permitted parties to challenge the validity of patent claims in federal court. See § § 282(b)(2)-(3). More recently, Congress has supplemented litigation with various administrative remedies. The first of these was ex parte reexamination. Anyone, including the Director of the Patent Office, can seek ex parte reexamination of a patent claim. § § 302, 303(a)....

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