CAFC Won’t Review PTAB’s Change to Institution Decision

Last week, the United States Court of Appeals for the Federal Circuit issued a split decision ordering dismissal in BioDelivery Sciences Int’l, Inc. v. Aquestive Therapeutics, Inc., fka Monosol Rx, LLC, Nos. 19-1643, 19-1644, 19-1645 (August 29, 2019), because 35 U.S.C. § 314(d) barred the Court’s review. 

In 2014, BioDelivery filed three petitions for inter partes review (IPR) of Aquestive’s U.S. Patent No. 8,765,167. Each petition asserted multiple grounds of unpatentability. The Patent Trial and Appeal Board instituted review, but only as to a single ground of each petition, finding BioDelivery failed to establish a reasonable likelihood of prevailing on the merits as to the other asserted grounds. In its final written decisions, the Board sustained the patentability of all claims subject to the instituted challenges. BioDelivery appealed. While the appeal was pending, the Supreme Court issued its decision in SAS Institute, Inc. v. Iancu, which forbade partial institution on IPR petitions containing multiple grounds. The Federal Circuit granted a motion by BioDelivery to vacate and remand the Board’s decisions with instructions “to implement the [Supreme] Court’s decision in SAS.” On remand, the Board decided to modify its institution decisions, deny the petitions, and terminate the proceedings. BioDelivery again appealed, and Aquestive moved to dismiss the appeals under § 314(d).

The Federal Circuit panel majority granted Aquestive’s motion, and dismissed the appeals. The Court explained “Section 314(d) plainly states that the Patent Office’s decision whether to institute IPRs is not appealable.” The Court rejected BioDelivery’s argument that, once instituted, IPRs must proceed through final written decision. In support of its conclusion, the Court cited § 318(a)’s provision that a proceeding can be “dismissed” after it is instituted, as well as the notion that administrative agencies possess inherent authority to reconsider their decisions even absent explicit statutory authority to do so. The Court explained that, while the Board initially erred under SAS in instituting only partial review, the remand permitted the Board to remedy that error by either instituting on all grounds or instituting on none. The Court held the Board’s decision choosing the latter is not reviewable.

Judge Newman, in dissent, asserted that the Federal Circuit’s remand order required the Board to institute on all grounds rather than revising its institution decision to decline review on any. In Judge Newman’s view, the PTAB’s decision improperly “discarded these three completed IPR cases as if they had never occurred.”

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