Does the APA give a patent owner a second way to appeal an IPR? SECURITY PEOPLE v. IANCU,

Does the APA give a patent owner a second way to appeal an IPR? SECURITY PEOPLE v. IANCU,

The America Invents Act of 2011 introduced a number of new innovations to United States Patent law, the most notable innovation being the inter partes review.  Inter partes review is a trial proceeding conducted at the Patent Trial and Appeal Board to review the patentability of one or more claims in a patent only on a ground that could be raised under §§ 102 or 103, and only on the basis of prior art consisting of patents or printed publications.

During the prosecution of a patent application, the inventor and the patent examiner do their best to consider all the relevant prior but sometimes relevant prior art is overlooked.  If a member of the public discovers a piece of prior art which anticipates a patent which has been granted they may request an inter partes review of the patent.  An inter partes review can result in invalidation of some or all of the claims of a patent.

Inter partes review is intended to fight bad patents. Bad patents are patents which should not have been granted because the patent application was defective. Stated differently, inter partes review are a way to ask the United States Patent and Trademark Office to rescind a patent which was granted in error.  Before inter partes review a patent which had been granted could only be challenged in federal court,  a long and expensive process.  Inter partes review created a parallel track to challenge the validity of a patent which was much faster and less expensive than litigation in a federal court.

Patent law does not exist in a vacuum.  United States Patent and Trademark Office is an administrative agency and is subject to the Administrative Procedure Act.   The APA governs the process by which federal agencies develop and issue regulations. The APA also addresses other agency actions such as issuance of policy statements, licenses, and permits.  If an administrative agency acts outside its authority the APA grants federal courts the ability to review agency decisions.  The question then becomes, does the APA apply to the inter partes review process?

SECURITY PEOPLE, INC. v. IANCU, 19-2118 (C.A.F.C. 2020) is a case which addresses this question.

Security People obtained U.S. Patent No. 6,655,180, “Locker Lock with Adjustable Bolt,” in 2003.  In 2015 a competitor of Security People petitioned for review of certain claims of the ’180 patent, after being sued for patent infringement. The Patent Trial and Appeal Board instituted an IPR and issued a final written decision finding the sole instituted claim unpatentable.  The Court of Appeals for the Federal Circuit affirmed the PTAB’s decision.  The United States Supreme Court declined to hear the case.

After the United States Supreme Court denied certiorari, Security People filed suit against the USPTO in California District Court.  The complaint alleged that as an administrative agency the PTAB violated the Administrative Procedure Act because the PTAB did not have the constitutional authority to deprive Security People of its property right in the ‘180 patent.  The District Court dismissed the case for lack of subject matter jurisdiction and Security People appealed again to the Federal Circuit.

The Federal Circuit found that the text of 35 U.S.C. § 141(c) makes it clear IPR final written decisions are precluded from district court judicial review.  A party to an inter partes review who is dissatisfied with the final written decision of the PTAB may appeal the decision only to the United States Court of Appeals for the Federal Circuit.

The Federal Circuit held that the APA does not allow a collateral attack on an agency decision for which it has already had the opportunity for comprehensive review. Allowing patentees to collaterally attack IPR decisions through suits under the APA would destroy the Patent Act’s careful framework for judicial review at the behest of particular persons through particular procedures.

Based on these finding the Federal Circuit affirmed the District Court’s decision to dismiss the case.

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