Last week, the U.S. Supreme Court heard oral arguments in two patent cases concerning IPRs. The first case (Oil States Energy Services v. Greene's Energy Group) has garnered much of the attention because it concerns the constitutionality of IPRs, but the second case (SAS Institute Inc. v. Matal) may actually have a bigger impact on how IPRs work. In SAS, the Supreme Court considered the PTAB's practice of selecting which challenged claims it reviews, rather than, once it institutes a trial, issuing a final decision on the patentability of all claims challenged in the petition. The oral arguments suggest how the Justices are approaching the case.
Petitioners and patent owners both have reason to dislike the PTAB's practice of reviewing only some of the challenged claims in an IPR petition. For patent owners, partial institution means it may face further challenges to the claims that the PTAB declined to review, since the petitioner is often not barred from challenging those claims again. For petitioners, appeal of a partial institution decision is not typically available, while it would be if the claims were addressed in a final decision.
SAS ultimately turns on how to interpret a statutory provision that could be read to bar partial institution decisions, and during oral arguments, the Justices appeared divided. Justices Ginsburg, Breyer, Sotomayor and Kagan generally focused on the broader context of the statute, which offers support for partial institution decisions. Chief Justice Roberts and Justices Alito and Gorsuch (with whom Justice Thomas will likely join) focused more narrowly on the language of the specific statutory provisions, which, in isolation, appear to bar partial institutions.
Although this case could dramatically change IPR procedure, Justice Kennedy may be the deciding vote, and his questions suggest that only a moderate change may be needed. He asked both parties whether the PTAB could refuse to institute review unless the petitioner dropped its challenge to claims the PTAB did not want to review. This question suggests a way to continue partial institutions even if the Court finds the current procedure improper. Justice Kennedy's question could be interpreted to suggest that he is leaning that way.
However, another interpretation of his question is as an acknowledgement that current practice is proper. Both parties agreed that the PTAB could proceed as described above. Justice Kennedy may not see any meaningful difference between that and current practice, which permits the petitioner to seek dismissal if not all the challenged claims are instituted.
At this point, there is no way to know for sure whether IPR is in for a major change, minor tweak, or no change at all. Based on the questioning, a 5-4 decision seems likely, but Justice Kennedy's questions suggest that any change could be relatively insignificant—if the PTAB chooses to use the procedure he suggested. The Supreme Court's decision will likely issue early next year.
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