In Polaris Innovations Ltd. v. Brent, No. 2019-1483, 2022 WL 4241665 (Fed. Cir. Sept. 15, 2022), the Federal Circuit faced an appeal that had bounced back and forth between the Court and Patent Trial and Appeal Board ("the Board") several times while it was caught in the administrative ambiguity resulting from the Arthrex decision. Although the Court made several substantive decisions about the patents at issue in the two inter partes review ("IPR") proceedings, this article will focus on the interaction of settlement, attempted termination, and appeal resulting from the unusual procedural posture of the case.
The timing of the IPR decisions underlying the Federal Circuit appeal created an unusual situation. NVIDIA challenged two patents owned by Polaris Innovations Limited, U.S. Patent Nos. 6,532,505 and 7,405,993, in two IPR proceedings. Polaris appealed to the Federal Circuit after the Patent Trial and Appeal Board determined that all challenged claims were unpatentable. During the appeal, NVIDIA and Polaris settled. As a result of this, the Patent Office intervened to defend the Board's decision. In this first round of appeals to the Federal Circuit, the Court vacated the decision and remanded in light of Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), which raised Appointments Clause issues affecting IPRs generally. On remand, the IPRs were administratively suspended pending Supreme Court review of the Arthrex decision. When the Supreme Court vacated the Arthrex decision, the Board's decisions in the IPRs were reinstated.
After the parties settled, Polaris had sought to terminate the IPRs. Now that the IPR decisions were reinstated, Polaris asked the Board to grant Polaris' still-pending motion to terminate the IPRs. The Board determined that the Final Decisions in each IPR were no longer vacated so no further action by the Board was necessary, and therefore termination was inappropriate. Instead, Polaris could request review by the Director. The Director denied rehearing. Polaris appealed, asking the Federal Circuit to vacate the Board's final decisions and remand for termination of the IPRs. The Court disagreed.
The Federal Circuit agreed with the Board's decision that the motions to terminate were untimely. The Board addressed settlement under 35 U.S.C. 317(a):
An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner's institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).
Here, settlement and the motions to terminate occurred after a final written decision of the Board.
The Court found that Polaris was incorrect on a few points. First, regardless of the timing, the Board was not obligated to terminate the proceeding. Under certain conditions, the mandatory termination is with respect to "any petitioner," not the proceeding itself. The statute permits the Board to proceed to a final written decision, even if no petitioner remains in the proceeding.
Second, the Court found the Board correctly identified Polaris' motion to terminate as untimely. The final written decisions of the IPRs issued more than a year earlier. The decisions were vacated for a period of time while the Supreme Court considered Arthrex, but afterward, the decisions were no longer vacated and were reinstated. When the Board considered the motion to terminate, no new final written decision by the Board was needed. Accordingly, termination of an already completed IPR was not appropriate.
The Federal Circuit also rejected Polaris' other arguments that the Board's decision was arbitrary. For example, one such argument was the arbitrariness of the extended time it took the Board to act on the motions to terminate. The Court did not view this as the type of arbitrary decision contemplated by the Administrative Procedure Act.
As the Federal Circuit succinctly summarized "the Board had already decided the merits of the cases in final written decisions that were not vacated at the time the Board made its decision denying Polaris's motions to terminate. This determination was not arbitrary." Polaris Innovations Ltd. v. Brent, No. 2019-1483, 2022 WL 4241665, at *7 (Fed. Cir. Sept. 15, 2022).
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