Patent Trial and Appeal Board (PTAB) : CAFC Alert

CAFC splits the difference between VLSI and Intel on Claim Construction

| December 28, 2022

VLSI Technology LLC v. Intel Corp.

Decided: November 15, 2022

CHEN, BRYSON, and HUGHES. Opinion by Bryson


The Court affirmed the PTAB’s claim construction which had narrowed an interpretation taken from the related District Court’s construction and remanded on a separate claim construction for reading a “used for” aspect out of the claim.


Intel filed three IPR’s against VLSI’s  U.S. Patent No. 7,247,552 (“the ’552 patent”).  The ’552 patent is directed to the structures of an integrated circuit that reduce the potential for damage to the interconnect layers and dielectric material when the chip is attached to another electronic component.  The two representative claims were claim 1 directed to a device and claim 20 directed to a method.  The terms subject to construction are emphasized below.

1. An integrated circuit, comprising:
a substrate having active circuitry;
a bond pad over the substrate;
a force region at least under the bond pad characterized by being susceptible to defects due to stress applied to the bond pad;
a stack of interconnect layers, wherein each interconnect layer has a portion in the force region; and
a plurality of interlayer dielectrics separating the interconnect layers of the stack of interconnect layers and having at least one via for interconnecting two of the interconnect layers of the stack of interconnect layers;
wherein at least one interconnect layer of the stack of interconnect layers comprises a functional metal line underlying the bond pad that is not electrically connected to the bond pad and is used for wiring or interconnect to the active circuitry, the at least one interconnect layer of the stack of interconnect layers further comprising dummy metal lines in the portion that is in the force region to obtain a predetermined metal density in the portion that is in the force region.

20. A method of making an integrated circuit having a plurality of bond pads, comprising:
developing a circuit design of the integrated circuit;
developing a layout of the integrated circuit according to the circuit design, wherein the layout comprises a plurality of metal-containing interconnect layers that extend under a first bond pad of the plurality of bond pads, at least a portion of the plurality of metal-containing interconnect layers underlying the first bond pad and not electrically connected to the bond pad as a result of being used for electrical interconnection not directly connected to the bond pad;
modifying the layout by adding dummy metal lines to the plurality of metal-containing interconnect layers to achieve a metal density of at least forty percent for each of the plurality of metal-containing interconnect layers; and
forming the integrated circuit comprising the dummy metal lines.

VLSI had brought suit in the District of Delaware, charging Intel with infringing the ’552 patent. The District court construed the term “force region,” referencing the specification of the ’552 patent to mean a “region within the integrated circuit in which forces are exerted on the interconnect structure when a die attach is performed.”  In the IPRs Intel proposed a construction of “force region” that was consistent with that adopted by the district court and VLSI did not oppose Intel’s proposed construction before the Board.

However, in the course of the IPR proceedings it became apparent that they disagreed as to the meaning of the term “die attach” as set forth in the District court construction.

Intel argued that the term “die attach” refers to any method of attaching the chip to another electronic component, and that the term “die attach” therefore includes attachment by a method known as wire bonding. VLSI argued that the term “die attach” refers to a method of attachment known as “flip chip” bonding, and does not include wire bonding. 

The construction was paramount to claim 1 as applying its proposed restrictive definition of “die attach,” VLSI distinguished Intel’s principal prior art reference for the “force region” limitation, U.S. Patent Publication No. 2004/0150112 (“Oda”). Oda discloses attaching a chip to another component using wire bonding but not the flip chip process.

The Board sided with Intel that wire bonding is a type of die attach, and that Oda therefore disclosed a “force region”.  Specifically, the Board found that the ’552 patent specification made clear in several places that the term “force region” was not limited to flip chip bonding, but could include wire bonding as well. Based on that finding, the Board concluded that Oda disclosed the “force region” element of claim 1 and was unpatentable for obviousness.

            Regarding claim 20 of the ’552 patent, the parties disagreed over the construction of the limitation providing that the “metal-containing interconnect layers” are “used for electrical interconnection not directly connected to the bond pad.” VLSI argued that the phrase requires a connection to active circuitry or the capability to carry electricity.  Intel argued that the claim does not require that the interconnection actually carry electricity.

The Board again sided with Intel, asserting the principally relied upon U.S. Patent No. 7,102,223 (“Kanaoka”) teaches the “used for electrical interconnection” limitation.  The Board cited to figure 45 of Kanaoka for its disclosure of a die that has a series of interconnect layers, some of which are connected to each other.

VLSI appealed.

CAFC Decision:

VLSI argued that the Board erred in its treatment of the “force region” limitation in claim 1 and in construing the phrase “used for electrical interconnection” in claim 20 to encompass a metallic structure that is not connected to active circuitry.

            Claim 1

Regarding the “force region” limitation, VLSI argued that the Board failed to acknowledge and give appropriate weight to the district court’s claim construction.  In particular, VLSI based its argument principally on the requirement that the Board “consider” prior claim construction determinations by a district court and give such prior constructions appropriate weight.

However, the CAFC found that the Board was clearly well aware of the district court’s construction, as it was the subject of repeated and extensive discussion in the briefing and in the oral hearing before the PTAB.  Further, the Court found that the Board did not reject the district court’s construction, but rather the district court’s construction concealed a fundamental disagreement between the parties as to the proper construction of “force region.”

They held that although the district court defined the term “force region” with reference to “die attach” processes, the district court did not decide— and was not asked to decide—whether the term “die attach,” as used in the patent, included wire bonding or was limited to flip chip bonding.  Thus, the CAFC found that the Board addressed an argument not made to the district court, and it reached a conclusion not at odds with the conclusion reached by the district court.

In reaching their decision, the Court noted that other language in the specification of the ‘552 patent indicates that the claimed “force region” is not limited to attachment processes that use flip chip bonding.  Restating precedence that claims should not be limited “to preferred embodiments or specific examples in the specification,”  they emphasized that even if the term “die attach,” was used in one section of the specification to refer to flip chip bonding in particular other portions of the specification did make clear that the invention was not intended to be limited to flip chip bonding.

VLSI further contended that defining “force region” to mean a region at least directly under the bond pad is legally flawed because the definition restates a requirement that is already in the claims.  The Court noted that although caselaw has emphasized redundant construction should not be used, in this case intrinsic evidence makes it clear that the “redundant” construction is correct.  Specifically, they stated that the “force region” limitation is best understood as containing a definition of the force region, (“… just as would be the case if the language of the limitation had read ‘a region, referred to as a force region, at least under the bond pad . . .’ or ‘a force region, i.e., a region at least under the bond pad . . . .’), and concluded that the language “is best viewed not as redundant, but merely as clumsily drafted.”

Additionally, VLSI argued the Board was bound by the district court’s and the parties’ agreed upon claim construction, regardless of whether the construction to which the parties agree is actually the proper construction of that term, citing the Supreme Court’s decision in SAS Institute v. Iancu, 138 S. Ct. 1348 (2018), and the CAFC’s decisions in Koninklijke Philips N.V. v. Google LLC, 948 F.3d 1330 (Fed. Cir. 2020), and In re Magnum Oil Tools International, Ltd., 829 F.3d 1364 (Fed. Cir. 2016). 

The Court rejected VLSI’s interpretation of the precedent set by the cases.  Instead, they noted that each of these cases in fact stands for the proposition that the petition defines the scope of the IPR proceeding and that the Board must base its decision on arguments that were advanced by a party and to which the opposing party was given a chance to respond. They affirmatively stated that none of the relied upon cases prohibits the Board from construing claims in accordance with its own analysis and may adopt its own claim construction of a disputed claim term.   Specifically, as to the case at hand, they noted the parties’ very different understandings of the meaning of the term “die attach,” and that it was clear in the Board proceedings that there was no real agreement on the proper claim construction.  They conclude that in such a situation, it was proper for the Board to adopt its own construction of a disputed claim term.

Based thereon, the Court affirmed the claim construction of “force region” and the PTAB’s application of the Oda prior art reference. 

Claim 20

Regarding claim 20, VLSI argued that the Board erred in construing the phrase “used for electrical interconnection not directly connected to the bond pad,”. As noted above, the Board had held that this phrase encompasses interconnect layers that are “electrically connected to each other but not electrically connected to the bond pad” or to any other active circuitry.  VLSI asserted that under its proposed construction, the Kanaoka reference does not disclose the “used for electrical interconnection” limitation of claim 20, because the metallic layers are connected by the vias only to one another; they do not carry electricity and are not electrically connected to any other components.

The Court agreed with VLSI that the Board’s construction of the phrase “used for electrical  interconnection not directly connected to the bond pad” was too broad, noting that two aspects of the claim make this point clear. First, the use of the words “being used for” in the claim imply that some sort of actual use of the metal interconnect layers to carry electricity is required. Second, the recitation of “dummy metal lines” elsewhere in claim 20 implies that the claimed “metal-containing interconnect layers” are capable of carrying electricity; otherwise, there would be no distinction between the dummy metal lines and the rest of the interconnect layer. The Court further noted that the file history of the ’552 patent and amendments made during prosecution provided additional support for this conclusion.

Furthermore, they noted that the phrase “as a result of being used for electrical interconnection not directly to the bond pad” was meant to serve some purpose and should be construed to have some independent meaning, citing Merck & Co. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1372 (Fed. Cir. 2005) (“A claim construction that gives meaning to all the terms of the claim is preferred over one that does not do so.”). Thus, they concluded that the words “being used for” imply that the interconnect layers are at least capable of carrying electricity.

The Court therefore remanded the patentability determination of claim 20 to the Board to assess Intel‘s obviousness arguments in light of their new construction of the “used for electrical interconnection” limitation.

Take away

            The PTAB is not hamstrung by prior claim construction reached in a District Court action.  The Board may construe claims in accordance with its own analysis and may adopt its own claim construction of a disputed claim term.

            The recitation of an operational function (“being used for”) in a claim should not be ignored in claim construction.  The claim language should be taken as a whole and other aspects of the claim (“dummy metal lines”) which infer an interpretation should be considered.

Forum Selection Clause Can Prevent IPR Fights

| March 25, 2022

Nippon Shinyaku Co., Ltd. v. Sarepta Therapeutics, Inc.

Decided on February 8, 2022

Lourie (author), Newman, and Stoll


The Federal Circuit reversed the district decision’s denial of a preliminary injunction for Nippon Shinyaku because its agreement with Sarepta was clear to exclude filing IPR petitions, and Sarepta’s filing of IPR petitions clearly breached the agreement with Nippon Shinyaku.


            On June 1, 2020, Nippon Shinyaku and Sarepta Therapeutics, Inc. (“Sarepta”) executed a Mutual Confidentiality Agreement (“MCA”) to enter into discussions for a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy (“DMD”).

            Section 6 of the MCA included a mutual covenant not to sue during the Covenant Term[1]:

shall not directly or indirectly assert or file any legal or equitable cause of action, suit or   claim or otherwise initiate any litigation or other form of legal or administrative proceeding against the other Party . . . in any jurisdiction in the United States or Japan of or concerning intellectual property in the field of Duchenne Muscular Dystrophy.

            Section 6 further stated:

For clarity, this covenant not to sue includes, but is not limited to, patent infringement litigations, declaratory judgment actions, patent validity challenges before the U.S. Patent and Trademark Office or Japanese Patent Office, and reexamination proceedings before the U.S. Patent and Trademark Office . . . .

            After the expiration of the Covenant Term, the forum selection clause in Section 10 of the MCA is applied:

[T]he Parties agree that all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware and that neither Party will contest personal jurisdiction or venue in the District of Delaware and that neither Party will seek to transfer the Potential Actions on the ground of forum non conveniens.

            Here, “Potential Actions” is defined as “any patent or other intellectual property disputes between [Nippon Shinyaku] and Sarepta, or their Affiliates, other than the EP Oppositions or JP Actions, filed with a court or administrative agency prior to or after the Effective Date in the United States, Europe, Japan or other countries in connection with the Parties’ development and commercialization of therapies for Duchenne Muscular Dystrophy.”

            The Covenant Term ended on June 21, 2021, at which point the two-year forum selection took effect.  On June 21, 2021, Sarepta filed seven petitions for IPR.

District Court

            On July 13, 2021, Nippon Shinyaku filed a complaint in the U.S. District Court for the District of Delaware asserting claims against Sarepta for breach of contract, among other things.  Nippon Shinyaku alleged that Sarepta breached the MCA by filing seven IPR petitions.  Nippon Shinyaku filed a motion for a preliminary injunction to enjoin Sarepta from proceeding with IPR petitions.

            On September 24, 2021, the district court denied Nippon Shinyaku’s motion for a preliminary injunction and issued its memorandum order with the following reasons:

  • There would be a “tension” that would exist between Sections 6 and 10 if the forum selection clauses were interpreted to exclude IPRs.
  • Section 10 applies only to cases filed in federal court.
  • Practical effects of interpreting Section 10 as excluding IPRs for two years following the Covent Term.
  • Finally, Nippon Shinyaku did not meet its burden on second (suffer irreparable harm), third (balance of hardship), fourth (public interest) PI factors in order to obtain a preliminary injunction.

Federal Circuit

            The CAFC reviewed a denial of a preliminary injunction using the law of the regional circuit (Third Circuit) for abuse of discretion. 

            The CAFC focused on the court’s interpretation of the MCA.

            Based on the plain language of the forum selection clause in Section 10 of the MCA, the CAFC held that the forum selection clause is unambiguous because the definition of “Potential Actions” includes “patent or other intellectual property disputes… filed with a court or administrative agency,” and the district court acknowledged that the definition of Potential Actions literally encompasses IPRs.

            The CAFC held that under the plain language of Section 10, Sarepta should have brought all disputes regarding the invalidity of Nippon Shinyaku’s patents in the District of Delaware. 

            The CAFC rejected Sarepta’s argument that IPR petitions must be filed in the federal district court in Delaware.  Also, the CAFC held that there is no conflict or tension between Sections 6 and 10.  The CAFC noted that this reflects harmony, not tension between two sections and this framework is “entirely consistent with our interpretation of the plain meaning of the forum selection clause.” 

            Finally, the CAFC noted that other factors of a preliminary injunction favored Nippon Shinyaku.  As for irreparable harm, the CAFC agreed with Nippon Shinyaku’s argument that they would be “deprived of its bargained-for choice of forum and forced to litigate its patent rights in multiple jurisdictions.”  As for balance of hardships, Nippon Shinyaku would suffer the irreparable harm, and Sarepta would potentially get multiple chances at a forum it bargained away.  As for public interest, the CAFC rejected any notion that there is “anything unfair about holding Sarepta to its bargain.”

            Therefore, the CAFC reversed the decision of the district court and remanded for entry of a preliminary injunction.


  • Companies will need to be extra careful when drafting nondisclosure and joint development agreements now that the CAFC held that clauses in those agreements can give up right to file challenges at the PTAB.
  • Contracts can be used to waive the right to AIA review.
  • This is a cautionary tale for attorneys to start paying attention to boilerplate parts of contracts.
  • This is the first time that the CAFC held that it is not again the public interest to have forum selection clauses that exclude PTAB proceedings.

[1] Covenant Term is defined as “the time period commencing on the Effective Date and ending upon twenty (20) days after the earlier of: (i) the expiration of the Term, or (ii) the effective date of termination.”

The “inferior” Board: Supreme Court preserves the Patent Trial and Appeal Board, but empowers the PTO Director with final decision-making authority over Board proceedings

| July 13, 2021

United States v. Arthrex, Inc. (also, Smith & Nephew, Inc. v. Arthrex, Inc., Arthrex, Inc. v. Smith & Nephew, Inc.) (Supreme Court)

Decided on June 21, 2021

Chief Justice Roberts wrote the opinion of the Court, with Justices Alito, Thomas, Breyer, Sotomayor, Kagan, Gorsuch, Kavanaugh, and Barrett variously concurring and dissenting.[1]


In U.S. v. Arthrex, the U.S. Supreme Court confirmed that the Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board are improperly appointed in violation of the Appointments Clause of the Constitution. The Court held that 35 U.S.C. §6(c), which provided that only the Board may grant a rehearing of a final decision arising out of an inter partes review proceeding, was unenforceable insofar as the provision denied the Director the power to review the Board’s decision. To cure the constitutional infirmity, the Court held that the correct remedy was to require that the Director review decisions by APJs.


When Arthrex, Inc. saw their U.S. Patent No. 9,179,907 being invalidated by the Patent Trial and Appeal Board, in an inter partes review brought by Smith & Nephew, Inc., they appealed to the Federal Circuit, challenging not only the substance of the Board’s Final Written Decision, but also the constitutionality of the Board. Arthrex argued that the appointment of the Administrative Patent Judges (APJs) violated the Appointments Clause of the Constitution. And being unconstitutionally appointed, the APJs had no authority to deprive Arthrex of their rights in their patent.

Arthrex’s constitutionality argument might have started out as a long-shot. It was the last of their four arguments on appeal, and occupied only 7 of their 149-page opening brief. Remarkably, it was the one that brought Arthrex the most success.

The Appointments Clause (Art. II, §2, cl. 2) of the Constitution provides that principal officers in the U.S. government must be appointed by the President “and by and with the Advice and Consent of the Senate”. But the Appointments Clause also provides that inferior officers may be appointed by “the President alone, in the Courts of Law, or in the Heads of Departments.”

The America Invents Act of 2011 established the Patent and Trial Appeal Board as a tribunal within the Executive Branch. The Board sits in panels of at least three members drawn from the PTO Director, PTO Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and APJs. The Secretary of Commerce appoints the members of the Board, except for the Director, who is appointed by the President.

On appeal at the Federal Circuit, the principal question was whether APJs were principal officers or inferior officers, the former requiring appointment by the President as opposed to the Secretary of Commerce.

To answer the question, the Federal Circuit looked mainly to Edmonds v. United States, 520 U.S. 651 (1997).

In Edmonds, the Supreme Court explained that “[w]hether one is an ‘inferior’ officer depends on whether he has a superior”, and “‘inferior officers’ are officers whose work is directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate”. Edmonds, 520 U.S. at 662-63. The Supreme Court in Edmonds articulated three factors that aided in distinguishing between principal and inferior officers: (1) whether an appointed official has the power to review and reverse the officers’ decision; (2) the level of supervision and oversight an appointed official has over the officers; and (3) the appointed official’s power to remove the officers. Id. at 664-65. The central consideration was the “extent of direction or control” that the appointed officials had over the officers, because the objective was to preserve the chain of command down from the President, so that “political accountability” may be preserved. Id. at 663.

Following Edmonds,the Federal Circuit found that APJs were principal officers due to the lack of any presidentially appointed officials who could review decisions by APJs, as well as the lack of unfettered authority on the part of the Secretary of Commerce and Director to remove APJs at will. Because APJs were found to be principal officers, their appointments by the Secretary of Commerce, instead of the President, violated the Appointments Clause.

Having found a constitutional violation, the Federal Circuit then fashioned a remedy that severed and invalidated the statutory limitations on the removal of APJs. The Federal Circuit reasoned that making APJs removable at will would render them inferior officers. The Federal Circuit also determined that, because the invalidity decision against Arthrex’s patent was issued by an unconstitutionally appointed Board, the decision must be vacated and remanded to the Board for a fresh hearing before a panel of new, constitutionally appointed APJs.

“This satisfied no one”, as the Supreme Court reflected in U.S. v. Arthrex.

All the parties involved in the Federal Circuit appeal—the government, Arthrex, Smith & Nephew—requested the Court’s review of different aspects of the Federal Circuit’s decision.

Nevertheless, the question before the Court was the same one that faced the Federal Circuit: “[W]hether the PTAB’s structure is consistent with the Appointments Clause, and the appropriate remedy if it is not.”

In a divided 5-4 decision, the Court agreed with the Federal Circuit that APJs were unconstitutionally appointed, but disagreed with the Federal Circuit on the appropriate remedy.

The Court began with the premise that “Congress provided that APJs would be appointed as inferior officers, by the Secretary of Commerce as head of a department”. However, the nature of the APJs’ authority was such that they were really acting as principal officers.

The problem was the lack of supervision over the APJs’ decision-making:

What was “significant” to the outcome [in Edmonds]—review by a superior executive office—is absent here: APJs have the “power to render a final decision on behalf of the United States” without any such review by their nominal superior or any other principal officer in the Executive Branch. The only possibility of review is a petition for rehearing, but Congress unambiguously specified that “[o]nly the Patent and Trial Appeal board may grant rehearings.” [35 U.S.C. § 6(c)]. Such review simply repeats the arrangement challenged as unconstitutional in this suit.

The current setup “diffuses” accountability. The Court recognized that “[he, the Director] is the boss” of APJs in most ways, but the Court was troubled by the Director’s powerlessness over the one source of APJs’ “significant authority”—their power to issue decisions on patentability. In that regard, the Director is relegated to the ministerial duty of issuing a certificate canceling or confirming patent claims. As the Court noted, “[t]he chain of command runs not from the Director to his subordinates, but from the APJs to the Director”.

The government attempted to drum up the Director’s influence over the Board’s decision-making. The government argued that it was the Director who decided whether to initiate inter partes reviews, who could designate APJs predisposed to his views to hear a case, who could vacate an institution decision “if he catches wind of an unfavorable ruling on the way” as long as he intervened before a final written decision, who could “manipulate the composition of the PTAB panel that acts on the rehearing petition”, who could “‘stack’ the panel at rehearing, and who could appoint himself to a panel to reverse a decision at rehearing.

Putting aside the troubling due process and fairness concerns raised by the alleged influences of the Director, the Court criticized the government for creating “a roadmap for the Director to evade a statutory prohibition on review [i.e., 35 U.S.C. § 6(c)] without having him take responsibility for the ultimate decision”:

Even if the Director succeeds in procuring his preferred outcome, such machinations blur the lines of accountability demanded by the Appointments Clause. The parties are left with neither an impartial decision by a panel of experts nor a transparent decision for which a politically accountable officer must take responsibility. And the public can only wonder “on whom the blame or the punishment of a pernicious measure, or series of pernicious measures ought really to fall.”

All this led to the Court’s conclusion that “the unreviewable authority wielded by the APJs during inter partes review is incompatible with their appointment by the Secretary to an inferior office”.

For a solution, the Court disagreed with the Federal Circuit that at-will removal of APJs was the answer. The unconstitutionality of the APJs’ appointments lay in the unreviewability of their decisions, and the Federal Circuit’s proposed solution did not adequately address that problem. The solution must instead empower the Director to review Board decisions:

In our view, however, the structure of the PTO and the governing constitutional principles chart a clear course: Decisions by APJs must be subject to review by the Director.

More particularly, the Court explained that:

The upshot is that the Director cannot rehear and reverse a final decision issued by APJs. If the Director were to have the “authority to take control” of a PTAB proceeding, APJs would properly function as inferior officers.

We conclude that a tailored approach is the appropriate one: Section 6(c) cannot constitutionally be enforced to the extent that its requirements prevent the Director from reviewing final decisions rendered by APJs….The Director may accordingly review final PTAB decisions and, upon review, may issue decisions himself on behalf of the Board. Section 6(c) otherwise remains operative as to the other members of the PTAB.

The Director’s decision is then subject to judicial review:

When reviewing such a decision by the Director, a court must decide the case “conformably to the constitution, disregarding the law” placing restrictions on his review authority in violation of Article II.

Finally, the Court vacated the Federal Circuit’s decision to grant Arthrex a hearing before a new panel of APJs. The Court found sufficient their remedy of a limited remand to the Director to determine whether to rehear Smith & Nephew’s inter partes review petition.

There are few interesting aspects to the Court’s Arthrex opinion.

The Court’s holding is narrow. It applies only to 35 U.S.C. §6(c), which currently provides that “[o]nly the Patent Trial and Appeal Board may grant rehearings”, and only to the extent that section 6(c) prohibits the Director from reviewing the Board’s decisions. The holding also applies only to inter partes reviews—the Court is explicit that “[w]e do not address the Director’s supervision over other types of adjudications conducted by the PTAB, such as the examination process for which the Director has claimed unilateral authority to issue a patent”.

In other words, the Court’s decision is unlikely to bring any radical changes to the Board.

It is also notable that Chief Justice Roberts wrote the majority opinion in Arthrex. In Oil State energy Services, LLC v. Greene’s Energy Group, LLC, 138 S.Ct. 1365 (2018), the Supreme Court held that patent grants involved public rights and the Board’s adjudication of patents without a jury, despite not being an Article III tribunal, was constitutionally permissible. But Chief Justice Roberts joined in the dissenting opinion in that case. The dissent was resolute that the Director and the Board, that is, “a politically appointee and his administrative agents, instead of an independent judge”, should not be permitted to adjudicate patents. Id. at 1380. That is, patent adjudication should be insulated from politics. During the oral argument in Oil State, Chief Justice Roberts raised due process concerns over the Director’s ability to influence Board decisions through panel stacking.

Yet, in Arthrex, Chief Justice Roberts would give the politically appointed Director plenary power to review, modify, and even nullify a Board decision, potentially making the Board vulnerable to political influences. How can Chief Justice Roberts’ positions in Oil State and Arthrex be reconciled?

The Court’s decision in Arthrex also touches on the complex relationship between the PTO, which is an agency, the Board, which is an adjudicatory within the agency, and the Administrative Procedure Act (APA) that is supposed to govern their actions.

The Federal Circuit has suggested in the past that proceedings before the Board are APA-governed formal adjudication subject to the formal adjudication procedures set forth in 5 U.S.C. §§556-557. However, the Court in Arthrex suggested that Board proceedings were actually “adjudication that takes place outside the confines of §557(b)”. If Board proceedings are not subject to the APA, then what, if any, regulatory scheme governs Board proceedings to ensure procedural fairness?

In addition, the plain language of the statutes seems to already authorize the Director to grant rehearings. Section 6(a) provides that “[t]he Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Patent Trial and Appeal Board”, and section 6(c) provides that “[o]nly the Patent Trial and Appeal Board may grant rehearings”. Is the Court really rewriting the statute by giving the Director reviewing powers? Or is the Court merely making explicit what Congress had already intended?

Interestingly, the Court’s opinion referred to the Trademark Modernization Act of 2020, which makes explicit that “the authority of the Director…includes the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board”.  The Trademark Modernization Act of 2020 thus shields the Trademark Trial and Appeal Board from copycat constitutional challenges.

What now?

The PTO will now need to issue guidance on how the Court’s holding will be implemented. The PTO’s existing Standard Operating Procedure 2[2] appears to provide a procedural framework for requesting rehearing by the Director, as the SOP2 already establishes the Director’s authority to convene a “Precedential Opinion Panel” to review decisions in cases before the Board and determine, in the Director’s sole discretion, whether to order sua sponte rehearing.

The PTO has its work cut out. Following the Federal Circuit’s decision in Arthrex, Inc. v. Smith & Nephew, Inc., the Chief Administrative Patent Judge of the Board issued a general order holding in abeyance more than 100 Board decisions from post-grant proceedings, which were remanded as a result of the Federal Circuit’s Arthrex­ decision. See General Order in Cases Remanded under Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) (Boalick, Chief APJ, PTAB, May 2020).

Also complicating the situation is the current absence of a Director at the PTO. Is a Commissioner of Patent, serving as an Acting Director, constitutionally authorized to review and potentially modify Board decisions? Can the Secretary of Commerce step in while the PTO awaits a new Director?

[1] This review will focus only on the majority opinion.


The appeal to the Federal Circuit would be an option if a motion to stay pending the CBM review is denied

| December 18, 2014

Versata Software, Inc. v. Callidus Software, Inc.

November 20, 2014

Panel: Chen, Mayer, and Linn. Opinion by Chen.


Callidus appealed from the U.S. District Court for the District of Delaware’s denial of a stay pending the PTO’s CBM review of the patents-in-suit.  The Federal Circuit used a four factor test set forth in AIA §18(b) to hold that each factor strongly favors a stay, thereby reversing and remanding with instructions to grant the motion to stay.

본 사건은 피고인 Callidus가 델라웨어주 연방지방법원의 특허재심사 절차 진행 중인 특허 소송에 대한 중지청구(motion to stay) 판결에 불복하여 연방항소법원에 상고한 사건이다.  판결에서 연방항소법원은 18(b)조에 있는 4가지 요소 모두 현 소송 진행상황상 미 특허청의 특허재심사 절차 (CBM) 결과를 기다리는 것이 타당하다고 판결하였다.  따라서, 연방항소법원은 개정 특허법 18(b)조에 의거하여 연방지방법원의 중지청구 판결을 번복하였다.

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