2019 patent litigation year in review

Last year struck many as a quiet year in patent law, with the U.S. Court of Appeals for the Federal Circuit issuing no en banc decisions and the U.S. Supreme Court declining to further clarify subject matter eligibility under 35 U.S.C. Section 101.

But there were still important decisions to be had. The Supreme Court addressed the ramifications of a confidential sale under Section 102(a)(1)'s "on sale" bar (Helsinn), the right of federal agencies to avail themselves of post-issuance relief (Return Mail), and the application of the American Rule to the payment of U.S. Patent Office expenses (Nantkwest).

The Federal Circuit considered the time bar for instituting inter partes review (Power Integrations), sovereign immunity in Patent Trial and Appeal Board proceedings (Regents of the University of Minnesota), the PTAB's right to decline institution (Biodelivery Sciences), and the constitutionality of the appointment of PTAB judges (Arthrex). The Federal Circuit's decisions highlight the continuing importance of the PTAB to contemporary patent litigation.

Summaries of the most significant patent cases of 2019 appear below.

Helsinn Healthcare v. Teva Pharmaceuticals

In Helsinn Healthcare v. Teva Pharmaceuticals, 139 S. Ct. 628 (2019), the Supreme Court held that an inventor's sale of an invention to a third party who is obligated to keep the invention confidential places the invention "on sale." Under 35 U.S.C. Section 102(a)(1), an individual is not entitled to a patent if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention." The court had previously determined in Pfaff v. Wells Electronics, Inc. that an invention was "on sale" within the meaning of an earlier version of the statute when it was the "subject of a commercial offer for sale" and "ready for patenting" without requiring that the sale make the details of the invention available to the public. 525 U.S. 55, 67 (1998). In concluding that a confidential sale is still a sale under the current "on sale" bar, the court reasoned that the America Invents Act of 2011's reenactment of the phrase "on sale" did not alter this meaning.

Return Mail v. U.S. Postal Service

In Return Mail v. U.S. Postal Service, 139 S. Ct. 1853 (2019), the Supreme Court held that a federal agency cannot seek post-issuance review. The AIA provides for three forms of post-issuance review: inter partes review, post-grant review, and covered-business method review. Each form of review may only be sought by a "person." 35 U.S.C. Sections 311(a), 321(a); AIA Section 18(a)(1)(B), 125 Stat. 330. The court found that federal agencies were not persons, observing that it has long presumed that "person" does not include the sovereign and that the AIA does not indicate otherwise.

Peter v. NantKwest

In Peter v. NantKwest, 140 S. Ct. 365 (2019), the Supreme Court held that patent applicants who file a civil action challenging a decision of the PTAB do not have to pay the salaries of U.S. Patent and Trademark Office attorneys and paralegals under 35 U. S. C. Section 145, which requires that applicants pay "[a]ll the expenses of the proceedings." The court reasoned that Congress' use of the term "expenses" did not evince an intent to depart from the presumption against fee shifting known as the American Rule.

Power Integrations v. Semiconductor Components

In Power Integrations v. Semiconductor Components, 926 F.3d 1306 (Fed. Cir. 2019), the Federal Circuit held that a privity or real party in interest relationship arising after filing a petition for inter partes review, but before the PTAB institutes the inter partes review, can time bar an inter partes review. Under 35 U.S.C. Section 315(b), "[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent." The Federal Circuit emphasized that Section 315(b)'s time bar applies to the "institut[ion]," not the filing of an IPR, and that this time bar is consistent with common law preclusion principles and the purposes of the statute.

Regents of the

University of Minnesota v. LSI

In Regents of the University of Minnesota v. LSI, 926 F.3d 1327 (Fed. Cir. 2019), the Federal Circuit held that states do not enjoy sovereign immunity in interp artes review proceedings. The court reasoned that the proceedings are more like agency enforcement actions than suits by private parties and that states are not immune from lawsuits and administrative adjudications brought by the United States. The Federal Circuit emphasized that the director of the USPTO decides whether to institute inter partes review, the PTAB can proceed if the petitioner elects not to participate, and that inter partes review procedure differs from ordinary civil litigation.

Biodelivery Sciences v. Aquestive Therapeutics

In Biodelivery Sciences v. Aquestive Therapeutics, 935 F.3d 1362 (Fed. Cir. 2019), the Federal Circuit refused to review the PTAB's decision declining to institute inter partes review when the overwhelming majority of unpatentability grounds presented in a petition for inter partes review fail to meet the standard for institution of inter partes review. Under 35 U.S.C. Section 314(a), "[t]he Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed ... shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition." The PTAB nevertheless has discretion to deny review even if the petitioner satisfies this threshold standard. Applying that discretion, the PTAB determined that it would be inefficient to institute review on a set of petitions where the petitioner had only established a reasonable likelihood of success on three of the petitions' seventeen grounds. When the petitioner appealed, the Federal Circuit held that 35 U.S.C. Section 314(d) barred judicial review of the PTAB's discretionary determination because that provision prohibits review of a decision whether to institute.

Arthrex v. Smith & Nephew

In Arthrex v. Smith & Nephew, 941 F.3d 1320 (Fed. Cir. 2019), the Federal Circuit held that administrative patent judges, or APJs, are principal officers of the United States and therefore must be appointed by the president and confirmed by the Senate. Because the version of Title 35 in effect when the Federal Circuit decided Arthrex did not provide for appointment by the president and confirmation by the Senate, the Federal Circuit held that it violated the appointments clause. The court found that the narrowest remedy to the constitutional defect was to sever 35 U.S.C. Section 3(c) to the extent it applies Title 5's "for cause" restriction on the removal of APJs by the secretary of Commerce's and to permit at-will, without-cause removal. The Federal Circuit also vacated and remanded the PTAB's decision, reasoning that the decision had been issued by an unconstitutionally appointed panel and that the petitioner had presented an appointments clause challenge on appeal. All parties have filed petitions for rehearing en banc, which remain pending. 