PTAB Refuses to Apply SAS Institute on Remand as Ordered by Federal Circuit, Federal Circuit Denies Rehearing

“Judge Newman argued that it was contrary to the America Invents Act, the mandate rule of the Administrative Procedure Act, and the USPTO’s own Office SAS Guidance for the PTAB to disregard the Federal Circuit’s remand order.”

The Federal Circuit recently denied a petition by BioDelivery Sciences International, Inc. (BioDelivery) for a rehearing en banc following a refusal by the Patent Trial and Appeal Board (PTAB) to apply the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). See BioDelivery Scis. Int’l, Inc. v. Aquestive Therapeutics, Inc., Nos. 2019-1643, 2019-1644, 2019-1645, 2020 U.S. App. LEXIS 1030 (Fed. Cir. Jan. 13, 2020) (Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, and Hughes, Circuit Judges) (Opinion for the Court, Lourie, Circuit Judge) (Dissenting opinion, Newman, Circuit Judge).

The petition for rehearing arrived at the Federal Circuit following a decision by the PTAB to disregard a remand order by the Federal Circuit ordering the PTAB to apply the Supreme Court’s holding in SAS Institute and decide all of the claims and grounds challenged in an inter partes review. Rather, the PTAB, on remand, withdrew all of its past actions as to the proceedings at issue and denied the petition in its entirety. BioDelivery then petitioned the Federal Circuit for a rehearing en banc, but the Federal Circuit voted to deny the rehearing, with Circuit Judge Newman offering the only dissenting opinion.

In her dissent, Circuit Judge Newman discussed the significance of the Federal Circuit’s decision to deny the rehearing and argued that the denial showed not only that the PTAB is not required to comply with the Court’s remand order but also that the PTAB’s noncompliance is not reviewable. Circuit Judge Newman argued that it was contrary to the America Invents Act, the mandate rule of the Administrative Procedure Act, and the USPTO’s own Office SAS Guidance for the PTAB to disregard the Federal Circuit’s remand order. See 35 U.S.C. § 144; 28 U.S.C. § 2196; 5 U.S.C. §§706(2)(A), (C)); Guidance on the Impact of SAS on AIA Trial Proceedings, U.S. Patent & Trademark Office (Apr. 26, 2018), https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-baord/trials/guidance-impact-sas-aia-trial.

Reiterating that the PTAB’s refusal to comply the Federal Circuit’s remand order should have been reviewed, Circuit Judge Newman argued that “the legislative record contains no contemplation of a PTAB procedure whereby, after full PTAB trial and decision and appeal to the Federal Circuit, the PTAB could annul the appeal and remove the entire action and decisions and procedure from history, insulated from review.” However, despite Circuit Judge Newman’s concerns with the PTAB’s actions, the majority voted to deny the rehearing.

The Court’s refusal to rehear the case effectively means that, although the PTAB is generally compelled to follow a remand order from the Federal Circuit, the PTAB may be able to disregard a remand order by denying institution of the trial on remand, and its decision may be unreviewable.