Federal Circuit: PTAB Denial of Motion to Terminate in Arthrex Remand Where SCOTUS Vacated CAFC is Proper

“[T]he statute provides no mandatory right to termination of the proceeding; at best, the statute provides for mandatory termination with respect to a petitioner, not termination of the proceeding itself.” – CAFC

motions to terminate - https://depositphotos.com/103763568/stock-photo-affirmed-stamp-sticker-white.htmlFollowing a remand on Appointments Clause issues under United States v. Arthrex, Inc., the U.S. Court of Appeals for the Federal Circuit (CAFC) today affirmed a Patent Trial and Appeal Board (PTAB) ruling finding all challenged claims of Polaris Innovations Limited’s patents unpatentable and denying Polaris’ motions to terminate. The decision is precedential and authored by Judge Stoll.

Polaris’ U.S. Patent Nos. 6,532,505 and 7,405,993 are directed to computer memory. In May 2016, Polaris filed suit against NVIDIA Corporation for infringement of certain claims of the two patents. NVIDIA then filed inter partes review (IPR) petitions challenging some claims as invalid. A final written decision on the petition involving the ‘993 patent issued on December 19, 2018, finding all challenged claims unpatentable. A final written decision on the petition involving the ‘505 patent issued on December 4, 2018, likewise finding all challenged claims unpatentable.

Polaris appealed, and the parties then settled, and NVIDIA withdrew from the appeals. But the U.S. Patent and Trademark Office (USPTO) stepped in as intervenor to defend the PTAB decisions. On March 20, 2020, the cases were scheduled for argument on May 8, 2020. Three days later, the CAFC declined to hear Arthrex v. Smith & Nephew en banc. The court thus vacated the PTAB’s decisions and remanded, granting the remedy required by their original Arthrex decision, namely, to have the case re-tried by a now constitutional panel of judges, following the CAFC’s decision severing a portion of the statute to make administrative patent judges (APJs) inferior officers.

On remand, the PTAB suspended the IPRs pending Supreme Court review. On June 10, 2020, Polaris and NVIDIA filed a joint motion to terminate the proceedings. But then came the Supreme Court’s ruling in United States v. Arthrex in June 2021, which had the effect of vacating the vacatur of the Board’s final written decisions and reinstating them. On remand, the CAFC asked Polaris how it thought the court should proceed in light of Arthrex, and Polaris asked for vacatur and remand so the PTAB could terminate the proceedings. But the USPTO opposed and said limited remand for Director Review was appropriate, and the CAFC agreed.

On remand, Polaris asked the PTAB to grant its still pending motion to terminate, but the PTAB determined that “termination was not appropriate because, due to the Supreme Court’s decision, the ‘final written decision in each of these cases is not vacated, and it is not necessary for the Board to issue a new final written decision in either of these cases.’” Director rehearing was denied.

On appeal to the CAFC, Polaris said that: 1) the PTAB erred by failing to grant the joint motions to terminate filed in both proceedings before the Board on remand, 2) the PTAB misconstrued the term “memory chip” in the IPR involving the ’993 patent, and 3) the Board misconstrued the term “resource tag buffer” in the IPR involving the ’505 patent.

Citing VirnetX Inc. v. Apple Inc., the CAFC said the motion to terminate issue turns on interpretation of 35 U.S.C § 317. This section reads:

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).

Polaris claimed it was entitled to termination because it timely filed joint motions to terminate, but the CAFC disagreed:

First, the statute provides no mandatory right to termination of the proceeding; at best, the statute provides for mandatory termination with respect to a petitioner, not termination of the proceeding itself…. Second, the Board correctly identified Polaris’s motion as untimely. The Board issued its final written decisions in these cases in December 2018. Polaris filed its joint motions to terminate more than a year later, in June 2020. Thus, the Board had already “decided the merits” at the time Polaris filed its motion.

While Polaris argued the PTAB had granted termination in other cases remanded under Arthrex, with motions filed around the same time as Polaris’, the CAFC said there was a key difference between the cited cases and Polaris’: in the other cases, the PTAB granted termination while the final written decisions stood vacated by the CAFC after the mandate in its original Arthrex ruling, while in this case, the vacatur pursuant to Arthrex “had already been vacated by the Supreme Court at the time the Board was evaluating Polaris’s motions.”

The court also rejected Polaris’ argument that the PTAB took too long to act on the motion to terminate, saying it should have granted it promptly after it was filed. “Polaris, however, points to no authority mandating that the Board act on its request within any particular time frame.6 The disparity in timing—the Board taking longer to act on Polaris’s motions than Polaris thinks it should have—is not the sort of arbitrariness in decision-making that § 706(2)(A)’s “arbitrary [and] capricious” standard was designed to protect against.”

The CAFC also disagreed with Polaris’ arguments that the PTAB misconstrued the claim terms “memory chips” and “semiconductor memory component” with respect to claim 2 of the ‘993 patent and the claim term “resource tag buffer” in claim 2 of the ’505 patent. Since Polaris did not dispute that the prior art disclosed the PTAB’s constructions of those terms, the CAFC ultimately affirmed the unpatentability determinations.

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