Justices Skip Bid to Review Case Questioning CAFC Reversal Practices

The U.S. Supreme Court yesterday denied a petition for writ of certiorari asking the Court to reconsider the U.S. Court of Appeals for the Federal Circuit’s (CAFC’s) June ruling that the petitioner said signals an expanding practice of reversing agency decisions in lieu of remand.

In the CAFC’s decision, the court reversed a Patent Trial and Appeal Board (PTAB) judgment that affirmed patent claims in part due to the commercial success of MacNeil IP’s WeatherTech vehicle floor tray. The CAFC also affirmed a PTAB ruling that invalidated three claims of one of MacNeil’s patents in its battle with Yita LLC, a Seattle-based auto parts company.

Yita brought inter partes reviews challenging all claims of MacNeil’s U.S. Patents, Nos. 8,382,186 and 8,833,834. With the exception of three claims in the ‘834 patent, the PTAB ruled in favor of MacNeil and rejected Yita’s challenges to 12 claims. While the Board found that an artisan would have the motivation to successfully combine the teachings of prior art references to arrive at all 7 challenged claims of the ‘186 patent, it found MacNeil’s evidence, “compelling and indicative of non-obviousness.”

The CAFC reversed the PTAB’s ruling related to the ‘186 patent. While it disagreed with how the Board arrived at its ruling on the ‘186 patent, the court affirmed the PTAB’s judgment in the ‘834 patent IPR proceeding. “Because the Board determined that a relevant artisan would have been motivated to combine the teachings of Rabbe, Yung, and Gruenwald to arrive at claims 1–7 of the ’186 patent with a reasonable expectation of success, the Board’s judgment that those claims are not unpatentable for obviousness must be reversed,” concluded the CAFC.

MacNeil presented two questions to the Supreme Court in November:

“1. Is it legal error for the Federal Circuit to substitute its own findings of fact for those of an agency and reverse on that basis instead of remanding as required by this Court’s “ordinary remand rule” as set forth in I.N.S. v. Orlando Ventura, 537 U.S. 12, 18, 123 S. Ct. 353, 154 L.Ed.2d 272 (2002)?

2. Does the Federal Circuit’s expanding practice of reversing agency decisions in lieu of remand now conflict with the binding precedent of this Court?”

The petition argued that the CAFC’s reasoning for reversing was based on the PTAB’s legal error and thus the case should have been remanded instead. “Rather than remanding the matter to the PTAB with instructions to evaluate the evidence under the proper legal standard, the Federal Circuit instead made its own findings of fact for itself and reversed,” explained the petition.

In the underlying case, the PTAB had identified three secondary considerations relevant to the two IPR proceedings: commercial success, long-felt but unresolved need, and industry praise. The CAFC said the Board had rejected Yita’s unpatentability claims “solely because it found MacNeil’s secondary-consideration evidence compelling.”

But the CAFC disagreed and wrote, “the Board’s finding…rests on legal errors, and once those errors are corrected, the finding is not supported by substantial evidence.”

MacNeil’s petition said the Federal Circuit’s exception to the “ordinary remand rule” are broadening when it comes to PTAB proceedings. The Supreme Court first established in 1943 that  “[f]or purposes of affirming no less than reversing its orders, an appellate court cannot intrude upon the domain which Congress has exclusively entrusted to an administrative agency.” Sec. & Exch. Comm’n v. Chenery Corp. That premise was reaffirmed by the Court in I.N.S. v. Orlando Ventura (2002) and other cases. And the Federal Circuit itself has acknowledged that “it possesses no tools or mandate for fact-finding,” said the petition.

But still, the CAFC has made a recent habit of “reversing PTAB decisions premised on legal error instead of vacating and remanding so that the PTAB may assess the evidence under the proper legal standard.”

No response was filed by Yita and the Court denied the petition yesterday.

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Author: kikkerdirk
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