‘Settled Expectations’ Challenges Heat Up at SCOTUS as Doctrine’s Author Exits USPTO

Kahoot AS! filed a petition for writ of certiorari on July 24 asking the U.S. Supreme Court to consider whether the U.S. Patent and Trademark Office’s (USPTO’s) “settled expectations” doctrine for denying inter partes review (IPR) requests is authorized under the patent statute.

The petition also asked the High Court whether 35 U.S.C. § 314(d) bars judicial review of that question.

The U.S. Court of Appeals for the Federal Circuit (CAFC) denied Kahoot!’s petition for writ of mandamus challenging the USPTO Director’s refusal to institute IPR of Interstellar Inc.’s U.S. Patent No. 10,339,825 based on Interstellar’s settled expectations. The patent covers an “on-line academic competition” system.

The Director’s denial reasoned that the patent had been in force for over six years, which created “strong settled expectations” for the patent owner. The Director also determined that an IPR would be an “inappropriate use of [Patent Trial and Appeal] Board resources under these circumstances.”

The “settled expectations” doctrine came into play under then-Acting Director Coke Morgan Stewart, who explained that while there is no bright-line rule, “the longer the patent has been in force, the more settled expectations should be.”

Now-Deputy Director Stewart announced this week that she will be leaving the Office as of this Friday.

USPTO Director John Squires has continued to rely on the doctrine to reject IPR institutions. The approach has been compared to the six-year statute of limitations for recovering damages in patent infringement lawsuits. In the original denial of Kahoot’s petition, the Director found that six years was sufficient to establish the “strong settled expectations” that counseled against the institution.

But Kahoot!’s petition argues that “the [America Invents Act] AIA does not authorize the PTO to impose an age-based limit as a condition of inter partes review eligibility.”

Under the statute, argues Kahoot!, the only age-based restriction is that an IPR may not be filed “until nine months elapse from the grant of the patent,” and the only other time-based limit is that an IPR petition may not be filed more than one year after service of an infringement complaint.

In its mandamus petition to the CAFC, Kahoot! argued that reliance on “settled expectations” exceeded the Director’s statutory authority, but the CAFC found that Kahoot! had not met the high standard for mandamus relief. The order explained that Congress has committed IPR institution decisions to the Director’s discretion and has explicitly made those decisions “final and nonappealable” under 35 U.S.C. § 314(d). Thus, absent a colorable constitutional claim, which was not raised by Kahoot!, mandamus is “‘ordinarily unavailable’ for reviewing institution decisions,” and arguments claiming the Director acted beyond legal authority “cannot be a basis for granting the petition for mandamus.”

But Kahoot!’s petition to the High Court argues:

“[C]ongressional grant of discretion does not authorize the PTO to rely on an arbitrary patent age limit that is wholly absent from the statutory timing framework. And this Court has recognized that Section 314(d) does not foreclose judicial review where the PTO’s action exceeds its statutory authority.”

In April of this year, Google also filed a petition for writ of certiorari at the Supreme Court  appealing the CAFC’s January ruling affirming the USPTO’s denial of an IPR to challenge patent claims owned by VirtaMove based on settled expectations in patent rights that have been in force for more than 14 years. Google’s petition asks the Supreme Court to consider similar questions to Kahoot!’s. A number of amici also weighed in on that petition, and the Court requested the views of the Solicitor General (SG) on June 12. The SG asked for an extension of time to file its response until August 12, which was granted.

Kahoot! is asking the Supreme Court to either grant its petition or hold it pending consideration of the Google petition.

Dennis Crouch of PatentlyO said Kahoot!’s petition “offers the Court a cleaner and more aggressive application of the rule,” since the patent involved in Kahoot! was only six years old compared with the 14-year-old patent involved in the Google petition.

Crouch also said he believes the question of whether judicial review is barred under 35 U.S.C. § 314(d) is “the stronger candidate for certiorari.”