Sas Institute, Inc. v. Complementsoft, LLC. , 825 F.3d 1341 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
SAS INSTITUTE, INC.,
Appellant
v.
COMPLEMENTSOFT, LLC.,
Cross-Appellant
______________________
2015-1346, 2015-1347
______________________
Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in No.
IPR2013-00226.
______________________
Decided: June 10, 2016
______________________
JOHN MARLOTT, Jones Day, Chicago, IL, argued for
appellant. Also represented by GREGORY A. CASTANIAS,
Washington, DC; DAVID B. COCHRAN, Cleveland, OH;
MATTHEW JOHNSON, Pittsburgh, PA.
MATTHEW TOPIC, Loevy & Loevy Attorney at Law,
Chicago, IL, argued for cross-appellant.
JOSEPH GERARD PICCOLO, Office of the Solicitor, Unit-
ed States Patent and Trademark Office, Alexandria, VA,
argued for intervenor. Also represented by THOMAS W.
KRAUSE, SCOTT WEIDENFELLER, STACY BETH MARGOLIES.
2 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
______________________
Before NEWMAN, CHEN, and STOLL, Circuit Judges.
Opinion for the court filed by Circuit Judge STOLL.
Opinion concurring-in-part and dissenting-in-part filed by
Circuit Judge NEWMAN.
STOLL, Circuit Judge.
SAS Institute, Inc. filed an inter partes review (“IPR”)
petition with the Patent Trial and Appeal Board (“Board”)
to review the patentability of ComplementSoft’s U.S.
Patent No. 7,110,936. The Board instituted an IPR
proceeding on some, but not all, of the ’936 patent claims
challenged in SAS’s petition. The Board ultimately found
all of the instituted claims, except for claim 4, unpatenta-
ble in view of the prior art. SAS argues on appeal that
the Board misconstrued a claim term and that the Board
erred by not addressing in the final written decision
claims SAS petitioned against, but that the Board did not
institute as part of the proceeding. ComplementSoft
cross-appeals two of the Board’s claim constructions. For
the reasons below, we agree with the Board on all of the
challenged constructions and determine that the Board
did not need to address in its final written decision claims
it did not institute. We also vacate the Board’s determi-
nation that claim 4 is patentable and remand so that the
parties may address a new construction that the Board
adopted in its final written decision after interpreting the
claim differently before.
BACKGROUND
I.
ComplementSoft is the assignee of the ’936 patent, is-
sued September 19, 2006, and directed to an “Integrated
Development Environment for generating and maintain-
ing source code . . . in particular, programmed in data
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 3
manipulation languages.” ’936 patent col. 2 ll. 8–11. The
patent characterizes a development environment as
comprising a set of software tools allowing users to devel-
op, edit, and debug software for a particular programming
language or set of programming languages. Id. col. 1
ll. 32–48. The development environment contemplated by
the ’936 patent utilizes a graphical user interface and is
particularly designed for data manipulation languages,
including SAS®, which is developed by the appellant. Id.
col. 1 l. 64 – col 2 l. 3, col. 2 l. 11. The specification de-
scribes that the development environment of the
’936 patent serves three primary functions: (1) it allows
users to locally edit code stored on a central server; (2) it
detects a user’s programming language and parses code
accordingly; and (3) it generates representative visualiza-
tion of such code, which can be directly edited to effect a
change to the underlying code. Id. col. 2 l. 8 – col. 3 l. 20.
The specification describes that four major compo-
nents of the ’936 patent design environment are a docu-
ment manager, an editor, a parser layer, and a visualizer.
The document manager is a program that performs en-
hanced file management functions. Id. col. 6 ll. 22–42.
The editor allows a user to edit and debug source code
using standard text-editing functions. Id. col. 7 l. 3 –
col. 8 l. 7. The parser layer examines source code, detects
which programming language is being used in the code,
and applies rules and logic corresponding to that pro-
gramming language. Id. col. 9 ll. 38–53, col. 17 ll. 30–45.
Finally, the visualizer works in conjunction with the
parser layer to parse the code and display it graphically
using icons connected with arrows. Id. col. 8 ll. 8–12.
The ’936 patent discloses two types of visualizations,
those for program flows and those for data flows. Pro-
gram flow diagrams contain programming block icons,
which represent sections of source code, linked with
arrows that depict the overall flow of the program. Id.
4 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
col. 2 ll. 38–40, col. 15 ll. 56–59. Figure 9 of the
’936 patent depicts a program flow.
Data flow diagrams, the other visualization disclosed by
the ’936 patent, “are comprised of icons depicting data
processing steps and arrows to depict the flow of the data
through the program.” Id. col. 2 ll. 40–42. Figure 17 of
the ’936 patent depicts a data flow.
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 5
During prosecution, the patentee added the “data ma-
nipulation languages” limitation to the claims in response
to a prior art rejection based on U.S. Patent No. 6,851,107
to Coad (“the Coad patent”). The Coad patent generally
describes a design environment for purely object-oriented
programming languages, such as Java and C++. In
response to the patentee’s amendment, the examiner
allowed the claims to issue, stating that the Coad patent
does not disclose “that the detected language is a data
manipulation language.” J.A. 528. 1
1 Citations to “J.A. ___” refer to the Joint Appendix
filed by the parties.
6 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
The claims at issue in this appeal are independent
claim 1 and dependent claim 4. They recite:
1. An integrated development environment,
comprising:
a document manager for retrieving source
code programmed using one of a plurality of types
of data manipulation languages;
an editor for displaying the retrieved source
code and providing a means for a user to edit the
retrieved source code;
a parser layer which detects the one of the
plurality of types of data manipulation languages
in which the retrieved source code is programmed
and which activates rules and logic applicable to
the detected one of the plurality of types of data
manipulation languages; and
a visualizer dynamically linked to the editor
for displaying graphical representations of flows
within the retrieved source code using the rules
and logic applicable to the detected one of the plu-
rality of types of data manipulation languages
and activated by the parser, wherein the editor,
parser layer and visualizer cooperate such that
edits made to the source code using the editor are
automatically reflected in the graphical represen-
tations of flows displayed by the visualizer and ed-
its made to the graphical representations of flows
in the visualizer are automatically reflected in the
source code displayed by the editor.
4. The integrated development environment as
recited in claim 1, wherein the graphical represen-
tations of data flows are expandable and collapsi-
ble.
Id. col. 18 ll. 19–43, 50–52 (emphases added).
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 7
II.
SAS petitioned for IPR of the ’936 patent, alleging
that all sixteen of the patent’s claims were unpatentable
as anticipated under 35 U.S.C. § 102 or as obvious under
35 U.S.C. § 103. 2 The Board instituted IPR for claims 1
and 3–10 on obviousness grounds, but did not institute
IPR for claims 2 and 11–16. Relevant to this appeal, the
Board’s institution decision construed “data manipulation
language” as “a programming language used to access
data in a database, such as to retrieve, insert, delete, or
modify data in the database,” and “graphical representa-
tions of flows within the retrieved source code” as “a
diagram that depicts a map of the progression (or path)
through the source code.” SAS Inst., Inc. v. Complemen-
tSoft, LLC, IPR2013-00226, 2013 WL 8595939, at *4–6
(PTAB Aug. 12, 2013) (Institution Decision). The institu-
tion decision also interpreted “graphical representations
of data flows” to mean “a depiction of a map of the path of
data through the executing source code.” Id. at *12.
The Board’s final written decision concluded that
claims 1, 3, and 5–10 of the ’936 patent were unpatenta-
ble as obvious in view of the prior art. At the same time,
the Board found claim 4 patentable over the prior art.
Particularly, the Board found that the prior art did not
satisfy the “graphical representations of data flows”
limitation in claim 4, which it newly construed to mean “a
graphical representation comprised of icons depicting
data processing steps and arrows to depict the movement
2 The versions of 35 U.S.C. §§ 102 and 103 that ap-
ply here are those in force preceding the changes made by
the America Invents Act, given the effective filing dates of
the claims of the ’936 patent. See Leahy–Smith America
Invents Act, Pub. L. No. 112-29, 125 Stat. 284, 293 (2011).
8 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
of data through source code.” 3 The Board’s construction of
this purportedly unmet claim limitation differed from the
interpretation the Board gave in its institution decision:
“a depiction of a map of the path of data through the
executing source code.” Institution Decision, 2013
WL 8595939, at *12. The final written decision did not
review patentability of claims 2 and 11–16 for which the
Board did not institute IPR. See SAS Inst., Inc. v. Com-
plementSoft, LLC, IPR2013-00226, 2014 WL 3885937, at
*24 & n.3 (PTAB Aug. 6, 2014) (Final Written Decision)
(“Claims 2 and 11–16 are not at issue in this trial.”).
SAS sought rehearing before the Board, which the
Board denied. SAS then timely appealed to this court,
and ComplementSoft timely cross-appealed. We have
jurisdiction under 28 U.S.C. § 1295(a)(4)(A) and
35 U.S.C. § 141(c) to review the Board’s final written
decision.
DISCUSSION
On appeal, SAS argues that the Board erred by con-
struing “graphical representations of data flows” in claim
4 as “a graphical representation comprised of icons depict-
ing data processing steps and arrows to depict the move-
ment of data through source code.” SAS also argues that
it was improper for the Board to change its interpretation
of this claim term in the final written decision without
3 The final written decision actually construed the
shorter term “data flows.” The Board, however, in its
denial of SAS’s request for rehearing, clarified that the
construction applies equally to the longer claim term
“graphical representations of data flows,” else the con-
struction would repeat the “graphical representations”
language found in the claim. SAS Inst., Inc. v. Comple-
mentSoft, LLC, IPR2013-00226, Paper No. 40, at *3–4
(PTAB Nov. 10, 2014) (Rehearing Denial).
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 9
affording the parties an opportunity to respond. SAS
lastly argues that the Board’s final written decision is
deficient for failing to address the patentability of all
claims SAS included in its IPR petition, including those
for which the Board did not institute IPR. Complemen-
tSoft cross-appeals, arguing that the Board erred in
construing two terms in claim 1: “data manipulation
language” as “a programming language used to access
data in a database, such as to retrieve, insert, delete, or
modify data in the database”; and “graphical representa-
tions of flows within the retrieved source code” as “a
diagram that depicts a map of the progression (or path)
through the source code.” We first address the parties’
claim construction arguments and then move to SAS’s
remaining arguments.
I.
“The ultimate construction of the claim is a legal
question and, therefore, is reviewed de novo.” Info-Hold,
Inc. v. Applied Media Techs. Corp., 783 F.3d 1262, 1265
(Fed. Cir. 2015). Further, claim construction based solely
upon intrinsic evidence—meaning the patent claims, the
patent specification, and the prosecution history—is a
matter of law reviewed de novo. Teva Pharms. USA, Inc.
v. Sandoz, Inc., 135 S. Ct. 831, 841 (2015). On the other
hand, when extrinsic evidence is relied upon, we review
the Board’s “underlying factual determinations involving
extrinsic evidence for substantial evidence.” Microsoft
Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1297 (Fed. Cir.
2015) (citing Teva, 135 S. Ct. at 841–42).
Claim construction seeks to ascribe the meaning to
claim terms as a person of ordinary skill in the art at the
time of invention would have understood them. Phillips
v. AWH Corp., 415 F.3d 1303, 1312–14 (Fed. Cir. 2005)
(en banc) (citing Vitronics Corp. v. Conceptronic, Inc., 90
F.3d 1576, 1582 (Fed. Cir. 1996)). In an IPR proceeding,
claims are given their broadest reasonable interpretation
10 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
in light of the specification. In re Cuozzo Speed Techs.,
LLC, 793 F.3d 1268, 1279 (Fed. Cir. 2015), cert. granted
sub nom. Cuozzo Speed Techs., LLC v. Lee, No. 15-446,
2016 WL 205946 (U.S. Jan. 15, 2015). In construing
terms, “the person of ordinary skill in the art is deemed to
read the claim term not only in the context of the particu-
lar claim in which the disputed term appears, but in the
context of the entire patent, including the specification.”
Phillips, 415 F.3d at 1313. Indeed, the specification is
“the single best guide to the meaning of a disputed term”
and “[u]sually, it is dispositive.” Id. Thus, “claims ‘must
be read in view of the specification, of which they are a
part.’” Id. at 1315 (quoting Markman v. Westview In-
struments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en
banc), aff’d, 517 U.S. 370 (1996)).
A.
The Board ultimately construed “graphical represen-
tations of data flows” as “a graphical representation
comprised of icons depicting data processing steps and
arrows to depict the movement of data through source
code.” Final Written Decision, 2014 WL 3885937, at *10.
In construing this term, the Board recognized that the
specification did not use the claim term at all. The Board
also recognized, however, that the specification spoke
extensively about “data flow diagrams” and, in fact,
defined them as comprising “icons depicting data pro-
cessing steps and arrows to depict the movement of data
through source code.” ’936 patent col. 2 ll. 40–42. After
determining that there was no reason to conclude that the
patentee meant something different between the terms
“graphical representations of data flows” and “data flow
diagrams,” the Board used the specification’s definition of
data flow diagrams to construe graphical representations
of data flows.
We agree with the Board’s construction. SAS argues
that because the Board’s construction is narrow, it cannot
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 11
be the broadest reasonable interpretation of the claim
term. This is not so. While we have endorsed the Board’s
use of the broadest reasonable interpretation standard in
IPR proceedings, we also take care to not read “reasona-
ble” out of the standard. This is to say that “[e]ven under
the broadest reasonable interpretation, the Board’s con-
struction cannot be divorced from the specification and
the record evidence, and must be consistent with the one
that those skilled in the art would reach.” Proxyconn, 789
F.3d at 1298 (internal quotation marks omitted) (first
quoting In re NTP, Inc., 654 F.3d 1279, 1288 (Fed. Cir.
2011); and then quoting In re Cortright, 165 F.3d 1353,
1358 (Fed. Cir. 1999)). The broadest reasonable interpre-
tation here is that the claimed “graphical representation
of a data flow” is commensurate with the “data flow
diagram” described in the specification. The Board noted
this, concluding that the specification suggests that the
terms “data flow diagram” and “graphical representation
of data flow” are interchangeable. Final Written Decision,
2014 WL 3885937, at *10; Rehearing Denial, IPR2013-
00226, Paper No. 40, at *4. The only difference between
these two phrases is the word “diagram” in the first
phrase and the word “graphical representation” in the
other. And a diagram is, in fact, a graphical representa-
tion. Because the specification explicitly defines data flow
diagram, one of skill in the art having read the specifica-
tion would apply this definition to graphical representa-
tions of data flows as well.
What the specification also makes clear is that pro-
gram flows differ from data flows. The Board correctly
noted that the specification consistently distinguishes
these flows. See Rehearing Denial, IPR2013-00226, Paper
No. 40, at *5 (citing ’936 patent col. 2 ll. 38–42, col. 8 ll. 8–
14, col. 16 ll. 6–30); see also ’936 patent abstract, col. 2
ll. 33–38, col. 3 ll. 3–5. The specification crystallizes this
distinction when it describes a user having to “toggle
between the program flow and the data flow display” in
12 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
the visualizer. ’936 patent col. 15 ll. 50–56. The figures
also show that program flows differ from data flows.
Compare id. Fig. 9, with id. Fig. 17. To the extent that
SAS argues that the specification describes a representa-
tion of a program flow as depicting the flow of data, we
disagree that one of skill in the art would equate this with
a graphical representation of a data flow, given the speci-
fication’s consistent disjunction of the two flows. Thus, it
is not in error for the Board’s construction of “graphical
representation of data flow” in claim 4 to exclude program
flows.
The structure of the claims also lends support to the
Board’s construction. See Phillips, 415 F.3d at 1314
(“Other claims of the patent in question, both asserted
and unasserted, can also be valuable sources of enlight-
enment as to the meaning of a claim term.”). Independent
claim 1 recites broadly “graphical representations of
flows,” and dependent claims 2 and 3 recite more specifi-
cally that the flows are “data flows” or “program flows,”
respectively. ’936 patent col. 18 ll. 19–49. This structure
is consistent with the specification, which first discloses
visualizations generally and then immediately defines
program flow diagrams and data flow diagrams as dis-
tinct things. See id. col. 2 ll. 33–42. We therefore reject
SAS’s argument that the Board construed the term
“graphical representations of data flows” too narrowly.
B.
On cross-appeal, ComplementSoft first challenges the
Board’s construction of “data manipulation language” as
“a programming language used to access data in a data-
base, such as to retrieve, insert, delete, or modify data in
the database.” ComplementSoft argues that this con-
struction should limit the claim term to program lan-
guages that are solely purposed for creating datacentric
programs and which provide direct access to a database.
Particularly, ComplementSoft would have us exclude
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 13
object-oriented languages altogether—even when imple-
mented with embedded data manipulation code using
Structured Query Language (“SQL”)—because the prior
art Coad patent the patentee distinguished during prose-
cution discussed object-oriented languages. Complemen-
tSoft makes this argument under a theory of prosecution
history disclaimer.
The prosecution history of a patent, though “less use-
ful for claim construction purposes” than the claim lan-
guage and written description, plays various roles in
resolving uncertainties about claim scope. Phillips, 415
F.3d at 1317. “[F]or prosecution disclaimer to attach, our
precedent requires that the alleged disavowing actions or
statements made during prosecution be both clear and
unmistakable.” Omega Eng’g, Inc., v. Raytek Corp., 334
F.3d 1314, 1325–26 (Fed. Cir. 2003). “Where the alleged
disavowal is ambiguous, or even ‘amenable to multiple
reasonable interpretations,’ Cordis Corp. v. Medtronic
AVE, Inc., 339 F.3d 1352, 1359 (Fed. Cir. 2003), we have
declined to find prosecution disclaimer.” Avid Tech., Inc.
v. Harmonic, Inc., 812 F.3d 1040, 1045 (Fed. Cir. 2016)
(citing Omega Eng’g, 334 F.3d at 1325 (“[W]e have thus
consistently rejected prosecution statements too vague or
ambiguous to qualify as a disavowal of claim scope.”);
Rheox, Inc. v. Entact, Inc., 276 F.3d 1319, 1327 (Fed. Cir.
2002)).
Prosecution history disclaimer does not apply in this
case, at least not as ComplementSoft would have it.
There is simply nothing in the prosecution history to
suggest that SQL, which the ’936 patent specification
specifically identifies as a data manipulation language,
embedded within another programming language does
not satisfy the “data manipulation language” limitation.
It is true that ComplementSoft added the “data manipula-
tion language” limitation to avoid the Coad patent, but
the Coad patent never discloses or suggests embedded
data manipulation coding. At most, the patentee dis-
14 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
claimed object-oriented programming languages without
any data manipulation components. There is no clear and
unmistakable evidence that the patentee disclaimed
anything more.
The Board also examined the specification and found
that it did not limit data manipulation languages to those
providing direct access to a database. In other words, the
Board found that the specification does not exclude em-
bedding database access within object-oriented language
code. We agree. And because the specification and prose-
cution history did not conclusively resolve construction,
we also agree that it was appropriate for the Board to rely
on dictionaries and expert testimony to aid its construc-
tion. Those sources lend support to the Board’s construc-
tion.
ComplementSoft lastly argues that “access” to data in
a database is not enough to make a programming lan-
guage a “data manipulation language.” As the Board
noted, ComplementSoft’s own expert and a named inven-
tor on the ’936 patent provided testimony that contradicts
this argument. Thus, we agree with the Board that this
argument is not compelling. For these reasons, we agree
with the Board’s construction of “data manipulation
languages.”
ComplementSoft’s second construction challenge re-
lates somewhat to its first. ComplementSoft argues that
when the Board construed “graphical representations of
flows within the retrieved source code” to mean “a dia-
gram that depicts a map of the progression (or path)
through the source code,” it failed to limit the graphical
representations to only depicting segments of source code
that manipulate data.
Because we have already determined that a “data
manipulation language” is not limited to languages that
only perform data manipulation, we likewise do not inject
a similar limitation into claim 1. Doing so would run
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 15
counter to the disclosure in the specification. Figures 9,
19, and 20, for instance, are graphical representations of
flows. Included within these representations is an icon
for a “Print” operation, which is not a data manipulation
step. Thus, we agree with the Board’s construction and
do not insert an additional limitation that all depicted
steps must relate to data manipulation.
II.
As noted above, we agree with the Board’s ultimate
construction of the “graphical representations of data
flows” claim term. The Board’s procedure for arriving at
this construction, however, gives us pause.
In its institution decision, the Board’s claim construc-
tion section indicated that “data flow diagram” means “a
map of the path of data through the executing source
code.” Institution Decision, 2013 WL 8595939, at *5. The
Board equated this interpretation of “data flow diagram”
with the claim limitation “graphical representations of
data flows” when it denied institution of a prior art
ground. Particularly, the Board concluded that SAS had
not demonstrated that the prior art ground disclosed “a
depiction of a map of the path of data through the execut-
ing source code” and thus had not shown that the ground
“discloses a graphical representation of a data flow.” Id.
at *11–12 (internal quotation marks omitted).
ComplementSoft filed its patent owner’s response and
identified “a diagram that depicts a map of the path of
data through the executing source code” as the Board’s
construction for the term “graphical representations of
data flows.” While it argued that the Board misconstrued
the “data manipulation language” term, it did not similar-
ly argue that the Board misconstrued graphical represen-
tations of data flows. SAS’s reply took issue with the
construction’s inclusion of the term “executing,” but
suggested no modifications other than to remove this term
from the construction. The parties did not ask for a
16 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
revised construction of “graphical representations of data
flows” at the oral hearing.
The Board’s final written decision acknowledged that
“the parties directly disagree regarding only the construc-
tion of the term ‘data manipulation language.’” Final
Written Decision, 2014 WL 3885937, at *3. Nonetheless,
the Board newly construed “graphical representations of
data flows” as “a graphical representation comprised of
icons depicting data processing steps and arrows to depict
the movement of data through source code,” id. at *10,
which varies significantly from its initial interpretation of
the term as “a map of the path of data through the execut-
ing source code.” Institution Decision, 2013 WL 8595939,
at *12. In denying SAS’s request for rehearing, the Board
concluded that the new construction did not prejudice
SAS because SAS could have made construction argu-
ments for the term in its IPR petition. Rehearing Denial,
Paper No. 40, at *3–4 n.1.
We disagree with the Board’s approach. As we have
noted, IPR proceedings are formal administrative adjudi-
cations subject to the procedural requirements of the
Administrative Procedure Act (“APA”). See Dell Inc. v.
Acceleron, LLC, 818 F.3d 1293, 1298 (Fed. Cir. 2016);
Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1080
(Fed. Cir. 2015); see also Dickinson v. Zurko, 527 U.S. 150,
154 (1999). One such APA provision is that “[p]ersons
entitled to notice of an agency hearing shall be timely
informed of . . . the matters of fact and law asserted.”
5 U.S.C. § 554(b)(3); see Dell, 818 F.3d at 1298. SAS, as
the petitioner, is entitled to this procedural protection in
this instance. Although in the past we have discussed
§ 554(b)(3) with respect to the protection it provides to the
patent owner, the provision is not so limited in an insti-
tuted IPR proceeding. First, the APA provides that this
protection applies to “[p]ersons entitled to notice of an
agency hearing.” 5 U.S.C. § 554(b)(3). In an IPR proceed-
ing, this class of persons includes the petitioner. See 35
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 17
U.S.C § 316(a)(10) (directing the PTO to promulgate
regulations “providing either party”—i.e., petitioner or
patent owner—“with the right to an oral hearing as part
of the proceeding”); 37 C.F.R. § 42.70 (providing that “[a]
party may request oral argument” before the Board).
Moreover, affording petitioners with the benefit of
§ 554(b)(3) is appropriate because petitioners are not
disinterested parties in an IPR proceeding. Rather,
petitioners stand to lose significant rights in an instituted
IPR proceeding because of the estoppel effects that trigger
against them if the Board issues a final written decision.
See 35 U.S.C. § 315(e).
We have interpreted § 554(b)(3) in the context of IPR
proceedings to mean that “‘an agency may not change
theories in midstream without giving respondents rea-
sonable notice of the change’ and ‘the opportunity to
present argument under the new theory.’” Belden, 805
F.3d at 1080 (quoting Rodale Press, Inc. v. FTC, 407 F.2d
1252, 1256–57 (D.C. Cir. 1968)); see also Dell, 818 F.3d
at 1300–01 (holding that the Board, in relying on factual
assertions the petitioner introduced for the first time at
the oral hearing, violated § 554(b)(3) because the patent
owner did not have a meaningful opportunity to respond).
That maxim applies in this fact-specific circumstance.
What concerns us is not that the Board adopted a con-
struction in its final written decision, as the Board is free
to do, but that the Board “change[d] theories in mid-
stream.” Belden, 805 F.3d at 1080. SAS focused its
argument on the Board’s institution decision claim inter-
pretation, a reasonable approach considering Complemen-
tSoft agreed with this interpretation in its patent owner’s
response and never suggested that the Board adopt the
construction that eventually materialized in the final
written decision. It is difficult to imagine either party
anticipating that already-interpreted terms were actually
moving targets, and it is thus unreasonable to expect that
they would have briefed or argued, in the alternative,
18 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
hypothetical constructions not asserted by their opponent.
This is especially true for SAS, considering the strict
fifteen page limit for its reply to the patent owner’s re-
sponse. See 37 C.F.R. § 42.24(c)(1) (2012). 4
Finally, to be clear, it is uncertain whether SAS will
ultimately be able to show unpatentability of the
’936 patent claim 4 even under the construction of “graph-
ical representations of data flows” that the Board adopted
and that we agree with. That is not for us to decide today,
but for the Board to examine in the first instance after
hearing from the parties on the new construction. See
Dell, 818 F.3d at 1301 (remanding to the Board for fur-
ther proceedings upon finding § 554(b)(3) not satisfied).
III.
SAS also argues that the Board erred by not address-
ing in the final written decision every ’936 patent claim
SAS challenged in its IPR petition. The Board’s final
written decision, rather, addresses patentability of only
those claims for which the Board instituted an IPR pro-
ceeding. SAS’s argument, however, is foreclosed by our
recent decision in Synopsys, Inc. v. Mentor Graphics
Corp., 814 F.3d 1309 (Fed. Cir. 2016).
Synopsys presented the same question that SAS rais-
es here: Must a final written decision by the Board ad-
4 37 C.F.R. § 42.24(c)(1) has been amended to pro-
vide 5,600 words for petitioner replies to patent owner
responses. See Amendments to the Rules of Practice for
Trials Before the Patent Trial and Appeal Board, 81 Fed.
Reg. 18750, 18765 (April 1, 2016). When SAS filed its
petitioner reply on February 12, 2014, however, the old
regulation limiting the reply to fifteen pages was in effect.
See Rules of Practice for Trials Before the Patent Trial
and Appeal Board, 77 Fed. Reg. 48669, 48673 (August 14,
2012).
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 19
dress every patent claim challenged in an IPR petition?5
The petitioner argued, as does SAS, that the text of the
final written decision statutory subsection, 35 U.S.C.
§ 318(a), compels the Board to address every petition-
challenged claim. We found, however, “no statutory
requirement that the Board’s final decision address every
claim raised in a petition for inter partes review. Sec-
tion 318(a) only requires the Board to address claims as to
which review was granted.” Id. at 1316–17. We found it
significant that § 318(a) describes “claims challenged by
the petitioner,” whereas the institution decision statutory
subsection, 35 U.S.C. § 314, describes “claims challenged
in the petition.” We reasoned that the differing language
implies a distinction between the two subsections such
that § 318(a) does not foreclose the claim-by-claim ap-
proach the Board adopted there and in this case. Further,
we upheld the validity of a PTO-promulgated regulation
authorizing the claim-by-claim approach. Id. at 1316
(validating 37 C.F.R. § 42.108, which “authorize[s] the
review to proceed on all or some of the challenged
claims”).
Accordingly, we reject SAS’s argument that the Board
must address all claims challenged in an IPR petition in
its final written decision.
CONCLUSION
For the foregoing reasons, we agree with the Board
regarding the challenged constructions and conclude that
5 Indeed, not only did SAS’s briefing identify Syn-
opsys as a related case, but SAS also submitted a brief as
amicus curiae in Synopsys urging us to reach the same
result that it now argues for in this appeal. See Brief of
Amicus Curiae SAS Institute, Inc. in Support of Appellant
Synopsys, Inc., Synopsys, 814 F.3d 1309 (Nos. 14-1516,
14-1530).
20 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
SAS’s argument that the Board must address all claims
from the IPR petition in the final written decision is
foreclosed by Synopsys. We vacate the Board’s patentabil-
ity determination of claim 4 and remand so that the
parties may address the Board’s construction of “graph-
ical representations of data flows.”
AFFIRMED-IN-PART, VACATED-IN-PART, AND
REMANDED
United States Court of Appeals
for the Federal Circuit
______________________
SAS INSTITUTE, INC.,
Appellant
v.
COMPLEMENTSOFT, LLC.,
Cross-Appellant
______________________
2015-1346, 2015-1347
______________________
Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in No.
IPR2013-00226.
______________________
NEWMAN, Circuit Judge, concurring in part, dissenting in
part.
I concur in Parts I and II of the majority opinion, for I
agree that principles of due process, as well as the stric-
tures of the Administrative Procedure Act as applied to
the America Invents Act (AIA) and the Patent and
Trademark Office (PTO), require that the parties have the
opportunity to adjust their arguments and evidence to the
Patent Trial and Appeal Board’s (PTAB’s) change in claim
construction.
I write separately because the PTAB’s practice of de-
ciding the validity of only some of the patent claims
challenged in the petition does not conform to the America
Invents Act. I stated these concerns in Synopsys, Inc., v.
2 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
Mentor Graphics Corp., 814 F.3d 1309, 1324, 117
U.S.P.Q.2d 1753, 1765 (Fed. Cir. 2016) (Newman, J.,
dissenting). The facts and rulings in the present case
further illuminate the error in the PTO’s adoption of rules
that depart from the legislative plan. The exclusion of
some of the challenged claims from the statutory proce-
dures and estoppels of the AIA, accomplished by accepting
some of the claims for which review is sought while ignor-
ing others, in the PTO’s absolute discretion, serves no
purpose other than to negate the intended legislative
purpose of the AIA.
The PTO practice replaces the benefits of the America
Invents Act with new disadvantages, for, after the exten-
sive (and expensive) proceedings of inter partes review,
the parties are left with unaddressed claims to the same
patented invention, claims that can be litigated as if no
post-grant proceeding had occurred. This departure from
the legislative purpose is illustrated in this case more
strongly than in Synopsys, for here the PTAB issued a
split final decision, invalidating eight petitioned claims
while validating one of the petitioned claims, simultane-
ously ignoring seven other petitioned claims that were
properly presented for review. The split decision, follow-
ing a partial institution, adds to the uncertainty of the
claims that the PTAB chose not to review. The legislative
plan contains no hint of such intentional irregularity.
As experience is gathered on diverse factual situa-
tions and the PTO’s erratic implementation, concerns
have arisen within the communities that collaborated in
the evolution of the America Invents Act. It is incumbent
on the courts to assure the correct statutory interpreta-
tion by administrative agencies charged with statutory
administration. Thus I respectfully dissent from Part III
of the majority opinion, and the majority’s ratification of
the PTO practice of addressing only some of the chal-
lenged claims in a fully compliant IPR petition.
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 3
DISCUSSION
The America Invents Act created a new expert tribu-
nal, charged to act with expedition and economy. Its
purpose is to facilitate both the validation of properly
issued patents and the elimination of invalid patents,
both in service to the compelling national interest in
invention and innovation. The PTO’s position that it need
not review some of the claims challenged in a petition for
review via a post-grant proceeding is inconsistent with
the Act. The PTO is authorized to refuse to institute
review entirely—but a partial review cannot be inferred
from the statute or accommodated to its purpose.
The statutory provisions and the legislative purpose
of substituting an agency tribunal for district court pro-
ceedings on aspects of patent validity are defeated by the
PTO’s position that it can leave some challenged claims
untouched. The America Invents Act presents a new
system of reviewing issued patents, providing for stays of
district court proceedings, and estoppels in all tribunals,
based on the PTO decision. Final determination of the
validity of a challenged patent is not achieved when the
PTO selects, at its sole and unreviewable choice, which
claims it will review and which it will not touch.
The post-grant procedures of the America Invents Act
are of great power and promise. However, as implement-
ed by the PTO, these procedures have produced a star-
tlingly destabilizing effect. As an amicus curiae stated in
an AIA case before the Supreme Court on a different
aspect of the statute, “IPR was meant to open an alterna-
tive pathway to the accurate resolution of patent disputes,
not a gaping loophole that undermines the integrity of
both administrative and federal court patent adjudica-
tions.” Brief for Intellectual Ventures as Amicus Curiae
Supporting Petitioner, Cuozzo Speed Techs., LLC v. Lee
(No. 15-446), 2016 WL 825549.
4 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
The AIA provisions are designed to act in harmony,
like a well-oiled engine. Incorrect implementation by the
agency distorts the framework, providing the now-
observed result of protracted litigation grinding against
administrative obstinacy. The victim is the Nation’s
innovation economy.
Statutory compliance is the judicial obligation. I focus
on specific statutory provisions that relate to, and are
violated by, the PTO’s practice of partial decision of IPR
petitions, viz., 35 U.S.C. §§ 311, 312, 314, 315, and 318,
and AIA Section 18(a)(D).
35 U.S.C § 311. Inter Partes Review
Section 311 states the scope of inter partes review,
and limits such review to challenges that “could be raised
under section 102 and 103 and only on the basis of prior
art consisting of patents or printed publications.” 35
U.S.C. § 311(b). The AIA proceeding is structured as a
complete alternative to litigation of these issues. In
providing a meaningful alternative to district court litiga-
tion of these primary issues of patent validity, Congress
designed the AIA to achieve expeditious and economical
final resolution. See, e.g., Patent Reform Act of 2009:
Hearing Before the House Comm. on the Judiciary, 111th
Cong. 153 (2009) (statement of Rep. Manzullo) (“It is
clearly appropriate to have an administrative process for
challenging patent validity, but it should exist within a
structure that guarantees a quick—and final—
determination.”).
The legislative record is uniform and compelling. See,
e.g., Patent Reform: The Future of American Innovation:
Hearing Before the Senate Comm. on the Judiciary, 110th
Cong. 13 (2007) (statement of Jon Dudas, Director,
USPTO) (“[T]he estoppel needs to be quite strong that
says on the second window any issue that you raised or
could have raised you can bring up no place else. That
second window, from the administration’s position, is
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 5
intended to allow nothing—a complete alternative to
litigation.”).
At enactment of the AIA in 2011, Senator Grassley
summarized that
if an inter partes review is instituted while litiga-
tion is pending, that review will completely sub-
stitute for at least the patents-and-printed-
publications portion of the civil litigation.
157 Cong. Rec. S1360-94 (daily ed. March 8, 2011) (state-
ment of Sen. Grassley).
The intended complete alternative and complete sub-
stitution is impossible if the PTAB chooses incomplete
review. That is my concern with Part III of the majority
opinion.
35 U.S.C. § 312. Petitions for review
Section 312 sets the requirements for petitions for
post-grant review. Among others, the petition must
identify:
[I]n writing and with particularity, each claim
challenged, the grounds on which the challenge to
each claim is based, and the evidence that sup-
ports the grounds for the challenge to each claim,
including—
(A) copies of patents and printed publications that
the petitioner relies upon to support the petition,
and
(B) affidavits or declarations of supporting evi-
dence and opinions, if the petitioner relies on ex-
pert opinions;
35 U.S.C. § 312(a)(3). The purpose of these detailed filing
requirements is: “to force a petitioner to present all of his
best evidence against a patent up front. His petition itself
must present a full affirmative case. It thus reinforces
6 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
the front loaded nature of an oppositional system, which
is critical to the efficient resolution of proceedings by the
PTO.” 154 Cong. Rec. S9982-93 (daily ed. Sept. 25, 2008)
(statement of Senator Kyl on S. 3600).
In the case at bar, SAS presented complete evidence
as to all of the claims that it challenged in the petition,
and ComplementSoft provided a full response. Nonethe-
less, the PTO refused to consider all of the claims that
had been placed at issue, leaving seven claims undecided.
The petition for review sets the boundaries of the IPR
proceeding, as summarized by Senator Grassley on en-
actment of S. 23, that “by requiring petitioners to tie their
challenges to particular validity arguments against
particular claims, the new threshold will prevent chal-
lenges from ‘mushrooming’ after the review is instituted
into additional arguments employing other prior art or
attacking other claims.” 157 Cong. Rec. S1360-94 (daily
ed. March 8, 2011). It is not disputed that these require-
ments were met in the petition presented in this case.
Section 312, like the rest of the AIA, provides no sup-
port for the PTO’s practice of accepting consideration of
some of the patent claims in the petition while ignoring
others, when all challenged claims are fully documented
and briefed in compliance with the statute. The PTO’s
selective practice is especially deleterious to the statutory
purpose when the patent is in validity litigation in the
district court.
35 U.S.C. § 314. Institution of Inter Partes Review
Section 314(a) establishes the threshold required for
the Director to institute proceedings adjudicating validity:
The Director may not authorize an inter partes
review to be instituted unless the Director deter-
mines that the information presented in the peti-
tion filed under section 311 and any response filed
under section 313 shows that there is a reasonable
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 7
likelihood that the petitioner would prevail with
respect to at least 1 of the claims challenged in
the petition.
35 U.S.C. § 314(a). The statute does not provide the PTO
with discretion to pick and choose which of the challenged
claims will be included in the post-grant review when at
least one claim is found to have crossed the threshold of
likely invalidity. The Director can still refuse to institute
review entirely, but the Director cannot choose to consider
some of the challenged claims and to ignore others. The
PTO departed from the statute in adopting regulations
that authorize review of only some of the challenged
claims and grounds, as in 37 C.F.R. 42.108(a):
(a) When instituting inter partes review, the
Board may authorize the review to proceed on all
or some of the challenged claims and on all or
some of the grounds of unpatentability asserted
for each claim.
I am not here concerned with the statutory authorization
for complete denial of a petition to institute, for then the
petitioner may proceed promptly with litigation. My
concern is with the unauthorized partial institution after
a PTO finding that at least one of the patent claims faces
a likelihood of invalidity. This defeats the legislative
purpose of creating a “substitute for court litigation” that
is a “quick and cost effective alternative[]” where chal-
lengers must “front load their case,” and the decision
imposes estoppel to “eliminate the need to press any
claims in other fora.” Patent Reform: The Future of Amer-
ican Innovation: Hearing Before the Senate Comm. On the
Judiciary, 110th Cong. 7 (2007) (written responses of Jon
Dudas, Director, USPTO); H.R. Rep. No. 112-98, pt. 1 at
48 (2011); 157 Cong. Rec. S1360-94 (daily ed. March 8,
2011) (Sen. Grassley during Senate consideration,
amendment, and passage of S. 23); 154 Cong. Rec. S9982-
8 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
93 (daily ed. Sept. 25, 2008) (statement of Sen. Kyl on S.
3600 (Patent Reform)).
Authorization to refuse to institute a petition was in-
cluded in response to the concerns of then Director Dudas
about whether the PTO could handle the increased work-
load within the statutory time frame; this accommodation
did not also authorize the PTO to choose to decide part of
a petition and leave the other part undecided. Partial
institution is not a reasonable statutory interpretation—it
imposes additional delay, uncertainty, and cost; all con-
trary to the purposes of the AIA. It particularly affects
§ 315, discussed post, which imposes estoppel against the
petitioner on all grounds that were “raised or reasonably
could have [been] raised” in the IPR petition.
The AIA provides for two determinations by the Di-
rector when a petition for post-grant review has been
filed: (1) whether the petitioner has presented grounds
reasonably likely to invalidate at least one of the chal-
lenged claims, and (2) whether to institute post-grant
review. Senator Kyl explained that the grant of discretion
to the Director to refuse to institute review even when the
invalidity threshold is met “reflects a legislative judgment
that it is better that the Office turn away some petitions
that otherwise satisfy the threshold for instituting an
inter partes or post-grant review than it is to allow the
Office to develop a backlog of instituted reviews that
precludes the Office from timely completing proceedings.”
157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement
of Sen. Kyl).
35 U.S.C § 315. Estoppel
Section 315 establishes how these post-grant proce-
dures interact with other aspects of patent litigation.
Among the consequences of the PTO’s curious and unfore-
seen practice, partial review does not estop unreviewed
claims as to either validity or invalidity, thereby adding to
the litigants’ burden rather than lightening it. The
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 9
estoppel provisions were the subject of extensive legisla-
tive discussion.
Section 315(e) provides that when a petition for re-
view is granted and the matter proceeds to trial and
decision in the PTAB in accordance with § 318(a), estop-
pel arises with respect to “any ground that the petitioner
raised or reasonably could have raised during that inter
partes review.” This estoppel applies in the PTO, in the
district courts, and in the International Trade Commis-
sion.
35 U.S.C. § 315(e) Estoppel.—
(1) Proceedings before the office.–The petitioner in
an inter partes review of a claim in a patent under
this chapter that results in a final written deci-
sion under section 318(a), or the real party in in-
terest or privy of the petitioner, may not request
or maintain a proceeding before the Office with
respect to that claim on any ground that the peti-
tioner raised or reasonably could have raised dur-
ing that inter partes review.
(2) Civil actions and other proceedings.–The peti-
tioner in an inter partes review of a claim in a pa-
tent under this chapter that results in a final
written decision under section 318(a), or the real
party in interest or privy of the petitioner, may
not assert either in a civil action arising in whole
or in part under section 1338 of title 28 or in a
proceeding before the International Trade Com-
mission under section 337 of the Tariff Act of 1930
that the claim is invalid on any ground that the
petitioner raised or reasonably could have raised
during that inter partes review.
The America Invents Act was designed—after a dec-
ade of hearings and revisions—to reduce the cost of patent
litigation, to resolve major validity issues in an expert
10 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
tribunal, and to put an end to repetitive challenges. The
estoppel provision was a controversial aspect of the en-
actment.
An interim Senate Report states that contributors
were concerned about the fairness of the “could have
raised” estoppel provision, given the extremely limited
discovery available to petitioners. See S. Rep. No. 111-18,
at 17, to accompany S. 515 (Patent Reform Act of 2009)
(“Many businesses also have described could-have-raised
estoppel as a powerful brake on their use of inter partes
reexamination. They find this standard vague and uncer-
tain, and fear that if they challenge a patent in an inter
partes reexamination, they will lose the ability to raise
later-discovered prior art against the patent if they are
subsequently sued for infringement.”).
Congress initially considered a lesser estoppel. See S.
Rep. No. 110-259, at 22, to accompany S. 1145 (“Moreover,
once a petitioner has challenged the validity of a patent
through a PGR, that party may not challenge validity in a
court proceeding based on any ground it raised during the
PGR”). But, by the time of enactment of the AIA in 2011,
stronger estoppel provisions appear to have achieved
consensus. See 157 Cong. Rec. S952 (Feb. 28, 2011)
(statement of Sen. Grassley on final consideration of S.
23):
In addition, the bill would improve the current in-
ter partes administrative process for challenging
the validity of a patent. It would establish an ad-
versarial inter partes review, with a higher
threshold for initiating a proceeding and proce-
dural safeguards to prevent a challenger from us-
ing the process to harass patent owners. It also
would include a strengthened estoppel standard to
prevent petitioners from raising in a subsequent
challenge the same patent issues that were raised
or reasonably could have been raised in a prior
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 11
challenge. The bill would significantly reduce the
ability to use post-grant procedures for abusive
serial challenges to patents. These new proce-
dures would also provide faster, less costly, alter-
natives to civil litigation.
Director Dudas had urged that because the PTO proce-
dures are intended to substitute for district court litiga-
tion, litigation-type estoppel should attach to PTAB
rulings:
We would favor providing for a second-window re-
view to have a different estoppel effect than a
first-window review . . . . A second-window re-
view, however, will serve as a substitute for court
litigation and, as such, should bind not only the
patentee but also the challenger as a decision on
the merits in litigation would.
Patent Reform: The Future of American Innovation:
Hearing Before the Senate Comm. on the Judiciary, 110th
Cong. 136–137 (2007) (statement of Jon Dudas, Director,
USPTO).
Senator Grassley further summarized, at enactment,
that the purpose of the estoppel is to “completely substi-
tute” for the same issues in litigation.
Ideally extending could-have-raised estoppel to
privies will help ensure that if an inter partes re-
view is instituted while litigation is pending, that
review will completely substitute for at least the
patents-and-printed-publications portion of the
civil litigation.
157 Cong. Rec. S1360-94 (daily ed. March 8, 2011) (state-
ment of Sen. Grassley). When PTO Director Kappos took
office as the legislation neared finality, he stated at a
closing hearing on the America Invents Act:
12 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
If I can say that in my own words also, that I be-
lieve there are significant advantages for patent-
ees who successfully go through the post-grant
system—in this case inter partes review—because
of those estoppel provisions. Those estoppel pro-
visions mean that your patent is largely unchal-
lengeable by the same party.
America Invents Act: Hearing on H.R. 1249 Before the
House Comm. on the Judiciary, 112th Cong. 52–53 (2011)
(statement of David Kappos, Director, USPTO).
The “complete substitution” for section 102 and 103
issues cannot occur unless all of the claims challenged in
the petition are included when post-grant review is ac-
cepted. Challengers may choose between the IPR pro-
ceeding and district court litigation of the same issues,
but Congress restricted the repetitive validity proceedings
of the past. A witness testified that:
With respect to your question on alternatives to
litigation…38% of all inter partes reexaminations
brought between 2001 and 2005 were filed after
patent litigation had already begun, showing that
this proceeding, to a very significant part, is not
used instead of litigation, but on top of litigation,
and sometime even after litigation in attempts at
undoing adverse district court judgments.
Patent Reform: The Future of American Innovation Before
the Senate Comm. on the Judiciary, 110th Cong. 94 (writ-
ten testimony for Alkermes plc) (emphasis original).
Senator Schumer stated at enactment of S. 23:
Too many district courts have been content to al-
low litigation to grind on while a reexamination is
being conducted, forcing the parties to fight in two
fora at the same time. This is unacceptable, and
would be contrary to the fundamental purpose
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 13
of . . . provid[ing] a cost efficient alternative to lit-
igation.
157 Cong. Rec. S1360-94 (March 8, 2011) (statement of
Sen. Schumer).
These universally emphasized AIA purposes fall flat
when the PTO chooses to review some but not all of the
challenged claims in the petition, leaving the other claims
presumably alive and well. The legislation does not
contemplate such a procedure. The legislation provides
only for a PTO proceeding that subjects “any patent
claim challenged by the petitioner and any new claim
added” during the proceeding to be fully and finally
decided through the PTO proceeding and its subsequent
appeal, bringing “more certainty in litigation.” 157 Cong.
Rec. S948 (Feb. 28, 2011) (statement of Sen. Leahy on
Senate consideration of S. 23) (emphasis added).
This finality is achieved by the estoppel provisions as
applied to the decision on every claim challenged by the
petitioner as to every issue raised or that could have been
raised. America Invents Act: Hearing on H.R. 1249 Before
the House Comm. on the Judiciary, 112th Cong. 12 (2011)
(statement of David Kappos, Director, USPTO) (“Those
estoppel provisions mean that your patent is largely
unchallengeable by the same party.”). However, when
review is declined as to some claims that may be of litiga-
tion interest, the partial institution practice cannot be a
“complete[] substitute for . . . [a] portion of civil litigation.”
This contravenes a primary purpose of the AIA.
During oral argument of this appeal, the court ques-
tioned PTO counsel on the relationship between the
conduct of reexamination proceedings, the conduct of inter
partes review proceedings, and the legislative purpose of
the AIA’s post-grant procedures. Oral Argument at
25:28–37:20. In a letter, the PTO provided MPEP sec-
tions 2243 and 2246, stating that reexamination under
past PTO practice authorized by Section 302 may be
14 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
conducted on “fewer than all claims in the subject patent
or in the reexamination request.” The PTO stated that
this supports the partial institution practice for AIA
proceedings. PTO Letter, January 11, 2016, ECF No. 61.
The PTO urged that Chevron deference should be applied.
However, the legislative history is clear that the AIA
inter partes review proceedings were designed to correct
inadequacies plaguing the former procedure. The former
PTO reexamination differs from AIA review in that (1)
reexamination under § 302 is conducted by an examiner
on the written record, not by the PTAB with discovery,
witnesses, and trial; (2) § 302 reexamination entitles
amendment as of right, and examination of the amended
claims is of right, contrary to the PTO’s implementation of
the AIA statute; (3) no estoppel attaches to § 302 reexam-
ination, unlike the AIA rulings; and (4) § 302 reexamina-
tion requires “a substantial new question of patentability”
and reexamination is mandatory when such a question is
found, unlike the standard for “institution.”
The new AIA system was designed to improve upon
the § 302 reexamination procedure. See 157 Cong. Rec.
S952 (Feb. 28, 2011) (statement of Sen. Grassley on
Senate consideration of S.23) (“In addition, the bill would
improve the current inter partes administrative process
for challenging the validity of a patent.”); 157 Cong. Rec.
S5370-77 (Sept. 7, 2011) (statement of Sen. Whitehouse
on Senate consideration of H.R. 1249) (“Administrative
processes that should serve as an alternative to litigation
[] have broken down, resulting in further delay, cost, and
confusion.”).
35 U.S.C § 316. Conduct of inter partes review
In promulgating regulations authorizing partial insti-
tution, the PTO invoked the authority of Section 6(c) of
the AIA, requiring the PTO to “issue regulations to carry
out chapter 31 of title 35, United States Code, as amended
by subsection (a) of this section.” See § 316(a) (“The
SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC. 15
Director shall prescribe regulations . . . (2) setting forth
the standards for the showing of sufficient grounds to
institute a review under section 314(a); . . . (4) establish-
ing and governing inter partes review under this chapter
and the relationship of such review to other proceedings
under this title”). 77 Fed. Reg. 7058.
This authority does not include authorization to de-
part from the statute. See Ernst & Ernst v. Hochfelder,
425 U.S. 185, 213–14 (1976) (“The rulemaking power
granted to an administrative agency charged with the
administration of a federal statute is not the power to
make law. Rather, it is the power to adopt regulations to
carry into effect the will of Congress as expressed by the
statute.”); see also H.R. REP. NO. 110-314, at 45 (2007)
(“Where Congress has seen fit to provide specific limita-
tions or conditions in statute, the USPTO may not sur-
pass or take away these limitations or conditions by
promulgated rule.”).
The PTO improperly adopted a system of partial insti-
tution and partial final written decision, contravening the
statute and the intent of Congress. The PTO has exceed-
ed its statutory authority. It befalls this court to “add
force and life to the cure and remedy, according to the
true intent of the makers of the act.” Heydon’s Case, 76
Eng. Rep. 637, 638 (1584).
35 U.S.C § 318. Decision of the PTAB
Section 318 requires the Board to address all of the
challenged claims and to issue a final written decision.
The statute provides:
§ 318(a). If an inter partes review is instituted
and not dismissed under this chapter, the Patent
Trial and Appeal Board shall issue a final written
decision with respect to the patentability of any
patent claim challenged by the petitioner and any
new claim added under section 316(d).
16 SAS INSTITUTE, INC. v. COMPLEMENTSOFT, LLC.
The statute is clear: the Board’s final written decision
must include “the patentability of any patent claim chal-
lenged by the petitioner and any new claim added under
section 316(d).” Id. And when a petition is instituted, all
of the challenged claims must be included in the final
written decision. Id.
The totality of provisions and history of the America
Invents Act demonstrates that the PTO has erroneously
adopted a system of partial review and partial decision
that was not contemplated, not intended, not discussed,
and indeed not suspected by Congress and the communi-
ties concerned with patent legislation.
CONCLUSION
The panel majority reinforces the erroneous PTO reg-
ulations and practices that contravene the statute. I
respectfully dissent from Part III of the court’s opinion.