Synopsys, Inc. v. Mentor Graphics Corporation , 814 F.3d 1309 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
SYNOPSYS, INC.,
Appellant
v.
MENTOR GRAPHICS CORPORATION,
Cross-Appellant
v.
MICHELLE K. LEE, DIRECTOR, U.S. PATENT AND
TRADEMARK OFFICE,
Intervenor
______________________
2014-1516, 2014-1530
______________________
Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in No.
IPR2012-00042.
______________________
Decided: February 10, 2016
______________________
ERIC SHUMSKY, Orrick, Herrington & Sutcliffe LLP,
Washington, DC, argued for appellant. Also represented
by JEREMY PETERMAN; INDRA NEEL CHATTERJEE, TRAVIS
JENSEN, CAM THI PHAN, Menlo Park, CA; GEORGE LASZLO
2 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
KANABE, San Francisco, CA; ANDREW D. SILVERMAN, New
York, NY; WILLIAM H. WRIGHT, Los Angeles, CA.
MARK E. MILLER, O’Melveny & Myers LLP, San Fran-
cisco, CA, argued for cross-appellant. Also represented by
GEORGE ALFRED RILEY; CHRISTOPHER LEWIS MCKEE,
MICHAEL STEVEN CUVIELLO, BRADLEY CHARLES WRIGHT,
Banner & Witcoff, Ltd., Washington, DC; KEVIN F. KING,
ROBERT ALLEN LONG, JR., Covington & Burling LLP,
Washington, DC.
SCOTT WEIDENFELLER, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA,
argued for intervenor. Also represented by NATHAN K.
KELLEY, JAMIE LYNNE SIMPSON.
JENNIFER LORAINE SWIZE, Jones Day, Washington,
DC, for amicus curiae SAS Institute, Inc. Also represent-
ed by JOHN S. SIEMAN.
______________________
Before NEWMAN, DYK, and WALLACH, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK.
Dissenting opinion filed by Circuit Judge NEWMAN.
DYK, Circuit Judge.
Synopsys, Inc. (“Synopsys”), the petitioner, appeals a
final decision of the Patent Trial and Appeal Board
(“Board”) in an inter partes review of claims of U.S.
Patent No. 6,240,376 (“the ’376 patent”). Mentor
Graphics Corporation (“Mentor”), the patent owner, cross
appeals. The Board found that claims 5, 8, and 9 were
invalid as anticipated (which Mentor does not challenge
on appeal) but declined to find that claims 1 and 28 were
anticipated (which Synopsys appeals). We conclude that
the Board did not err in its ruling that claims 1 and 28
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 3
were not invalid. We also hold that (1) the final order of
the Board need not address every claim raised in the
petition for review, and (2) the Board did not err in deny-
ing Mentor’s motion to amend. Accordingly, we affirm.
BACKGROUND
The ’376 patent claims a method of tracing bugs, i.e.,
errors in coding, in the design of computer chips. An error
in the design of a computer chip, even a minor one, can be
extremely problematic and costly for the company that
produces the chip. Thus, before a chip is manufactured,
the design undergoes significant testing to make sure that
the chip performs as intended. The ’376 patent relates to
a method of testing involving a software or hardware
simulation of the chip. The method allows a chip designer
to trace errors discovered during testing back to the
original source code that a designer uses to program the
chip so that these errors can be corrected.
To explain the specifics of this invention, some back-
ground information about chip design is necessary. Chip
designers write source code to design the basic operation
of the circuits that make up a computer chip. For exam-
ple, a chip designer may indicate that a particular
“gate”—or component of the circuit—is supposed to pro-
vide a particular output given a particular input. The
source code indicates this using general logical state-
ments, such as “if A=0, then B=0, else B=1.” 1 See, e.g.,
’376 patent, fig.4. However, this source code must be
“translated” into the actual design of the chip. Special-
1 In this admittedly simple example, if the input A
is equal to 0, then the output B would be equal to 0. If the
input A is not equal to zero, then the output B would be 1.
Depending on the particular input, only one “branch” of
this “if-then” statement is executed.
4 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
ized software “synthesizes,” i.e., translates, the source
code into a “gate-level netlist,” or a basic schematic of the
chip. Id. at 1:26–36. But the design still may be incom-
plete, as it may contain redundant circuitry based on a
direct translation from the source code. Yet another
specialized piece of software is then used to optimize the
design, which removes the superfluous components from
the circuit and results in a simpler and more efficient
circuit without losing any functionality. 2
When the design process is complete, chip designers
use specialized software or hardware to imitate the be-
havior of the final circuitry to test whether the chip does
what it is supposed to do. For example, a designer can
simulate the circuit from the original source code. During
this test, if there is a problem, the designer can fix it by
going back to the code and making modifications. How-
ever, it is often difficult to trace back errors to the right
place in the source code because high level information in
the source code is lost during translation and optimiza-
tion. The loss of this information makes identifying and
correcting errors much more costly and time consuming.
The ’376 patent seeks to solve this problem. The inven-
tion uses “instrumented signals” to identify the place in
the source code where the error resides, thus allowing the
designer to go back to the specific part of the source code
to correct the error. ’376 patent, col. 2 ll. 40–43.
On September 26, 2012, Synopsys filed a petition for
inter partes review of claims 1–15 and claims 20–33 of the
‘376 patent, alleging that these claims were anticipated or
would have been obvious in light of various prior art
references, including U.S. Patent No. 6,132,109 (“Grego-
2 For example, the statement “if A=0, then B=1,
else B=1” is redundant and can be replaced with just
“B=1.” The optimizer removes these redundancies.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 5
ry”). In its preliminary patent owner response, Mentor
contested Synopsys’s invalidity contentions and also
argued that Synopsys’s petition was time-barred and
moved for discovery relating to the time-bar. Specifically,
after filing the petition for inter partes review, Synopsys
had acquired an entity who had previously been sued by
Mentor for infringement of the ’376 patent more than one
year earlier. Mentor argued that the petition for inter
partes review was time-barred under 35 U.S.C. § 315(b),
which states that “[a]n inter partes review may not be
instituted if the petition requesting the proceeding is filed
more than 1 year after the date on which the petitioner,
real party in interest, or privy of the petitioner is served
with a complaint alleging infringement of the patent.” In
the alternative, Mentor argued that the acquired entity,
rather than Synopsys, was the appropriate real party in
interest to the inter partes review and, in light of the
earlier suit, the inter partes review was time barred.
On February 22, 2013, the Board instituted review of
claims 1–9, 11, and 28–29 based solely on anticipation by
Gregory, finding that the petition “show[ed] that there is
a reasonable likelihood that the petition would prevail” in
demonstrating unpatentability. 35 U.S.C. § 314(a). The
Board denied the petition with respect to claims 10, 12–
15, 20–27, and 30–33, finding that there was no reasona-
ble likelihood of invalidity because Synopsys had not
shown, for example, how any prior art disclosed “local
variable assignment statement[s]” as required by claim
20. J.A. 34–35.
In the decision to institute, the Board also rejected
Mentor’s argument that Synopsys’s petition was time-
barred by section 315(b) of title 35. The Board found that
the § 315(b) bar is measured as of the filing date of the
petition, pursuant to its regulation interpreting this
section, 37 C.F.R. § 42.101(b), which states that a petition
is barred only if “[t]he petition requesting the proceeding
6 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
is filed more than one year after the date on which the
petitioner . . . is served with a complaint alleging in-
fringement of the patent.” According to the Board, Men-
tor had not “provide[d] persuasive evidence that Synopsis
[sic] and [the newly acquired entity that had been sued by
Mentor more than one year earlier] were in privity on the
filing date of the petition.” J.A. 16. The Board also found
that Synopsys was the appropriate real party in interest.
Therefore, the Board found that the petition was not time
barred.
After institution, Mentor filed a motion to amend and
substitute claims 34–43 for claims 1, 5, 28, 2, 3, 6, 8, 9, 11,
and 29, respectively, which was opposed by Synopsys.
After an oral hearing, the Board issued its final writ-
ten decision on February 19, 2014. Synopsys Inc. v.
Mentor Graphics Corp., IPR2012-00042, Paper 60 (PTAB
February 19, 2014) (“Bd. Op.”). The Board found claims 5,
8, and 9 anticipated by Gregory. However, the Board also
found that claims 1–4, 6, 7, 11, 28, and 29 were not antic-
ipated. In addition, the Board denied Mentor’s motion to
substitute claims 35, 40, and 41 for claims 5, 8, and 9.
According to the Board, Mentor failed to “demonstrate
general patentability over prior art,” including Gregory.
Id. at 47. “As the moving party,” Mentor bore “the burden
to show entitlement to the relief requested,” namely the
amendment of claims. Id.Synopsys appeals, arguing that the Board erred in
finding claims 1 and 28 not anticipated and by issuing a
final decision that did not address the validity of all
claims raised in the petition. Mentor cross appeals,
challenging the Board’s finding that the petition was not
time barred and the Board’s denial of its motion to
amend. The PTO has intervened as an interested party to
defend its procedures. We have jurisdiction under 28
U.S.C. § 1295(a)(4)(A). We review the Board’s factual
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 7
findings for substantial evidence and its legal conclusions
de novo. In re Baxter Int’l, Inc., 678 F.3d 1357, 1361 (Fed.
Cir. 2012).
DISCUSSION
I
Synopsys first contends that the final decision of the
Board erroneously failed to address every claim raised in
the petition for inter partes review. As we have previous-
ly explained, inter partes review proceeds in two stages.
See St. Jude Med., Cardiology Div., Inc. v. Volcano Corp.,
749 F.3d 1373, 1375 (Fed. Cir. 2014). In the first stage,
the Board, acting on behalf of the Director, reviews the
petition for inter partes review and any patent owner
preliminary response to decide whether “there is a rea-
sonable likelihood that the petitioner would prevail with
respect to at least 1 of the claims challenged in the peti-
tion.” 35 U.S.C. § 314(a); 37 C.F.R. § 42.4(a). The PTO
has adopted a regulation allowing the Board to initiate
inter partes review “on all or some of the challenged
claims.” 37 C.F.R. § 42.108(a). At the second stage, the
Board conducts the inter partes review and then issues a
final decision with respect to “any patent claim challenged
by the petitioner.” 35 U.S.C. § 318(a). 3
The decision of the Board to institute inter partes re-
view cannot be appealed. 35 U.S.C. § 314(d); In re Cuozzo
Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015),
3 Section 318(a) reads as follows:
If an inter partes review is instituted and not
dismissed under this chapter, the Patent Trial
and Appeal Board shall issue a final written deci-
sion with respect to the patentability of any pa-
tent claimed challenged by the petitioner and any
new claim added under section 316(d).
8 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
cert. granted, No. 15-446, 2016 WL 205946, at *1. 4 The
PTO argues that the “logical import” of Synopsys’s chal-
lenge is a challenge to the decision to institute. Br. of
PTO, at 15–16. However, Synopsys does not challenge
the decision to institute but rather the scope of the final
decision itself. Because Synopsys challenges the final
decision, we can hear this appeal. The statute allows “[a]
party dissatisfied with the final written decision of the
Patent Trial and Appeal Board” to “appeal the decision.”
35 U.S.C. § 319; Versata Dev. Grp., Inc. v. SAP Am., Inc.,
793 F.3d 1306, 1322 (Fed. Cir. 2015).
On the merits, Synopsys argues that, because § 318(a)
directs the Board to issue a final written decision with
respect to “any patent claim challenged by the petitioner,”
the Board’s final decision must address every claim raised
in the petition. 5 However, the statute cannot be read to
impose such a requirement. First, the text makes clear
that the claims that the Board must address in the final
decision are different than the claims raised in the peti-
tion. Congress explicitly chose to use a different phrase
when describing claims raised in the petition for inter
partes review in § 314(a) and claims on which inter partes
4 We note that an issue relating to institution does
not become appealable simply because the Board men-
tions that issue in its final decision. See Achates Refer-
ence Publ’g, Inc. v. Apple Inc., 803 F.3d 652, 658 (Fed. Cir.
2015) (appealability bar applies to institution decisions
“even if such assessment is reconsidered during the
merits phase of proceedings and restated as part of the
Board’s final written decision”).
5 Presumably, Synopsys’s theory is that even if the
Board, in a final decision, found the additional claims not
invalid, Synopsys could on appeal challenge the finding of
non-invalidity of those claims.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 9
review has been instituted in § 318(a). Section 314(a)
specifies that Board may not institute inter partes review
unless “the information presented in the petition . . . and
any response filed . . . shows that there is a reasonable
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) (emphasis added). However, in describing
the final written decision, Congress stated that the Board
must issue a final written decision with respect to any
“claim challenged by the petitioner.” 35 U.S.C. § 318(a)
(emphasis added). When Congress chooses to use two
different words or phrases, this typically suggests that the
two were deemed to have two different meanings. See,
e.g., Bailey v. United States, 516 U.S. 137, 146 (1995)
(distinction between “used” and “intended to be used”
creates implication that a related provision’s reliance on
“use” alone refers to actual and not intended use”).
In addition, the conditional phrase “[i]f an inter partes
review is instituted” in § 318(a) also strongly suggests
that the “challenged” claims referenced are the claims for
which inter partes review was instituted, not every claim
challenged in the petition. Thus, the text of § 318(a)
demonstrates that the Board need only issue a final
written decision with respect to claims on which inter
partes review has been initiated and which are challenged
by the petitioner after the institution stage.
Second, the statute would make very little sense if it
required the Board to issue final decisions addressing
patent claims for which inter partes review had not been
initiated, as Synopsys admitted at oral argument. After
inter partes review is initiated, the patent owner files a
full response to the petition. See 35 U.S.C. § 316(a)(8); 37
C.F.R. § 42.120. In addition, both parties may submit
information to supplement the record by taking discovery,
submitting affidavits, and by submitting expert declara-
tions. See 37 C.F.R. §§ 42.123, 42.51, 42.65. Parties may
10 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
present their cases to the Board in an oral hearing. 37
C.F.R. § 42.70. All of these various mechanisms allow the
Board to issue a final decision based on a full record
rather than just on the limited record in the initial peti-
tion and the patent owner’s preliminary response. See 35
U.S.C. § 314(a) (specifying that the decision to institute is
made on “information presented in the petition . . . and
any [preliminary] response” filed by the patent owner). It
would make no sense to interpret § 318 in a way that
would require the Board to issue a final determination on
validity of patent claims without the benefit of this addi-
tional argument and record.
At the same time, the statute is quite clear that the
PTO can choose whether to institute inter partes review
on a claim-by-claim basis. In deciding when to institute
IPR, the statute requires a claim-by-claim inquiry to
determine whether “there is a reasonable 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)
(emphasis added). Unless at least one of the claims
satisfies this inquiry, the Board cannot institute. The
statute strongly implies that the initiation decision be
made on a claim-by-claim basis and that the Board can
pick and choose among the claims in the decision to
institute. In fact, nothing in § 314 requires institution of
inter partes review under any circumstance.
Although we find that the language is clear, if there
were any doubt about the Board’s authority and the
statute were deemed ambiguous, the PTO has promulgat-
ed a regulation allowing the Board to institute as to some
or all of the claims. The regulation “authorize[s] 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.” 37 C.F.R. § 42.108. Contrary to
Synopsys’s argument that this regulation is invalid, the
PTO has explicit authority to promulgate regulations
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 11
“setting forth the standards for the showing of sufficient
grounds to institute” inter partes review. 35 U.S.C.
§ 316(a)(2). This regulation is plainly an exercise of that
authority. Under Chevron U.S.A., Inc. v. Natural Re-
sources Defense Council, Inc., 467 U.S. 837 (1984), this
regulation is a reasonable interpretation of the statutory
provision governing the institution of inter partes review.
See Cuozzo, 793 F.3d at 1278. As the PTO noted in adopt-
ing the regulation, the claim-by-claim approach “stream-
line[s] and converge[s] the issues for consideration” and
“aids in the efficient operation of the Office and the ability
of the Office to complete the [review] within the one-year
timeframe.” Changes to Implement Inter Partes Review
Proceedings, Post-Grant Review Proceedings, and Transi-
tional Program for Covered Business Method Patents, 77
Fed. Reg. 48703 (Aug. 14, 2012) (Response to Comment
60).
Synopsys also argues that the legislative history and
the structure of the AIA support its construction. For this
assertion, it points to a few floor statements suggesting
that inter partes review “will completely substitute for at
least the patents-and-printed publication portion of”
infringement litigation. 157 Cong. Rec. S1376 (daily ed.
Mar. 8, 2011 (statement of Sen. Kyl); see also 154 Cong.
Rec. S9989 (daily ed. Sept. 27, 2008) (statement of Sen.
Kyl); 153 Cong. Rec. H10280 (Sept. 7, 2007) (statement of
Rep. Jackson-Lee). Floor statements by a few members of
the legislative branch cannot supplant the text of the bill
as enacted. In addition, Synopsys argues that the Board’s
practice of issuing final decisions only addressing some of
the claims in the petition is inconsistent with the estoppel
provisions of the AIA because final decisions that do not
address all of the claims “will have limited estoppel effect”
and thus do not “force a party to bring all of its claims in
one forum.” Appellant’s Br. 74 (internal quotation marks
omitted). The validity of claims for which the Board did
12 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
not institute inter partes review can still be litigated in
district court. We see no inconsistency in this. Inter
partes review cannot replace the district court in all
instances, for example, when claims are challenged in
district court as invalid based on the on-sale bar, for
claiming patent-ineligible subject matter, or on grounds of
indefiniteness. See 35 U.S.C. § 311(b) (limiting inter
partes review to grounds “that could be raised under
section 102 [anticipation] or 103 [obviousness] and only on
the basis of prior art consisting of patents or printed
publications”). 6
In summary, we find no statutory requirement that
the Board’s final decision address every claim raised in a
petition for inter partes review. Section 318(a) only
requires the Board to address claims as to which review
was granted.
6 Both Synopsys and the PTO argue that the
change from the prior reexamination statute supports
their respective constructions. The statute stated that if
“the Director finds that a substantial new question of
patentability affecting a claim of a patent raised” the
Director shall order “inter partes reexamination of the
patent for resolution of the question.” 35 U.S.C. § 313(2010). Synopsys argues that because the AIA does not
specifically mention “resolution of the question,” institu-
tion under the AIA must be broader in scope. The PTO
argues that because the previous version required institu-
tion and the AIA makes institution discretionary, the
change supports its view of the AIA which makes discre-
tionary claim-by-claim institution allowable. We find
neither of these arguments persuasive.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 13
II
We now turn to the substance of the Board’s anticipa-
tion finding with respect to claims 1 and 28. Anticipation
is a question of fact. See In re Graves, 69 F.3d 1147, 1151
(Fed. Cir. 1995). This court reviews the Board’s decision
for substantial evidence. Dickinson v. Zurko, 527 U.S.
150, 152 (1999); In re Gartside, 203 F.3d 1305, 1313 (Fed.
Cir. 2000).
Claims 1 and 28 read:
1. A method comprising the steps of:
a) identifying at least one statement with-
in a register transfer level (RTL) synthe-
sizable source code; and
b) synthesizing the source code into a
gate-level netlist including at least one in-
strumentation signal, wherein the in-
strumentation signal is indicative of an
execution status of the at least one state-
ment.
28. A storage medium having stored therein pro-
cessor executable instructions for generating a
gate-level design from a register transfer level
(RTL) synthesizable source code, wherein when
executed the instructions enable the processor to
synthesize the source code into a gate-level netlist
including at least one instrumentation signal,
wherein the instrumentation signal is indicative
of an execution status of at least one synthesiza-
ble statement of the code.
’376 patent col. 15 ll. 1–8, col. 17 l. 62–col. 18 l. 7. The
Board found that Gregory disclosed everything in these
claims except for “instrumentation signals” that are
“indicative of an execution status of the at least one
14 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
statement.” Bd. Op. at 30. The finding that the prior art
disclosed all other aspects of the claims is not challenged
on appeal by the patentee. The Board construed “instru-
mentation signal” to be “an output signal created during
synthesis of [] source code by inserting additional code
into a program that indicates whether the corresponding
[] source code statement is active.” Id. at 26–27. The
Board construed the term “execution status” to mean
“information regarding whether a particular [source code]
instruction has been performed.” Id. at 27. These con-
structions are not challenged on appeal by the petitioner.
Rather, the petitioner asserts that Gregory discloses
the “execution status” limitation. As discussed above, the
’376 patent is directed to locating errors in the source
code. Testing of chips is done by inputting “millions or
billions of test vectors” into the chip and comparing the
outputs the chip gives with expected results. ’376 patent
col. 4 ll. 58–60. As a very simplified example, a designer
may ask the chip to compute “1+1.” If the chip outputs 3
instead of the expected result, the designer knows that
there is an error in the source code somewhere leading to
that inaccurate output. When one of the tests gives an
incorrect output, the designer must go back to the source
code to find the error that caused this. The difficulty lies
in finding the particular statement in the source code that
caused the error.
During typical testing of code, programmers have ac-
cess to a number of tools that help locate errors in source
code. For example, programmers are able to set a “break
point,” which is a signal that tells the debugging software
to temporarily suspend execution of the code. ’376 pa-
tent, col. 1 l. 49. In other words, a programmer will
artificially stop the execution of the code at a particular
point and examine the results of the execution up to that
point. Setting a breakpoint allows a programmer to
examine only a small subset of the code and thus simplify
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 15
the task of finding where in the source code errors arise
by narrowing the code tested to only a portion of the
entire code. Another traditional debugging method is a
visual trace where a programmer can examine exactly
which lines of code have been executed during one of the
tests. However, “the designer typically cannot set a
breakpoint from the source code during gate-level simula-
tion” because the designs after translation “include[] none
of the high-level information available in the . . . source
code.” ’376 patent, col. 2 ll. 5–6; col. 4 l. 66–66. Thus,
traditional debugging tools “such as setting breakpoints
or analyzing the source code coverage are not available”
when doing “gate-level” testing of the designs of chips. Id.
at col. 4 l. 67–col. 5 l. 2.
The invention of the ’376 patent uses instrumentation
signals to “facilitate source code analysis, breakpoint
debugging, and visual tracing of the source code execution
path during gate-level simulation.” ’376 patent, col. 2
ll. 52–55. These instrumentation signals are created in
the source code as illustrated below:
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 17
will not execute. A designer can know this because the
“trace” variables associated with the executed lines of
code will have a value of 1 whereas the “trace” variables
associated with the unexecuted lines of code will still have
a value of 0.
This instrumentation logic is preserved during trans-
lation, and becomes instrumentation signals in the sche-
matic used for testing (a signal being output is the same
as the variable being set to 1). Thus, chip designers can
set a breakpoint by telling the testing software to stop
when a particular instrumentation signal is output (i.e.
when a particular line of code is executed) and can visual-
ly trace the execution of the code in any given test by
looking at a list of outputted instrumentation signals
associated with that test.
Gregory also deals with tracing errors in chip design
to source code, but uses a different method, as is uncon-
tested. The designer, using the invention described in
Gregory, can identify the “source code in the places that
the designer wants to be able to debug,” and isolate those
particular portions of the chip design for testing. Gregory,
col. 8 l. 24. During synthesis of the source code into the
schematic of the chip, “the translator . . . adds additional
information or components to the initial circuit that
indicate that certain components should not be replaced
during optimization.” Gregory, col. 8, ll. 27–31. The
designer then can test only those portions of the chip and,
after errors are discovered, only have a smaller subset of
the code to search for errors. Further, because the code in
those portions is unoptimized, it corresponds to the source
code directly so if an erroneous answer is output, the
designer can know exactly which lines of the original
source code were executed and can narrow down even
further the source of the error.
18 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
Synopsys argues that the Board erred in concluding
that Gregory does not disclose instrumentation signals
that are indicative of the execution status.
First, Synopsys argues that the Board applied the
wrong legal standard by requiring explicit disclosure in
Gregory of the “execution status” element of claims 1 and
28. According to Synopsys, Gregory implicitly or inher-
ently discloses the “execution status.”
Synopsys relies on one sentence out of the Board deci-
sion and takes it out of context. The Board stated: “Greg-
ory does not state explicitly that ‘tempout,’ or any other
element, indicates an ‘execution status’ of an HDL in-
struction.” Bd. Op. at 32. However, the Board then
immediately went on to discuss how Gregory does not
implicitly disclose the necessary limitation. See id. The
Board relied on Mentor’s expert testimony that Gregory
did not disclose instrumentation signals indicative of
execution status. This expert testimony does not rely on
explicit disclosures’ being missing from the Gregory
reference—rather, it carefully explains how the Gregory
reference does not inherently (or even implicitly) disclose
the necessary claim limitation. The Board did not require
explicit disclosure in Gregory.
Second, Synopsys argues that the Board improperly
required it to present expert testimony. For this proposi-
tion, it again points to a single sentence in the Board’s
opinion where the Board stated, in weighing the quality of
evidence presented by Synopsys, “Synopsys, however,
does not point to any expert testimony to support these
statements.” Bd. Op. at 31. Synopsys argues that be-
cause the Board is constituted to evaluate technical
arguments about technical materials, expert testimony
should not be required.
We have previously found that, in the context of dis-
trict court litigation, “expert testimony is not required
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 19
when the references and the invention are easily under-
standable.” Wyers v. Master Lock Co., 616 F.3d 1231,
1242 (Fed. Cir. 2010). However, when the technology is
complex and “beyond the comprehension of laypersons,”
expert testimony is “sometimes essential.” Centricut, LLC
v. Esab Grp., Inc., 390 F.3d 1361, 1369 (Fed. Cir. 2004).
In the context of inter partes reviews, “Board members,
because of expertise, may more often find it easier to
understand and soundly explain the teachings and sug-
gestions of prior art without expert assistance,” but
“[w]hat the Board can find without an expert depends on
the prior art involved in a particular case.” Belden Inc. v.
Berk-Tek LLC, 805 F.3d 1064, 1079 (Fed. Cir. 2015).
Certainly, “[n]o rule requires a Petition to be accompanied
by any declaration, let alone one from an expert guiding
the Board as to how it should read prior art.” Id. At the
same time, the Board is not precluded from finding that
the technology in a particular case is sufficiently complex
that expert testimony is essential for a petitioner to meet
his burden of proving unpatentability. In this particular
case, the technology involved is highly complex. The
invention of the ’376 patent deals with testing the design
of microchips, a process that even Synopsys describes as
an “extremely complicated task.” See Appellant’s Br. 6.
But we need not decide whether the Board here cor-
rectly required expert testimony. The Board here did not,
in fact, require expert testimony. The Board simply noted
that Mentor provided expert testimony whereas Synopsys
did not, which the Board gave “substantial weight.” Bd.
Op. at 31. We see no error in this approach.
Third, Synopsys argues that that the “tempout” signal
of Figure 9 in Gregory is an “instrumentation signal”
“indicative of an execution status.” Figure 9 “shows a
circuit that a translator could produce” from source code
modified as described in Gregory. Gregory, col. 12 ll. 62–
63. The figure contains an output termed “tempout”
20 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
which is created from a designer’s addition of lines of code
in the source code for the purposes of testing, much like
the “trace” variables of the ’376 patent. The Board found
that “tempout” is an “instrumentation signal,” as it, like
the instrumentation signals in the ’376 patent, is created
by adding extra source code solely for testing purposes
and unrelated to the underlying functions of the chip. See
Bd. Op. at 30–32. However, the Board found that this
signal was not indicative of an execution status.
Synopsys argues that this finding of the
Board is not supported by substantial evidence because a
designer can “anaylz[e] the value of ‘tempout []’ [and can]
determine a broad range of information” including wheth-
er particular line of source code has been executed.
Appellant’s Br. 59. Though this “tempout” signal is
typically used for a different kind of testing, see Gregory
col. 13 ll. 16–29, Synopsys argues that a designer might
be able to re-trace the logical steps that led to this partic-
ular output and thus can glean whether particular lines of
code had been executed.
The Board gave “significant weight to the testimony of
Mentor Graphics’s expert,” Bd. Op at 28, who testified
“the result of the ‘tempout’ signal is not indicative of the
execution status,” id. at 31. Specifically, Mentor’s expert
testified that, in several instances, knowing the tempo-
rary output “provides no information as to whether the
statement is executed.” J.A. 1905. We see no error in the
Board’s reliance on expert testimony to resolve this factu-
al dispute.
Even if we were to accept Synopsys’s assertion that
“tempout” “can indicate which statement was executed,”
Appellant’s Br. at 59 (emphasis added), a signal that may,
under some circumstances, indicate an execution status
does not meet the limitation in this case. The point of the
invention is to enable designers to more easily debug the
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 21
source code based on testing of the optimized circuits.
Developers could not do this if the instrumentation signal
were indicative of execution status only some of the time.
Thus, accordingly, the Board construed “execution status”
as “information regarding whether a particular [source
code] instruction has been performed,” pointing specifical-
ly to a passage in the ’376 patent discussing determining
“the execution status of every branch” of code. Bd. Op. at
27. In the case of this invention, partially accurate infor-
mation is tantamount to no information. “The mere fact
that a certain thing may result from a given set of circum-
stances is not sufficient” to show anticipation where the
claim, as here, requires more. See In re Oelrich, 666 F.2d
578, 581 (C.C.P.A. 1981); see also MEHL/Biophile Int’l
Corp. v. Milgraum, 192 F.3d 1362, 1365 (Fed. Cir. 1999)
(noting that a “possibility” that under certain circum-
stances a laser designed for tattoo removal may be point-
ed at hair follicles “does not legally suffice to show
anticipation” of a patent involving laser hair removal).
The Board’s finding of non-anticipation in this respect is
supported by substantial evidence.
Fourth, Synopsys argues that the output of logic gate
232 in Figure 9 (see figure above) meets the “execution
status” limitation. As previously discussed, a logic gate is
a visual representation of a particular logical statement
in the source code and performs an operation based on
that logic. Logic gate 232 is an “AND” gate, which means
that it outputs a signal only when it receives both inputs.
Synopsys argues that if a designer knew the output of this
particular gate, the designer would be able to figure out
whether the particular line of source code associated with
that gate had been executed. The Board rejected the
argument as waived because “the argument [was] pre-
sented for the first time in Synopsys’s reply and is not
responsive to arguments made in Mentor Graphic’s re-
sponse.” Bd. Op. at 33.
22 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
We see no error in the Board’s determination that this
argument was not properly raised in the petition for inter
partes review. See 37 C.F.R. § 42.23(b). In any case, the
Board did not entirely ignore this argument, noting that
“Synopsys does not point to any evidence or persuasive
argument to explain how [the output of AND gate 232]
disclose[s] the claimed instrumentation signal.” Bd. Op.
at 33. Substantial evidence supports the conclusion that
the output of the “AND” gate is not an instrumented
“output signal” as required by the undisputed claim
construction of “instrumentation signal.” See Bd. Op. at
26–27 (requiring that an instrumentation signal “at least
includes an output signal created during synthesis of RTL
source code by inserting additional code into a program
that indicates whether the corresponding [] source code
statement is active”) (emphases added).
Lastly, Synopsys argues that the “tempout” signals of
Figures 16 and 18 of Gregory disclose instrumentation
signals indicative of execution status, and that the Board
improperly did not address this argument in its decision.
In general, an agency issuing an order from a formal
adjudication must “include a statement of findings and
conclusions, and the reasons or basis therefor, on all the
material issues of fact, law, or discretion presented on the
record.” 5 U.S.C. § 557(c)(3)(A). This means that agen-
cies must articulate “logical and rational” reasons for
their decisions. See Allentown Mack Sales and Serv., Inc.
v. NLRB, 522 U.S. 359, 374 (1998). However, this does
not require an agency to address every argument raised
by a party or explain every possible reason supporting its
conclusion. See, e.g., Human Dev. Ass’n v. NLRB, 937
F.2d 657, 669 (D.C. Cir. 1991) (“Although ‘the better
practice’ . . . might have been to identify and . . . brush off
the argument [that the appellant argued the agency
should have addressed], the ruling under review leaves no
room for doubt that the” agency decided the issue.); Am.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 23
President Lines v. NLRB, 340 F.2d 490, 492 (9th Cir.
1965) (finding that, despite not making “separate rulings
on each” claim, “[t]he [agency] sufficiently informed
petitioner of the disposition of all of its” claims). The
agency’s decision must allow effective judicial review,
which means that the agency is obligated to “provide an
administrative record showing the evidence on which the
findings are based, accompanied by the agency’s reason-
ing in reaching its conclusions.” In re Sang Su Lee, 277
F.3d 1338, 1342 (Fed. Cir. 2002); see also SEC v. Chenery
Corp., 318 U.S. 80, 94 (1943) (“[T]he orderly functioning of
the process of review requires that the grounds upon
which the administrative agency acted [are] clearly dis-
closed and adequately sustained) (emphasis added).
In its final decision, the Board addressed why a “tem-
pout” signal is not “indicative of an execution status.” Bd.
Op. at 31–32. The Board need not specifically reference
Figure 18 in its finding—it only need explain itself suffi-
ciently to allow effective judicial review. And the Board
did so here. It specifically stated that it relied on Men-
tor’s expert witness who gave testimony that the “tem-
pout” signal of Figure 9 was not “indicative of execution
status.” Id. The “tempout” signal of Figure 18 is the
same type of signal as the “tempout” signal in Figure 9
and the arguments for why it discloses (and does not
disclose) are, in essence, the same. Compare Gregory col.
13 ll. 1–6 with col. 14 ll. 27–29. Because the Board ad-
dressed whether the “tempout” signal, in general, was
indicative of execution status, we find no error in the
Board not having specifically referenced Figures 16 or 18
in its decision.
III
We next address the issues raised by the cross appeal.
Mentor does not challenge the substance of the Board’s
anticipation finding. Rather, Mentor first argues that the
24 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
Board improperly instituted review because Synopsys’s
petition was time barred under § 315(b). The theory is
that Synopsys’s acquisition of an entity who had been
sued by Mentor alleging infringement of this patent more
than one year earlier should bar Synopsys from petition-
ing for inter partes review or, alternatively, that the
acquired entity is the real party in interest, also barring
the petition. See 35 U.S.C. § 315(b). At oral argument,
Mentor conceded that our previous decision Achates, 803
F.3d at 658, held that the PTO’s decisions concerning the
§ 315(b) time bar, including determinations of the real
party in interest and rulings on discovery related to such
determinations, are non-appealable. Mentor agrees that
Achates precludes review of this issue here. This issue is
not appealable pursuant to § 314(d).
Mentor also argues that the Board impermissibly
placed the burden of proving patentability of the proposed
claims on Mentor when it denied Mentor’s contingent
motion to substitute claims 35, 40, and 41 for claims 5, 8,
and 9. The Board denied the motion to substitute the
claims on two grounds. First, the Board found that “Men-
tor Graphics has not met its burden to show that inde-
pendent claim 35 or claims 40 and 41, which depend from
claim 35, would not have been obvious to a person of
ordinary skill in the art based on the disclosure of Grego-
ry.” Bd. Op. at 47. The Board, alternatively, found that
Mentor had not shown general patentability over the
prior art.
We have previously held in Microsoft Corp. v. Proxy-
conn, Inc. that the Board may properly place the burden
of proving patentability of substitute claims on the pa-
tentee for the prior art of record. 789 F.3d 1292, 1303–08
(Fed. Cir. 2015); see also Prolitec, Inc. v. ScentAir Techs.,
Inc., 807 F.3d 1353, 1363 (Fed. Cir. 2015) (finding that
“the PTO’s approach [requiring the patentee to prove
patentability over the relevant prior art in the prosecu-
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 25
tion history] is a reasonable one at least in a case . . . in
which the Board’s denial of the motion to amend rested on
a merits assessment of the entire record developed on the
motion, not just on the initial motion itself”). Mentor
argues that Proxyconn does not control because the Proxy-
conn opinion did not address whether the patentee ought
to bear the burden to distinguish all prior art known to
the patent owner and whether this requirement is contra-
ry to 35 U.S.C. § 316(e), which states that in an inter
partes review, “the petitioner shall have the burden of
proving a proposition of unpatentability.”
In the present case, the Board found that Mentor
“ha[d] not met its burden to show that independent claim
35 or claims 40 and 41, which depend from claim 35,
would not have been obvious to a person of ordinary skill
in the art based on the disclosure of Gregory.” Bd. Op. at
47. As in Proxyconn and Prolitec, we see no error in
placing the burden of demonstrating patentability of
substitute claims on the patentee over Gregory, which
was the only piece of prior art for the inter partes review.
While the Board also concluded that Mentor had not
“demonstrate[d] general patentability over prior art,” id.,we find that the Board’s narrower holding requiring
Mentor to prove patentability over Gregory sufficient to
sustain the decision.
Section 316(e) does not alter our analysis. That sec-
tion reads: “In an inter partes review instituted under
this chapter, the petitioner shall have the burden of
proving a proposition of unpatentability by a preponder-
ance of the evidence.” 35 U.S.C. § 316(e). The introducto-
ry phrase referring to an “inter partes review instituted
under this chapter” makes clear that this provision specif-
ically relates to claims for which inter partes review was
initiated, i.e., the original claims of the patent that a
party has challenged in a petition for review. Inter partes
26 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
review was not initiated for the claims put forward in the
motion to amend.
We find that Mentor’s arguments here are foreclosed
by Proxyconn and Prolitec and affirm the Board’s denial of
the motion to amend. 7
AFFIRMED
COSTS
Costs to neither party.
7 Mentor also alleges that the Board placed unrea-
sonable procedural constraints in connection with the
motion to amend. Mentor’s motion was initially denied
because the replacement claims were not listed as part of
the motion, but were rather included in an appendix
which the Board found to be contrary to 37 C.F.R.
§ 42.121 (previous version) (requiring that a “motion to
amend claims must include a claim listing”). The regula-
tion governing motions to amend now allows the claim
listing to “be contained in an appendix to the motion.” 37
C.F.R. § 42.121 (effective May 19, 2015). The earlier
regulation simply stated that a “motion to amend claims
must include a claim listing.” 37 C.F.R. § 42.121 (effective
September 16, 2012 to May 18, 2015). The Board inter-
preted that regulation as barring placing the claims in an
appendix, a permissible interpretation of the Board’s own
regulation. When an agency interprets its own regulation
it is entitled to near-absolute deference unless it “is
plainly erroneous or inconsistent with the regulation.”
Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414
(1945). See also Auer v. Robbins, 519 U.S. 452, 461–463
(1997).
United States Court of Appeals
for the Federal Circuit
______________________
SYNOPSYS, INC.,
Appellant
v.
MENTOR GRAPHICS CORPORATION,
Cross-Appellant
v.
MICHELLE K. LEE, DIRECTOR, U.S. PATENT AND
TRADEMARK OFFICE,
Intervenor
______________________
2014-1516, 2014-1530
______________________
Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in No.
IPR2012-00042.
______________________
NEWMAN, Circuit Judge, dissenting.
The Leahy-Smith America Invents Act of 2011 chang-
es the way patent validity disputes are resolved—a
change at least as significant for this Nation’s patent
system as the formation of the Federal Circuit in 1982.
The purpose is as ambitious as it is necessary: to
strengthen the incentive to industrial and technological
2 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
innovation by restructuring the system for reviewing and
adjudicating patent validity.
Today’s economic reality is based on continuing ad-
vances in science and technology. The system of patents
is integral to commercial development of new science and
technology, and spurs innovators to create new products
and methods of economic value. American industry and
entrepreneurship use and rely on the patent system; and
as patent activity has increased, 1 so have disputes con-
cerning patent rights. 2
Congress and the public recognized that the tradi-
tional adjudicatory structure is imperfectly adapted to
resolution of technologically complex patent validity
issues, as advancing science, competitive forces, and high
stakes meet in the courthouse. It came to be understood
that the cost and delay of litigation is a disincentive to
commercial activity. When the result is inventions not
1 In 1982 (the year the Federal Circuit came into
being), 117,987 patent applications were filed and 63,276
patents were granted; in FY 2015, 617,216 patent applica-
tions were filed and 322,448 patents were granted.
USPTO, Performance and Accountability Report Fiscal
Year 2015, 185–187 available at http://www.uspto.gov/
sites/default/files/documents/USPTOFY15PAR.pdf and
U.S. Patent Statistics Chart Calendar Years 1962–2014
available at http://www.uspto.gov/web/offices/ac/ido/oeip/
taf/us_stat.htm.
2 In FY 1982, 845 patent infringement suits were
filed. Admin. Office of U.S. Courts, U.S. District Courts—
Civil Cases Commenced, by Nature of Suit, tbl.C-2A (Sept.
1985). In FY 2015, 5,686 patent infringement suits were
filed. Admin. Office of U.S. Courts, U.S. District Courts—
Civil Cases Commenced, by Nature of Suit, tbl.C-2A (Sept.
2015).
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 3
made and technology not developed, the losers are the
public and the Nation’s economy.
The Leahy-Smith America Invents Act (AIA) is the
product of extensive study by the concerned communities
and the Congress. The AIA’s purpose is to reinvigorate
the foundations of industrial innovation, by providing
expeditious and reliable review of patents that had previ-
ously been examined and granted. The goal is stability of
patent-based property rights, whereby valid patents
would be reinforced and invalid patents eliminated, in an
economical proceeding conducted by experts in technology
and law.
To this end, the AIA established a new adjudicatory
body in the Patent and Trademark Office, and vested it
with many of the civil litigation powers of the district
courts. This new tribunal, named the Patent Trial and
Appeal Board (PTAB), would have administrative judges
experienced in technology and knowledgeable in the
relevant law and policy, and would provide stability,
confidence, and reliability to the patent-based foundations
of industrial innovation.
The goal is to serve the Nation’s traditional innova-
tive spirit and entrepreneurial energy, and thereby to
enhance economic growth and industrial strength, while
supporting discovery and invention for public benefit.
This ambitious project consumed over a decade of evolu-
tion, starting with the May 10, 2001 hearing on “Patents:
Improving Quality and Curing Defects” before the House
Committee on the Judiciary.
The AIA, as enacted, contains balances and compro-
mises, for many interests are affected. I write in dissent
because the court’s rulings today depart from the text,
purpose, and policy of the AIA, and abrogate the careful
balance of this new adjudicatory system. The result is
that patent validity adjudication is incompletely fulfilling
the goals of the AIA.
4 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
I list my principal concerns:
1. The court today holds, contrary to the AIA, that the
PTAB can “pick and choose” which of the challenged
patent claims and issues it will decide in these new pro-
ceedings. Maj. Op. at 10. The court endorses such partial
decisions by the PTAB, and “see[s] no inconsistency” with
leaving some of the challenged claims and issues undecid-
ed. Maj. Op. at 12. This absence of finality negates the
AIA’s purpose of providing an alternative and efficient
forum for resolving patent validity issues.
Instead, the present practice of partial decision by the
PTAB leads to duplicative proceedings in the PTAB and
the district courts. Since the AIA provides for a different
standard of proof than in the district courts, this system
of partial decision does not achieve the reliability and
expedition for which the AIA was enacted, but instead can
produce prolonged uncertainty and multiplied proceed-
ings, at increased rather than reduced cost. In the case at
bar, validity of all of the challenged claims was not decid-
ed by the PTAB, illustrating this concern.
2. The court also misapplies the AIA provision that
the decision whether to “institute” these post-grant pro-
ceedings is not appealable. The statute requires the PTO
Director first to determine, at an initial “institution”
phase, whether it is more-likely-than-not that at least one
claim of the challenged patent is invalid. This threshold
phase serves the tripartite purpose of screening out
harassing and unfounded petitions, accommodating the
PTO’s concern about the increased workload, and elimi-
nating the delay and burden of interlocutory appeals.
The non-appealability of the institution determination
should not mean that substantive rulings material to the
final decision or to the propriety of the entire proceeding
are immunized on review of the final decision, if such
aspects arose at the institution phase. However, the court
holds otherwise, and removes from judicial review any
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 5
decision during the institution phase—here the question
of whether certain prior patent litigation is a statutory or
jurisdictional bar. These issues are raised on this appeal,
for the court has converted the threshold phase into a
source of unappealable substantive rulings, subverting
the purpose of the adjudicatory design.
3. The court also supports the PTO’s elimination of
the statutory designation of different decision-makers for
the institution phase and the trial phase. The AIA as-
signs the former role to the Director and the latter role to
the PTAB. The record shows the concern of practitioners
that the institution phase would become a short-cut to
final judgment. Whatever the convenience to the PTO,
there is no authority to violate the statute.
4. A critical aspect of the AIA—the aspect credited
with the large influx 3 of petitions for post-grant proceed-
ings—is the easier standard of patent invalidation that is
accorded to these PTAB proceedings. Although patents
submitted for PTAB review have all been previously
examined and granted and carry the statutory presump-
tion of validity, the AIA assigns the standard of prepon-
derance of the evidence for invalidation, whereas the
district courts must apply the standard of clear and
convincing evidence for invalidation.
3 From the September 16, 2012 opening date to De-
cember 31, 2015, 3,953 petitions for inter partes review
were filed. See online at http://www.uspto.gov/sites/
default/files/documents/2015-12-31%20PTAB.pdf. During
the period between September 30, 2012, to September 30,
2015, 17,747 patent infringement complaints were filed in
the district courts. See Admin Office of U.S. Courts, note
2, supra.
6 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
The panel majority also supports the PTO’s stingy
implementation of the statutory authorization for claim
amendment. The opportunity to amend is an important
part of the balance struck in the AIA. The easier stand-
ards and lighter burdens for invalidation in AIA proceed-
ings, including the PTAB’s use of the broadest claim
interpretation instead of the correct claim interpretation,
up-end the delicate balance crafted by Congress.
Amendment issues are present in this case.
The America Invents Act made dramatic changes in
the way patent disputes are resolved, in the way complex
technologies are integrated into the law, in the way a
devoted and expert agency is burdened in service to the
Nation. It is our judicial responsibility to assure that the
agency and its new tribunal are in compliance with the
statute. It is our responsibility to assure that the legisla-
tive plan is fulfilled.
DISCUSSION
The America Invents Act responds to concerns that
the time and cost and uncertainty of resolving patent
validity challenges are a disincentive to development and
commercialization of new science and technology. As
stated by Senator Leahy, an architect and principal
sponsor of the legislation:
This legislation is not an option but a necessi-
ty . . . . I also want to ensure the delicate balance
we have struck in the post-grant review process
and make certain that the procedure is both effi-
cient and effective at thwarting some strategic
behavior in patent litigation and at promoting a
healthier body of existing patents.
Introduction of Patent Reform Act of 2006, 152 Cong. Rec.
S8830 (Aug. 3, 2006) (statement of Sen. Patrick Leahy,
Member, Subcomm. on Intellectual Prop. of the S. Comm.
on the Judiciary).
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 7
Senator Leahy refers to the “delicate balance” that
pervades this statute. The legislative record spans a
decade 4 of hearings, reports, bills, and debates, with
submissions and testimony by the nation’s inventors,
industries, bar associations, academics, the PTO and
other government and public interests; and demonstrates
the breadth of concerned attention throughout the devel-
opment of this legislation.
Senator Grassley, a central figure in this effort, de-
scribed the highlights of the achievement as the final bill
neared enactment:
[T]he bill . . . would establish an adversarial inter
partes review, with a higher threshold for initiat-
ing a proceeding and procedural safeguards to
prevent a challenger from using the process to
harass patent owners. It also would include a
strengthened estoppel standard to prevent peti-
tioners from raising in a subsequent challenge the
same patent issues that were raised or reasonably
could have been raised in a prior challenge. The
bill would significantly reduce the ability to use
post-grant procedures for abusive serial challeng-
es to patents. These new procedures would also
provide faster, less costly, alternatives to civil liti-
gation.
157 Cong. Rec. S952 (daily ed. Feb. 28, 2011) (statement
of Sen. Grassley on S.23). The House Report on the final
4 Starting with a hearing on May 10, 2001, before
the House Committee on the Judiciary (Patents: Improv-
ing Quality and Curing Defects). The first bill that would
coalesce into the AIA was introduced on October 8, 2004.
108 H.R. 5299 (Patent Quality Assistance Act of 2004).
8 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
bill stated the necessity of assuring that serial and dupli-
cative attacks did not result from the new procedures:
The Committee recognizes the importance of quiet
title to patent owners to ensure continued invest-
ment resources. While this amendment is intend-
ed to remove current disincentives to current
administrative processes, the changes made by it
are not to be used as tools for harassment or as a
means to prevent market entry through repeated
litigation and administrative attacks on the valid-
ity of a patent. Doing so would frustrate the pur-
pose of the section as providing quick and cost
effective alternatives to litigation. Further, such
activity would divert resources from the research
and development of inventions.
H.R. REP. NO. 112-98, pt. 1, at 48 (2011).
The AIA was signed into law on September 16, 2011,
with an effective date of September 16, 2012. The new
procedures were promptly invoked. The concerns I out-
line arose early in implementation of the statute, and
continue to this day.
I
PTAB Decision of Only Some of the Chal-
lenged Claims Is Contrary To the
Statute
The America Invents Act vests the PTAB with author-
ity to adjudicate post-grant validity under sections 102
(anticipation) and 103 (obviousness), for these are the
principal documentary grounds on which validity is
challenged in the courts. These grounds are well suited to
resolution by the PTAB whose adjudicators are experi-
enced in technology, for the determination is required to
be made from the viewpoint of “a person having ordinary
skill in the art to which said subject matter pertains,” the
words of section 103.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 9
The America Invents Act requires the PTAB to issue a
final written decision on the patentability of the chal-
lenged claims:
35 U.S.C. § 318(a).—FINAL WRITTEN DECISION. If
an inter partes review is instituted and not dis-
missed 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).
The court today holds that, despite the statute, “the final
order of the Board need not address every claim raised in
the petition for review.” Maj. Op. at 3. However, the
statute uses the word “shall.” “Shall” is a term of com-
mand. Merck & Co. v. Hi-Tech Pharmacal Co., 482 F.3d
1317, 1322 (Fed. Cir. 2007) (“Use of the word ‘shall’ in a
statute generally denotes the imperative.”).
A statutory requirement cannot be overridden by
agency rule. See Norwegian Nitrogen Prods. Co. v. United
States, 288 U.S. 294, 315 (1933) (“[A]dministrative prac-
tice does not avail to overcome a statute so plain in its
commands as to leave nothing for construction.”). Howev-
er, the PTO proposed an administrative Rule authorizing
the PTAB to decide which of the challenged claims and
issues it would “proceed on”:
42.108(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.
Changes to Implement Inter Partes Review Proceedings of
the Leahy-Smith America Invents Act, 77 Fed. Reg. 7041(proposed Feb. 10, 2012) (recorded at 37 C.F.R. 42.108(a)).
This proposed Rule was widely criticized, as commen-
tators pointed out that the Rule violated the statute and
10 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
negated the AIA’s purpose of achieving finality of validity
review by the PTAB instead of the district court. The
Minnesota Intellectual Property Law Association
(MIPLA) explained the consequences of the proposed
departure from the statute:
[I]n cases where IPR would be granted under the
proposed rule for some requested claims and not
others, the result is likely to be a serial or parallel
process of IPR review of some claims and Federal
district court review of the other claims. Con-
gress, however, appears to have intended that IPR
be an alternative system in which a litigant can
choose to resolve disputed patent validity in either
an IPR setting or through the Federal courts, but
not both. Hence, the claim-by-claim approach of
§ 42.108 would not seem to accomplish the result
intended by Congress in this regard.
Comments on Changes to Implement Inter Partes Review
Proceedings, MIPLA 2 at 4 (April 10, 2012) available at
http://www.uspto.gov/sites/default/files/aia_implementatio
n/comment-mipla2.pdf. The MIPLA complained that the
proposed partial review raises “fairness and due process”
concerns, and is unlikely “to fully achieve the intent of
Congress in establishing these proceedings.” Id. at 3.
The MIPLA urged the PTO to “revert to the language of
35 U.S.C. § 314(a), which contemplates that review will be
ordered as to all requested claims.” Id. at 5.
IBM’s chief patent counsel objected that the Rule is
contrary to the AIA, stressing the mandatory words of the
statute:
Under provisions of 318(a) final written decisions
are required for all reviews which are “instituted
and not dismissed”. The statute makes no provi-
sions for reviews which are “instituted-in-part” or
“dismissed-in-part”. . . . The same provision fur-
ther provides that the Board “shall issue a final
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 11
written decision with respect to the patentability
of any patent claim challenged by the petition-
er and any new claim . . .” Thus, any claim chal-
lenged in the initial petition in a review that was
instituted must be decided upon in the final writ-
ten decision; the statute does not appear to leave
discretion to provide a final written decision not
addressing any claim that was initially challenged
by the petitioner on the basis that the Office de-
termined it to be “not part of the trial”. We do not
see how the Office squares its attempt to limit the
scope of review with the referenced statutory re-
quirements; in essence, the scoping decision
amounts to a premature final decision. We be-
lieve the Office should, consistent with the stat-
ute, allow all challenged claims to be included in
the inter partes review when it has found a rea-
sonable likelihood of prevailing with respect to
one challenged claim.
Comments on Changes to Implement Inter Partes Review
Proceedings, IBM 5 at 3 (April 6, 2012) (emphases in
original) (parentheticals omitted) available at
http://www.uspto.gov/sites/default/files/aia_implementatio
n/comment-ibm5.pdf.
Expressions of concern were also presented by other
participants in the process that produced the legislation.
See Comments on Changes to Implement Inter Partes
Review Proceedings of the Leahy-Smith America Invents
Act, available at http://www.uspto.gov/patent/laws-and-
regulations/america-invents-act-aia/comments-changes-
implement-inter-partes-review.
As the panel majority recognizes, Maj. Op. at 11, the
PTO stated that its departure from the statute allows it to
“streamline and converge the issues for consideration,” to
“aid[] in the efficient operation of the Office and the
ability of the Office to complete the [review] within the
12 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
one-year timeframe.” Changes to Implement Inter Partes
Review Proceedings, Post-Grant Review Proceedings, and
Transitional Program for Covered Business Method Pa-
tents, 77 Fed. Reg. 48703 (Aug. 14, 2012) (Response to
Comment 60). Criticism of the practice of partial resolu-
tion of the challenged claims continued, and the PTO on
Aug. 20, 2015 published the following Comment and
Response:
Comment 12: Several commenters expressed
concern about the Office’s practice of allowing in-
stitution based on some, but not all, of the
grounds presented in a Petition. Commenters are
concerned that because the decision on institution
is not appealable, and any ground on a challenged
claim that is not instituted is not reflected in the
final, appealable decision, a petitioner has no re-
dress for grounds on which the Office chooses not
to institute . . . .
Response: The Office appreciates the concern
expressed by the comments, but must balance
these concerns with the workload in AIA proceed-
ings and the statutory time constraints under
which AIA review proceedings must be decided.
In order to ensure a fair and efficient process to
resolve reviews in a timely fashion, the Office uses
partial institution as one tool to manage effective-
ly AIA reviews. The Office is cognizant of the
ramifications of partial institution where the
grounds are in different statutory classes, or when
a reference may be overcome by swearing behind
it, and strives to strike an appropriate balance be-
tween what can be accomplished during the finite
time frame for a trial and fairness to the parties
in fully vetting patentability issues on challenged
claims. The Office will continue to assess whether
such balance is appropriately struck.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 13
80 Fed. Reg. 50739 (Aug. 20, 2015).
Agency convenience is not grounds for negation of a
statutory obligation. See Utility Air Regulatory Grp. v.
Environmental Protection Agency, 134 S. Ct. 2427, 2446
(2014) (“[A]n agency may not rewrite clear statutory
terms to suit its own sense of how the statute should
operate.”). Nonetheless, the PTO continues to adhere to
Rule 42.108(a), although it is apparent that the Rule
conflicts with the statute, and that “[n]othing in the
language of the statute states or suggests that the word
‘shall’ does not mean exactly what it says.” Gutierrez de
Martinez v. Lamagno, 515 U.S. 417, 434 n. 9 (1995).
The criticized Rule was here applied to the ’376 patent
of Mentor Graphics, presented for inter partes review by
Synopsys’ petition challenging claims 1–15 and 20–33.
Review was instituted on claims 1-9, 11, 28, and 29, the
selection apparently made by the PTAB. The PTAB
conducted a trial, and issued a decision on the selected
claims. The PTAB ruled that claims 5, 8, and 9 were
unpatentable, and that claims 1–4, 6, 7, 11, 28, and 29
were patentable. The PTAB did not decide the patentabil-
ity of claims 10, 12-15, 20-27 and 30-33.
Responding to Synopsys’ objection to the incomplete
decision, the panel majority states that “the statute is
quite clear that the PTO can choose whether to institute
inter partes review on a claim-by-claim basis . . . and that
the Board can pick and choose among the claims in the
decision to institute.” Maj. Op. at 10. The statutory
clarity is ephemeral, and authority to “pick and choose
among the claims” does not exist. Neither the AIA nor
anything in its voluminous history suggests a legislative
plan whereby the Board could decide which of the chal-
lenged claims would be decided, leaving the other chal-
lenged claims untouched.
The design of the AIA is that the major documentary
validity challenges, sections 102 and 103, will be subject
14 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
to decision by the PTO expert tribunal. As commentators
pointed out, if only some of the challenged claims are
decided, there is neither complete nor final disposition.
Senator Schumer explained this foundation of the legisla-
tion:
What the bill does . . . is very simple. It says the
Patent Office will make an administrative deter-
mination before the years of litigation as to
whether this patent is a legitimate patent so as
not to allow the kind of abuse we have seen.
157 Cong. Rec. S5437 (statement of Sen. Schumer during
Senate consideration of H.R. 1249).
When review is instituted, 35 U.S.C. § 318(a) requires
the PTAB to issue a Final Written Decision on all of the
claims challenged in the petition. The AIA authorizes the
Director to decline to institute any requested review, 35
U.S.C. § 314(d), but the AIA does not authorize or con-
template that the PTO would pick and choose which
patent claims it will decide. “Administrative construction
of a statute which conflicts with the express meaning of
the statutory terms can be viewed as authoritative only if
it appears that Congress has in fact accepted that con-
struction, and the burden of proof necessarily is on the
proponent of the administrative view.” Saxbe v. Bustos,
419 U.S. 65, 84 (1974).
The legislative record emphasizes the purpose of this
new PTO tribunal to resolve validity issues, a purpose
that collapses if only some of the challenged claims are
decided. A Senate Report explained:
[I]f [such] proceedings are to be permitted, they
should generally serve as a complete substitute
for at least some phase of the litigation.
S. REP. NO. 110-259, at 67 (Additional Views of Senator
Specter Joined with Minority Views of Senators Kyl,
Grassley, Coburn and Brownback) (2008). This statement
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 15
encapsulates the purpose of the legislation, and the record
shows that the concerned communities welcomed this new
adjudicatory role of the PTO, built on its reputation for
excellence.
Chevron Deference Does Not Apply
PTO Rule 42.108(a) is “not in accordance with law,”
the words of the Administrative Procedure Act, 5 U.S.C. §
706(2)(A). Agency rulemaking authority “does not include
a power to revise clear statutory terms,” Utility Air Regu-
latory Group, 134 S. Ct. at 2446:
Under our system of government, Congress makes
laws and the President, acting at times through
agencies . . . “faithfully execute[s]” them. U.S.
Const., Art. II, § 3 . . . . The power of executing
the laws necessarily includes both authority and
responsibility to resolve some questions left open
by Congress that arise during the law’s admin-
istration. But it does not include a power to revise
clear statutory terms that turn out not to work in
practice.
See also, e.g., Ernst & Ernst v. Hochfelder, 425 U.S. 185,
213–14 (1976):
The rulemaking power granted to an administra-
tive agency charged with the administration of a
federal statute is not the power to make law. Ra-
ther, it is the power to adopt regulations to carry
into effect the will of Congress as expressed by the
statute . . . .
These concepts are the core of the administrative state.
“Chevron deference” applies to statutory implementation
in fidelity to the statute—not statutory departure from
the legislative plan.
Nonetheless, the panel majority, invoking Chevron
deference, holds that the statute “only requires the Board
16 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
to address claims as to which review was granted.” Maj.
Op. at 12. That is not what the statute says.
“[R]easonable statutory interpretation must account for
both ‘the specific context in which . . . language is used’
and ‘the broader context of the statute as a whole.’” Utility
Air Regulatory Group, 134 S. Ct. at 2442 (omission in
original). Partial decision negates the purposes of the
America Invents Act, and achieves neither expedition nor
economy nor finality nor estoppel.
Senator Kyl explained a central purpose of the Ameri-
ca Invents Act is “to force a party to bring all of [its]
claims in one forum . . . and therefore to eliminate the
need to press any claims in other fora.” 154 Cong. Rec.
S9989. Senator Kyl stressed that this new system “ideal-
ly [will] completely substitute for at least the patents-and-
printed-publication portion of the civil litigation.” 157
Cong. Rec. S1376. This goal is thwarted when the PTAB
decides validity of some but not all of the claims chal-
lenged in the petition.
The justification offered for partial institution or par-
tial decision of an AIA petition is the workload of the
PTO. Maj. Op. at 11. See Patent Reform: The Future of
American Innovation: Hearing Before the Senate Comm.
on the Judiciary, 110th Cong. 7 (2007) (statement of
Director Jon Dudas) (“[Q]uite frankly, without having the
resources available now, we are not certain that we could
handle the administration of that many cases.”). This
concern received a sympathetic response, and the AIA
authorizes the Director to refuse to institute any review
petition in its entirety, without excuse and without ap-
peal. Senator Kyl explained that this provision
reflects a legislative judgment that it is better
that the Office turn away some petitions that oth-
erwise satisfy the threshold for instituting an in-
ter partes or post-grant review than it is to allow
the Office to develop a backlog of instituted re-
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 17
views that precludes the Office from timely com-
pleting proceedings.
157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement
of Sen. Kyl).
The PTO can refuse to institute any post-grant chal-
lenge, as the statute provides, 35 U.S.C. § 314(d) (“The
determination by the Director whether to institute an
inter partes review under this section shall be final and
nonappealable.”). However, when a petition is accepted,
the PTAB “shall” decide the challenged claims, 35 U.S.C.
§318(a). Decision of only some of the challenged claims
leaves the undecided claims for district court resolution,
as this court recognizes, Maj. Op. at 12. In such event,
the AIA purpose of replacing the cost and delay of district
court validity proceedings instead dissolves into potential-
ly duplicative proceedings in the PTO and the district
court, enlarging rather than reducing cost and delay.
The panel majority states that if there is uncertainty
as to this statutory obligation of the PTAB, Chevron
deference requires support of the PTO position. However,
Chevron states that: “If the intent of Congress is clear,
that is the end of the matter; for the court, as well as the
agency, must give effect to the unambiguously expressed
intent of Congress.” Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 842–43
(1984). “Chevron allows agencies to choose among com-
peting reasonable interpretations of a statute; it does not
license interpretive gerrymanders under which an agency
keeps parts of statutory context it likes while throwing
away parts it does not.” Michigan v. Environmental
Protection Agency, 135 S. Ct. 2699, 2708 (2015).
Here there are no “competing reasonable interpreta-
tions.” Id. The command of section 318(a) is clear; the
intent of Congress is plain in the statute. There is no
ambiguity, and no silence; Chevron provides no support
for “pick and choose” authority. The theory that the
18 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
PTAB can select what it will decide cannot be found in the
legislative record. To the contrary, partial post-grant
review eviscerates the purpose of resolving major validity
issues in a PTO tribunal instead of in the district court.
The judicial obligation is to assure fidelity to the stat-
ute and to the legislative policy, lest we become complicit
in frustrating the intent of Congress:
[T]he courts are the final authorities on issues of
statutory construction. They must reject adminis-
trative constructions of the statute, whether
reached by adjudication or by rulemaking, that
are inconsistent with the statutory mandate or
that frustrate the policy that Congress sought to
implement.
Federal Energy Comm’n v. Democratic Senatorial Cam-
paign Comm., 454 U.S. 27, 32 (1981).
The Legislative Record Cannot Be Discarded
The panel majority disposes of the legislative record
with the remark that “Floor statements by a few members
of the legislative branch cannot supplant the text of the
bill as enacted.” Maj. Op. at 11. That is not this legisla-
tive record.
The record of the AIA starts with a House Judiciary
hearing on “Patents: Improving Quality and Curing
Defects,” on May 10, 2001, and shows the continuing
involvement of both parties and both Houses, filling nine
fat volumes in the Federal Circuit library. There are
statements by Senators and Representatives, statements
for government agencies including the PTO, the Depart-
ment of Commerce, the International Trade Commission,
the Department of Health and Human Services, and the
Government Accountability Office. There are written
submissions and recorded testimony from large and small
industries, from labor unions, from inventors, and from
virtually every patent bar association in the nation, as
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 19
well as from university scientists, law professors, and
others. There is interaction, commentary, debate and
compromise. The panel majority’s dismissal of this record
as “a few floor statements” is not easy to fathom.
We have canvassed the entire record, 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). The record shows bipartisan una-
nimity on the foundational principle of this legislation;
that is, that a tribunal within the PTO would be empow-
ered to conduct post-grant review of major patent validity
issues, with the intent to provide an expert adjudicatory
alternative to litigation. The commentators’ views of
details in achieving this goal were not unanimous, and
balances, trade-offs, and compromises are embodied in the
final statute. The court must give effect to this legislative
accomplishment.
Statutes are administered to conform to “the design of
the statute as a whole and to its object and policy.” Cran-
don v. United States, 494 U.S. 152, 158 (1990). The record
shows the participation and collaboration among the
legislators as well as the concerned communities. See 157
Cong. Rec. S1044 (daily ed. Mar. 1, 2011) (statement of
Sen. Leahy):
Mr. President, the Senator [Kyl] has been in-
volved in this right from the beginning. We have
worked at having a bill that would be in the best
interests of the Senate under both Republicans
and Democrats across the political spectrum. We
have worked very closely together.
Many Senators and Representatives placed comments in
the record. Senator Ted Kaufman, of the Senate Judici-
ary Committee, described PTO post-grant review as “a
viable alternative to litigation:”
20 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
The good news is that there are several aspects of
the reform effort that are relatively uncontrover-
sial. Just about everyone agrees that we need . . .
to limit unnecessary litigation costs. So there is
much on which we can agree, including . . . im-
proving the Patent Office challenge process as a
viable alternative to litigation.
Patent Reform in the 111th Congress: Legislation and
Recent Court Decisions: Hearing Before the Senate Comm.
on the Judiciary, 111th Cong. 205 (2009).
Senator Schumer cited the benefits of this alternative
forum for validity determination:
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
of . . . provid[ing] a cost efficient alternative to lit-
igation.
157 Cong. Rec. S1360-94 (daily ed. Mar. 8, 2011).
Senator Sheldon Whitehouse referred to the cost and
delay of litigation:
Similarly, the bill will improve administrative
processes so that disputes over patents can be re-
solved quickly and cheaply without patents being
tied up for years in expensive litigation.
157 Cong. Rec. S1052 (daily ed. Mar. 1, 2011).
The intended benefits were also described by Repre-
sentative Issa, a member of the House Judiciary Commit-
tee and its Subcommittee on Courts, the Internet, and
Intellectual Property:
[The issue of overzealous litigation is] addressed
in part in this bill. The creation of a post grant
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 21
review procedure at the Patent Office will help di-
rect some conflicts away from court to an adminis-
trative remedy, hopefully saving vast resources in
time and money.
153 Cong. Rec. 23927–66, (2007) (House consideration
and passage of H.R. 1908).
Representative Berman discussed the value of an
agency procedure for assuring that issued patents are
valid:
When functioning properly, the patent system en-
courages and enables inventors to push the
boundaries of knowledge and possibility. I sup-
port strong, robust protection for quality patents.
However, when the system functions improperly,
such as allowing an overly broad or obvious pa-
tent, the patent system can stifle innovation and
harm America’s competitiveness in the global
economy . . . . This legislation favors no industry,
no person, organization or interest group. It seeks
to solve problems that we have identified and
have been identified for us by outside experts and
agencies.
153 Cong. Rec. 23904–11, (2007) (House consideration of
H.R. RES. 636 (rule for debate on Patent Reform Act of
2007).
Senator Leahy, reporting the Administration’s sup-
port of the proposed legislation, again mentioned the
“alternatives to costly and complex litigation” that would
be achieved, along with other benefits of the legislation:
The Administration supports Senate passage of
S. 23. As a whole, this bill represents a fair, bal-
anced, and necessary effort to improve patent
quality, enable greater work sharing between the
United States Patent and Trademark Office
(USPTO) and other countries, improve service to
22 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
patent applicants and the public at the USPTO,
and offer productive alternatives to costly and
complex litigation.
157 Cong. Rec. S1030 (daily ed. Mar. 1. 2011).
The legislators gave attention to assuring the efficien-
cy and effectiveness of this “second window” of agency
action. Senators Specter, Kyl, Grassley, Coburn, and
Brownback stated in a Senate Report:
[O]pening up a second window for administrative
challenges to a patent only makes sense if defend-
ing a patent in such proceedings is not unduly ex-
pensive, and if such proceedings substitute for a
phase of district-court litigation. . . . The initia-
tion of the proceedings is likely to lead to a stay in
the litigation, which likely will remain in place
through the appeal of the PTO’s second-window
decision . . . . If second window proceedings are to
be permitted, they should generally serve as a
complete substitute for at least some phase of the
litigation.
S. REP. NO. 110-259 at 66 (2008). The Senators stressed
that the second window should be a “complete substitute”
for the major validity phase—not a partial disposition.
These goals are forsaken if the PTO decides only some
of the challenged claims, restoring the costly litigation
procedures and delay that the AIA is designed to replace.
The intent and purpose of the legislators, embodied in the
enacted legislation and replete in its history, cannot be
ignored. Amid universal accolades for assignment to the
PTO of post-grant review of major issues of validity, the
legislators and collaborators never suggested that the
PTO could “pick and choose” which of the challenged
claims would be decided. This spurious outcome was not
contemplated.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 23
Representative Manzullo stressed the legislative pur-
pose that these PTO proceedings would substitute for
district court proceedings, not merely provide another
forum for non-final validity debate:
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. Congress must
ensure that the administrative processes provided
for in the bill do not become a vehicle for infring-
ers to avoid justice.
Patent Reform Act of 2009: Hearing Before the House
Comm. on the Judiciary, 111th Cong. 153 (2009).
The panel majority supports PTAB partial decision of
some of the challenged claims by suggesting that maybe
other validity issues would require district court resolu-
tion, beyond the section 102 and 103 issues assigned to
the PTAB. Maj. Op. at 12. It is of course possible that
claims held valid by the PTAB under sections 102 and 103
would be vulnerable on other grounds. The legislators
recognized that not all validity issues are assigned to the
PTAB. Senator Kyl explained:
In this bill, however, the issues that can be raised
in the second window are so sharply limited that
the goal of flushing out all claims is unattainable.
Only 102 and 103 arguments based on patents
and printed publications can be raised in the sec-
ond window . . . .
154 Cong. Rec. S9982-93 (daily ed. Sept. 25, 2008) (state-
ment by Sen. Kyl on S. 3600).
The legislators also recognized that sections 102 and
103 are the major grounds of challenge to issued patents,
as well as the most demanding of technologic or scientific
expertise. The heavy and immediate recourse to the new
AIA proceedings attests to the soundness of this principle.
24 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
The possibility that other grounds of invalidity might also
be present does not justify dilution of the provisions
directed to sections 102 and 103.
On this vast legislative record, it is surprising to read
the panel majority’s dismissal of “floor statements by a
few members of the legislative branch.” Maj. Op. at 11.
To the contrary, the record confirms that throughout the
gestation of the America Invents Act, legislators of the
House and Senate sought strong and conclusive resolution
of the most challenging issues of patent-supported inno-
vation, by providing an effective alternative to district
court litigation, whereby the expert agency would reliably
and confidently review the validity of granted patents.
Ignoring this purpose, the panel majority holds that
“the validity of claims for which the Board did not insti-
tute inter partes review can still be litigated in district
court. We see no inconsistency in this.” Maj. Op. at 11–
12. To the contrary—it is inconsistent with the entirety of
the America Invents Act.
II
The Stay and Estoppel Provisions Are Also
Undermined by Partial Decision of
Validity Challenges
An amicus curiae explained the stay and estoppel
provisions of the AIA and their role in resolution of patent
disputes:
The experienced administrative judges at the
PTAB evaluate the patentability of the claims
identified by a petitioner. Claims that are can-
celled for lack of patentability vanish from the lit-
igation entirely. Claims that undergo review, and
survive, will return to the district court with stat-
utory estoppel, which prevents the accused in-
fringer from making the same invalidity
arguments before the district court that it made
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 25
before the PTA. Thus, whether or not the patent
claims are cancelled or survive, the case is simpli-
fied for claims addressed in a PTAB trial. It is
therefore no surprise that, as Congress envi-
sioned, courts frequently stay litigation pending
PTAB review. But when the PTAB decides to re-
view only some of the challenged claims, but not
others, it undermines the intended efficiency of
these trials and saddles the district courts with
larger and redundant workloads.
SAS Institute amicus Br. 6 (Oct 10, 2014).
The stay and estoppel provisions become irrelevant if
only some of the challenged claims are decided by the
PTAB, leaving other claims unresolved. Yet the court
today sees “no inconsistency” in leaving some claims
undecided, because “the validity of claims for which the
Board did not institute inter partes review can still be
litigated in district court,” Maj. Op. at 11–12. This is an
extreme distortion of the statutory purpose.
Senator Grassley discussed the scope of the litigation
stay authorization, as the AIA reached enactment in the
Senate:
Lengthy and duplicative proceedings are one of
the worst evils of other systems of administrative
review of patents. . . . Ideally extending could-
have-raised estoppel to privies will help ensure
that if an inter partes review 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. Mar. 8, 2011).
On the foundational principle that the PTAB proceed-
ing is designed as an alternative to district court litiga-
tion, there was extensive commentary from the
innovation communities. An example is a letter from the
26 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
Consortium of Higher Education Institutions, supporting
the proposed new system because it would–
reduce patent litigation costs by establishing the
new post-grant procedure noted above, and by
significantly improving the current inter partes
review procedure, which will provide a lower-cost
alternative to civil litigation to challenge a patent
throughout its lifetime, while significantly reduc-
ing the capacity to mount harassing serial chal-
lenges . . .
157 Cong. Rec. S1178 (daily ed. Mar. 3, 2011). The PTO
Director, testifying for the administration, also supported
estoppel, stating that–
the 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 intended to allow nothing–a complete
alternative to litigation.
Patent Reform: The Future of American Innovation:
Hearing Before the Senate Comm. on the Judiciary, 110th
Cong. 13 (2007) (statement of Director Jon Dudas).
The court’s ruling today inhibits the America Invents
Act from achieving its purposes. It is reported that some
district courts are declining to stay parallel litigation.
E.g. Invensys Sys. v. Emerson Elec. Co., No. 6:12-cv-00799,
2014 U.S. Dist. LEXIS 128454, at *10 (E.D. Tex. July 25,
2014) (district court denying stay where PTAB instituted
partial review because “any simplification is likely to be
minimal”); U.S. Nutraceuticals LLC v. Cyanotech Corp.,
No. 5:12-cv-366-Oc-10PRL, 2013 U.S. Dist. LEXIS
163057, at *8 (M.D. Fla. Oct. 15, 2013) (recommending
denial of stay pending inter partes review because “the
USPTO may authorize the review to proceed on only
‘some of the challenged claims’ or on only ‘some of the
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 27
grounds of unpatentability asserted for each claim.’ 37
C.F.R. § 42.108(a). It is entirely possible, perhaps even
likely, that this case will proceed on numerous claims
regardless of the outcome of the USPTO proceeding”);
Xilinx, Inc. v. Invention Inv. Fund I LP, Nos. 5:11-cv-
00671-EJD, 5:11-cv-04407-EJD, 2012 WL 6003311, at *4
(N.D. Cal. Nov. 30, 2012) (“the court will have to resolve
all claims in dispute as to [claims not currently undergo-
ing inter partes reexamination]. That being the case,
waiting for the outcome of reexamination does nothing for
that portion of the litigation.”).
Similarly for the estoppel provision, it too is under-
mined by partial decision, for estoppel is effective only
when validity is resolved by the PTAB. This provision is
important to the AIA structure, as explained by Repre-
sentative Jackson-Lee, for the purpose of “prohibiting a
party from reasserting claims in court that it raised in
post-grant review.” 153 Cong. Rec. H10,280 (daily ed.
Sept. 7, 2007). This view was urged by the PTO as im-
portant to the new proceeding:
We would favor providing for a second-window re-
view to have a different estoppel effect than a
first-window review . . . A second-window review,
however, will serve as a substitute for court litiga-
tion and, as such, should bind not only the patent-
ee 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 Director Jon Dudas).
This position was reiterated by Director Kappos:
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-
28 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
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 Director David Kappos).
Instead of vigorously implementing the AIA as it was
enacted, the panel majority’s rulings today waffle toward
the inefficiencies, conflicts, and uncertainties that the
America Invents Act was designed to resolve.
III
Rulings at “Institution” Do Not Restrict
All Appellate Review
The “institution” phase of the AIA is a threshold pro-
ceeding whose primary purpose is to screen out unsup-
ported attacks on validity. As Senator Grassley
explained, there is a “higher threshold” for commencing a
PTAB proceeding as compared with the filing of a com-
plaint in district court, by requiring a showing that at
least one patent claim is more likely than not invalid.
This is a safeguard against harassment, tactical delay,
and like abuses. This purpose pervades the legislative
record, e.g., 157 Cong. Rec. S952 (statement of Sen.
Grassley) (describing the AIA’s “procedural safeguards to
prevent a challenger from using the process to harass
patent owners.”).
The “institution” decision is, by statute, not appeala-
ble. However, information presented and rulings made at
this threshold are not immunized from judicial review,
when material to the final decision on validity. The court
today holds otherwise, stating that “an issue relating to
institution does not become appealable simply because
the Board mentions that issue in its final decision.” Maj.
Op. at 8 n.4. The court cites Achates Reference Publish-
ing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015), for
its statement that the “appealability bar applies to insti-
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 29
tution decisions ‘even if such assessment is reconsidered
during the merits phase of proceedings and restated as
part of the Board’s final written decision’.” Maj. Op. at 8
n.4 (quoting Achates, 803 F.3d at 658).
Precedent does not require this extended application
of Achates. In Versata Dev. Group, Inc. v. SAP Am., Inc.,
793 F.3d 1306 (Fed. Cir. 2015), the court held that when
information at the threshold phase is material to the
PTAB final decision, this court on appeal is not precluded
from reviewing such information. The court stated:
Congress explained the anomalous nature of a bar
to judicial review of final agency action: “Very
rarely do statutes withhold judicial review. It has
never been the policy of Congress to prevent the
administration of its own statutes from being ju-
dicially confined to the scope of authority granted
or to the objectives specified. Its policy could not
be otherwise, for in such a case statutes would in
effect be blank checks drawn to the credit of some
administrative officer or board.”
Id. at 1319 (quoting S. Rep. No. 79-752, at 26 (1945)). As
stated in Social Security Board v. Nierotko:
Administrative determinations must have a basis
in law and must be within the granted authori-
ty . . . . An agency may not finally decide the lim-
its of its statutory power. That is a judicial
function.
327 U.S. 358, 369 (1946). These principles are a founda-
tion of the Administrative Procedure Act.
On this appeal, a ruling that the court insulates from
review relates to the one-year bar. The America Invents
Act requires that a petition must be filed within one year
after the start of any district court litigation on the same
patent:
30 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
35 U.S.C. §315(b) PATENT OWNER’S ACTION.—An
inter partes review may not be instituted if the
petition requesting the proceeding is filed more
than 1 year after the date on which the petitioner,
real party in interest, or privy of the petitioner is
served with a complaint alleging infringement of
the patent. . . .
Although this issue is presented on this appeal, the panel
majority refuses to consider it because it was decided at
the “institution” phase. The question is whether a prede-
cessor to Synopsys, in litigation with Mentor Graphics
more than a year earlier, raised the one-year bar. The
PTAB held that there was no bar. PTAB Op. 14–17. The
court today holds that “the PTO’s decisions concerning the
§315(b) time bar, including determinations of the real
party in interest and rulings on discovery related to such
determinations, are non-appealable,” even after the
PTAB’s final written decision. Maj. Op. at 24.
It is unlikely that such issues material to statutory
compliance–issues of privity, standing, and jurisdiction–
were intended to be excluded from appellate review. Such
a departure from the judicial obligation cannot be pre-
sumed. See Crowell v. Benson, 285 U.S. 22, 54-55 (1932):
A different question is presented where the de-
terminations of fact are fundamental or ‘jurisdic-
tional,’ in the sense that their existence is a
condition precedent to the operation of the statu-
tory scheme. These fundamental requirements
are . . . indispensable to the application of
the statute . . . because the Congress has so pro-
vided explicitly.
The Court in Crowell notes that: “In relation to adminis-
trative agencies, the question in a given case is whether it
falls within the scope of the authority validly conferred.”
Id. at 54 n.17.
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 31
Whether or not the one-year bar here is deemed juris-
dictional, it is an essential part of the AIA structure. The
correctness of its treatment is subject to the traditional
judicial review of agency determinations; the question is
not insulated from appeal simply because it was decided
at the start of the post-grant proceeding. The Court
guides in Bowen v. Michigan Academy of Family Physi-
cians that preclusion of judicial review is viewed strictly:
We begin with the strong presumption that Con-
gress intends judicial review of administrative ac-
tion. From the beginning “our cases [have
established] that judicial review of a final agency
action by an aggrieved person will not be cut off
unless there is persuasive reason to believe that
such was the purpose of Congress.” Abbott Labor-
atories v. Gardner, 387 U.S. 136, 140 (1967).
476 U.S. 667, 670 (1986) (alteration in original). The appel-
late court must ensure that an agency’s action is not “so
extreme as to amount to an abdication of its statutory
responsibilities.” Heckler v. Chaney, 470 U.S. 821, 833 n.4
(1985). When an agency “exercise[s] its power in some
manner. The action at least can be reviewed to determine
whether the agency exceeded its statutory powers.” Id. at
832.
In sum, “Congress rarely intends to prevent courts
from enforcing its directives to federal agencies;” there is
“a strong presumption favoring judicial review of adminis-
trative action.” Mach Mining, LLC v. EEOC, 135 S. Ct.
1645, 1651 (2015) (quoting Bowen, 476 U.S. at 670). My
colleagues’ position that no ruling during institution can
receive appellate review, even when material to the final
decision, cannot be correct.
32 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
IV
The AIA Assigns the Decision to “Institute”
to the Director, and Assigns the Trial and
Final Decision to the PTAB
By statute, the “institution” decision is made by the
Director, not by the judges of the Patent Trial and Appeal
Board. The legislative record shows that these functions
were deliberately separated. Senator Kyl explained the
purpose of avoiding self-review:
Obviously, subsection (a) alone would not be
enough to test the view that PTO has reached an
incorrect conclusion on an important legal ques-
tion because subsection (a) requires the petitioner
to persuade PTO that a claim appears to be un-
patentable, and PTO is unlikely to be so persuad-
ed if it has already decided the underlying legal
question in favor of patentability.
154 Cong. Rec. S9982–93 (Sept. 27, 2008). The separation
of these roles helps to ensure that the decision of the
PTAB is not a rubber stamp of the institution decision,
nor a shortcut on “an important legal question.” The
PTO’s practice of assigning the institution decision to the
PTAB is contrary to the statute, and commentators have
objected, stating that:
Currently the same APJs consider an incomplete
and preliminary record to decide that the claims
being challenged in a petition are likely unpatent-
able. Those same APJs are then required to make
the Final Written Decision—in essence, they are
put in the position of defending their prior deci-
sion to institute the trial. This creates an actual
or perceived bias against the patent owner.
AIPLA Comments on PTAB Trial Proceedings, at 20 (Oct.
16, 2014), available at http://www.uspto.gov/ip/boards/
bpai/aipla_20141016.pdf. See also Ethicon Endo-Surgery,
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 33
Inc. v. Covidien LP, No. 2014-1771 (Fed. Cir. Jan. 13,
2016) (Newman, J., dissenting).
This further contravention of the statute is not sup-
portable.
V
The AIA Must Be Applied as a
Balanced Whole
The record shows extensive policy balances in the AIA
as eventually enacted. Today’s concerns focus primarily
on procedures adopted after enactment of the statute,
such as post-grant use of the “broadest” claim construc-
tion; a topic under review elsewhere. 5 And I have previ-
ously pointed to issues arising from conflicting final
decisions in the PTAB and the district court, see Frese-
nius USA, Inc. v. Baxter International, Inc., 721 F.3d
1330, 1347 (Fed. Cir. 2013) (Newman, J., dissenting).
In addition, the statutory provision for amending
claims for post-grant review has been misapplied. Alt-
hough the AIA authorizes claim amendment, PTO statis-
tics demonstrate the PTAB’s practice of denying almost
all motions to amend, as referenced in Cuozzo, 793 F.3d at
1288 n.1 (Newman, J., dissenting). Updated statistics
show little change, see Daniel F. Klodowski and David
Seastrunk, Claim and Case Disposition, AIA BLOG,
http://www.aiablog.com/claim-and-case-disposition/ (visit-
ed Feb. 5, 2016) (Reporting IPR Substitute Claim Disposi-
tion as of Jan. 1, 2016: 446 (94.49%) substitute claims
denied, 26 (5.51%) substitute claims granted.)
It devolves upon the court to assure fulfillment of the
policy embodied in the statute, with appreciation of the
5 In re Cuozzo Speed Technologies, LLC, 778 F.3d
1271 (Fed. Cir. 2015), cert. granted Jan. 15, 2016.
34 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
statutory balance and the interrelation of provisions. The
availability of amendment in IPR proceedings, as com-
pared with district courts, balances the lighter standard
of invalidation for IPR proceedings. A witness stated, in
response to questions by Senators Grassley, Coburn,
Specter and Kyl:
[U]nnecessarily restricting the patentee’s ability
to amend its claims (in contrast with the flexible
inter partes reexamination process) . . . encou-
rage[s] outright invalidation of a patent that may
simply require an adjustment in scope.
Patent Reform: the Future of American Innovation: Hear-
ing Before Senate Comm. on the Judiciary, 110th Cong. 45
(Responses of Bruce Bernstein, Chief Intellectual Proper-
ty and Licensing Officer, InterDigital Communications
Corp.).
The amendment opportunity was emphasized. See id.
at 90 (Post-Hearing question of Sen. Kyl to Mary Doyle)
(“24. Under the post-grant review procedure proposed in
S. 1145, a patentee may amend its claims only once as a
matter of right, and may further amend only for good
cause shown.”). Thus the statute provides:
§ 316(d) AMENDMENT OF THE PATENT.—
(1)In general.—During an inter partes review
instituted under this chapter, the patent
owner may file 1 motion to amend the pa-
tent in 1 or more of the following ways:
(A) Cancel any challenged patent claim.
(B) For each challenged claim, propose a
reasonable number of substitute claims.
(2)Additional motions.—
Additional motions to amend may be per-
mitted upon the joint request of the peti-
tioner and the patent owner to materially
advance the settlement of a proceeding
SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION 35
under section 317, or as permitted by reg-
ulations prescribed by the Director.
(3)Scope of claims.—
An amendment under this subsection may
not enlarge the scope of the claims of the
patent or introduce new matter.
(emphasis added). In the context of the statement of
Senator Kyl that the legislation provides for one amend-
ment “as a matter of right,” the reported implementation
is indeed questionable.
The record demonstrates that the statute was well
understood as creating a fresh balance, whereby patents
could be challenged in opposition-like proceedings, wheth-
er or not there was a “case or controversy” as required by
Article III. Congress lowered the evidentiary standard of
invalidity applied by the courts to granted patents, and
authorized limited amendment, thereby allowing correc-
tion of flaws in the prior grant. This statute requires
implementation in accordance with the legislative pur-
pose.
VI
This New Proceeding Is of
Power and Promise
The power and promise of the America Invents Act,
and the aspirations held by Congress and the Nation,
recognize American innovation and the capability of
invention to serve the public and the economy. For so
large a change in national practice, adjustment is not
surprising. The glitches I have pointed out are readily
remediable, and appear to flow from construing isolated
statutory provisions. See Davis v. Mich. Dep’t of Treasury,
489 U.S. 803, 809 (1989) (“[S]tatutory language cannot be
construed in a vacuum. It is a fundamental canon of
statutory construction that the words of a statute must be
read in their context with a view to their place in the
36 SYNOPSYS, INC. v. MENTOR GRAPHICS CORPORATION
overall statutory scheme.”). Each provision contributes to
the balance established in the statute, as Congressman
Berman explained:
Like all compromises, not everyone received eve-
rything they wanted, which is honestly just as it
should be. This legislation favors no industry, no
person, organization or interest group. It seeks to
solve problems that we have identified and have
been identified for us by outside experts and
agencies.
153 Cong. Rec. 23904–11 (2007) (Rule for debate on
Patent Reform Act of 2007). Senator Leahy also com-
mented on concerns that were balanced:
The array of voices heard in this debate represent
virtually all sectors of our economy, all interests
in the patent system. They have not been uni-
form, but they know the legislative process is one
of compromise and accommodation where possi-
ble, and it has been that way during the 6 years
we have been at work on this bill.
157 Cong. Rec. S1349 (daily ed. Mar. 8, 2011).
Congress aspired to revitalize the Nation’s patent sys-
tem, in an era of innovation beyond imagination. I re-
spectfully dissent from the departures from the legislative
plan.