St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp. , 749 F.3d 1373 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
ST. JUDE MEDICAL,
CARDIOLOGY DIVISION, INC.,
Appellant
v.
VOLCANO CORPORATION,
Appellee,
AND
MICHELLE K. LEE, Deputy Director, United States
Patent and Trademark Office,
Intervenor.
______________________
2014-1183
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2013-
00258.
______________________
ON MOTION
______________________
Before PROST, O’MALLEY, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
ORDER
2 ST. JUDE MEDICAL v. VOLCANO CORPORATION
St. Jude Medical, Cardiology Division, Inc., petitioned
the Director of the United States Patent & Trademark
Office to institute an inter partes review of a patent owned
by Volcano Corporation. The Director, through her dele-
gee, denied the petition. St. Jude appealed the non-
institution decision to this court. Volcano and the Direc-
tor now move to dismiss. We grant the motion.
BACKGROUND
In chapter 31 of Title 35, Congress established a pro-
cess for inter partes review of an issued patent within the
PTO. Section 311 specifies that a person other than the
owner of the patent may petition the PTO for such review;
section 312 describes the required contents of the petition;
section 313 allows a response. 35 U.S.C. §§ 311-313.
Section 314 provides for the Director to institute an inter
partes review upon receiving a petition. It specifies that
the Director “shall determine whether to institute an
inter partes review,” id. § 314(b), and states that the
Director may not grant the petition unless “there is a
reasonable likelihood that the petitioner would prevail
with respect to at least 1 of the claims challenged,” id.
§ 314(a). Section 315 imposes certain other restrictions
on the Director’s “instituting” an inter partes review; for
example, it bars such institution where “the petition
requesting the proceeding is filed more than 1 year after
the date on which the petitioner . . . is served with a
complaint alleging infringement of the patent.” Id.
§ 315(b). Section 314(d), entitled “No Appeal,” adds: “The
determination by the Director whether to institute an
inter partes review under this section shall be final and
nonappealable.” Id. § 314(d).
The “conduct” of an inter partes review follows its “in-
stitution,” and the Patent Trial and Appeal Board is the
one to “conduct each inter partes review instituted under”
chapter 31. Id. § 316(c). Unless the review is dismissed,
the Board “shall issue a final written decision,” determin-
ST. JUDE MEDICAL v. VOLCANO CORPORATION 3
ing “the patentability of any patent claim challenged by
the petitioner and any new claim added” during the
review under section 316. Id. § 318(a). The final written
decision is the only decision that the statute authorizes a
dissatisfied party to appeal to this court. Section 319
states that “[a] party dissatisfied with the final written
decision of the [Board] under section 318(a) may appeal
the decision pursuant to sections 141 through 144.” Id.
§ 319. Section 141(c) states that “[a] party to an inter
partes review . . . dissatisfied with the final written
decision of the [Board] under section 318(a) . . . may
appeal the Board’s decision only to the United States
Court of Appeals for the Federal Circuit.” Id. § 141(c).
In 2010, St. Jude brought suit against Volcano in the
United States District Court for the District of Delaware,
alleging infringement of five St. Jude patents. St. Jude
Med., Cardiology Div., Inc. v. Volcano Corp., No. 10-cv-
631 (D. Del. filed July 27, 2010). On September 20, 2010,
Volcano filed a counterclaim against St. Jude asserting
infringement of U.S. Patent No. 7,134,994—the patent at
issue here. More than two years later, on October 22,
2012, the district court, based on the stipulations of the
parties, dismissed all claims relating to the ’994 patent.
See St. Jude Med., Cardiology Div., Inc. v. Volcano Corp.,
No. 10-cv-631 (D. Del. Oct. 22, 2012), ECF No. 437.
Six months after the dismissal, on April 30, 2013, St.
Jude filed a petition for inter partes review of the ’994
patent. The Director, through the Board as her delegee,
denied the petition. 1 The Board explained that a counter-
claim alleging infringement constitutes a “complaint
1 The Director, by regulation, has delegated to the
Board the authority under section 314 to decide whether
to institute an inter partes review. 37 C.F.R. §§ 42.4 &
42.108. The Board, in making the review-instituting
decision, is exercising the Director’s section 314 authority.
4 ST. JUDE MEDICAL v. VOLCANO CORPORATION
alleging infringement of the patent” within the meaning
of section 315(b), which bars institution of an inter partes
review of a patent if the petitioner was served with a
complaint alleging infringement of the patent more than
one year before filing the petition. Accordingly, the 2010
counterclaim against St. Jude in the Delaware action
barred the Director from instituting an inter partes review
of the ’994 patent on St. Jude’s 2013 petition.
St. Jude has appealed the Director’s decision not to
institute an inter partes review, asserting that this court
has subject matter jurisdiction under 28 U.S.C. § 1295
and that 35 U.S.C. § 314(d) does not bar this court’s
immediate review of the Director’s decision. Volcano and
the Director moved to dismiss the appeal.
DISCUSSION
We hold that we may not hear St. Jude’s appeal from
the Director’s denial of the petition for inter partes review.
We base that conclusion on the structure of the inter
partes review provisions, on the language of section 314(d)
within that structure, and on our jurisdictional statute
read in light of those provisions.
Chapter 31 authorizes appeals to this court only from
“the final written decision of the [Board] under section
318(a).” Id. § 319. Likewise, section 141(c) in relevant
part authorizes appeal only by “a party to an inter partes
review . . . who is dissatisfied with the final written
decision of the [Board] under section 318(a).” Id. § 141(c).
What St. Jude now challenges, however, is the Director’s
non-institution decision under section 314(a) & (b). That
is not a “final written decision” of the Board under section
318(a), and the statutory provisions addressing inter
partes review contain no authorization to appeal a non-
institution decision to this court.
The statute separates the Director’s decision to “insti-
tute” the review, § 314, on one hand, from the Board’s
ST. JUDE MEDICAL v. VOLCANO CORPORATION 5
“conduct” of the review “instituted” by the Director,
§ 316(c), and the Board’s subsequent “written decision,”
§ 318, on the other. And it applies one standard—based
on “reasonable likelihood” of success—to the Director’s
decision to institute, § 314(a), and another standard—
based on “patentability”—to the Board’s decision on the
merits, § 318(a). The statute thus establishes a two-step
procedure for inter partes review: the Director’s decision
whether to institute a proceeding, followed (if the proceed-
ing is instituted) by the Board’s conduct of the proceeding
and decision with respect to patentability. Cf. Belkin
Int’l, Inc. v. Kappos, 696 F.3d 1379, 1382 (Fed. Cir. 2012)
(characterizing inter partes reexamination as a “two-step
process”: “[f]irst, . . . a determination ‘whether a substan-
tial new question of patentability affecting any claim of
the patent is raised’ . . . [and] [s]econd, . . . ‘resolution of
the question’”). The statute provides for an appeal to this
court only of the Board’s decision at the second step, not
the Director’s decision at the first step.
In fact, the statute goes beyond merely omitting, and
underscoring through its structure the omission of, a right
to appeal the non-institution decision. It contains a
broadly worded bar on appeal. Under the title, “No Ap-
peal,” Section 314(d) declares that “[t]he determination by
the Director whether to institute an inter partes review
under this section shall be final and nonappealable.” Id.
§ 314(d). That declaration may well preclude all review
by any route, which we need not decide. It certainly bars
an appeal of the non-institution decision here.
The chapter 31 provisions, together with section
141(c), make clear that we lack jurisdiction. The statuto-
ry grant of subject matter jurisdiction that St. Jude
identifies, 28 U.S.C. § 1295(a)(4)(A), authorizes this court
to hear “an appeal from a decision of the Patent Trial and
Appeal Board of the United States Patent and Trademark
Office with respect to a[n] . . . inter partes review under
title 35.” That provision is most naturally read to refer
6 ST. JUDE MEDICAL v. VOLCANO CORPORATION
precisely to the Board’s decision under section 318(a) on
the merits of the inter partes review, after it “conducts”
the proceeding that the Director has “instituted.” Under
that reading, the statutory grant of jurisdiction to this
court matches the appeal right in chapter 31 and section
141(c), and St. Jude’s appeal is outside both.
Accordingly,
IT IS ORDERED THAT:
(1) The motions to dismiss are granted.
(2) Each side shall bear its own costs.
FOR THE COURT
April 24, 2014 /s/ Daniel E. O’Toole
Date Daniel E. O’Toole
Clerk of Court