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SAS decision could have chilling effect on university licensing

By Jesse Schwartz
Published: June 6th, 2018

The recent Supreme Court decision in SAS Institute v. Iancu could change how the Patent Trial and Appeal Board (PTAB) conducts future proceedings, with the Court directing it to provide a full written decision for all claims challenged. The court rejected the PTAB’s practice of “partial institution,” in which it provided a written decision that only addressed claims under review post-institution.

SAS had challenged the validity of a patent’s claims and PTO determined that some of the claims were likely valid and should proceed to trial. Other claims were not allowed to proceed to a final decision and SAS petitioned for a full written decision explaining why.

The decision notes that Section 314(a) of Title 35 prohibits the PTO director from initiating a review unless “there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.” If the Director does initiate that review, Section 318(a) states that PTO “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).”

Justice Neil Gorsuch wrote for the 5-4 majority in the SAS case, noting that the law seemed clear. Nevertheless, PTAB only instituted review and issued a final written decision on a subset of the claims that SAS initially challenged. The Federal Circuit had affirmed the PTAB’s “partial institution,” saying the board’s final written decision only needed to address the claims under review post-institution. The Supreme Court reversed the Federal Circuit and remanded the case for further proceedings.

The SAS decision may change how universities address patent challenges, says Rubén H. Muñoz, JD, partner with the law firm of Akin Gump Strauss Hauer & Feld in Philadelphia. IPRs will now be a binary decision, either yes or no rather than one answer on some claims and no decision on others, he explains.

“Everything that was challenged will be subject to that decision from the moment of institution to the final written decision,” Muñoz says. “There is nothing the patent owner can do to change that other than withdrawing or amending claims along the way.”

Previously with PTAB’s partial institution practice in IPRs, the university might choose to forgo the other claims and go back to the district court saying that of the 10 claims that were challenged, for instance, only four were instituted.

“If the district court had stayed the patent infringement suit, the university could very go well go back and say it wanted to go forward with this case because it was only instituted on four claims and I have six I can still go forward with,” he says. “That will be less likely going forward, because even if the threshold weren’t met for all 10 claims to be under review, they’re still going to be part of the proceedings. This is not good news for universities, because now all the claims are at risk.”

The SAS decision can be seen as yet another blow to patent owners, but it may be an especially troublesome complication for universities and research institutions trying to generate licensing revenue, says Lauren E. Schneider, partner with the Lewis Roca Rothgerber Christie law firm in Los Angeles. She works with many of Southern California’s major universities.

“Obtaining a decision of invalidity may be easier in an IPR in front of the PTAB than in a case before a federal district court, so the Supreme Court’s mandate that the PTAB decide the validity of every challenged claim in an instituted IPR may make IPRs even more attractive to potential patent challengers,” Schneider says. “And as the risk of being pulled into an IPR proceeding can have a deterrent effect on licensing, universities and research institutions may find procuring lucrative licensing agreements for their patents to be even more challenging, requiring innovative negotiation and licensing strategies.”

A detailed article on the SAS decision and its impact on university licensing appears in the May issue of Technology Transfer Tactics. To subscribe and get the complete article, plus access the publication’s rich, 11-year archive of best practices and success strategies for TTOs, CLICK HERE.

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