In Alarm.com Inc. v. Hirshfeld, the US Court of Appeals for the Federal Circuit ruled that decisions by the US Patent and Trademark Office Director vacating ex parte reexamination based on estoppel may be subject to judicial review under the Administrative Procedure Act.
In 2015, Alarm.com filed a series of petitions seeking inter partes review (IPRs) of claims in patents owned by Vivint Inc.[1] The Patent Trial and Appeal Board issued three final written decisions on the IPRs, determining that Alarm.com had not carried its burden of proving the challenged claims unpatentable.[2]
Then, in 2020, Alarm.com filed three requests for ex parte reexamination of those same claims but on different grounds than those presented in the IPRs.[3] Thereafter, the Patent Owner filed petitions to terminate the reexamination proceedings.[4] Although the US Patent and Trademark Office (PTO) initially assigned control numbers and filing dates to the requested reexamination proceedings, the Director issued three decisions, dismissing (and expunging) the patent owner’s petitions as moot[5] and vacating the ex parte reexamination requests.[6]
Focusing on the 37 CFR § 1.510(b)(6) requirement that the requester certify that “the statutory estoppel provisions of 35 U.S.C. [§] 315(e)(1)…do not prohibit the requester from filing the ex parte reexamination request,”[7] the Director found that Alarm.com reasonably could have raised its reexamination grounds in the IPRs, and, as such, was estopped under § 315(e)(1) from submitting its ex parte reexamination requests.[8]
In each of the decisions, the Director issued a “Clarification of General Policy and Practice” for applying § 315(e)(1)’s estoppel precondition that a particular ground of unpatentability asserted against a particular claim be one that was “raised or reasonably could have [been] raised” in the prior IPR involving the same claim and the reexamination requester was the IPR petitioner or a real party in interest or privy of the IPR petitioner.[9]
In response to the Director’s decisions, Alarm.com filed a complaint in the US District Court for the Eastern District of Virginia against the Director and the PTO.[10] Alarm.com brought its claims pursuant to § 702 of the Administrative Procedure Act (APA), which provides that “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.”[11] According to Alarm.com’s complaint, the Director’s decisions vacating the ex parte reexamination proceedings were final agency actions that should be set aside as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” and “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.”[12]
Thereafter, on the government’s motion, the district court dismissed Alarm.com’s suit because review of Alarm.com’s challenge to the vacatur decision based on estoppel was precluded.[13] Specifically, Alarm.com’s challenge to the Director’s decision fell within the exception to APA review when “statutes preclude judicial review.”[14]
The Federal Circuit reversed, determining that “Alarm.com’s APA challenge to the Director’s vacatur decisions based on estoppel is not precluded” where “[t]he text, statutory scheme, and legislative history pertaining to ex parte reexamination do not evince a fairly discernable intent to preclude judicial review of these decisions.”[15]
Beginning with the “‘strong presumption’ in favor of judicial review,” the Federal Circuit looked for “clear and convincing indications, drawn from specific legislative history, and inferences of intent drawn from the statutory scheme as a whole, that Congress intended to bar review.”[16]
The Text
The Federal Circuit explained that “[t]he only portion of the ex parte reexamination statutory scheme that expressly precludes judicial review is § 303(c),” which states that “[a] determination by the Director pursuant to subsection (a) of this section that no substantial new question of patentability has been raised will be final and nonappealable.”[17] But, as the Federal Circuit noted, “the preclusion established by that text is narrowly defined.”[18] And the government agreed that “section 303(c)…concededly does not expressly bar Alarm.com’s challenge.”[19]
Statutory Design
The Federal Circuit rejected the government’s argument that the ex parte reexamination statutory design provides clear and convincing evidence that Congress intended to preclude judicial review of determinations not otherwise expressly barred by § 303(c).[20] The government’s argument focused on § 306, which states, “[t]he patent owner involved in a reexamination proceeding … may appeal under the provisions of section 134, and may seek court review under the provisions of sections 141 to 144, with respect to any decision adverse to the patentability of any original or proposed amended or new claim of the patent.”[21]
But, according to the court, the affirmative grant in § 306 and its associated provisions of a patent owner’s right to review “a different decision”—i.e., a decision adverse to patentability in an ordered reexamination proceeding—“is insufficient to overcome the presumption of reviewability as a matter of recognized principle and precedent” for other proceedings like the one at issue in this appeal.[22]
Legislative History
The Federal Circuit acknowledged that “the government’s strongest evidence” of an intent to preclude judicial review in the legislative history is a statement from a report by the Judiciary Committee of the House of Representatives, which states, in pertinent part: “Subsection 303(c) makes final and nonappealable a decision by the Commissioner not to conduct reexamination,” and “[a] party to reexamination proceeding could still argue in any subsequent litigation that the PTO erred and that the patent is invalid on the basis of the cited prior art.”[23] But the court explained that “there is no reason to infer that the Committee in 1980 was referring to anything other than the ex parte reexamination scheme it was adopting at the time.”[24] Specifically, that scheme “provided for PTO determination of whether a substantial new question of patentability was presented, but the estoppel and multiplicity provisions that now apply, see §§ 315(e)(1), 325(d), (e)(1), were added to the statute only well after the 1980 enactment.”[25] Moreover, when Congress enacted the AIA in 2011, “it chose to make no substantive modifications to § 303(c)” while modestly modifying other portions of the statutory design.[26] Thus, the court concluded that the legislative history evidence “is too weak to supplant the text and accompanying presumption of judicial review.”[27]
Based on this review of the text, statutory design, and legislative history, the Federal Circuit “reversed the district court’s determination that Alarm.com’s 5 U.S.C. §§ 706(2)(A), (C) claims challenging the Director’s decisions to vacate the ex parte reexamination proceedings are precluded” and remanded for further proceedings.[28]
Future patent owners must remain cognizant of this decision if they successfully argue a patent challenger is estopped under § 315(e)(1) from submitting a reexam request because the challenger reasonably could have raised its grounds in a prior IPR. Following this decision, judicial review will be available to the challenger under the APA. Simultaneously, patent challengers will want to keep the APA standards in mind when determining whether to challenge a decision to vacate ex parte reexam proceedings as estopped under § 315(e)(1). Finally, this decision provides guidance to practitioners on the types of statutory interpretation arguments likely to succeed for post-grant proceedings before the Federal Circuit.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Boston
Joshua M. Dalton
Century City
Andrew V. Devkar
Chicago
Jason C. White
Houston
C. Erik Hawes
Rick L. Rambo
Philadelphia
Louis W. Beardell, Jr.
San Francisco
Brent A. Hawkins
Silicon Valley
Andrew J. Gray IV
Ahren C. Hsu-Hoffman
Michael J. Lyons
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Jeffrey G. Killian, Ph.D.
Robert Smyth, Ph.D.
[1] Alarm.com Inc. v. Hirshfeld, No. 21-2102, slip op. at 2, 4-5 (Fed. Cir. Feb. 24, 2022).
[2] Id. at 2, 5. Alarm.com had previously appealed the Board’s determinations, and the Federal Circuit affirmed. Id. at 5.
[3] Id. Although the requests for ex parte reexamination presented different grounds than in the IPRs, certain references identified in the requests were raised in the IPRs or submitted as exhibits accompanying the IPR petitions. See Decision Sua Sponte Vacating Ex Parte Reexamination Request Filing Date and Dismissing Petition as Moot for U.S. Patent No. 6,147,601 at 11-16 (June 4, 2020).
[4] See Decision Sua Sponte Vacating Ex Parte Reexamination Request Filing Date and Dismissing Petition as Moot for U.S. Patent No. 6,147,601 at 1-2 (June 4, 2020)
[5] Id. at 2.
[6] Alarm.com Inc., slip op. at 5.
[7] Id. at 5-6.
[8] Id. at 6.
[9] Id.
[10] Id.
[11] 5 U.S.C. § 702.
[12] Id. at §§ 706(2)(A), (C).
[13] Alarm.com Inc., slip op. at 7.
[14] 5 U.S.C. § 701(a)(1).
[15] Alarm.com Inc., slip op. at 9.
[16] Id. (citing Cuozzo Speed Techs. LLC v. Lee, 579 U.S. 261, 273 (2016),
[17] Id. at 10 (quoting 35 U.S.C. § 303(c)).
[18] Id.
[19] Id. (quoting Gov’t Br. at 39).
[20] Id. at 13, 19.
[21] 35 U.S.C. § 306.
[22] Alarm.com Inc., slip op. at 13.
[23] Id. at 20 (quoting H.R. Rep. No. 96-1307, pt. 1, at 7 (1980), as reprinted in 1980 U.S.C.C.A.N. 6460, 6466).
[24] Id. at 21.
[25] Id.
[26] Id.
[27] Id. at 22.
[28] Id. at 23.