Federal Circuit Approves PTAB Trial Approach

Authored by Brian S. Mudge

In a split decision, the Federal Circuit has approved the PTAB’s practice of deciding to institute AIA trials on a claim-by-claim basis. The case, Synopsys, Inc. v. Mentor Graphics Corp., No. 2014-1516 (Feb. 10, 2016), involved an appeal of a PTAB final decision that did not address all claims that were initially challenged in the IPR petition. Rejecting the petitioner’s argument that the PTAB’s final decision must address each claim challenged in an IPR petition, the Federal Circuit held that the PTAB had discretion to institute inter partes review on less than all claims initially presented in the petition. The Federal Circuit also ruled that the PTAB’s determination on the issue of a potential time bar could not be appealed, and that the PTAB properly handled the patent owner’s motion to amend.

Case Facts. Synopsys filed an IPR petition challenging Mentor Graphics’ patent no. 6,240,376, which is directed to tracing “bugs” in software code. The petition alleged that claims 1-15 and 20-33 of the ’376 patent were anticipated or rendered obvious by the prior art (including a reference identified as “Gregory”). Mentor submitted a preliminary response in which it argued that the claims were not unpatentable, and alleged that the petition was time barred under 35 U.S.C. §315(b) because the petition was filed more than one year after Mentor had sued an entity that was later acquired by Synopsys. After considering the petition and the preliminary response, the Board instituted trial on claims 1–9, 11, and 28–29 based solely on anticipation by Gregory, and rejected trial on all grounds of unpatentability alleged as to claims 10, 12–15, 20–27, and 30–33. Synopsys, Inc. v. Mentor Graphics Corp., IPR2012-00042 (Feb. 22, 2013). In its institution decision, the Board also rejected Mentor’s argument that the petition was time-barred under 35 U.S.C. §315(b), ruling that the one-year time limit is properly measured with respect to the filing date of the petition and that, as of the filing date, Synopsys was not in privity with the later-acquired entity. The Board also found that Synopsys was the proper real party-in-interest.

After trial, the Board issued its final decision, ruling that claims 5, 8 and 9 were unpatentable as anticipated by Gregory, but finding that claims 1–4, 6, 7, 11, 28, and 29 were not anticipated. Synopsys, Inc. v. Mentor Graphics Corp., IPR2012-00042 (Feb. 19, 2014). In addition, the Board denied Mentor’s motion to substitute new claims for claims 5, 8 and 9.

Synopsys appealed the PTAB’s final decision, and Mentor cross-appealed. The PTO (Director Lee) intervened to defend its procedures.

Proper Scope of Final Decision. On appeal, Synopsys contended that the Board erred when it failed to address in the final decision all of the claims raised in the petition. Synopsys argued that, under 35 U.S.C. §318(a), the Board was required to issue a final decision covering all of the challenged claims — and not merely those for which the Board instituted trial. In support, Synopsys relied on the text of section 318(a), which directs the PTO to issue a final written decision “with respect to the patentability of any patent claim challenged by the petitioner.”

In the majority opinion, the Federal Circuit rejected Synopsys’ position, holding that the statutory language makes clear that the claims to be addressed in the final decision are different than the claims raised in the petition. Pointing to differences in statutory text between section 318(a) (relating to the final decision requirement) and section 314(a) (relating to institution of inter partes review), the court concluded that Congress intended the phrasing relating to claims in each section to have different meanings. The court also pointed to the conditional phrase “[i]f an inter partes review is instituted” in section 318(a) as further support of its holding that the claims addressed in the final decision can be just those for which the IPR was instituted.

In addition, the majority opinion relied on the trial process to support its ruling. Noting that, after institution, the parties take discovery, submit further briefing and evidence, and present argument at an oral hearing, the majority reasoned that the determination of patentability on the instituted claims benefits from a fuller record and argument, in contrast with the limited record and argument available at the time of institution. Thus, according to the majority, it would make no sense to require the Board to enter a final decision as to those claims for which trial was rejected because they not would not have the benefit of the fuller record and argument as developed during the trial.

Synopsys also argued that legislative history supported its position, pointing to statements that IPR proceedings would substitute for that portion of infringement litigation pertaining to patent and printed publication prior art. However, the majority rejected that argument, concluding that a few floor statements could not supplant the text of the statute.

In further support of its decision, the majority quoted the PTO’s regulation which permits the Board to proceed with review “on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted ….” 37 C.F.R. §42.108. Noting that the regulation streamlines the issues for trial and furthers the goals of efficiency and the ability of the PTO to complete review within the one-year timetable, the majority concluded that the regulation was a reasonable interpretation of the statute by the PTO under Chevron.1

Disagreeing with the majority’s ruling, the dissent contended that the statute requires the Board to issue final decisions that address all of the claims challenged in the petition, pointing to the word “shall” in §318(a). According to the dissent, allowing the Board to pick and choose among the challenged claims is not supported by the statutory language, frustrates the purpose of the AIA and runs contrary to the extensive legislative history. Rather, the dissent argued that the purpose of IPRs is to provide a single forum to replace costly district court validity litigation and efficiently resolve validity disputes; and allowing the Board to proceed on fewer than all challenged claims leads to duplicative validity proceedings before the PTO and the courts. Further, according to the dissent, the ability for the Board to pick and choose reduces the likelihood that district courts would stay litigation pending the outcome of IPR trials.

Time Bar. In its cross-appeal, Mentor contended that the petition was time-barred under section 315(b), essentially presenting the same arguments it made to the Board in its preliminary response. However, the majority pointed to the Federal Circuit’s prior Achates2 opinion in which, as Mentor acknowledged at oral argument, the court ruled that decisions made in connection with the time bar under §315(b) were not appealable. Accordingly, the majority ruled that the time bar determination here by the Board was not subject to appellate review. The dissent disagreed on appealability of rulings on the time bar, arguing that the issue can be heard on appeal even if it was determined at the initial institution phase by the PTAB.

Motion to Amend. Mentor also contended in its cross-appeal that the Board improperly placed the burden on Mentor, the patent owner, to prove that its proposed new claims were patentable. However, the Federal Circuit had previously ruled in Proxyconn3 and Prolitec4 that the Board may place the burden on the patent owner to prove patentability of substitute claims in a motion to amend, at least as to patentability over the prior art of record. Because the Board ruled here that Mentor had not proven patentability of the proposed substitute claims over the Gregory reference, the majority affirmed (and, thus, declined to address the Board’s alternate ruling that Mentor did not establish general patentability over the prior art). In so doing, the majority rejected the position that section 316(e) mandates a different conclusion. While §316(e) provides that the petitioner shall have the burden of proving unpatentability, the majority reasoned that this provision applies to an inter partes review “instituted.” Thus, according to the court, the petitioner’s burden applies as to the claims in the original patent for which review has been instituted, but not to proposed substitute claims presented in a motion to amend (which are not the claims for which review was instituted). Though not taking specific issue with the result by the majority, the dissent commented on the inability generally for patent owners to successfully amend the claims in AIA trials, thus implying that amendments should be more readily obtainable.


  1. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)
  2. Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652, 658 (Fed. Cir. 2015)
  3. Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1303–08 (Fed. Cir. 2015)
  4. Prolitec, Inc. v. ScentAir Techs., Inc., 807 F.3d 1353, 1363 (Fed. Cir. 2015)