SAS INSTITUTE INC. v. IANCU, DIRECTOR, UNITED STATES PATENT AND TRADEMARK OFFICE, ET AL.
No. 16-969
SUPREME COURT OF THE UNITED STATES
April 24, 2018
584 U. S. ____ (2018)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
(Slip Opinion)
OCTOBER TERM, 2017
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
Syllabus
SAS INSTITUTE INC. v. IANCU, DIRECTOR, UNITED STATES PATENT AND TRADEMARK OFFICE, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
No. 16-969. Argued November 27, 2017—Decided April 24,
Inter partes review allows private parties to challenge previously issued patent
Petitioner SAS sought review of respondent ComplementSoft‘s software patent, alleging that all 16 of the patent‘s claims were unpatentable. Relying on a Patent Office regulation recognizing a power of “partial institution,” 37 CFR §42.108(a), the Director instituted review on some of the claims and denied review on the rest. The Board‘s final decision addressed only the claims on which the Director had instituted review. On appeal, the Federal Circuit rejected SAS‘s argument that
Held: When the Patent Office institutes an inter partes review, it must decide the patentability of all of the claims the petitioner has challenged. The plain text of
The statute envisions an inter partes review guided by the initial petition. See
Sectiоn 314(a)‘s requirement that the Director find “a reasonable likelihood” that the petitioner will prevail on “at least 1 of the claims challenged in the petition” suggests, if anything, a regime where a reasonable prospect of success on a single claim justifies review of them all. Again, if Congress had wanted to adopt the Director‘s claim-by-claim approach, it knew how to do so. See
The Director suggests that a textual discrepancy between
The Director‘s policy argument—that partial institution is efficient because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others—is properly addressed to Congress, not this Court. And the Director‘s asserted “partial institution” power, which is wholly unmentioned in the statute, is not entitled to deference under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837. Finally, notwithstanding
825 F. 3d 1341, reversed and remanded.
GORSUCH, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined. BREYER, J., filed a dissenting opinion, in which GINSBURG and SOTOMAYOR, JJ., joined, and in which KAGAN, J., joined except as to Part III–A.
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
No. 16-969
SAS INSTITUTE INC., PETITIONER v. ANDREI IANCU, AS DIRECTOR, UNITED STATES PATENT AND TRADEMARK OFFICE, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
[April 24, 2018]
JUSTICE GORSUCH delivered the opinion of the Court.
A few years ago Congress created “inter partes review.” The new procedure allows private parties to challenge previously issued patent claims in an adversarial process before the Patent Office that mimics civil litigation. Recently, the Court upheld the inter partes review statute against a constitutional challenge. Oil States Energy Services, LLC v. Greene‘s Energy Group, LLC, ante, p. ___. Now we take up a question concerning the statute‘s operation. When the Patent Office initiates an inter partes review,
“To promote the Progress of Science and useful Arts,” Congress long ago created a patent system granting inventors rights over the manufacture, sale, and use of their inventions.
Sometimes, though, bad patents slip through. Maybe the invention wasn‘t novel, or maybe it was obvious all along, and the patent owner shouldn‘t enjoy the special privileges it has received. To remedy these sorts of problems, Congress has long permitted parties to challenge the validity of patent claims in federal court. See
The new inter partes review regime looks a good deal more like civil litigation. At its outset, a party must file “a petition to institute an inter partes review of [a] patent.”
Once the Director institutes an inter partes review, the matter proceeds before
Our case arose when SAS sought an inter partes review of ComplementSoft‘s software patent. In its petition, SAS alleged that all 16 of the patent‘s claims were unpatentable for various reasons. The Director (in truth the Board acting on the Director‘s behalf) concluded that SAS was likely to succeed with respect to at least one of the claims and that an inter partes review was therefore warranted. But instead of instituting review on all of the claims challenged in the petition, the Director instituted review on only some (claims 1 and 3–10) and denied review on the rest. The Director did all this on the strength of a Patent Office regulation that purported to recognize a power of “partial institution,” claiming that “[w]hen instituting inter partes review, the [Director] may authorize the review to proceed on all or some of the challenged claims and on all or some or the grounds of unpatentability asserted for each claim.” 37 CFR §42.108(a). At the end of litigation, the Board issued a final written decision finding claims 1, 3, and 5–10 to be unpatentable while upholding claim 4. But the Board‘s decision did not address the remaining claims on which the Director had refused review.
That last fact led SAS to seek review in the Federal Circuit. There SAS argued that
We find that the plain text of
The Director replies that things are not quite as simple as they seem. Maybe the Board has to decide every claim challenged by the petitioner in an inter partes review. But, he says, that doesn‘t mean every challenged claim gains admission to the review process. In the Director‘s view, he retains discretion to decide which claims make it into an inter partes review and which don‘t. The trouble is, nothing in the statute says anything like that. The Director‘s claimed “partial institution” power appears nowhere in the text of
Start where the statute does. In its very first provision, the statute says that a party may seek inter partes review by filing “a petition to institute an inter partes review.”
It‘s telling, too, to compare this structure with what came before. In the ex parte reexamination statute, Congress embraced an inquisitorial approach, authorizing the Director to investigate a question of patentability “[o]n his own initiative, and at any time.”
More confirmation comes as we move to the point of institution. Here the statute says the Director must decide “whether to institute an inter partes review . . . pursuant to a petition.”
To this the Director replies by pointing to another part of
Here again we know that if Congress wanted to adopt the Director‘s approach it knew exactly how to do so. The ex parte reexamination statute allows the Director to assess whether a request raises “a substantial new question of patentability affecting any claim” and (if so) to institute reexamination limited to “resolution of the question.”
Faced with this difficulty, the Director tries another tack. He points to the fact that
The rest of the statute confirms, too, that the petitioner‘s petition, not the Director‘s discretion, is supposed to guide the life of the litigation. For example,
The Director says we can find at least some hint of the discretion he seeks by comparing
We just don‘t see it. Whatever differences they might display,
Moving past the statute‘s text and context, the Director attempts a policy argument. He tells us that partial institution is efficient because it permits the Board to focus on the most promising challenges and avoid spending time and resources on others. Brief for Federal Respondent 35–36; see also post, at 1 (GINSBURG, J., dissenting); post, at 7–8 (BREYER, J., dissenting). SAS responds that all patent challenges usually end up being litigated somewhere, and that partial institution creates inefficiency by requiring the parties to litigate in two places instead of one—the Board for claims the Director chooses to entertain and a federal court for claims he refuses. Indeed, SAS notes, the government itself once took the same view, arguing that partial institution “undermine[s] the Congressional efficiency goal” for this very reason. Brief for Petitioner 30. Each side offers plausible reasons why its approach
That leaves the Director to suggest that, however this Court might read the statute, he should win anyway because of Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). Even though the statute says nothing about his asserted “partial institution” power, the Director says the statute is at least ambiguous on the propriety of the practice and so we should leave the matter to his judgment. For its part, SAS replies that we might use this case as an opportunity to abandon Chevron and embrace the “impressive body” of pre-Chevron law recognizing that “the meaning of a statutory term” is properly a matter for “judicial [rather than] administrative judgment.” Brief for Petitioner 41 (quoting Pittston Stevedoring Corp. v. Dеllaventura, 544 F. 2d 35, 49 (CA2 1976) (Friendly, J.)).
But whether Chevron should remain is a question we may leave for another day. Even under Chevron, we owe an agency‘s interpretation of the law no deference unless, after “employing traditional tools of statutory construction,” we find ourselves unable to discern Congress‘s
meaning. 467 U. S., at 843, n. 9. And after applying traditional tools of interpretation here, we are left with no uncertainty that could warrant deference. The statutory provisions before us deliver unmistakable commands. The statute hinges inter partes review on the filing of a petition challenging specific patent claims; it makes the petition the centerpiece of the proceeding both before and after institution; and it requires the Board‘s final written decision to address every claim the petitioner presents for review. There is no room in this scheme for a wholly unmentioned “partial institution” power that lets the Director select only some challenged сlaims for decision. The Director may (today) think his approach makes for better policy, but policy considerations cannot create an ambiguity when the words on the page are clear. See SEC v. Sloan, 436 U. S. 103, 116–117 (1978). Neither may we defer to an agency official‘s preferences
At this point, only one final question remains to resolve. Even if the statute forbids his partial institution practice, the Director suggests we lack the power to say so. By way of support, he points to
But this reading overreads both the statute and our precedent. As Cuozzo recognized, we begin with “the ‘strong presumption’ in favor of judicial review.” Id., at ___ (slip op., at 9). To overcome that presumption, Cuozzo explained, this Court‘s precedents require “clear and convincing indications” that Congress meant to foreclose review. Id., at ___ (slip op., at 10) (internal quotation marks omitted). Given the strength of this presumption and the statute‘s text, Cuozzo concluded that
And that, of course, is exactly the sort of question we are called upon to decide today. SAS does not seek to challenge the Director‘s conclusion that it showed a “reasonable likelihood” of success sufficient to warrant “insti-tut[ing] an inter partes review.”
Because everything in the statute before us confirms that SAS is entitled to a final written decision addressing all of the claims it has challenged and nothing suggests
So ordered.
GINSBURG, J., dissenting
SUPREME COURT OF THE UNITED STATES
No. 16-969
SAS INSTITUTE INC., PETITIONER v. ANDREI IANCU, AS DIRECTOR, UNITED STATES PATENT AND TRADEMARK OFFICE, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
[April 24, 2018]
JUSTICE GINSBURG, with whom JUSTICE BREYER, JUSTICE SOTOMAYOR, and JUSTICE KAGAN join, dissenting.
Given the Court‘s wooden reading of
BREYER, J., dissenting
SUPREME COURT OF THE UNITED STATES
No. 16-969
SAS INSTITUTE INC., PETITIONER v. ANDREI IANCU, AS DIRECTOR, UNITED STATES PATENT AND TRADEMARK OFFICE, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
[April 24, 2018]
JUSTICE BREYER, with whom JUSTICE GINSBURG and JUSTICE SOTOMAYOR join, and with whom JUSTICE KAGAN joins except as to Part III–A, dissenting.
This case requires us to engage in a typical judicial exercise, construing a statute that is technical, unclear, and constitutes a minor procedural part of a larger administrative scheme. I would follow an interpretive technique that judges often use in such cases. Initially, using “traditional tools of stаtutory construction,” INS v. Cardoza-Fonseca, 480 U. S. 421, 446 (1987), I would look to see whether the relevant statutory phrase is ambiguous or leaves a gap that Congress implicitly delegated authority to the agency to fill. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842–843 (1984). If so, I would look to see whether the agency‘s interpretation is reasonable. Id., at 843. Because I believe there is such a gap and because the Patent Office‘s interpretation of the ambiguous phrase is reasonable, I would conclude that the Patent Office‘s interpretation is lawful.
I
The majority sets out the statutory framework that establishes “inter partes review.” See ante, at 2–3;
The statutory chapter entitled “Inter partes review” еxplains just how this is to be done. See
Third, the Director of the Patent Office will decide whether to “institute” inter partes review.
The Director, by regulation, has delegated the power to institute review to the Patent Trial and Appeal Board. 37 CFR §42.4(a) (2017). And the Director has further provided by regulation that where a petition challenges several patent claims (say, all 16 claims in my example), “the Board may authorize the review to proceed on all or some of the challenged claims.” 37 CFR §42.108(a) (emphasis added). Thus, where some, but not all, of the challenges have likely merit (say, 1 of the 16 has likely merit and the others are close tо frivolous), the Board is free to conduct inter partes review only as to the challenge with likely merit.
Fourth, the statute next describes the relation of a petition for review and an instituted review to other proceedings involving the challenged patent.
Sixth, the statute sets forth the section primarily at issue here, which describes what happens at the end of the process. It says:
“Final Written Decision. If an inter partes review is instituted and not dismissed 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).”
§318(a) (emphasis added).
Finally, the chapter says that a “party dissatisfied with the final written decision . . . may appeal the dеcision” to the U. S. Court of Appeals for the Federal Circuit.
Thus, going through this process, if a petitioner files a petition challenging 16 claims and the Board finds that the challenges to 15 of the claims are frivolous, the Board may then, as it interprets the statute, begin and proceed through the inter partes review process as to the remaining claim, number 16, but not in respect to the other 15 claims. Eventually the Board will produce a “final written decision” as to the patentability of claim number 16, which decision the challenger (or the patentee) can appeal to the Federal Circuit.
II
Now let us return to the question at hand, the meaning of the phrase “any patent claim challenged by the petitioner” in
Which reading we give the statute makes a difference. The first reading, the majority‘s reading, means that in my example, the Board must consider and write a final, and appealable, see
I cannot find much in the statutory context to support the majority‘s claim that the statutory words “claim challenged by the petitioner” refer unambiguously to claims challenged initially in the petition. After all, the majority agrees that they do not refer to claims that initially were challenged in the petition but were later settled or withdrawn. Ante, at 9–10; see
Nor does the chapter‘s structure help fill the statutory gap. I concede that if we examine the “final written decision” section,
The very next section, however,
I am not helped by examining, as the majority examines, what Congress might have done had it used other language. Ante, at 6–8. The majority points out that had Congress meant anything other than “challenged in the petition,” it might have said so more clearly. Ibid. But similarly, if Congress had meant “challenged in the petition,” it might have used the words “in the petition.” After all, it used thosе very words only four sections earlier. See
Neither am I helped by analogizing the inter partes review proceeding to civil litigation. Cf. ante, at 2–3, 5. That is because, as this Court said in Cuozzo, inter partes review is a “hybrid proceeding.” 579 U. S., at ___ (slip op., at 16). It has some adversarial characteristics, but “in other significant respects, inter partes review is less like a judicial proceeding and more like a specialized agency proceeding.” Id., at ___ (slip op., at 15). Its purposes are not limited to “helping resolve concrete patent-related disputes among parties,” but extend to “reexamin[ing] . . . an earlier administrative grant of a patent” and “protect[ing] the public‘s ‘paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.‘” Ibid. (quoting Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816 (1945); ellipsis in original); see also Oil States Energy Services, LLC v. Greene‘s Energy Group, LLC, ___ U. S. ___ (2018) (slip op., at 8–9).
Finally, I would turn to the likely purposes of the statutory provision. As the majority points out,
The majority points out that it does not follow from
More than that, to read
III
I end up where I began. Section 318(a) contains a gap just after the words “challenged by the petitioner.” Considerations of context, structure, and purpose do not close the gap. And under Chevron, “where a statute leaves a ‘gap’ or is ‘ambigu[ous],’ we typically interpret it as grant-ing the agency leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute.” Cuozzo, supra, at ___ (slip op., at 13) (quoting United States v. Mead Corp., 533 U. S. 218, 229 (2001); alteration in original).
A
In referring to Chevron, I do not meаn that courts are to treat that case like a rigid, black-letter rule of law, instructing them always to allow agencies leeway to fill every gap in every statutory provision. See Mead Corp., supra, at 229–231. Rather, I understand Chevron as a rule of thumb, guiding courts in an effort to respect that leeway which Congress intended the agencies to have. I recognize that Congress does not always consider such matters, but if not, courts can often implement a more general, virtually omnipresent congressional purpose—namely, the creation of a well-functioning statutory scheme—by using a canon-like, judicially created construct, the hypothetical reasonable legislator, and asking what such legislators would likely have intended had Congress considered the question of delegating gap-filling authority to the agency.
B
To answer this question, we have previously held that a “statute‘s complexity, the vast number of claims that it engenders, and the consequent need for agency expertise and administrative experience” normally “lead us to read [a] statute as delegating to the Agency considerable authority to fill in, through interpretation, matters of detail related to its administration.” Barnhart v. Walton, 535 U. S. 212, 225 (2002). These considerations all favor
*
I consequently would affirm the judgment of the Federal Circuit. And, with respect, I dissent from the Court‘s contrary cоnclusion.