Section 325(d) gives the Patent Trial and Appeal Board (“PTAB”) discretion to deny a post-grant petition when “the same or substantially the same prior art or arguments previously were presented to the Office.” 35 U.S.C. § 325(d). Both the PTAB and the Federal Circuit have opined on the discretionary denial provisions in 35 U.S.C. § 325(d) in the context of serial inter partes review (“IPR”) petitions. The Federal Circuit has now held that § 325(d) applies to requests for ex parte reexamination. This decision did not involve biotechnological subject matter, but the holdings are nevertheless applicable.
In this case, the appellant, Vivint, sued Alarm.com in district court for infringement of four patents. In re Vivint, No. 20-1992, slip op. at 3 (Fed. Cir. Sept. 29, 2021). Alarm.com, for its part, filed fourteen IPR petitions related to Vivint patents, including three petitions on the patent at issue in the Federal Circuit appeal. Id. The PTAB declined, however, to institute those three IPR petitions. While the PTAB denied two petitions for failure to demonstrate a reasonable likelihood that Alarm.com would prevail on at least one challenged claim, the PTAB used its discretion to deny the third petition as “an example of ‘undesirable, incremental petitioning.’” Id. (quoting Alarm.com Inc. v. Vivint, Inc., IPR2016-01091, Paper 11, at 12 (P.T.A.B. Nov. 23, 2016)).
Alarm.com then filed a request for ex parte reexamination. Id. at 4. The Federal Circuit noted that “[l]argely, this request repackaged the arguments raised in” the IPR petition that the PTAB had discretionarily denied, including the use of identical language at times. Id. The Patent Office nevertheless ordered reexamination of the patent, finding that Alarm.com had raised substantial new questions of patentability. Id. When Vivint sought dismissal of the reexamination under § 325(d), the Patent Office dismissed Vivint’s arguments, claiming it had no authority to consider petitions for dismissal after reexamination was ordered. Id. at 5. The Patent Office ultimately invalidated the claims of Vivint’s patents, and the PTAB affirmed the decision. Id. at 6.
The Federal Circuit vacated and remanded the reexamination, ordering its dismissal based on § 325(d). Id. at 18. Vivint first argued that the Patent Office erred in ordering reexamination based on a “substantial new question of patentability” (35 U.S.C. § 303(a)), because the reexamination petition simply repackaged Alarm.com’s prior IPR arguments, but the Federal Circuit disagreed, holding that a question of patentability is “new” until considered and decided on the merits. Id. at 7-10. However, the Court agreed with Vivint on § 325(d). First, the Federal Circuit held that the Patent Office has authority to reconsider a decision ordering ex parte reexamination based on § 325(d), analogizing it to the PTAB’s power to reconsider IPR institution decisions. Id. at 12-13. The Court ultimately held that the Patent Office abused its discretion by ordering reexamination—or at least refusing to terminate the reexamination once requested by Vivint—by relying primarily on its lack of authority to do so. Id. at 10-14.
Instead of remanding the Patent Office’s decision to allow it to reconsider whether to apply § 315(d), the Federal Circuit determined that remanding would be a waste of resources, holding that it would be arbitrary and capricious to do anything other than terminate the reexamination. Id. at 14. The Court reasoned that after the agency denied Alarm.com’s IPR petition for abusive filing practices under § 325(d), it was arbitrary and capricious to order reexamination when there was no basis to distinguish the circumstances of the reexamination from the denied IPR. Id. at 14-16. The Federal Circuit therefore vacated the Patent Office’s decision and remanded with instructions to dismiss the reexamination. Id. at 18.
The Federal Circuit cautioned that its holding was narrow, emphasizing that there could be situations to not deny reexamination under § 325(d) when a similar IPR petition was previously denied under the same statute, including in the circumstance of serial filings. Id. at 17. For example, the Patent Office Director could institute ex parte reexamination on his own initiative. However, the Court noted that the Director did not invoke his own authority as a basis for proceeding with reexamination in this case, and thus the Patent Office’s decision to proceed with reexamination was arbitrary and capricious. Id.