Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Security People Inc. v. Iancu, No. 19-2118 (August 20, 2020), affirming a district court’s dismissal of Security People’s challenge to the constitutionality of the Patent Trial and Appeal Board’s cancellation of its patent under the Administrative Procedure Act.
Following an inter partes review (IPR) trial, the Board issued a final written decision finding the lone challenged claim of Security People’s patent unpatentable. Security People appealed the decision to the Federal Circuit, which summarily affirmed the Board’s decision. The Supreme Court denied certiorari. Security People then filed suit in the U.S. District Court for the Northern District of California challenging the constitutionality of the Board’s cancellation of its patent claim. The Patent Office moved to dismiss asserting, inter alia, the district court lacked subject matter jurisdiction because Congress established a specific means for judicial review of IPR decisions, rendering collateral suits in district court inappropriate. The district court agreed and dismissed the case. Security People appealed.
The Federal Circuit affirmed. As an initial matter, the Court concluded that Congress’s intent to preclude district court judicial review of IPR final written decisions is evidenced by 35 U.S.C. § 141(c), which provides for exclusive review of the Board’s final written decisions by the Federal Circuit. The Court further held that even if the Board lacks authority to consider constitutional challenges, the Federal Circuit has authority to review constitutional challenges on appeal. The Court reasoned it was not unusual for an appellate court reviewing the decision of an administrative agency to consider a constitutional challenge to a federal statute that the agency itself concluded it lacked authority to decide. The presence of disputed factual questions does not preclude such review, the Court held, because the Board has authority to conduct fact finding even if it cannot decide related legal questions. The Court also rejected the contention that Security People could not have raised its constitutional challenge until the Court affirmed the Board’s cancellation of the patent claim. The Court reasoned the Patent Office’s decision-making process in an IPR was complete after issuance of the final written decision, making an as-applied challenge ripe for review by the Federal Circuit on a first appeal.