Federal Circuit: Effect Of Disclaimer Prior To Trial Institution

In Arthrex, Inc. v. Smith & Nephew, Inc., et al., slip op. 2017-1239, the Federal Circuit affirmed the Board's decision to enter an adverse judgment following Patent Owner's disclaimer of all claims challenged in an inter partes review petition before the institution of trial. At the time of entering the adverse judgment, an estoppel effect attached which precluded Patent Owner from "taking action inconsistent with the adverse judgment, including obtaining in any patent ... [a] claim that is not patentably distinct from a finally refused or canceled claim." Id. at 3 (citing 37 C.F.R. § 42.73(d)(3)(i)).[1]

In the underlying proceeding, an IPR Petition was filed challenging nine claims. Id. at 2. Patent Owner disclaimed all nine claims as permitted under 37 C.F.R. § 42.107(e), and also filed a Preliminary Response arguing there should be no institution because 37 C.F.R. § 42.107(e) states "[n]o inter partes review will be instituted based on disclaimed claims." Id. (emphasis in original). As the majority opinion states "[a]t that point, [Patent Owner] confronted 37 C.F.R. § 42.73(b), which provides:

A party may request judgment against itself at any time during a proceeding. Actions construed to be a request for adverse judgment include:

(1) Disclaimer of the involved application or patent;

(2) Cancellation or disclaimer of a claim such that the party has no remaining claim in the trial;

(3) Concession of unpatentability or derivation of the contested subject matter; and

(4) Abandonment of the contest."

Id. at 2-3 (emphasis in original). In order to distinguish § 42.73(b), Patent Owner stated in its Preliminary Response that "[b]y filing the statutory disclaimer, [Patent Owner] is not requesting an adverse judgment." Id. at 3. Nevertheless, the Board entered an adverse judgment stating "our rules permit the Board to construe a statutory disclaimer of all challenged claims as a request for adverse judgment, even when the disclaimer occurs before the Board has entered a decision on institution." Id. (PTAB citation omitted).

There were two central issues on appeal at the Federal Circuit: (1) whether the adverse final judgment is appealable, and (2) whether the Board properly entered an adverse judgment pursuant to 37 C.F.R. § 42.73(b). Id. at 4, 6.

Whether The Adverse Final Judgment Is Appealable

Regarding the appellate jurisdiction question, the majority opinion first notes that there was no contention that the statutory appeal-bar provision of...