CAFC Decision Allows Court Challenge of USPTO Director's Barring Ex Parte Reexamination Due to IPR Estoppel

On February 24, 2022, in Alarm.com Inc. v. Hirshfeld,[1] the Court of Appeals for the Federal Circuit held that the USPTO Director’s vacatur of ex parte reexamination requests filed by a previously unsuccessful IPR petitioner, on the basis of IPR estoppel, 35 U.S.C. § 315(e)(1), may be challenged in a suit filed under the Administrative Procedure Act (APA), 5 U.S.C. §§ 706(2)(A), (C). As a result, a district court’s dismissal of the APA suit for lack of jurisdiction was reversed, and the case was remanded to the trial court for a determination of the correctness of the Director’s decision regarding the IPR estoppel issue.

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The factual details of this case are not of great significance. An unsuccessful IPR petitioner (Alarm.com) filed requests for ex parte reexamination of patents owned by Vivint, Inc. Alarm.com had previously filed IPR petitions challenging validity of the same claims of the same Vivint patents. All of the IPR proceedings resulted in final written decisions upholding the challenged claims, and those final written decisions were affirmed on appeal to the CAFC. Undeterred, Alarm.com filed its further validity challenges in the form of the requests for ex parte reexamination at issue in this case, under 35 U.S.C. §§ 301-307.

The USPTO Director, without deciding whether the requests presented a “substantial new question of patentability” under the reexamination statute, 35 U.S.C. § 303(a), vacated the ex parte reexamination proceedings based on the estoppel provision of the IPR regime, § 315(e)(1), which, the Director concluded, estopped Alarm.com from pursuing the requests once the IPRs resulted in final written decisions. Under the reexamination regime, if the Director determines pursuant to § 303(a) that no substantial new question of patentability has been raised, that determination is “final and nonappealable.” 35 U.S.C. § 303(c). 

The USPTO argued, and the district court agreed, that the Director’s vacatur of Alarm.com’s requests for ex parte reexamination on the basis of IPR estoppel was also final and nonappealable, not under § 303(c) but by the ex parte reexamination scheme viewed as a whole. However, the reexamination statute is silent regarding appealability of any Director determinations other than those that no substantial new question of patentability has been raised by the request. The CAFC has now held that there is no basis in the reexamination statute, or its scheme viewed as a whole, or in any other authority or rule, for the USPTO’s position and the district court’s conclusion accepting it. In other words, Alarm.com may appeal the Director’s decision that the ex parte reexamination requests are barred by the IPR estoppel statute, notwithstanding the “no appeal” provision of § 303(c).

While the result certainly seems correct in view of the lengthy legal analysis and discussion presented in the CAFC’s opinion, the result also significantly raises the possibility that the Director will achieve the same desired result regarding the ex parte reexamination requests filed by Alarm.com, but in a mischievous way designed to avoid any future challenges under the Administrative Procedure Act. Specifically, the Director could decide that a previously unsuccessful IPR petitioner’s new request for ex parte reexamination simply does not raise any substantial new question of patentability under § 303(a) of the reexamination statute. 

One may imagine that there could be a number of creative pathways for the Director to reach the “no substantial new question” determination, even where the ex parte request raises invalidity grounds that were plainly not raised in the previous unsuccessful IPR proceedings. Such a “no substantial new question” determination is clearly “final and nonappealable” under § 303(c), and the legal obstacles to pursuing an Administrative Procedure Act challenge of such a determination would be formidable. Thus, while the Alarm.com decision appears to benefit patent challengers, exactly how much benefit it will actually yield going forward remains to be seen – only time will tell.[1]