Constitutional Issues Arising From PTAB Decisions Must Be Appealed to the Federal Circuit

SECURITY PEOPLE, INC. v. IANCU

Before Lourie, Wallach, and Hughes.  Appeal from the United States District Court for the Northern District of California

Summary: Congress foreclosed the possibility of Administrative Procedure Act (APA) review of an Inter Partes Review (IPR) proceeding by district courts. The America Invents Act (AIA) provides an adequate remedy in a court for a constitutional challenge through appeals to the Federal Circuit of the Patent Trial and Appeal Board’s final written decisions.

The Board issued a final written decision finding the only instituted claim of a Security People patent unpatentable.  Security People appealed the Board decision to the Federal Circuit, raising only issues of patentability. The Federal Circuit affirmed and the Supreme Court denied certiorari. Security People then filed suit in district court alleging the Board decision violated its Fifth Amendment due process rights.

The district court dismissed for lack of subject matter jurisdiction, reasoning that the AIA, codified in relevant part at 35 U.S.C. §§ 319, 141(c), provides for broad Federal Circuit review of Board final written decisions, including constitutional challenges, but only allows for review by the Federal Circuit.  Security People appealed the dismissal.  First, Security People argued that the Board lacks authority to consider constitutional claims, and that Security People could not assert constitutional challenges for the first time on appeal because doing so would raise issues requiring factual resolution.  Second, Security People argued that its as-applied challenge ripened only after cancellation of its patent claim following affirmance of the Board decision.

The Federal Circuit affirmed the district court and rejected both arguments advanced by Security People. First, even if the Board could not decide a constitutional question, the Federal Circuit, on review of the Board decision, could do so. Furthermore, the Federal Circuit can take judicial notice of facts, and in the rare situation where facts, beyond those that can be judicially noticed, are needed, the Board can pursue the necessary fact-finding—even if the Board cannot decide the legal questions to which those factual questions are relevant.  Second, the Federal Circuit clarified that a final written decision from the Board is agency action that directly affects the parties, and is thus final. Therefore Security People’s as-applied challenge ripened when the Board issued its final written decision.  

Editor: Paul Stewart