Federal Circuit Again Defers to PTO, Granting PTAB Broad Discretion Where Statute Offers Little

Last week we posted about the Federal Circuit’s decision in In re Cuozzo Speed Techs., LLC, deferring to the PTAB’s application of the “broadest reasonable interpretation” standard in IPR proceedings.  The Federal Circuit recently gave deference to the PTAB in another context in Redline Detection LLC v. Star Envirotech Inc., granting the PTAB discretion in deciding whether to grant requests to file supplemental information in IPRs, even when the request satisfies all of the listed regulatory requirements.  This continues a trend of the Federal Circuit deferring to the PTO’s statutory and regulatory interpretations.

Rule 37 C.F.R. § 42.123(a) permits petitioners to move for permission to submit “supplemental information” after the PTAB has granted a petition if (1) a request is made within one month of institution, and (2) the supplemental information is relevant to an instituted claim.  The regulation does not identify any other requirements.  In contrast, §§ 123(b)-(c), which provide for submitting information more than one month after institution, and information that is not relevant to an instituted claim, require the moving party to show (1) why the information could not have been submitted earlier, and (2) why admitting such information is in the interest of justice.  Neither of these requirements appear in subsection (a).

In the case at hand, the petitioner, Redline, filed a Motion for Supplemental Disclosure of New Exhibits less than a month after institution.  Redline’s original petition did not include an expert report (a cost saving tactic), and the proposed supplementation included a 60-page expert declaration limited to the instituted claims.  The PTAB rejected Redline’s motion, stating that it had discretion to do so under 37 C.F.R. § 42.123(a).  The PTAB found that all of the supplemental information could have been submitted earlier along with the petition, and that Redline’s cost and efficiency argument was not a sufficient basis for admitting the information.

Redline appealed, arguing that the PTAB was improperly reading the requirements of §§ 123(b)-(c) into § 123(a), namely why the information could not have been submitted earlier and why its admission is in the interest of justice.

In affirming the PTAB’s decision, the Federal Circuit gave deference to the PTAB’s interpretation of its own rules.  Among other things, the Federal Circuit noted (1) that the plain language of § 123(a) did not preclude the application of other general governing regulations, and (2) § 123 is also informed by 37 C.F.R. Part 42, Subpart A, which requires PTO regulations to be construed for the “just, speedy, and inexpensive resolution of every proceeding.”  Nothing in the regulatory history or the PTAB’s other decisions suggested that the PTAB should not be able to exercise such discretion in the management of its trials.

Redline continues the Federal Circuit’s recent practice of deferring to the PTAB in deciding the proper rules and standards that govern its trials, suggesting it may be difficult to appeal procedural rulings of the PTAB.

Redline also reinforces the need for petitioners to put it all on the table at the petition stage in IPR proceedings.  Given the page limitations of petitions, it also suggests a strategy of focusing on one’s best arguments, rather than trying to present all possible arguments to the PTAB in a petition—a half-developed ground for institution may not be able to be further developed later.