Adam Charnes. Photo by John Disney/Daily Report.

The U.S. Supreme Court on Monday gave the U.S. Patent and Trademark Office more latitude over administrative patent validity challenges under the America Invents Act.

A 7-2 majority held in Thryv v. Click-to-Call Technologies that USPTO has unreviewable authority to decide whether a party properly petitioned under the AIA within a year of being sued for patent infringement, or was in privity with a supplier, business partner or other party who had been sued.

That isn't sitting well with patent owners, given the one-year time bar is one of the few limitations on the validity challenges, known as inter partes review, which can be brought by anyone at almost any time.

Under Thryv, "IPR challenges to patents that should have never gone forward will proceed without any recourse to patent owners on appeal," said Kramer Levin Naftalis & Frankel partner Irena Royzman.

Or, as dissenting Justice Neil Gorsuch put it, the decision is "another step down the road of ceding core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy."

But Justice Ruth Bader Ginsburg held for the majority that the AIA says explicitly that decisions to institute are unappealable, and that language is consistent with its goal of eliminating bad patents. Letting patent owners tie up proceedings with timeliness appeals would "tug against that objective, wasting the resources spent resolving patentability and leaving bad patents enforceable," Ginsburg wrote.

"We always thought we had the better argument on the plain language of the statute, and the legislative purpose behind it," said Kilpatrick Townsend & Stockton partner Adam Charnes, who had the winning argument for petitioner Thryv Inc.

Or as McDonnell Boehnen Hulbert & Berghoff partner Kevin Noonan put it, the majority didn't want to give patent owners a way to "snatch defeat from the jaws of victory" after going all the way through an IPR proceeding, particularly when the PTO considered a patent invalid on the merits.

Assistant to the Solicitor General Jonathan Ellis argued on behalf of the USPTO, which also was a party to the case, and Daniel Geyser of Geyser PC in Dallas argued for Click-to-Call.

Monday's ruling will change the playing field at the Federal Circuit. Facebook Inc. will be one immediate beneficiary. It lost a high-profile time-bar decision to Windy City Innovations LLC in March. Although it didn't raise the issue in its original appeal, Facebook, anticipating the Thryv decision, filed a petition for en banc review Friday, arguing that the Federal Circuit lacked jurisdiction to review the PTAB's decision.

Thryv will also shift the spotlight to the PTO's Precedential Opinion Panel, on which PTO management, including Director Andrei Iancu, exercises discretionary review over panel decisions.

"The decisions of the PTAB's Precedential Opinion Panel will now have outsized importance when it comes to institution decisions," said Ropes & Gray partner Matthew Rizzolo.

The Federal Circuit had concluded in the Facebook case that it did not owe any deference to POP decisions. Now POP will have the final word on institution decisions.

The dispute decided Monday stretches back 20 years. A predecessor of Thryv sued a licensee of a Click-to-Call patent on making anonymous telephone calls in 2001. The case was dismissed without prejudice soon thereafter.

When Thryv petitioned for IPR in 2013, Click-to-Call argued it was a decade too late, because the AIA says that an IPR may not be instituted "more than one year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent."

The PTO's Patent Trial and Appeal Board instituted proceedings anyway, on the theory that a voluntary dismissal without prejudice is treated as if the suit never was filed. The government conceded before the Supreme Court that that reasoning was mistaken, but both Thryv and the PTO argued that the decision nevertheless should have been insulated from review.

Ginsburg pointed to language in the AIA that renders the initial decision to institute IPR proceedings "final and nonappealable." The court held in 2016′s Cuozzo v. Lee that that language overcomes the strong presumption in favor of judicial review of administrative proceedings.

In a portion of the decision that two members of the majority—Chief Justice John Roberts Jr. and Justice Samuel Alito Jr.—didn't join, Ginsburg added that the AIA's goal of weeding out bad patents reinforces her conclusion. After all, patent owners need to bring a timeliness challenge only if their patents are ruled invalid. "[I]f the institution decision is reversed, then the agency's work will be undone and the canceled patent claims resurrected," Ginsburg wrote.

Gorsuch dissented, arguing that the time bar is "both a constraint on the agency's power and a valuable guarantee that a patent owner must battle the same foe only once." The PTO should not have "freewheeling authority" to interpret it, he wrote.

He said the court had made "a wrong turn" two years ago when it acquiesced to the AIA in Oil States v. Greene's Energy, a decision he (and Roberts) dissented from. Thryv v. Click-to-Call "takes us further down the road of handing over judicial powers involving the disposition of individual rights to executive agency officials," Gorsuch wrote.

One question left hanging by Monday's decision is whether the PTAB will now start approaching institution decisions differently, and whether it will continue to follow case law the Federal Circuit has handed down on institution-related decisions over the last few years.

Womble Bond Dickinson partner Brenton Babcock said he doesn't expect dramatic changes. But the PTAB's APJs have disagreements about the law occasionally, and, like any other judges, they sometimes make mistakes. The problem from his point of view is that "when you say to a judge, 'You're not going to be reviewed on this,' it creates a sense of unfairness" for any losing party, whether they're right or wrong.

Babcock said this could pose challenges for PTO Director Iancu, who has tried to restore a sense of balance between petitioners and patent owners during his tenure.

Rizzolo said he wouldn't anticipate any significant changes in the short term. But "you could see it changing when the director changes. This decision puts more power into the hands of the director," he said.