We Shall fight in the Fields and in the Streets, We Shall Fight in the Hills; We Shall Never Surrender.

In Papst Licensing GmbH & Co. KG v. Samsung Electronics America, Inc., [2018-1777] (May 23, 2019), the Federal Circuit affirmed the PTAB’s determination that claims 1–38 and 43–45 of Papst’s U.S. Patent No. 9,189,437 are unpatentable for obviousness. The ‘437 patent, titled “Analog Data Generating and Processing Device Having a Multi-Use Automatic Processor” is directed to an interface device for communication between a data device (on one side of the inter-face) and a host computer (on the other).

The Federal Circuit noted that there were several other inter partes reviews and corresponding appeals relevant to this proceeding, in particular, six weeks before the Board rendered its ’437 Patent Decision, the Board rendered final written decisions in two other IPRs (requested by Samsung among other petitioners) involving two other Papst-owned patents (U.S. Patent Nos. 8,966,144 and 8,504,746) which share a specification with the ’437 patent and contain claim terms related to those involved in the the appeal. While Papst initially appealed those decisions, it later voluntarily dismissed those appeals, which had the effect of making those decisions final.

The Federal Circuit noted that it has held that issue preclusion doctrine can apply to the Patent Trial and Appeal Board’s decision in an IPR once it becomes final. While there is an exception to the preclusion doctrine where the prior matter was of disparately low value compared to the current proceeding, the Federal Circuit found that this did not apply because Papst fully litigated the prior case up to the eve or oral argument, and did not avail itself of the opportunity to simply disclaim the claims, if they were not worth fighting for.

Upon examining whether issue preclusion did in fact apply, the Federal Circuit noted that the Board’s ruling in the prior decision was not just materially identical to the Board’s claim construction ruling in the present case, it was essential to that determination. The Federal Circuit thus concluded that issue preclusion therefore applies to the only two issues properly preserved for and presented on appeal, and affirmed the Board’s decision on that basis.

The Federal Circuit gratuitously continued, however, to confirm that Papst’s would have failed on the merits, even apart from issue preclusion, finding substantial evidence supported the Board’s decision.

The clear lesson taught the Federal Circuit is that when dealing with multiple post grant proceedings on related patents — or at least patents with related claim elements — the parties must consider how the timing and manner of dropping portions of the proceedings might create issue preclusion. Winston Churchill once famously said:

We shall defend our island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender.

So, too, in patent disputes, sometimes, surrender is not an option.

Another IPR Petitioner Had No Standing to Appeal; Does Estoppel Apply to Such Petitioners?

In AVX Corp. v. Presidio Components, Inc., [2018-1106] (May 13, 2019), the Federal Circuit dismissed the appeal of a PTAB Final Written Decision because the Petitioner/Appellant lacked judicial standing to appeal.

The Federal Circuit noted that because the Constitution limits its grant of the “judicial power” to “Cases” or “Controversies,” U.S. Const., Art. III, § 2, any party that appeals to it must have standing under Article III before it can consider the merits of the case. Thus in IPR appeals, an appellant must . supply the requisite proof of an injury in fact when it seeks review of a Final Written Decision.

AVX argued that it is injured by the Board’s rejection of its obviousness challenges to the upheld claims because of the statutory estoppel provision, 35 U.S.C. § 315(e). The Federal Circuit rejected this argument because it has previously estoppel as a sufficient basis for standing, and because it has yet to decide whether estoppel applies to Petitioners who lack Article III standing to appeal.

AVX also argued that it was injured by the decision because it reduces its ability to compete with the patent owner, citing decisions that, in nonpatent contexts, have found “competitor standing” to challenge certain government actions. . The Federal Circuit noted that in all the cases in which standing rested on competitive harm, the challenged government action non-speculatively threatened economic injury to the challenger by the ordinary operation of economic forces. The Federal Circuit found the government action in an IPR was quite different. The Federal Circuit said that government action in an IPR is the upholding of specific patent claims, which does not address prices or introduce new competitors, but rather give exclusivity rights over precisely defined product features.

The Federal Circuit said a patent claim could have a harmful competitive effect on a would-be challenger if the challenger was currently using the claimed features or nonspeculatively planning to do so in competition, i.e., if the claim would block the challenger’s own current or nonspeculative actions in the rivalry for sales. However taking all of AVX’s allegations as true, the Federal Circuit concluded that AVX has not shown that it is engaging in, or has nonspeculative plans to engage in, conduct even arguably covered by the upheld claims of the ʼ639 patent.

The Federal Circuit dismissed the appeal. However the Federal Circuit’s suggestion that estoppel might not apply to IPR’s where the petitioner lacks standing to appeal causes one pause. If this turns out to be the case, a patent challenger might be better off concealing its plans to make a competitive product, so that it can take a “free swing” at the patent before the PTAB, without incurring the cost of estoppel from an adverse decision.

Abandoning Infringing Conduct Caused Loss of Standing to Appeal IPR

Momenta Pharmaceuticals, Inc. v. Bristol-Myers Squibb Co., [2017-1694] (February 7, 2019), the Federal Circuit dismissed the appeal of the PTAB Final Written Decision sustaining patentability of claims 1 through 15 (all the claims) of United States Patent No. 8,476,239, for lack of standing/jurisdiction and for mootness.

The ‘239 patent covered compounds under the generic name “abatacept” and the BMS brand name Orencia®, used in treatment of immune system disorders such as rheumatoid arthritis. Momenta’s proposed product failed its Phase 1 clinical trials and had been withdrawn, so BMS moved to dismiss the appeal because Momenta no longer had standing. Momenta responded that it had not abandoned its intent to produce a counterpart and that the ’239 Patent is an obstacle to these activities, and that it is injured by the estoppel provision of 35 U.S.C. § 315(e). Momenta cited to the “relaxed” standard for Article III compliance when the right of appeal is established by statute.

The Federal Circuit said that Congress cannot erase Article III’s standing requirements by statute. Noting that Momenta had initially stressed that it had spent millions of dollars in its development of a biosimilar, upon Momenta’s termination of all potentially infringing activity, Momenta has not shown “an invasion of a legally protected interest” that is “actual or imminent, not conjectural or hypothetical.” The Federal Circuit concluded that upon abandoning development of this product, Momenta has no legally protected interest in the validity of the ’239 Patent, and there is no real need to exercise the power of judicial review.

The Federal Circuit rejected the Momenta’s argument that the estoppel effect of the decision created stating, noting that estoppel cannot constitute an injury-in-fact when Momenta “is not engaged in any activity that would give rise to a possible infringement suit.”

The Federal Circuit further found that Momenta’s abandonment of the development of a biosimilar made the appeal moot: the cessation of potential infringement means that Momenta no longer has the potential for injury, thereby mooting the inquiry.

Collateral Estoppel Exposes the Failure to have Legitimate Plan B

In Virtnex Inc. v. Apple, Inc., [2017-2490, 2017-2494] (December 10, 2018) the Federal Circuit affirmed the PTAB that claims 1–11, 14–25, and 28–30 of U.S. Patent No. 8,504,696 were unpatentable as obvious., noting that VirnetX was collaterally estopped from relitigating the threshold issue of whether prior art reference was a printed publication and because VirnetX did not preserve the only remaining issue of whether inter partes review procedures apply retroactively to patents that were filed before Congress enacted the America Invents Act.

During the pendency of VirnetX’s appeal, the Federal Circuit summarily affirmed seven final written decisions between VirnetX Inc. and Apple in which the Board found that RFC 2401 was a printed publication.  The Federal Circuit said that Rule 36 summary dispositions could be the basis collateral estoppel, and that the only issue was whether the printed publication issue was necessary or essential to the judgment in the prior cases.  The Federal Circuit held that it was.

VirnetX also argued that it preserved in its opening brief the issue of whether inter partes review procedures apply retroactively to patents that were filed before Congress enacted the AIA, pointing to a single paragraph in its Opening Brief, filed prior to the Supreme Court’s decision in Oil States.  The Federal Circuit said that this paragraph raised the specific question later decided in Oil States, and under a very generous reading, the paragraph also arguably raises a general challenge under the Seventh Amendment, but it in no way provides any arguments specifically preserving the retroactivity issue.

The Federal Circuit concluded that VirnetX did not preserve the issue of whether inter partes review procedures apply retroactively to patents that were filed before Congress enacted the AIA and that, therefore, the conclusion that VirnetX was collaterally estopped from raising the printed
publication issue resolved all other issues in the appeal.  The Federal Circuit affirmed.

The lesson, of course, is to correctly predict the future and simply preserve the issues you will need.  Virtnex can hardly be faulted for not preserving the issue, when they had a more substantive issue before it, buy it always pays to have a legitimate Plan B.

“Capable of” Construction (Rather than “Configured to” Construction) Dooms Apparatus, but Not Method Claims

In Parkervision, Inc. v. Qualcomm Incorporated, [2017-2012, 2017-2013, 2017-2014, 2017-2074] (September 13, 2018), the Federal Circuit affirmed the PTAB’s determination in related inter partes review proceedings, The certain apparatus claims of U.S. Patent No. 6,091,940, generally related to telecommunications devices,  were unpatentable as obvious under 35 U.S.C. § 103(a), and that certain method claims were not unpatentable.

The Federal Circuit rejected the argument that the Board erred by basing its
patentability decisions on theories and evidence regarding the phrase “plurality of harmonics” that Qualcomm did not present in its petitions.  The case came down to whether the claim language required the production of the “plurality of harmonics,” or simply the capability of producing the “plurality of harmonics” —  The Federal Circuit found the claim language merely required the capability of producing the plurality of harmonics, which was met by the prior art that was similarly capable.

The method claims presented a different story —  while Qualcomm was only required to identify a prior art reference that discloses an apparatus “capable of” performing
the recited functions to prove that the apparatus claims would have been obvious, more was required with respect to the method claims. Specifically, Qualcomm needed to present evidence and argument that a person of ordinary skill would have been motivated to operate the prior art in a manner that satisfied the “plurality of harmonics”
limitation, which Qualcomm failed to do.

Do Over — Different Evidence and Different Evidentiary Standard Allow IPR to Reach Different Conclusion of Validity than ITC

in Nobel Biocare Services AG v. Instradent USA, Inc., [2017-2256] (September 13, 2018), the Federal Circuit affirmed the PTAB’s determination that claims 1-5 and 19 of U. S. Patent No. 8,714,977,directed to dental implants, were anticipated.

The undisputed critical date of the ‘977 patent was May 23, 2003, and Instradent alleged that the claims were anticipated by an ABT “Product Catalog” with the date
“March 2003” on the cover.  The ITC, applying a clear and convincing evidentiary standard, had previously determined that the claims were not anticipated, and the Federal Circuit affirmed.

Meanwhile, Instradent petitioned for IPR.  While the Board adopted the same claim construction as the ITC, and considered the same evidence presented to the ITC, the Board also considered new evidence not considered by the ITC, including the declarations and deposition testimony of Hantman and Chakir that the catalog was available to the industry in March 2003.  The Board determined that a preponderance of the evidence establishes that the ABT Catalog qualifies as a prior art printed publication under 35 U.S.C. § 102(b).

On appeal, the parties disputed whether the ABT Catalog qualifies
as a “printed publication” under § 102(b).  The Federal Circuit said that whether a reference qualifies as a “printed publication” is a legal conclusion based on underlying factual findings, including The parties dispute whether the ABT Catalog qualifies
as a “printed publication” under pre-AIA § 102(b). Whether a reference qualifies as a “printed publication” is a legal conclusion based on underlying factual findings, including whether a reference was publicly accessible. Public accessibility has been called the touchstone in determining whether a reference constitutes a “printed publication.”  A reference will be considered publicly accessible if it was disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence can locate it.

The Federal Circuit noted that it was not bound by its prior affirmance of the ITC’s holding that there was insufficient evidence to find pre-critical date public accessibility, observing that the evidentiary standard in IPRs, “preponderance of the evidence” is different from the higher standard applicable in ITC proceedings.  The Federal Circuit further noted that the Board also had more evidence on this issue than what was before the ITC.  Finally the Federal Circuit said that under the substantial evidence standard, the inconsistent conclusions from the evidence does not prevent an administrative agency’s finding from being supported by substantial evidence.

The Federal Circuit agreed with Instradent that substantial evidence supported the Board’s finding that the ABT Catalog was publicly accessible prior to the critical date. The Board credited Chakir and Hantman’s testimony that Chakir obtained a copy of the ABT Catalog at the March 2003 IDS Conference and that Hantman retained that copy in
his records thereafter. Furthermore, Hantman’s declaration included excerpts of his copy of the ABT Catalog taken from his files. The Board found that Hantman’s copy of the ABT Catalog and the copy offered as prior art by Instradent in the IPR had identical pages except for some handwriting on the cover of Hantman’s copy.

The Federal Circuit noted that corroboration is required of any witness whose testimony alone is asserted to invalidate a patent, regardless of his or her level of interest.  Corroborating evidence may include documentary or testimonial evidence, and circumstantial evidence can be sufficient corroboration.  The Federal Circuit listed eight factors to be considered in evaluating corroboration:

(1) the relationship between the corroborating witness and the alleged prior user,
(2) the time period between the event and trial,
(3) the interest of the corroborating witness in the subject matter in suit,
(4) contradiction or impeachment of the witness’ testimony,
(5) the extent and details of the corroborating testimony,
(6) the witness’ familiarity with the subject matter of the patented invention and the prior use,
(7) probability that a prior use could occur considering the state of the art at the time,
(8) impact of the invention on the industry, and the commercial value of its practice.

Applying a “rule of reason” analysis to the corroboration requirement, which “involves an assessment of the totality of the circumstances including an evaluation of all pertinent evidence, the Federal Circuit held the corroboration to be sufficient, noting “there are no hard and fast rules as to what constitutes sufficient corroboration, and each case must be decided on its own facts.”

The Federal Circuit rejected the challenges to the claim construction, and affirmed the Board.

 

 

Change In Construction of Claims from Petition Required Board to Allow Petitioner to Respond

In Ericsson Inc. v. Intellectual Ventures I LLC, [2017-1521] (August 27, 2018), the Court of Appeals for the Federal Circuit held that the PTAB did not consider portions of Ericsson’s Reply, and vacated and remanded the Final Written decision that claims 1–3, 6–9, and 12–14 of U.S. Patent No. 5,602,831 were not unpatentable under 35 U.S.C. § 103.

Under PTO regulations, the Board is entitled to strike arguments improperly raised for the first time in a reply. Such decisions related to compliance with the Board’s procedures are reviewed for an abuse of discretion.  An abuse of discretion is found if the decision: (1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law; (3) rests on clearly erroneous fact finding; or (4) involves a record that contains no evidence on which the Board could rationally base its decision.

Ericsson argued on pages 13 and 14 of its Reply that, given the admitted state of the art regarding interleaving disclosed in the patent at issue, the prior art’s teachings render obvious the claimed invention.  The Board characterized this portion of Ericsson’s Reply as raising a new theory of obviousness, one that was not addressed in the Petition or
responding to arguments raised in the Patent Owner Response, but the Federal Circuit disagreed, noting the portions of the Reply the Board declined to consider expressly follow from the contentions raised in the Petition.

The Federal Circuit found that the Board’s error was parsing Ericsson’s arguments
on reply with too fine of a filter. The error was exacerbated by the fact that the significance arose after the Petition was filed, in that the Board adopted a different
construction of the terms after the Petition instituting inter partes review was granted, and the issue was the essential basis of the Board’s decision in concluding that  the claim had not been shown unpatentable, Ericsson should have been given an opportunity to respond.  Undoubtedly, this was a special case in which Petitioner, Patent Owner, and the Board all initially applied the broadest reasonable interpretation claim construction standard (despite the fact that the patent had expired when it filed the petition), and only after institution applied Phillips instead. In light of these changed circumstances, the Board revisited its approach to the claims in light of this error, and Ericsson likewise deserved an opportunity to do the same.

The Federal Circuit said that its decision should not be viewed as changing or challenging the Board’s practice of limiting the scope of replies pursuant to its regulations; precedent supports the Board’s discretion to reject arguments raised for the first time in a reply.

What has been Served Cannot Be Unserved: §315(b) Time Bar Applies Even if the Suit is Subsequently Withdrawn

In Click-to-Call Technologies, LP v. Ingenio, Inc., [2015-1242] (August 16, 2018), the Federal Circuit concluded that the Board committed legal error in rendering its § 315(b) determination, and vacated the Board’s Final Written Decision and remanded with instructions to dismiss IPR2013-00312.

With respect to the § 315(b) issue, the Board acknowledged that Ingenio was served with a complaint alleging infringement of the ’836 patent on June 8, 2001.  The Board nonetheless concluded that Ingenio had not been served more than a year before the May 28, 2013, filing of the Petition because the Federal Circuit consistently has interpreted the effect of such dismissals as leaving the parties as though the action had never been brought.  The issue before the Federal Circuit was whether the Board
erred in interpreting the phrase “served with a complaint alleging infringement of [a] patent” recited in § 315(b) such that the voluntary dismissal without prejudice of the
civil action in which the complaint was served “does not trigger” the bar.

The Federal Circuit’s analysis began with the language of §315(b), noting that the plain and unambiguous language stated an IPR “may not be instituted if the petition
requesting the proceeding is filed more than 1 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 Federal Circuit observed that the statute does not contain any exceptions or exemptions for complaints served in civil actions that are
subsequently dismissed, with or without prejudice. Further the statute does it contain any indication that the application of § 315(b) is subject to any subsequent act or ruling. Instead, the provision unambiguously precludes the Director from instituting an IPR if the petition seeking institution is filed more than one year after the petitioner, real party in interest, or privy of the petitioner “is served with a complaint” alleging patent infringement.  The Federal Circuit concluded: “Simply put, § 315(b)’s time bar is implicated once a party receives notice through official delivery of a complaint in a civil
action, irrespective of subsequent events.”

The Federal Circuit said that courts must avoid adding conditions to the applicability of a statute that do not appear in the provision’s text. The Federal Circuit noted that Congress specifically addressed the effect of a dismissal of an IPR petitioner’s district court action in § 315(a)(2), but did not include any similar language in § 315(b). Congress also demonstrated that it knew how to provide an exception to the time bar by
including a second sentence in the provision: “The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).” 35
U.S.C. § 315(b). Similarly, Congress could have chosen to include a variation of the phrase “unless the action in which the complaint was served was later dismissed
without prejudice,” but it did not do so. The Federal Circuit rejected the Board’s effort to graft this additional language into § 315(b).

The Federal Circuit further said that the legislative history of § 315(b) further supports the understanding that its time bar concerns only the date on which the complaint was formally served.

Considering Chevron deference, the Federal Circuit found that the text of the statute answers the question — § 315(b) clearly and unmistakably considers only the date
on which the petitioner, its privy, or a real party in interest was properly served with a complaint — there is no need to  proceed to Chevron’s second step.

The Federal Circuit rejected the Board’s interpretation of the text of § 315(b) for failing to recognize the statute was agnostic as to the “effect” of the service—i.e., what events
transpired after the defendant was served.

The Federal Circuit also rejected the Petitioner’s arguments that, because the claims of
the ’836 patent were materially changed during a subsequent ex parte reexamination, neither they nor any other entity was served with a complaint alleging infringement
of this patent more than one year before the IPR petition was filed.  The Federal Circuit pointing out that unlike reissue, reexamination does not result in the surrender of the original patent and the issuance of a new patent.

The Federal Circuit also rejected the Petitioner’s argument that some of the petitioners were not barred, noting four entities declared themselves as “the Petitioner” in their sole IPR petition, and certified that each was a “real party in interest.” The Federal Circuit said that under these circumstances, under current law, Petitioners are properly treated as an undifferentiated unit that filed an untimely petition.”

You Can’t Sidestep Nonappealability of Institution Decisions with Mandamus

In re: Power Integrations, Inc., [2018-144, 2018-145, 2018-146, 2018-147] (August 16, 2018), the Federal Circuit denied Power Integrations, Inc. petitions for writs of mandamus, challenging . The petitions challenge the decisions of the Patent Trial and Appeal Board denying the institution of inter partes review of claims from three patents owned by Semiconductor Components Industries, LLC.

The Federal Circuit noted that the statute prohibits appeals of Board decisions not to institute, and said that Power Integrations was seeking to obtain review of the non-institution decisions through petitions for mandamus covering all four of the Board’s orders. However, a writ of mandamus is not intended to be simply an alternative means of obtaining appellate relief, particularly where relief by appeal has been specifically prohibited by Congress.  To obtain the remedy of mandamus, a party must show that its right to issuance of the writ is “clear and indisputable,” and that there are no adequate alternative legal channels through which it may obtain that relief. Moreover, “even if the first two prerequisites have been met, the issuing court, in the exercise of its discretion,
must be satisfied that the writ is appropriate under the circumstances.”

The Federal Circuit held that mandamus does not lie in this case, both because Power Integration has not shown a clear and indisputable right to issuance of the writ and because relief by way of mandamus would not be appropriate here. The statutory prohibition on appeals from decisions not to institute inter partes review cannot be sidestepped simply by styling the request for review as a petition for mandamus.

While Power Integration complained the Board did not explain itself well enough, the Federal Circuit said that Power Integration understands perfectly well what the Board did, but it regards the Board’s actions as legally and factually incorrect, and it seeks this
court’s intervention to overturn the Board’s decisions not to institute inter partes review. The Federal Circuit found what Power Integration ultimately wants is not just to be given a more complete explanation of the Board’s action, but for the Federal Circuit to review that decision on the merits.  The Federal Circuit said that the essence of Power Integration’s claim— that the Board’s analysis “is premised on an incorrect legal standard or a misapplication of that standard”—is nothing more than a challenge to the Board’s conclusion that the information presented in the petitions did not warrant review.

A disappointed petitioner cannot by-pass the statutory bar on appellate review simply by directing its challenge to asserted procedural irregularities rather than to the substance of the non-institution ruling.  This is not to say that mandamus will never lie in response to action by the agency relating to the noninstitution of inter partes review. The circumstances described by the Supreme Court in Cuozzo as illustrations of issues for which an appeal might be justified (e.g., constitutional issues, issues involving questions outside the scope of section 314(d), and actions by the agency beyond its statutory limits) would be potential candidates for mandamus review as well.  However this case involved no issues extraneous to the application of patent law principles of unpatentability based on printed publications, nor does it involve any “shenanigans” on the part of the Board that might justify appellate review or review by mandamus.

Federal Circuit Vacates Another IPR as Time-Barred

Luminara Worldwide, LLC v. Iancu, [2017-1629, 2017-1631, 2017-1633] (August 16, 2018), the Federal Circuit affirmed the PTAB’s invalidation of claims of two of Luminara’s patent, and as to the third, it vacated the Final Written Decision, and remanding for dismissal of that IPR, because of the section §315(b) time-bar.

In instituting the IPR, the Board rejected the argument was untimely under §315(b) because the first action had been voluntarily dismissed without prejudice.  Because the section 315(b) time-bar applies when the underlying complaint alleging infringement has
been voluntarily dismissed without prejudice, the Federal Circuit said the Board erred in instituting the IPR challenging the ’319 patent, vacating the Board’s final written decision as to the ’319 IPR and remand for dismissal of that IPR.

As to the obviousness in the other two IPRs, the Federal Circuit found that these were supported by substantial evidence.