In NIDEC Motor Corp. v. Zhongshan Broad Ocean Motor Co. Ltd., [2016-2321] (August 22, 2017), the Federal Circuit affirmed the Board’s determination that claims 1–3, 8, 9, 12, 16, and 19 of U.S. Patent No. 7,626,349 are invalid as anticipated or obvious.

The Board instituted review on the ground of obviousness over Bessler and Kocybik, but declined to institute review on the ground of anticipation
by Hideji, because Broad Ocean had failed to provide an affidavit attesting to the accuracy of the submitted translation of Hideji as required by 37 C.F.R. § 42.63(b).

Broad Ocean filed a second petition again asserting that the challenged claims are anticipated by Hideji, including the required affidavit, and requesting that the Board join the Second Petition with Broad Ocean’s already-instituted IPR involving the First Petition.  The Board again declined to institute review, this time on the grounds that the Petition was time-barred.

Broad Ocean requested a rehearing of the panel’s decision, which was granted by an expanded panel of five Administrative Patent Judges.  The expanded administrative panel set aside the original panel’s decision and
concluded that § 315(c) permits the joinder with the original IPR.

On appeal the parties agreed that, if the Federal Circuit affirmed as to obviousness, it need not address Nidec’s challenges to the procedural aspects of the Board’s joinder decision and its holding concerning anticipation by Hideji.  Because the Federal Circuit affirmed as to invalidity for obviousness, it did not have to reach the Board’s joinder decision.

Judges Dyk and Wallach wrote separate to express their concerns as to the United States Patent and Trademark Office’s position on joinder and expanded panels.  Although the panel did not decide the  propriety of joinder, the judges had “serious questions” as to the Board’s (and the Director’s) interpretation of the relevant statutes and current practices.  Judges Dyk and Wallach think it unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar
by adding time-barred issues to an otherwise timely proceeding.

Of greater note is Judges Dyk and Wallach’s concern about the PTO’s practice of expanding administrative panels to decide requests for rehearing.  Broad Ocean requested rehearing and further requested that the rehearing be decided by an expanded panel.  While Judges Dyk and Wallach recognized the importance of achieving uniformity in PTO decisions, they questioned whether the practice of expanding panels
where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.

It is difficult to image a practice more offensive to fair adjudication then adding judges to a panel to achieve a desired outcome.  It is outrageous to make parties participate in an adjudication where the outcome is predetermined by court packing.


The Board can Rely on a Party’s Arguments in an IPR, as Long as it Explains Why

In Outdry Technologies Corp. v. Geox S.P.A., [2016-1769] (June 16, 2017), the Federal Circuit affirmed the Board’s determination that claims 1–15 of U.S. Patent No. 6,855,171 would have been obvious over a combination of prior art.

The ‘171 patents claims methods of waterproofing leather, particularly for the manufacture of shoes, clothes, or leather accessories by lining the interior surface of the leather with a semipermeable membrane.  The Board found that one reference showed all of the elements of the claimed method except for the size and density of the adhesive dots, and that the other references taught the size and density of the adhesive dots.

The Federal Circuit agreed with the Board’s construction of “directly pressing” as to mean “applying pressure without any intervening
materials or layers other than the recited adhesive.”  The Federal Circuit also discounted the “process for waterproofing leather” language of the claim, because it was in the preamble and was “simply a statement of intended use, not a separate claim limitation.”

The Federal Circuit rejected the patent owner’s argument that the Board failed to provide adequate motivation to combine the references.  After reviewing cases (Rovalma, Van Os, Arendi, Cutsforth, NuVasive, and Icon Health) where the Board did fail to provide adequate motivation, the Federal Circuit found that the Boards decision did not suffer from similar deficiencies.  The Federal Circuit said that the Board clearly articulated Petitioner’s arguments for why a person of ordinary skill in the art would have been motivated to modify the process of adhering dots to create waterproof and breathable leather with the secondary references disclosed glue patterns.  The Federal Circuit concluded that the Board engaged in reasoned decision making and sufficiently articulated its analysis in its opinion to permit review.

The Federal Circuit found that the Board’s reliance on petitioner’s arguments did not undermine its otherwise adequate explanation for finding a motivation to combine. The Federal Circuit noted that the Board did not reject the patent owner’s positions without clarity as to why it found petitioner’s arguments persuasive. It did not merely incorporate petitioner’s petition by reference, leaving uncertainty as to which positions the Board was adopting as its own. Nor was it other unclear what evidence the Board may or may not have relied
on to find a motivation to combine. The Federal Circuit said that the Board is “permitted to credit a party’s argument as part of its reasoned explanation of its factual findings”; it simply must “explain why it accepts the prevailing argument.”


General Statements in Petition and Institution Decision Did Not Give Patent Owner Fair Notice of the Grounds of Invalidity in the Final Written Decision

In Emerachem Holdings, LLC v. Volkswagen Group of America, Inc., [2016-1984] (June 15, 2017), the Federal Circuit affirmed the Board’s decision that claims 1–2, 4–14, and 17–19 of U.S. Patent No. 5,599,758 were obvious, and vacated and remand as to claims 3, 16, and 20.

The ‘558 patent claims methods for regenerating a catalyst/absorber that has absorbed and oxidized nitrates and nitrites from the combustion gases of an engine.  The regeneration can be carried out in situ, without
removing and replacing the catalyst with a fresh, unreacted one.

The patent owner attempted to remove a reference under 102(e), with the declaration of the inventor, but the Board found the evidence insufficient.  The Federal Circuit agreed, noting that corroboration is always required of an inventor’s testimony about invention, although the level of corroboration depends upon the circumstances.

The patent owner was more successful in its argument under the APA that it was denied adequate Notice and Opportunity to Respond. Petitioner’s provided detailed claim charts, but only cited to a single reference for dependent claims 3, 16, and 20, and the Board’s institution decision only cited the same one reference as to these claims.  However the final written decision relied upon a different reference.

The Federal Circuit stated that in a formal adjudication, like an IPR, the APA imposes particular procedural requirements on the USPTO.  In particular, the agency must timely inform the patent owner of the matters of fact and law asserted, and give all interested parties the opportunity to submit and consider facts and arguments, and allow a party “to
submit rebuttal evidence as may be required for a full and true disclosure of the facts. 5 U.S.C. §§ 554(b)–(c), 556(d).

The Federal Circuit found that the Board denied patent owner its procedural rights guaranteed by the APA by relying on a new reference for its disclosure of limitations in dependent claims 3, 16, and 20.  The Federal Circuit rejected petitioner’s arguments that the patent owner had adequate notice of the reference from general comments about obviousness in the Petition.  The Federal Circuit also rejected petitioner’s arguments that the patent owner had adequate notice from general statements in the Institution Decision.  The Federal Circuit said that given the specificity with which the petition’s claim chart and the Institution Decision’s list of claims expressly identified particular references’ disclosures for some claims and not for others, it cannot be the case that the general statements relied upon provided sufficient notice that Stiles could be applied to all claims.

The Federal Circuit distinguished Cuozzo, because the institution decision gave the patentee notice of the prior art combination that
the final decision relied upon, even though the petition did not. In the current case, neither the petition nor the Institution Decision put the patentee on notice of the reference that would be used to reject claims 3, 16, and 20.  The Federal Circuit also distinguished Genzyme because  the patent owner had the opportunity to address the relied upon by the Board.

The Federal Circuit explained that it was not holding that the Board is constricted in its final written decision to citing only the portions of a reference cited in its Institution Decision — “word-for-word parity between the institution and final written decisions” is not required.  The questions was not whether the Board cited a different passage of a reference than what it specifically cited in the Institution Decision, rather the question was whether the Board provided adequate notice and opportunity to respond to the reference being used to reject claims 3, 16, and 20, given the specificity with which the Board itemized the
challenged claims with specific grounds for rejection in the Institution Decision. On this question, the Federal Circuit said that the Board did not.

“Means” Does Not Always Mean “Means Plus Function”

In Skky, Inc. v. Mindgeek, S.A.R.L., [2016-2018] (June 7, 2017), the Federal Circuit affirmed the PTAB decision in IPR2014-01236 that all of the challenged claims in  U.S. Patent 7,548,875 were invalid for obviousness.

The ‘875 patent relates to a method of delivering audio and/or visual files to a wireless device.  The prosecution lasted almost seven years, and the claims were only allowed after they were amended to recite a “wireless device means.”  The Board determined that “wireless device means” was not a means plus function element, but even if it was it did not require a device with multiple processors.

The Federal Circuit said that in determining whether a claim term invokes § 112 ¶ 6, the essential inquiry is not merely the presence or absence of the word “means” but whether the words of the claim are understood by persons of ordinary skill in the art to have a sufficiently definite meaning as the name for structure.  It is sufficient if the claim term is used in common parlance or by persons of skill in the pertinent art to designate structure, even if the term covers a broad class of structures and even if the term identifies the structures by their function.

The Federal Circuit agreed that We agree with MindGeek that “wireless device means” does not invoke § 112 ¶ 6 because it recites sufficient structure.  Although the term uses the word “means” and so triggers a presumption, the full term recites structure, not functionality. The claims do not recite a function or functions for the wireless device means to perform, and “wireless device” is “used in common parlance . . . to designate structure. The Federal Circuit further found that “wireless device means” did not require multiple processors, noting that at least one disclosed embodiment was exclusively software, and thus it would be improper to construe  “wireless device means” to require multiple processors.

The Federal Circuit found that substantial evidence supported the Board’s claim construction, and its resulting finding of obviousness.


Patent Owner Statements During an IPR Disclaimed Claim Scope

In Aylus Networks, Inc., v. Apple, [2016-1599] (May 11, 2017), the Federal Circuit affirmed summary judgment of non-infringement of U.S. Patent No. RE 44,412 on systems and methods for implementing digital home networks having a control point located on a wide area network.

Apple argued that it did not practice the claim requirement “wherein the CPP logic is invoked to negotiate media content delivery between the MS and the MR” recited in the two asserted claims 2 and 21.  Apple argued that this language required that only the CPP logic is invoked to negotiate media content delivery between the MS and the MR, and based upon this construction the district court granted summary judgment.

In construing the “wherein the CPP logic is invoked to negotiate media content delivery between the MS and the MR” limitation, the district court relied on statements made by Aylus in its preliminary responses to Apple’s petitions for IPR of the ’412 patent, finding these  statements
“akin to prosecution disclaimer.”  On appeal Aylus argued that statements made during an IPR cannot be relied on to support a finding of prosecution disclaimer, and that even if they can, the statements it made did not constitute a clear and unmistakable disclaimer of claim scope.

The Federal Circuit rejected Aylus’s first argument, holding that statements made by a patent owner during an IPR proceeding can be relied on to support a finding of prosecution disclaimer during claim construction.  After briefly reviewing the disclaimer doctrine, and noting that disclaimer have been applied in post-issuance proceedings before the patent office, such as reissues and reexaminations, the Federal Circuit said that extending the prosecution disclaimer doctrine to IPR proceedings will ensure that claims are not argued one way in order to maintain their patentability and in a different way against accused
infringers.  The Federal Circuit noted that several district courts have already held that statements in an IPR can be considered for prosecution disclaimer.  The Federal Circuit also rejected Aylus argument that statements in a Patent Owner’s Preliminary Response don’t count as a disclaimer because they are made pre-institution.

The Federal Circuit then turned to the question of whether Aylus’s statements in the IPR were sufficiently “clear and unmistakable.”  After examining the statements themselves, and the fact that the statements worked — avoiding IPR for the subject claims — the Federal Circuit agreed with the district court that the statements represent
an unequivocal and unambiguous disavowal, and found no
error in the district court’s claim construction.


Not Necessarily Unfair to Reply on Patent Owner’s Submissions in Obviousness Finding, but Board Failed to Provide Adequate Explanation

In Rovolma, S.A. v. Bohler-Edelstahl GmbH & Co., KG, [2016-2233] (May 11, 2017), the Federal Circuit vacated the Board’s Final Written Decision in IPR2015-00150, finding the Board did not set forth its reasoning in sufficient detail to determine whether the Board’s decision was substantively supported and procedurally proper, and remanded the case.

Bohler petitioned for inter partes review of all four claims of U.S. Patent No. 8,557,056, arguing that the claims should be construed to cover the specific chemical compositions described in the specification, regardless of whether they were created according to the recited process steps.  Rovalma successfully argued that the claims should be construed to require the process steps, but the Board then used Rovalma’s evidence of enablement to find the claims obvious.

The Fedeal Circuit noted the importance of clarity with respect to obviousness determinations, and noted that it has repeatedly
insisted on explanations in reviewing the adequacy of the Board’s analysis—both as a matter of obviousness law and as a matter of administrative law.  However, the Federal Circuit found that the Board did not sufficiently lay out the basis for its implicit findings regarding serveral of the process limitations in the claims, noting that the Board simply found that these steps would have been obvious in view of Rovalma’s submissions, with no explanation of the evidentiary basis for those determinations.  The Federal Circuit noted that petitioner did not provide any explanation regarding the process claim elements that the Board could adopt as its own.  The Federal Circuit also found that the Board did not adequately explain what would motivate a person of ordinary skill to make the modifications.  Finally, the Federal Circuit found that Board did not adequately explain why a person of ordinary skill in the art would have reasonably expected success.

The Federal Circuit rejected Rovalma’s argument that the Board was precluded from relying on a patent owner’s submissions in determining that the claims, as construed by Patent Owner, would have been obvious over the Petitioner-asserted prior art.  The Federal Circuit said that this took the rule of Magnum Oil Tools too far.  Magnum Oil Tools rejected the PTO’s position that the Board is free to adopt arguments on behalf of petitioners that could have been, but were not, raised by the petitioner during an IPR, and simply required the Board to base its decision on
arguments that were advanced by a party, and to which the opposing party was given a chance to respond.”  This does not preclude the Board from using submissions of the Patent Owner to support invalidity arguments of which Patent Owner adequate notice and opportunity to be heard.

The Federal Circuit suggested that a Petitioner may commit forfeiture when it receives notice of the Patent Owner’s claim construction (in the Patent Owners’ response) and chooses not to present a case for unpatentability under that construction when it had the opportunity, in its Reply.

As to Rovalma’s challenge that it was not given notice and an opportunity to respond, the Federal Circuit said that because it could not sufficiently determine which inferences the Board drew from Rovalma’s submissions, it would not decide whether the Board violated Rovalma’s procedural rights. The Federal Circuit said that to make that decision, it would need
to be able to determine what evidence the Board relied on to support its implicit factual findings, how the Board interpreted that evidence, and what inferences the Board drew from it.




IPR – The Odds Still Favor Petitioners, and Greatly Favor Smart Petitioners

The USPTO’s most recently published IPR statistics show that the odds still greatly favor the patent challenger:

Given that a settlement (presumably), a request for adverse judgment, and a finding of patentability are all good outcomes for the patent challenger, patent challengers have “won” 58.4% of the time, and when you add in invalidation at least some of the time, then the patent challenger improves its situation 63.9% of the time.

The odds are even better for petitioners who do their homework and present a grantable petition.  For petitions for which trial is instituted, the challengers win 77.8% of the time, and at least improve their situation 86.4% of the time.


Someone Forgot to Tell the PTAB That There is No IPR Estoppel

In Great West Casualty Co. v. Intellectual Ventures II LLC, [IPR2016-01534] (February 15, 2017), the PTAB declined to institute an IPR because petitioners were estopped by their prior challenge to U.S. Patent No. 7,516,177.

The Board noted that the instant Petition was the fifth petition filed by Petitioners challenging claims 11–20 of the ’177 patent. Of the four prior petitions IPR2015-01706 and IPR2015-01707 (“prior completed proceedings”) were the only two of the four petitions for which trial was instituted.  In these, the Board issued final written decisions that claims 11–13 and 15–20 of the ’177 patent were unpatentable.

The current petition is substantively identical to a petition filed by Oracle Corporation and HCC Insurance Holdings, Inc., and Petitioner moved to join the proceedings.

The PTAB began with 35 USC 315(e)(1) which provides that a after a final written decision, Petitioner may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.  The PTAB noted that 35 U.S.C. 315(e) applies estoppel on a claim-by-claim basis.

Before the Board, then was the scope of “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  The current proceeding relied upon the Robinson reference, which was not at issue in the two completed proceedings, which further focused the Board on “reasonably could have raised.”

Petitioner argued that Shaw Industries limited estoppel effect to grounds actually instituted.  The Board disagreed, saying taht it was unpersuaded that the words “reasonably could have raised during that inter partes review” from Section 315(e)(1) should be interpreted as limited to grounds actually raised during the prior completed proceedings.  Instead, the Board interpreted Shaw Industries as meaning that estoppel does not apply to any ground of unpatentability that was presented in a petition.

The Board observed:

a petitioner makes an affirmative choice to avail itself of inter partes review only on certain grounds. That choice, however, comes with consequences, most prominently, that grounds petitioner elects not to raise in its petition for inter partes review may be subject to the consequences of Section 315(e)(1).

The Board next turned to Petitioner’s argument that Robinson is, nevertheless, not a ground that Petitioner “reasonably could have raised” because (1) Petitioner was unaware of Robinson prior to the filing of the petition in IPR2016-01434 despite an exhaustive, litigation-motivated prior art search, and (2) there is not a shred of evidence suggesting that Robinson could be found in the types of places a diligent prior art searcher.  The Patent Owner however identified several searches that would have found Robinson, so the Board concluded that it could have been raised, and thus the Petitioner was estopped.

The Board denied institution at to claims 11-13 and 15-20 because of estoppel, and exercised its discretion not to institute as to claim 14, to which the parties agreed estoppel did not apply.

At least at the Board, estoppel applies to grounds that could have been raised (which does not include grounds presented by for which Board does not institute).

Just Because One Could Doesn’t Mean One Would

In Personal Web Technologies, LLC v. Apple, Inc., [2016-1174] (February 14, 2017), the Federal Circuit affirmed the Board’s claim construction, but vacated the Board’s obviousness determination because the Board did not adequately support its findings that the prior art disclosed all elements of the challenged claims and that a relevant skilled artisan would have had a motivation to combine the prior-art references to produce the claimed inventions.

The Federal Circuit said that in the obviousness theory presented by Apple and adopted by the Board, the Board had to make findings, supported by evidence and explanation, on two points.  First, the Board had to find all of the elements of the ’310 patent claims at issue.  Second, the Board had to find that a person of ordinary skill in the art would have been motivated to combine the prior art in the way claimed by the ’310 patent.

The Federal Circuit noted that in KSR the Supreme Court said “it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does” and added that “[t]o facilitate review, this analysis should be made explicit.”

The Federal Circuit said that in order to allow effective judicial review, the agency is obligated to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.  The Federal Circuit concluded that the Board’s decision was inadequate; it found that the Board did not sufficiently explain and support the conclusions that (1) the references disclose all of the elements recited in the challenged claims and (2) a relevant skilled artisan would have been motivated to combine the art in the way the ’310 patent claims and reasonably expected success.

The Federal Circuit noted that the Board’s decision cited a different reference for an element than Apple asserted in its Petition, and the Board’s citation to Apple’s petition was incorrect.  The Federal Circuit further noted that the Board’s analysis did not address motivation.  The Federal Circuit found that the Board’s reasoning seems to say no more than that a skilled artisan, once presented with the two references, would have understood that they could be combined. The Federal Circuit said that is not enough: it does not imply a motivation to pick out those references and combine them to arrive at the claimed invention.

The Federal Circuit said that the Board’s reasoning does not meet
the requirements for a sustainable obviousness determination
in this case.  The Federal Circuit explained that the remand is not merely for explanation or clarification of what the Board meant in the decision; the remand is for the Board to reconsider the merits of the obviousness challenge.

An IPR Petitioner Does Not Necessarily Have Standing to Appeal if it Loses

In Phigenix, Inc. v. ImmunoGen, Inc., [2016-1544] (January 9, 2017), the Federal Circuit held that Phigenix, the losing petitioner in an IPR, lacked standing to appeal the PTAB’s decision that claims 1–8 of U.S. Patent No. 8,337,856 were nonobvious.  The Federal Circuit said that although Article III standing is not necessarily a requirement to appear before an administrative agency, an appellant must nevertheless supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court.  To show this standing, an appellant must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the appellee, (3) that is likely to be redressed by a favorable judicial decision.

The Federal Circuited noted that in some cases, an appellant’s standing to seek review of administrative action is self-evident; no evidence outside the administrative record is necessary for the court to be sure of it.  When the appellant’s standing is not self-evident, however, the appellant must supplement the record to the extent necessary to explain and substantiate its entitlement to judicial review. In so doing, an appellant may submit arguments and any affidavits or other evidence to demonstrate its standing. Taken together, an appellant must either identify record evidence sufficient to support its standing to seek review or, if there is none because standing was not an issue before the agency, submit additional evidence to the court of appeals, such as by affidavit or other evidence.

The Federal Circuit noted that Phigenix does not contend that it faces risk of infringing the patent, that it is an actual or prospective licensee of the patent, or that it otherwise plans to take any action that would implicate the patent.  Instead, Phigenix asserted that it has suffered an actual economic injury because the existence of the patent increases competition between Phigenix and ImmunoGen, which the Federal Circuit found unsubstantiated.  The Federal Circuit also rejected Phigenix contention  that it has suffered an injury in fact because 35 U.S.C. §141(c) “provides a statutory basis for appeal.”  While §141(c) permitted the filing of an appeal, it does nothing to establish Article III standing.  Finally, the Federal Circuit rejected the argument that the estoppel provisions of  35 U.S.C. § 315(e) created standing, but the Federal Circuit found it did not constitute an injury in fact when the appellant is not engaged in any activity that would give rise to a possible infringement suit.