Constitutional Rights — Use Them or Lose Them

In Security People, Inc. v. Iancu, [2019-2118] (August 20, 2020), the Federal Circuit affirmed the dismissal of Security People’s challenge to the constitutionality of the cancellation of its U.S. Patent No. 6,655,180 in an inter partes review.

The district court dismissed Security People’s complaint for lack of subject matter jurisdiction, noting that the district court lacked subject matter jurisdiction because Congress established a specific means for judicial review of IPR decisions, rendering collateral APA suits in district court inappropriate.  Security People alleged two errors in this decision: First, the Board lacks authority to consider constitutional claims, and thus it could not then assert a constitutional challenge for the first time on appeal because retroactivity challenges raise issues requiring factual resolution. Second, Security People argued that its challenge was not yet ripe until cancellation of its patent claims, which required affirmance of the Board’s decision by this court, and that it had to exhaust those non-constitutional claims before raising its constitutional claims.

The Federal Circuit disagreed.  The Federal Circuit said that Security People could have and should have raised constitutionality during the proceeding, observing that it is not unusual for an appellate court reviewing the decision of an administrative agency to consider a constitutional challenge to a federal statute that the agency concluded it lacked authority to decide. The presence of disputed factual questions does not change that calculus.

The Federal Circuit also found that Security People was wrong about when the USPTO’s action became final, noting that the USPTO’s decision making process was complete after issuance of the Final Written decision.

The moral of the story is that you cannot wait to assert you Constitutional rights, and must do so at the earliest possible instance.  It is better to be told that your assertion is too early, than to find out latter that it was too late.

Posted in IPR

Federal Circuit to PTAB: Show Your Work

In Alacritech, Inc., v. Intel, [2019-1467, 2019-1468] (July 31, 2020) the Federal Circuit vacated the Board’s obviousness determination as to claims 41–43 of U.S. Patent No. 8,131,880  because the Board did not adequately support its finding that the asserted prior art combination teaches or suggests a limitation recited in claims, and remanded for further proceedings regarding those claims.

The ’880 patent relates to computer networking, and is specifically directed to offloading certain network-related processing tasks from a host computer’s central processing unit (CPU) to an “intelligent network interface card” (INIC). According to the ’880 patent, one of the tasks that can be offloaded from the CPU to the INIC is the reassembly of data from packets received by the host computer from the network.

The Federal Circuit said that to support Federal Circuit review, the Board 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 said that it does not require perfect explanations, and it will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.  However, the Federal Circuit found that the Board’s analysis of the disclosure of the reassembly limitations in claims 41–43 falls short of that which the APA and our precedent require.

The Federal Circuit found that the Board’s analysis did not acknowledge the parties’ dispute over where the reassembly occurs, much less explain how the prior art teaches or suggests reassembly in the network interface. As such, the Federal Circuit said that it could not reasonably discern whether the Board followed a proper path in determining that the asserted prior art teaches or suggests the reassembly limitations, and by extension, that the subject matter of claims 41–43 would have been obvious.  The Federal Circuit further noted that because the Board’s reasoning appears to be untethered to either party’s position, it could not infer that the Board’s obviousness determinations flowed directly from its rejection of the patent owner’s arguments, or adoption of the Petitioner’s arguments.

The Federal Circuit vacated the Board’s obviousness determination as to claims 41–43 and remanded for further proceedings consistent with this opinion.   

Posted in IPR

Petitioner Can’t Complaint About Improperly Appointed PTAB

In Ciena Corp. v. Oyster Optics, LLC, [2019-2117] (May 5, 2020), the Federal Circuit affirmed the PTAB final written decision that Ciena had failed to demonstrate by a preponderance of the evidence that any of the challenged claims were un-patentable.  On appeal, Ciena argued that, under Arthrex, the Board’s decision must be vacated and remanded for a new hearing before a differently constituted panel because the members of the Board panel that issued the decision were not appointed in compliance with the Appointments Clause. The Federal Circuit said that problem with Ciena’s request is that, unlike the patent owner in Arthrex, Ciena requested that the Board adjudicate its petition. It, thus, affirmatively sought a ruling from the Board members, regardless of how they were appointed. The Federal Circuit said that Ciena was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it. Under those circumstances, the Federal Circuit found that Ciena has forfeited its Appointments Clause challenge.

Congress’ carelessness in creating the PTAB continues to vex the PTAB and the Courts. The Federal Circuit’s quick fix, although understandable, has not helped matters.

Posted in IPR

Losing the Right to Challenge a Patent is not Enough to Confer Standing to Appeal IPR Decision

In Argentum Pharmaceuticals LLC v. Novartis Pharmaceuticals Corp., [2018-2273] (April 23, 2020), the Federal Circuit dismissed the appeal, noting that the appellant remaining after settlement lacked Article III standing to appeal the PTAB’s IPR decision.

The Federal Circuit said that although it had jurisdiction to review final decisions of the Board under 28 U.S.C. § 1295(a)(4)(A), an appellant must meet the irreducible constitutional minimum of standing. This is true even if there is no such requirement in order to appear before the administrative agency being reviewed.

The Federal Circuit said that to prove standing, Argentum bears the burden of showing that it has (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The Federal Circuit added that Argentum must supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court, by creating a necessary record in this court, if the record before the Board does not establish standing.

To establish injury in fact, an appellant must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical. An injury is particularized if it affects the appellant in a personal and individual way.

Argentum argued that it demonstrated at least three concrete injuries in fact. First, without an opportunity to appeal, it faces a real and imminent threat of litigation as it jointly pursues a generic version of Novartis’ Gilenya® product; but the Federal Circuit found that any ANDA would not be filed by Argentum, but by its manufacturing and marketing partner. Second Argentum argued that it will incur significant economic injury as its investments in developing a generic version of Gilenya® and preparing an ANDA would be at risk, but the Federal Circuit found that Argentum had not provided sufficient evidence to establish an injury in fact through economic harm. Third, Argentum argued that Argentum would be estopped under 35 U.S.C. § 315(e) from raising the patentability and validity issues in a future infringement action, but the Federal Circuit said that it had already rejected invocation of the estoppel provision as a sufficient basis for standing.

Accordingly, the Federal Circuit held that Argentum has failed to prove that it has suffered an injury in fact necessary to establish standing.

Posted in IPR

Motivation to Combine Prior Art Can Come from Knowledge of those Skilled in the art, the Art Itself, or the Nature of the Problem

In Acoustic Technology, Inc. v. Itron Networked Solutions, Inc., [2019-1061] (February 19, 2020), the Federal Circuit affirmed the PTAB’s determination in IPR2017-01024 that the challenged claim of U.S. Patent No. 6,509,841 was unpatentable,

The patent owners first ground of attack was that nine days after institution of the IPR, Silver Spring agreed to merge with Itron, Inc., an entity undisputedly time-barred under 35 U.S.C. § 315(b). However, the Federal Circuit held that the patent owner waived this argument because it failed to present those arguments before the Board.

As the the merits of the anticipation finding, the patent owner complained that the petitioner’s expert improperly testified about what a person of ordinary skill in the art would “recognize” from the reference, — arguing that this might be appropriate for obviousness, but not anticipate. The Federal Circuit disagreed, noting that in an anticipation analysis, the dispositive question is whether a skilled artisan would “reasonably understand or infer” from a prior art reference that every claim limitation is disclosed in that single reference. Expert testimony may shed light on what a skilled artisan would reasonably understand or infer from a prior art reference. Moreover, expert testimony can constitute substantial evidence of anticipation when the expert explains in detail how each claim element is disclosed in the prior art reference.

The Federal Circuit examined the testimony of Petitioner’s expert and concluded that he conducted a detailed analysis and explained how a skilled artisan would reasonably understand the cited prior art. The Court thus concluded that the Board’s finding of anticipate was supported by substantial evidence.

The Federal Circuit also rejected the patent owner’s argument that the Board improperly relied on “the same structures to satisfy separate claim limitations.” The Federal Circuit explained that it was clear from the disclosure that the identified structure may have different functions in a given embodiment.

Finally with respect to the obviousness of the claimed invention, the Federal Circuit rejected patent owners argument that the Board erroneously mapped the prior art onto the elements of the claim and that the Board’s motivation-to-combine finding is not supported by substantial evidence. On this later point the Federal Circuit pointed out that the motivation to combine prior art references can come from the knowledge of those skilled in the art, from the prior art reference itself, or from the nature of the problem to be solved. The Board found that motivation was adequately explained by expert testimony which was not conclusory or otherwise defective, and thus the Board was within its discretion to rely upon it.

Patent Office Ignores Federal Circuit, and Gets Away with It

In Biodelivery Sciences International, Inc., v. Aquestive Therapeutics, Inc., [2019-1643, 2019-1644, 2019-1645] (January 13, 2020) the Federal Circuit declined to rehear this appeal en banc. The Federal Circuit earlier remanded IPR2015-00165, IPR2015-00168, and IPR2015-00169 for the PTAB to consider all claims as required by the Supreme Court in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). The PTAB failed to do so, and the panel on the resulting appeal allowed them to do so.  Judge Newman wrote separately in dissent “because of the significance of the balance of agency and judicial authority, and the rules of procedural law in the administrative state.”

Posted in IPR

IPR Decision Wipes Out Patent Owner’s Earlier Victory in District Court

Personal Audio, LLC, v. CBS Corporation, [2018-2256] (January 10, 2020), the Federal Circuit affirmed the district court judgment of infringement of U.S. Patent No. 8,112,504, on a a system for organizing audio files, by subject matter, into “program segments.”

A jury found that three claims of the ‘850 patent not invalid and were infringed.  Subsequently the PTAB issued a final written decision determining that those claims are unpatentable.  The district court, with the parties’ consent, stayed entry of its judgment in this case until completion of the Federal Circuit review of the PTAB decision.  The Federal Circuit affirmed the PTAB, and the parties agreed that CBS was entitled to entry of final judgment in its favor.  Personal Audio appealed.

The Federal Circuit said that to the extent that Personal Audio challenges the Board’s final written decision, the district court lacked jurisdiction to consider the challenges, and the Federal Circuit had no jurisdiction to review them on appeal from the district court’s judgment. The Federal Circuit said that the exclusive avenue for review of the PTAB decisions was a direct appeal from the final written decision.

The Federal Circuit said that to the extent that Personal Audio challenges the district court’s determination of the consequences of the affirmed final written decision for the proper disposition of this case, Personal Audio conceded that governing precedent required judgment for CBS, and thus the Federal Circuit affirmed.

Posted in IPR

Petitioner Allowed to Supplement Evidence that Reference was Available

In Telefonaktiebolaget LM Ericsson v. TCL Corp., [2017-2381, 2017-2385] (November 7, 2019) the Federal Circuit affirmed the Board’s decision that the specified publication is an available reference, and based on this publication in combination with other prior art it affirmed the Board’s decision of invalidity of the challenged claims.

Ericsson argued that the Jentschel article is not prior art because it was not publicly available more than one year before Ericsson’s earliest asserted filing date, and thus is subject to antedating by Ericsson’s invention date. During the trial TCL sought to provide evidence of the date of availability of this journal issue in university libraries in Germany.

TCL first submitted to the PTAB a letter from a librarian from the “Periodicals Team” at the Technische Informationsbibliothek and Universitätsbibliothek in Hannover, Germany. Ericsson objected to the letter as inadmissible hearsay, and the statement was withdrawn when the librarian declined to provide a sworn statement and declined to testify in the United States. TCL then moved to submit the sworn Declaration of Doris Michel, a librarian at the Technische Universität Darmstadt in Germany. Ericsson again objected, stating that the submission was not in compliance with the Board’s Rules, which required a petitioner to present sufficient evidence, at the petition stage, and requires that a party who seeks to submit new or supplemental information more than one month after the date an IPR is instituted must show why the supplemental information rea-sonably could not have been obtained earlier, and that consideration of the supplemental information would be in the interests-of-justice.

TCL responds that Regulation § 42.123(b) gives the Board discretion to accept a tardy submission and to consider the interest of justice. TCL argues that the Jentschel article is very close prior art and that Ericsson was allowed to file supplemental briefing and to depose Ms. Michel.

The Federal Circuit concluded that the Board did not abuse its discretion in admitting the Michel Declaration, for when the challenged evidence is reasonably viewed as material, and the opponent has adequate opportunity to respond and to produce contrary evidence, the interest of justice weighs on the side of admitting the evidence.

Ericsson argues that the date of availability to the public of the Jentschel reference was not established by the Michel Declaration, even if that Declaration were deemed admissible. The Federal Circuit explained that a reference is deemed publicly available if it has been 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 Ericsson provided no evidence to counter the Michel Declaration, the date on the face of the journal, and the Library’s records showing receipt of the journal and its shelving. The Federal Circuit found that substantial evidence supports the Board’s ruling that Jentschel was accessible to the public in the May/June 1996 period, and that the Board did not abuse its discretion in receiving the Jentschel article as a reference.

The Federal Circuit further concluded that substantial evidence supports the Board’s finding that Jentschel renders obvious the claims.

PTAB Reconsideration Did Not Violate Due Process

In AC Technologies S.A., v. Amazon.com, Inc., [2018-1433] (January 9, 2019) the Federal Circuit affirmed the Final Written Decision of the PTAB ruling certain claims of AC Technologies S.A.’s U.S. Patent No. 7,904,680 unpatentable. AC complained that the Board, on reconsideration, invalidated claims based on a ground of unpatentability raised in their petition but not addressed in the original Final Written Decision, arguing that the Board exceeded its authority and deprived it of fair process by belatedly considering this ground.

The Federal Circuit disagreed, noting that precedent mandated that the Board consider all grounds of unpatentability raised in an instituted petition. The Board complied with due process, and AC did not persuade it that the Board erred in either its claim construction or its ultimate conclusions of unpatentability.  The Petition contained three grounds, Ground 1 alleged unpatentability giving the claims, and in particular, the term “computer unit” a narrow construction.  Grounds 2 and 3 asserted unpatentability over the same reference, giving “computer unit” a broader construction.

The Board invalidated claims based upon Grounds 1 and 2, but not three.  When the inconsistency was pointed out on request for rehearing, the Board address Ground 3.  The Federal Circuit said that no due process violation occurred here. As AC admits, after the Board decided to accept Amazon’s rehearing request and consider Ground 3, it permitted AC to take discovery and submit additional briefing and evidence on that ground. The Federal Circuit noted that alhough AC did not receive a hearing specific to Ground 3, it never requested one. Had AC desired a hearing, it should have made a request before the Board.

Posted in IPR

Expert Testimony Critical to Determining Meaning of Prior Art to a PHOSITA

In IXI IP, LLC v. Samsung Electronics Co.. Ltd., [2017-1665] (September 10, 2018), the Federal Circuit affirmed the PTAB’s determination that the challenged claims of U.S. Patent No. 7,039,033 were unpatentable.  The ’033 patent is directed to a system that accesses information from a wide area network (WAN), such as the Internet, and local wireless devices in response to short-range radio signals.

The Federal Circuit noted that issues relating to a motivation to combine prior art references and a reasonable expectation of success are both questions of fact, reviewed for substantial evidence.  Substantial evidence is “such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.”

The single issue on appeal is whether a PHOSITA would read the prior art as implicitly
describing an implementation in which the JINI LUS, which identifies services provided on the network, is located on the gateway device, i.e., the cellphone.  Samsung acknowledged that the reference does not expressly state that the JINI LUS is located on a mobile phone, but nonetheless, contended, and the Board agreed, that a PHOSITA would read the reference to understand that JINI LUS may be located on the cellphone.

After examining the evidence, the Federal Circuit held that the Board’s determination
that a POSITA reading the reference would understand that the cellphone is the master of the ad-hoc network and contains the LUS is reasonable and was supported by substantial evidence.  The determination of how a PHOSITA would understand the references was based on the weighing expert testimony from both parties, with Samsung’s expert being credited by the Board.