PTAB is not Limited to § 102 and § 103 when Reviewing Amended Claims in IPR

In Uniloc 2017 LLC v. Hulu, LLC, [2019-1686] (July 22, 2020) the Federal Circuit affirmed the PTAB’s denial of Uniloc 2017’s motion to amend on the grounds that the substitute claims were unpatentable under 35 USC 101.

During an IPR the patent owner may file one motion to amend the patent, canceling any challenged patent claim and for each challenged claim, proposing a reasonable number of substitute claims. § 316(d)(1). At the conclusion of the IPR, the Director shall issue and publish a certificate incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable. § 318(b).

In its Final Written Decision, the PTAB, in addition to explaining why the challenged original claims are unpatentable, denied Uniloc’s Motion to Amend the claims, concluding that Hulu had shown by a preponderance of the evidence that the Substitute Claims are directed to non-statutory subject matter under 35 U.S.C. § 101. Ineligibility was the sole ground on which the PTAB denied the motion to amend.

Rejecting the argument that the case was moot, the Federal Circuit considered PTAB authority to consider § 101 eligibility for proposed
substitute claims, concluding that the PTAB was authorized by statute to assess Uniloc’s proposed Substitute Claims for eligibility under § 101 and,
finding the claims ineligible, to deny the motion to amend.

Uniloc argued that the PTAB was limited in its review of proposed
substitute claims to anticipation or obviousness, as provided by § 311(b). However the Federal Circuit found that the PTAB correctly concluded that it is not limited by § 311(b) in its review of proposed substitute claims in an
IPR, and that it may consider § 101 eligibility. The Federal Circuit said that this determination was supported by the text, structure, and history of
the IPR Statutes, which indicate Congress’s unambiguous intent to permit the PTAB to review proposed substitute claims more broadly than those bases provided in § 311(b).

The Federal Circuit said that the IPR Statutes plainly and repeatedly require the PTAB to determine the “patentability” of proposed substitute claims. The Federal Circuit said that Congress did not intend §311 to constrain the PTAB’s review of proposed substitute claims to anticipation and obviousness, pursuant to § 102 and § 103, because §311 is confined to the review of existing patent claims, not proposed ones. The Federal Circuit said that the structure and legislative history of the IPR Statutes support this conclusion, as section 311 applies to the petition phase of the proceedings, and not to a separate adjudication-stage provision, such as § 316. Finally, the Federal Circuit found support in the IPR statute’s legislative history.

The Federal Circuit concluded that the PTAB can consider §101 when considering amended or substitute claims in an IPR (and no doubt §112 as well).

More Mischief from Exempting Agency Action from Review: Real Party in Interest in IPR not Reviewable

In ESIP Series 2, LLC v. Puzhen Life USA, LLC, [2019-1659] (May 19, 2020), the Federal Circuit affirmed the institution of the IPR as non-reviewable, and affirmed the Board’s obviousness determination of claims of U.S. Patent No. 9,415,130, which relates to “a novel system and method for combining germicidal protection and aromatic diffusion in enclosed habitable spaces.”

Based on the prior art and expert testimony, the Board determined that the challenged claims would have been obvious.  The Federal Circuit found no error in the Board’s decision to credit the opinion of one expert over another, and would not reweigh evidence on appeal. The Federal Circuit found that substantial evidence supported the Board’s finding that the prior art made the invention obvious. 

Because the Board’s obviousness conclusion was not legally erroneous and the fact findings are supported by substantial evidence, the Federal Circuit affirmed obviousness determination.

 On the issue of whether the Petition properly named the real party in interest, based upon Cuozzo Speed Techs., LLC v. Lee, and Thryv, Inc v. Click-To-Call Techs., LP, the Federal Circuit found we find no principled reason why preclusion of judicial review under §314(d) would not extend to a Board decision concerning the “real parties in interest” requirement of § 312(a)(2).  Accordingly, the Federal Circuit held that  ESIP’s challenge to the Board’s “real parties in interest” determination “raises ‘an ordinary dispute about the application of’ an institution-related statute,” and that § 314(d) precludes its review of that determination.

Federal Circuit to PTAB: Try Harder to Construe Claims in IPR

In Cochlear Bone Anchored Solutions AB, v. Oticon Medical AB, [2019-1105, 2019-1106] (May 15, 2020), the Federal Circuit affirmed the PTAB’s determination that claims 4-6 and 11-12 of U.S. Patent No. 7,043,040, that claims 7-9 were not unpatenable, and vacated and remanded the determination that claim 10 was not unpatentable.

With respect to claims 4-6 and 11-12, Cochlear argued that the preamble “for rehabilitation of unilateral hearing loss” should have been treated as a claim limitation.  The Federal Circuit noted that in general, a preamble limits the invention if it recites essential structure or steps, or if it is necessary to give life, meaning, and vitality to the claim. But preamble language merely extolling benefits or features of the claimed invention does not limit the claim scope without clear reliance on those benefits or features as patentably significant.  A preamble is not limiting where a patentee defines a structurally complete invention in the claim body and uses the preamble only to state a purpose or intended use for the invention.  The Federal Circuit concluded that the preamble was merely a statement of intended use of the claimed hearing aid; it identified no structure for the apparatus claimed. Moreover, this use itself is not an inventive or patentably distinct aspect of the claimed invention, as “rehabilitation of unilateral hearing loss” was a conventional use of prior art bone-anchored hearing aids.  Further, the bodies of the claims contain the only descriptions of the structure for the hearing aid, with no additional structure furnished by the preamble.

With respect to claims 4-5, Cochlear argued that it was error for the Board to conclude that “specifically adapted to” had its ordinary meaning.  The Federal Circuit rejected this argument, noting that to the extent that Cochlear was suggesting that the language requires a particular intent or objective of a hearing-aid designer or manufacturer, this was incorrect.  The Federal Circuit has held that the claim term “adapted to” generally means “made to,” “designed to,” or “configured to” perform the stated function, without introducing a subjective element into the construction of the phrase.  To the extent that Cochlear is suggesting an objective characteristic of the configuration, it has not shown overbreadth of the Board’s ordinary-meaning construction. With respect to claims 7-10, the Board determined that it could not conduct a prior-art analysis of these claims because they contained means-plus-function elements.  The Federal Circuit held that the  Board did not err as to claims 7–9, but did err as to claim 10.  The Federal Circuit claim 10 is different in a crucial respect. It does not contain a required claim element in means-plus-function form. Claim 10 recites a “directivity means comprising at least one directivity dependent microphone and/or signal processing means in the electronic circuitry.  Thus claim 10, unlike the other means-plus-function claims, also describes a stand-alone alternative to the signal processing means: a directivity dependent microphone, which is a clear structure for performing the claimed directivity means.  The Board relied entirely on the presence of the signal-processing-means alternatives in the claim to deem a prior-art analysis impossible, and this was error.  Even if claim 10 is indefinite, such a conclusion would not imply that it is incapable of being compared to prior art to determine if one of its alternatives is anticipated or would have been obvious on the grounds asserted.

The Board Can Identify New Issues of the Patentability of Amended Claims; But Must give the Parties Notice

In Nike, Inc.v. Adidas AG, [2019-1262] (April 9, 2020) The Federal Circuit affirmed the Board’s the Board’s finding that Nike failed to establish a long-felt need for substitute claims 47–50, but vacated the Board’s decision of obviousness as to substitute claim 49 because no notice was provided to Nike for the Board’s theory of unpatentability.

The case involved U.S. Patent No. 7,347,011, which discloses articles of footwear having a textile “upper,” which is made from a knitted textile using any number of warp knitting or weft knitting processes. The case in an appeal after remand from a previously appeal where the Federal Circuit affirmed-in-part and vacated-in-part the Board’s decision denying Nike’s motion to amend. Nike is again appealing the denial of its motion motion to enter substitute claims 47–50.

Substitute claim 49 recites a knit textile upper containing “apertures” that can be used to receive laces and that are “formed by omitting stitches” in the knit textile. Adidas opposed substitute claim 49, arguing that it was obvious form the combination of three prior art references: U.S. Patent No. 5,345,638 (Nishida); U.S. Patent No. 2,178,941 (Schuessler I); and U.S. Patent No. 2,150,730 (Schuessler II), and in particular that Nishida disclosed substitute claim 49’s limitation that the apertures are “formed by omitting stitches.” The Board found that Nishida does not disclose apertures formed by omitting stitches, as recited in claim 49, but that another prior art document of record in the proceeding demonstrates that skipping stitches to form apertures was a well-known technique.

Nike, having no chance to address this finding, appealed. The Federal Circuit held that the Board may sua sponte identify a patentability issue for a proposed substitute claim based on the prior art of record. However, if the Board sua sponte identifies a patentability issue for a proposed substitute claim, however, it must provide notice of the issue and an opportunity for the parties to respond before issuing a final decision under 35 U.S.C. § 318(a).

Because the case involves a motion to amend, The Federal Circuit concluded that the Board should not be constrained to arguments and theories raised by the petitioner in its petition or opposition to the motion to amend. However the Federal Circuit reserved for another day the question of the Board may look outside of the IPR record in determining the patentability of proposed substitute claims.

Although the Board was permitted to raise a patentability theory based on Spencer, the notice provisions of the APA and Federal Circuit case law require that the Board provide notice of its intent to rely on Spencer and an opportunity for the parties to respond before issuing a final decision relying on Spencer. Under the APA, “[p]ersons entitled to notice of an agency hearing shall be timely informed of of fact and law asserted,” 5 U.S.C. § 554(b)(3), and the agency “shall give all interested parties opportunity for . . . the submission and consideration of facts [and] arguments,” id. § 554(c)(1).

§ 315(c) Does Not Authorize Joinder of Two Proceedings, or Joining a Person to a Proceeding in Which that Person is Already a Party

In Facebook, Inc., v. Windy City Innovations, LLC, [2018-1400, 2018-1401, 2018-1402, 2018-1403, 2018-1537, 2018-1540, 2018-1541] (March 18, 2020) the Federal Circuit hold that the Board erred in allowing Facebook to join itself to a proceeding in which it was already a party, and also erred in allowing Facebook to add new claims to the IPRs through that joinder.

Exactly one year after being served with Windy City’s complaint for infringement of U.S. Patent Nos. 8,458,245, 8,694,657, 8,473,552, and 8,407,356, Facebook petitioned for inter partes review of several claims of each of the patents.  Seven  months later, after Windy City identified the claims it was asserting, Facebook filed two additional petitions for IPR of additional claims of two of the challenged patents, together with a motion for joinder.  Although this was now well more than a year after Facebook had been served, the Board nonetheless instituted Facebook’s two new IPRs, and granted Facebook’s motions for joinder.

The Federal Circuit examined the statutory language and concluded that joinder was not proper.  It noted that the plain language of § 315(c) indicates that the exception to the time bar offered by the joinder provision only applies if there is an instituted IPR, meaning that a first petition must have been timely under § 315(b), among other requirements.   It went on to note that subsection (c) then provides that after an inter partes review has been instituted, the Director, in his or her discretion, “may join” “as a party to that inter partes review” “any person” who has filed “a petition under section 311 that the Director . . . determines warrants the institution of an inter partes review under section 314.”

The Federal Circuit observed that the Board was operating under the premise that § 315(c) authorizes two proceedings to be joined, rather than joining a person as a party to an existing proceeding.  The Federal Circuit said that the Board’s understanding of § 315(c) is contrary to the plain language of the provision. Section 315(c) authorizes the Director to “join as a party to [an IPR] any person who” meets certain requirements, i.e., who properly files a petition the Director finds warrants the institution of an IPR under § 314. The Federal Circuit said that no part of § 315(c) provides the Director or the Board with the authority to put two proceedings together. That, the Federal Circuit pointed out, is the subject of § 315(d), which provides for “consolidation,” among other options, when “[m]ultiple proceedings” involving the patent are before the PTO.

The Federal Circuit admitted the possibility that the Board was in fact intending to join Facebook as a party to its previously instituted IPRs, and not joining the IPR proceedings themselves, but found that the clear and unambiguous language of § 315(c) does not.  The Federal Circuit said it would be an extraordinary usage of the term “join as a party” to refer to persons who were already parties.  The Federal Circuit concluded that a party cannot logically be “join[ed] as a party” in a proceeding if it is already a party to that proceeding.  The Federal Circuit held that the clear and unambiguous meaning of § 315(c) does not authorize joinder of two proceedings, and does not authorize the Director to join a person to a proceeding in which that person is already a party.

Petitioner in an IPR is Entitled to Respond to Arguments Made by Patent Owner

In Apple Inc. v. Andrea Electronics Corp., [2018-2382, 2018-2383] (February 7, 2020), the Federal Circuit vacated the Board’s decision in a first IPR on U.S. Patent No. 6,363,345 because the the Board erred in refusing to consider Apple’s reply arguments, but in the second IPR on the patent, it affirmed the determination that claims 5-9 were not invalid.

The Board’s determinations that a party exceeded the scope of a proper reply are reviewed for abuse of discretion. The Federal Circuit said that a reply may only respond to arguments raised in the corresponding opposition, patent owner preliminary response, or patent owner response. Thus, it had to determine whether we must consider: whether the petitioner’s reply brief was responsive to arguments originally raised in its petition; or whether the reply arguments are responsive to arguments raised in the patent owner’s response brief.

The Federal Circuit noted tat Apple’s legal ground did not change in its reply— its reply still asserted that claims 6–9 would have been obvious over the same references. Further, Apple’s arguments were not the types of arguments that we have previously found to raise a “new theory of unpatentability.” The Federal Circuit noted that Apple’s reply does not cite any new evidence or unidentified portions of the references, but merely demonstrated another example of the same algorithm to further explain why the reference discloses the claim elements. The Federal Circuit said that parties are not barred from elaborating on their arguments on issues previously raised.

The Federal Circuit concluded that Apple’s reply squarely responds to the Patent Owner Response.

Federal Circuit Asks PTAB to Give it a Go and Decide Whether Indefinite Claims Were otherwise Patentable

In Samsung Electronics America, Inc. v. Prisua Engineering Corp., 2019-1169, 2019-1260 (February 4, 2020) the Federal Circuit affirmed the PTAB determination that claim 11 of U.S. Patent No. 8,650,591 was invalid for obviosuness, but vacated the PTAB’s decision declining to decide whether claims 1-4 and 8 were patentable because these claims were indefinite.

The claims of the ‘591 patent are directed to methods and apparatuses for generating a displayable edited video data stream from an original video data stream. The Board determined that claim 1 (and claims 2-4 and 8) claimed both an apparatus and a method, and thus was indefinite under IPXL Holdings. Because the claims were indefinite, the Board declined to determine whether they otherwise defined patentable subject matter. The Board also found the claims indefinite because of the inclusion of “digital processing unit” which the Board found invoked 112(f), without identifying any corresponding stucture in the claims.

Samsung appealed arguing that the Board should have declared the claims in valid for indefiniteness. The Federal Circuit agreed with the Board that the Board did not have the authority to invalidate claims on that ground.

Samsung’s secondary argument was that the Board should have nonetheless assessed the patentability of claims 1 and 4–8 under sections 102 or 103. On this point, the Federal Circuit agreed.

The Federal Circuit noted that on the first ground of indefiniteness — mixed method and apparatus claiming, the indefiniteness problem was one of understanding when infringement occurred, and not necessarily what the claim actually means. Moreover, the Federal Circuit noted that the Board had previously held that IPXL-type indefiniteness does not prevent the Board from addressing patentability.

Thus the Federal Circuit remanded the case for the Board to attempt to apply 102 and 103 to the claims.

As to the second ground of indefiniteness, that “digital processing unit” invoked 112(f) without providing corresponding structure in the claims, the Federal Circuit disagreed. The Federal Circuit said that the question whether the term “digital processing unit” invokes section 112, paragraph 6, depends on whether persons skilled in the art would understand the claim language to refer to structure, assessed in light of the presumption that flows from the drafter’s choice not to employ the word “means. The Federal Circuit said that the Board pointed to no evidence that a person skilled in the relevant art would regard the term “digital processing unit” as purely functional. In fact, the patent owner argued to the Board, based on testimony from its expert (the inventor), that the digital processing unit recited in the claims is “an image processing device that people in the art are generally familiar with.” Moreover, the fact that claim 1 required the “digital processing unit” to be operably connected to a “data entry device” supports the structural nature of the term “digital processing unit,” as used in the claim.

The Federal Circuit rejected the Board’s conclusion that the term “digital processing unit,” as used in claim 1, invoked means-plus-function claiming,
and that for that reason claims 1 and 4–8 cannot be analyzed for anticipation or obviousness.

General Knowledge is Available in Obviousness Inquiry Even Though IPRs are Limited to Documentary Prior Art

In Koninklijke Philips N.V. v. Google, [2019-1177] (January 30, 2020), the Federal Circuit affirmed the PTAB determination that claims 1-11 of U.S. Patent No. 7,529,806 were unpatentable as obvious.

Philips presetnted three arguments on appeal. First, that the Board erred by instituting inter partes review on the ground that the claims would have been obvious over SMIL 1.0 in light of Hua because Google did not advance that specific combination in its petition. Second, that the Board erred in finding that the claims would have been obvious in view of SMIL 1.0 because the Board impermissibly relied on “general knowledge” to supply a missing claim limitation. Third, that the Board’s obviousness findings are nevertheless unsupported by substantial evidence.

On Philips’ first point, the Federal Circuit agreed, holding that the Board erred by instituting inter partes review based on a combination of prior art references not advanced in Google’s petition. 35 U.S.C. § 311(a) does not contemplate a petition that asks the Director to initiate whatever kind of inter partes review he might choose.

On Philips’ second point, the Federal Circuit disagreed with Philips’ argument that because 35 U.S.C. § 311(b) expressly limits inter partes reviews to “prior art consisting of patents or printed publications,” and because general knowledge is neither of those, § 311(b) prohibits use of general knowledge to supply a missing claim limitation in an inter partes review. The Federal Circuit explained that although the prior art that can be considered in inter partes reviews is limited to patents and printed publications, it does not follow that we ignore the skilled artisan’s knowledge when determining whether it would have been obvious to modify the prior art.

The Federal Circuit also disagreed with Philips that the Board’s reliance on “general knowledge” violated Arendi. The Federal Circuit explained that in Arendi it cautioned that although “common sense and common knowledge have their proper place in the obviousness inquiry,” (a) invoking “common sense . . . to supply a limitation that was admittedly missing from the prior art” should generally only be done when “the [missing] limitation in question [is] unusually simple and the technology particularly straightforward;” and (b) references to common sense “cannot be used as a whole-sale substitute for reasoned analysis and evidentiary support.” The Federal Circuit said that in Arendi, the Board relied on nothing more than “conclusory statements and unspecific expert testimony” in finding that it would have been “common sense . . . to supply a limitation that was admittedly missing from the prior art.” Conversely, in the present case, the Federal Circuit found that the Board relied on expert evidence, which was corroborated by Hua, in concluding that pipelining was not only in the prior art, but also within the general knowledge of a skilled artisan.

Finally, the Federal Circuit disagreed with Philips third point, that the finding of obvious was not supported by substantial evidence. The Federal Circuit noted that the Board thoroughly explained why the modified prior art disclosed all the limitations of claim 1, The Federal Circuit said that relying on an expert declaration and reference as evidence of a skilled artisan’s general knowledge, the Board found that a skilled artisan “would have been motivated to modify the prior art. The Board also determined that there would have been a reasonable expectation of success. The Federal Circuit concluded concluded that the Board’s findings are supported by substantial evidence.

Federal Circuit Gives the PTAB an Inferiority Complex

In Arthrex, Inc. v. Smith & Nephew, Inc., [2018-2140](October 31, 2019), the Federal Circuit vacated and remanded the Final Written Decision of the PTAB in IPR2017-00275 because the decision was issued while there was an Appointments Clause Violation.

The Board held that claims 1, 4, 8, 10–12, 16, 18, and 25–28 of Arthrex’s U.S. Patent No. 9,179,907 were unpatentable as anticipated. Arthrex appealed, contending that the appointment of the Board’s Administrative Patent Judges (“APJs”) by the Secretary of Commerce, as currently set forth in Title 35, violates the Appointments Clause of the constitution (Art. II, § 2, cl. 2). The Federal Circuit agreed concluding that the statute as currently constructed improperly makes the APJs principal officers.

More specifically, Arthrex argued that the APJs who presided over its inter partes review were not constitutionally appointed; they were principal officers who must be, but were not, appointed by the President with the advice and consent of the Senate. The issue was whether the APJs were in fact “Officers of the United States” and if so, whether they are inferior officers or principal officers. The Federal Circuit held that in light of the rights and responsibilities in Title 35, APJs were principal officers.

The Federal Circuit, under cover of Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010) determined that the solution was to sever the problematic portions of the patent act, while leaving remaining provisions intact. The Federal Circuit thus severed the portion of the Patent Act restricting removal of the APJs, thereby rendering the APJs inferior officers and solving the constitutional appointment problem.

Poof. Fixed.

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.