Board’s Construction of the Claims was Unreasonably Broad and Inconsistent with the Specification

In In re Hodges, [2017-1434] (February 12, 2018), the Federal Circuit reversed the Board’s anticipation determinations, vacate
its obviousness determinations, and remand for further
proceedings.  The application is directed to a valve assembly
for draining contaminants, condensation, and other fluids that adversely affect the efficiency and function of a pressurized system.

The Federal Circuit found that the Board’s Finding that the claims were anticipated was unsupported by substantial evidence.  A prior art reference anticipates a patent’s claim when the four corners of the document “describe every element of the claimed invention, either expressly or inherently, such that a person of ordinary skill in the art could practice the invention without undue experimentation.  At issue was the positioning of a valve in the prior art relative to the claimed invention.  The Board found the positioning “similar,” but the Federal Circuit found that the Board neither supported its assertion of
similarity, nor explained how the positioning of the valve in the prior art would enable a skilled artisan to “practice the invention without
undue experimentation.”

As to anticipation by another reference, the Board affirmed a rejection that a piston stem and piston head collectively constitute the claimed “sensor” because they sense pressure insofar as they move in response to the pressure applied thereto.  The Federal Circuit noted that the Patent Office did not attempt to defend this finding on appeal “for good reason” as the Board’s anticipation finding was predicated on an erroneous construction of “signal,” and the reference did not disclose a sensor.  The Federal Circuit found the Board construction of the claims to be unreasonably broad and inconsistent with the specification.  The Federal Circuit said that under any reasonable construction of “signal,”
the prior art’s piston stem and head combination cannot fairly
be characterized as a sensor that generates a signal.  The Federal Circuit reversed the rejection, not wanting to give the Patent Office “a second chance to reject the claims on grounds that it is unwilling or unable to defend on appeal.”

On the obviousness rejections, the Board concluded in a “single paragraph” that the claims would have been obvious, but did not explain how the reference could be modified.  The Federal Circuit also noted that the Board made no findings on any of the Graham factors.  The Federal Circuit said that the Board must “explicate its factual conclusions, enabling us to verify readily whether those conclusions are indeed supported by ‘substantial evidence’ contained within the record,” but that the Board failed to do so, so the Federal Circuit remanded the case.



About “About”: “Less Than About 3%” Includes 4%

In Monsanto Technology LLC v. E.I. DuPont De Nemours & Co., [2017-1032] (January 5, 2018), the Federal Circuit affirmed the PTAB’s decision that affirmed reexamination examiner’s rejection of claims of U.S. Patent No. 7,790,953, on Soybean Seed and Oil Compositions and
Methods of Making Same as anticipated by or obvious from U.S. Patent No. 6,426,448.

Monsanto argued that misconstruing the Board misconstrued the “about 3% or less” limitation in the ’953 patent to include progeny with a linolenic acid content of 4%, but the Federal Circuit found that the PTAB “reasonably interpreted” Booth’s parent line containing 4% linolenic acid “to be within the scope of ‘about 3%,’” as recited in claim 1 step (a).  The Federal Circuit found that the claim language was not instructive, so it turned to the the remainder of the specification.  The Federal Circuit noted that Exhibit 9, which purportedly had a linolenic acid content of about 3%, which included a reference that disclosed linolenic acid contents from 2.3% to 4.1%.  Thus the Federal Circuit found that the intrinsic evidence supported finding that a person having ordinary skill in the art would reasonably consider “about 3%” to encompass a range that includes 4%, and that Monsanto’s counterarguments were “unavailing.”

Monsanto further argued that the finding of anticipation was not supported by substantial evidence because the anticipation was not inherent, as the PTAB found.  The Federal Circuit disagreed, saying that inherent anticipation applies because the prior art “necessarily include the unstated limitation.”  Declarations in the record confirmed that the generation identified in the prior art would necessarily result in progeny within the scope of claim 1. Monsanto challenged the PTAB’s reliance on this “non-prior art data” and “secret data” in the declarations, but the Federal Circuit found this was appropriate, saying that Monsanto was confusing prior art with extrinsic evidence used to support what is “necessarily present” in a prior art’s teaching. Extrinsic evidence may be used to interpret the allegedly anticipating reference and to shed light on what it would have meant to a person of ordinary skill in the art. The Federal Circuit said that the declarations did not expand the
meaning of reference or serve as prior art: they demonstrate
what is inherent in the disclosure.  Second the declarations were not improper “secret data” — the were not used as prior art , but merely in support of prior art already of record.  Third, the Federal Circuit offered no rebuttal evidence to the declarations.

The Federal Circuit further affirmed the obviousness determination, noting that PTAB did not rely solely on its finding of inherent anticipation, but explained that explained that a PHOSITA would have been motivated to modify the reference to meet the requirements of the claims.


Federal Circuit Affirms Board on Claim Construction, No Anticipation, and Nonobviousness

In HTC Corp. v. Cellular Communications Equipment, LLC [2016-1880] (December 18, 2017), the Federal Circuit affirmed the PTAB’s Final Written Decision, finding no error in the Board’s claim construction, and that substantial evidence supported the Board’s determination that the challenged claims were not invalid.

The IPR involved U.S. Patent No. 7,941,174, which is directed to
methods and apparatuses for a radio communications system where a subscriber station, i.e., a mobile device, is assigned a plurality of codes for transmitting messages.

The Board did not expressly construe the term “message,” nor did HTC did not seek construction of the term.  However, the Federal Circuit found that Board findings establishing the scope of the patented subject matter may fall within the ambit of claim construction, reviewable on appeal.  However the Federal Circuit found HTC’s arguments unpersuasive and inconsistent.

On the asserted anticipation grounds, the Federal Circuit found that substantial evidence supported the Board’s conclusion, and rejected arguments presented by HTC for the first time on appeal.  On the asserted obviousness grounds, the Federal Circuit agreed with the Board’s reading of the prior art, and found that HTC did not point to any evidence in the record that would undermine the Board’s findings on the scope and content of the prior art.


Obviousness v. Anticipation: That Which Doesn’t Disclose Still Could Teach

In CRFD Research, Inc., v. Matal, [2016-2198] (December 5, 2017), the Federal Circuit affirmed two Final Written Decisions invaliding claims of U.S. Patent No. 7,191,233 on user-directed transfer of an on-going software-based session from one device to another device, and reversed one Final Written Decision that the claims were not obvious.

What is interesting about this case beyond the fact that a patent owner should have to simultaneously defend three IPR attacks on its patent, the loss of any one of which would be fatal, is the Federal Circuit’s reversal of the Board’s determination that Hulu had not shown the challenged claims to have been obvious.  The Federal Circuit said “the Board erred, both in how it performed its obviousness analysis and in the merits of its determination of nonobviousness.”

The Board concluded that the Bates reference did not anticipate certain challenged claims because it did not meet the claim requirement of “transmission of session history after discontinuation.”  Hulu complained, and the Federal Circuit agreed that the Board improperly
relied on its finding that Bates did not anticipate various asserted claims to support its finding of nonobviousness without considering whether Bates suggests transmission of session history after
discontinuation.  The Federal Circuit said that “Even if a reference’s
teachings are insufficient to find anticipation, that same reference’s teachings may be used to find obviousness.”

Hulu further argued that it would have been obvious, based on Bates, to
transmit session history after session discontinuation.  Hulu argued the obviousness of the claims based upon Bates, but the Board declined to institute on grounds of redundancy.  The Federal Circuit noted that Hulu expressly incorporated this argument as part of other grounds of unpatentability on which the Board instituted trial.  The Federal Circuit found that:

To bar Hulu from pressing an argument it raised in a ground the Board found “redundant” and that it expressly incorporated into other proposed grounds of unpatentability on which the Board instituted would not only unfairly prejudice Hulu, but would also raise questions about the propriety of the Board’s redundancy  decision.

Of course, even if it does “raise questions about the propriety of the Board’s redundancy decision,” that should not be a concern of the Federal Circuit because according to Cuozzo institution decisions are not reviewable.  The Federal Circuit went on to find that Bates did in fact sufficiently teach what it did not exprsessly disclose, and reversed the Board’s determination that the claims were not shown to be obvious.

This case illustrates that some of the mischief that arises from a Board’s finding of redundancy.  The petitioner is allowed to use the arguments in the non-instituted redundant ground to support its position in the instituted grounds — at least if they are sufficiently “incorporated.”  Another problem with redundancy is that the estoppel effect is unclear.  The Federal Circuit has indicated that estoppel does not apply to grounds that are not instituted.  HP Inc. v. MPHJ Tech. Inv., LLC, 817 F.3d 1339, 1347-48 (Fed. Cir. 2016).  If this interpretation applies to grounds denied for redundancy, it means that a patent owner could prevail in the IPR, and later face a challenge based upon the redundant ground — one found by the Board to indistinguishable from the ground on which the patent owner prevailed.

You Need Standing to Appeal and IPR Decision, But Not to Participate in the Appeal

In Personal Audio, LLC v. Electronic Frontier Foundation, [2016-1123] (August 7, 2017), the Federal Circuit affirmed the PTAB’s determination in an IPR that claims 31-35 of U.S. Patent No. 8,112,504, related to a system and apparatus for storing and distributing episodic media files, were unpatentable.

The Federal Circuit first addressed whether the Electronic Frontier Foundation had standing to participate in the appeal after  Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014), where the Federal Circuit held that a challenger who was not a competitor did not have Article III standing to appeal a PTAB determination of patentability.

However the Federal Circuit concluded that because Personal Audio had standing to appeal the invalidation of its patent claims, the Electronic Frontier Foundation did not need Article III standing to merely participate in the proceeding in which the appellant had standing.

On the merits, the Federal Circuit rejected Personal Audio’s objections to the Board’s claim construction, and affirmed the Board’s decision that the claims were anticipated or obvious.

Board Was Mixed Up Over Blender Patent

In Homeland Housewares, LLC v. Whirlpool Corp., [2016-1511](August 4, 2017), the Federal Circuit reversed the PTAB’s determination that Whirlpool’s U.S. Patent No. 7,581,688 relating to household blender was not anticipated by U.S. Patent No. 6,609,821.

The patent claims a pre-programmed, automated blending cycle designed to blend items “by repeatedly dropping to a speed slow enough to allow the blender contents to settle around the cutter assembly, and then returning to a [higher] speed suitable for processing the contents.”  It was it was well known that a user could manually pulse between a high speed and a low speed to achieve efficient mixing.  Thus, in the words of the Federal Circuit “the claimed automatic blending routine was, in the prior art, done manually.”

Claim 1 provided that during pulsing, “the speed of the cutter assembly is reduced from the operating speed to a predetermined settling speed.” The Federal Circuit noted that the Board failed to explicitly construe “settling speed,” even though the parties disagreed about its meaning.  Whirlpool urged a construction the essentially required an empirical determination of the settling speed, while Homeland urged a construction that that “settling speed” means any comparative low speed less than the operating speed.  The Federal Circuit found that both parties were wrong, and that the broadest reasonable construction of “a predetermined settling speed” is a speed that is slower than the operating speed and permits settling of the blender contents.

With this construction the Federal Circuit found that the Wulf reference’s teaching of  alternating between high and low speeds “permits the material being blended to fall back to the region of the cutting knives” met the claim language.  While the Board credited Whirlpool’s exert testimony because it was unrebutted, the  Federal Circuit said that expert testimony should be disregarded when it is plainly inconsistent with the record.

The Federal Circuit found all of the claims anticipated, and vacated the decision of the Board.

The Federal Circuit Holds that a Public, Non-Disclosing Sale is Prior Art; But Do the 102(b)(1) Exceptions Apply?

In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., [2016-1284, 2016-1787] (May 1, 2017), the Federal Circuit reversed the district court’s determination that U.S. Patent Nos.  7,947,724, 7,947,725, 7,960,424, and 8,598,219, were not anticipated, finding that the patents-in-suit were subject to an invalidating contract for sale prior to the critical date, and the AIA did not change the statutory meaning of “on sale.”  The product covered by the patents was subject to a Supply and Purchase Agreement, contingent on FDA approval of the formulation, the terms of which were public except for the price and the specific dosage formulation covered by the agreement.

As to the ’724, ’725, and ’424 patents, the district court found that pre-AIA law applied under § 102(b) and that the Supply and Purchase Agreement was a contract for a future sale of a commercial product embodying the
0.25 mg dose and therefore constituted a sale under (old) §102(b). But, the district court found that the claimed invention was not reduced to practice before the critical date, and therefore was not ready for patenting
under the second prong of Pfaff.

As to the ’219 patent governed by the AIA, the court held that the AIA changed the meaning of the on-sale bar and § 102(a)(1) now “requires a public sale or offer for sale of the claimed invention.” The district court concluded that, to be “public” under the AIA, a sale must publicly disclose the details of the invention, and thus the Supply and Purchase Agreement did not constitute a public sale or commercial offer for sale because, although it disclosed the sale agreement and substance of the transaction, it failed to publicly disclose the 0.25 mg dose. The district court also found that the invention was not ready for patenting before the critical date.

On the issue of the post-AIA meaning of “on sale,” the Federal Circuit acknowledged the arguments that the statutory language “otherwise available to the public” and various statements by individual members of Congress, meant that “on sale” in post-AIA 102 does not include non-disclosing sales.  After first noting that “floor statements are typically not reliable,” the Federal Circuit distinguished these statements as directed to non-disclosing public uses, not non-disclosing offers for sale.  The Federal Circuit noted that the comments did not identify any sale cases that would be overturned by the amendments, and noted that even if they were intended to overrule prior secret sale cases, the comments still did not apply because the case before it involved a public but non-disclosing sale.

The Federal Circuit said that requiring disclosure as a condition of the on-sale bar would work a “foundational change” in the theory of the statutory on-sale bar.  The Federal Circuit noted that both the Supreme and its own precedent had rejected the requirement that the sale be disclosing:

[O]ur prior cases have applied the on-sale bar even when there is no delivery, when delivery is set after the critical date, or, even when, upon delivery, members of the public could not ascertain the claimed invention.

The Federal Circuit found no indication in the floor statements that these
members intended to overrule these cases, and in fact the Federal Circuit found the statements to be consistent.  The Federal Circuit found no floor statements suggesting that the sale or offer documents must themselves publicly disclose the details of the claimed invention before the critical
date, and said that if Congress intended to work such a sweeping change to our on-sale bar jurisprudence and wished to repeal these prior cases legislatively, it would do so by clear language.

The Federal Circuit concluded that “after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale.”  Thus the Supply and Purchase Agreement constituted a sale of the claimed invention before the critical
date, and therefore both the pre-AIA and AIA on-sale bars apply.

Finally, the Federal Circuit found the invention was ready for patenting, so that the pre-filing sales did, in fact, invalidate the four patents in suit.

The Federal Circuit’s construction makes some sense, relying on the addition of a clause, and some remarks of a few Congressmen does not seem a proper way to over rule a century of cases surrounding the meaning of “on sale.”  However, the overall structure of the statute raises a further question — assuming that the Federal Circuit is correct, does the statute provided any any grace period for non-disclosing sales?  In the rearrangement of Section 102 by the AIA, the grace period was separated into its own section (§102(b)(1)), and by its express terms, only applies to disclosures:

(b)(1) Disclosures made 1 year or less before the effective filing date of the claimed invention.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

It would seem either a non-disclosing offer for sale or sale is a disclosure, which does not make linguistic sense, or a non-disclosing offer for sale or sale is an absolute bar to patentability because there is no exception for non-disclosures. which does not make practical sense.  The result would be that a public non-disclosing sale is an immediate bar to patentability, but a public disclosing sale is not.

It is possible that the §102(b)(1) exception could be found to apply by treating the disclosure of the offer for sale or sale as a disclosure that triggers the exception, but such an interpretation strains the language of the statutory exceptions, which refer to “subject matter.”  It also raises further questions, such as: Does the public disclosure of a non-disclosing offer for sale or sale, count as a disclosure that bars third parties from filing on the undisclosed subject matter?  Does the public siclosure of a non-disclosing offer for sale or sale count as a §102(b)(1)(B) disclosure that would remove subsequent third party disclosures of the subject matter as prior art?

If a public, non-disclosing offer for sale, is in fact a disclosure, it would seem that this would provide a peculiar incentive for inventors to make a public but non-disclosing offer for sale of an invention immediately, the subject matter of which would be prior art to all subsequent third parties under 102(a), and would remove the prior art effect of subsequent third party disclosures under 102(b)(1)(B), all without actually disclosing what was invented.

The definitions of what is and what is not patentable, and what is and what is not prior art, are fundamental to a patent system.  It is disappointing that something optimistically titled the America Invents Act could not have been better thought out.




Dependent Claims Anticipated, While Independent Claims Were Not

In Duncan Parking Technologies, Inc. v IPS Group, Inc., [IPR2016-00067] (March 27, 2017) the PTAB found that claims 8 and 10 of U.S. Patent No. 7,854,310 were anticipated under 102(e), while claims 1–5, 7, and 9, including the claim 1 from which claim 8 depended and claim 9 from which claim 10 depended were not anticipated.  This peculiar result stemmed from the fact that the cited reference, the King ’054 patent, named King and Schwarz as inventors, while the ‘310 patent named King, Hunter, Hall, and Jones.  Petitioner urged that the King  ‘054 patent was “by another” inventive entity, qualifying it as prior art under §102(e).  The patent owner argued that King was the sole inventor of the subject matter claimed in claims 1–5, 7, and 9 of the the ‘310 patent, and as disclosed in the ‘054 patent, and thus the ‘054 did not represent work “by another” with respect to the subject matter of claims 1–5, 7, and 9.  The PTAB rejected petitioner’s arguments that Schwarz was a co-inventor of the relevant disclosure in King ‘054 or that Jone was a co-inventor of the subject matter in claims 1–5, 7, and 9.

Noting that the touchstone of inventorship is conception, the PTAB concluded that the record as a whole adequately established that King had mentally conceptualized the invention, and athough King engaged a third party to implement various mechanical aspects of the invention, the record conveys that the third party’s role in such implementation was more tantamount to perfection or reduction to practice of King’s conceived invention, rather than amounting to acts of conception with respect to claims 1–5, 7, and 9. The PTAB concluded that such perfection does not negate King’s claim of sole inventorship.

With respect to claims 8 to 10, the PTAB found that the record created a clearer picture that the inventive entity of claims 8 and 10 of the ’310 patent is different than the entity that created the same content of King ’054.

Prior Art that must be Distorted from its Obvious Design does not Anticipate

In re Chudik, [2016-1817] (March 27, 2017), the Federal Circuit reversed the PTAB’s determination that claims 1, 15, 18, and 33–40 of U.S. Patent Application 11/525,631 on an implant for shoulder replacement surgery were anticipated.

The rejected claims required “a shell having a protruding surface on a first side arranged to engage the surface of a cavity formed in a glenoid extending between peripheral glenoid surfaces.  The PTAB affirmed the rejection because claims did not require the recited surfaces engage the specified glenoid regions; rather they require only that the recited surfaces be arranged for such engagement.

A patent claim is invalid for anticipation under 35 U.S.C. § 102 when a prior art reference describes each and every claim limitation and enables one of skill in the art to practice an embodiment of the claimed invention without undue experimentation.  However, a prior art reference that must be distorted from its obvious design does not anticipate a patent claim.


The Board found that because the surfaces of element of the prior art “can still be arranged to” engage the glenoid regions, it anticipated the claims.  However the Federal Circuit rejected this finding, noting that while the claim language could imply that the protruding surface on the flat side need not always actually engage the glenoid cavity surface, it must be at least capable of doing so.  The Federal Circuit found that the prior art ’s protruding surface cannot be arranged to engage the glenoid cavity surface without reconfiguration.  The Federal Circuit said that prior art that “must be distorted from its obvious design” does not anticipate a new invention.

The Federal Circuit reached a similar result with respect to a second reference because this endeavor would constitute a significant and impermissible modification of the prior art.



Invention Must Inevitably Result to be Anticipated by Inherency

In U.S. Water Services, Inc., v. Novozymes A/S, [2015-1950, 2015-1967] (December 15, 2016), the Federal Circuit vacated summary judgment of anticipation, and affirmed the denial of summary judgment of no inequitable conduct.

The patents relate to methods of reducing fouling in fermentation equipment through the use of phytase.  The district court found the claims inherently anticipated.  The Federal Circuit cautioned that inherency may not be established by probabilities or possibilities, and said that the mere fact that a certain thing may result from a given set of circumstances is not sufficient.  The inherent result must inevitably result from the disclosed steps.

While the prior art disclosed the use of phytase in fermentation, the Federal Circuit found that the district court erred in finding no genuine dispute of material fact as to whether the patents-in-suit were inherently anticipated because the prior art discloses the conditions that will necessarily result in phytase reducing deposits.  In particular the district court erred in deeming irrelevant evidence that practicing the prior art will not always result in deposit reduction.  The Federal Circuit found a genuine dispute as to a material fact remained and that, consequently, the district court improperly granted summary judgment on inherent anticipation.

Regarding the denial of Summary Judgment of no inequitable conduct. A party seeking to prove inequitable conduct must
show that the patent applicant made misrepresentations
or omissions material to patentability, that he did sowith the specific intent to mislead or deceive the USPTO, and that deceptive intent was the single most reasonable inference to be drawn from the evidence.  The Federal Circuit found no genuine dispute about this material fact.  The Federal Circuit found that the record contains no suggestion that, but-for the disclosures the examiner would not have issued the patents-in-suit.