Reexamination Bites Another Patent Owner

Stephen G. Adrian | April 16, 2014

In Re Teles AG Informationstechnologien and Sigram Schindler Beteiligungsgesellschaft MBH

Decided April 4, 2014,

Before Dyk, Moore, and Wallach.  Opinion by Dyk

Summary:

This precedential decision illustrates a number of strategies that a patent owner may need to consider when an unfavorable decision is rendered by the Board of Patent Appeals and Interferences (now Patent Trial and Appeal Board) during a reexamination proceeding. Although an appeal to the Federal Circuit is most commonly pursued by a patent applicant, why would a patent owner consider an appeal to the U.S. District Court for the District of Columbia? In addition, this decision illustrates that while a broad claim construction may be desirable to ensnare infringers, a broad claim construction can also come back to bite the patent owner in a way to render claims invalid over the prior art.

Details:

A third party filed an ex parte reexamination of U.S. Patent No. 6,954,453, owed by Teles. The reexamination proceeded to appeal, where the Board affirmed the Examiner’s rejection of claims 34-36 and 38 as obvious over prior art. Teles sought review in district court, but the case was dismissed for lack of subject matter jurisdiction, holding that the 1999 amendments of 35 USC §145 could not be maintained by patent owners. Teles then appealed the dismissal to the Federal Circuit.

1. Jurisdiction

Although not evident from the decision itself, a patent practitioner should initially wonder why an appeal to the district court would be considered. The reason becomes apparent by reviewing the reexamination proceeding. In particular, after the appeal to the Board, it seems that Teles may have understood that a broad claim interpretation of the means plus function language could be a problem. Teles attempted to add new claims after the appeal to the Board by petitioning for entry of the new claims. However, the petition was denied. An appeal to the district court would be advantageous as it allows patent applicants to introduce new evidence which would not be possible with an appeal to the Federal Circuit. This strategy seems like the best option to pursue, particularly since prior decisions (See Joy Techs., Inc. v. Manbeck, 959 F.2d 226, 227 (Fed. Cir. 1992)) allowed patent owners to appeal adverse decisions to the district court even though §145 refers to patent applicants. Unfortunately for Teles, the Federal Circuit held the subsequent amendments to §145 clarified that appeals to the district court by patent owners was no longer permitted. Three reasons were given for this conclusion: In 1999, (1) Congress amended § 141 to state that patent owners may appeal only to the CAFC; (2) §134 was amended for the first time to refer to patent applicants, patent owners and third party requesters individually; and (3) §145 was amended so that it no longer referred to §134 generally, but instead to specifically refer to §134(a) (which defines a patent applicant). Accordingly, the CAFC affirmed that the district court lacked jurisdiction.

The issue of jurisdiction did not apply to decisions rendered as late as 2009 (See Takeda Pharm. Co., Ltd. v. Doll, 561 F.3d 1372 (Fed. Cir. 2009), so it would seem that Teles had a strong argument for jurisdiction. In this regard, Teles pointed out that amended §306 continued to read:

The patent owner involved in a reexamination proceeding under this chapter may appeal under the provisions of section 134 of this title, and may seek court review under the provisions of section 141 to 145 of this title, with respect to any decision adverse to the patentability of any original or proposed amended or new claim of the patent.

However, this argument was dismissed as a drafting error, as the 2011 amendments to §306 limited review to patent owners under the provisions of sections 141 to 144.

Although it would seem that it was over for Teles, the CAFC did hold that the district court erred in dismissing the case instead of transferring the case to the Federal Circuit. Under these circumstances, it was in the interest of justice to transfer the case pursuant to §1631.

2. Claim Construction and Obviousness

Teles argued that the Board decision was based upon an incorrect claim construction. However, during reexamination, the PTO must give claims their broadest reasonable interpretation. The Board’s interpretation focused on dependent claim 35.

34. Switching apparatus for routing a telephone call comprising non-packetized data from a first end terminal located at a user’s premises to a second end terminal located at another user’s premises, selectively by line switching or packet switching, the switching apparatus comprising:

means for establishing a connection through a line-switching network to the second end terminal;

means for line-switching transferring data received from the first end terminal as non-packetized data over the line-switching network to the second end terminal;

means for establishing a connection through a packet-switching network to the second end terminal;

means for packet-switching transferring data received from the first end terminal as non-packetized data over the packet-switching network to the second end terminal; and

means responsive to a control signal for transferring to a line-switching transfer or a packet switching transfer to the second end terminal;

said means responsive to a control signal changing-over to a line switching data transfer or a packet-switching transfer during the existing transfer with the presence of said control signal.

35. The switch of claim 34, further comprising means to produce the control signal for transferring to a line-switching transfer or a packet-switching transfer to the second end terminal, said control signal being produced automatically.

Claim 35 deals with line switching and packet switching in routing telephone calls. Line switching requires a connection to be continuously provided in real time with the complete bandwidth whereas packet switching does not need to maintain a continuous connection. As such, claim 35 deals with a device for switching from a packet-switched network to a line-switched network “automatically when demands on the quality of the data transfer are understepped or exceeded.”

The Board construed the claimed “means to produce the control signal” under § 112 ¶ 6 and defined the function as “produc[ing] the control signal for transferring to a line-switching or a packet-switching transfer to the second end terminal.” The Board agreed with the examiner that, in order to release a control signal, the claim required monitoring factors related to demands of quality, but did not limit those factors to include only the bandwidth of a particular transfer. The Board explained that “by using the broad term ‘demands of quality’ in the specification, claim 35 is not limited to the ‘bandwidth of a transfer,’” and that the time delay of a transmission was an example of a “quality factor.”

Teles had argued that a passage in the specification requires the function to include monitoring the bandwidth, but this was found to be merely an alternative possibility, not a requirement of the claim.

Based on this claim construction, the prior art became a problem for Teles as the prior art was considered to teach “producing a control signal automatically when the demands of quality are understepped or exceeded.”

Takeaway:

Civil actions under §145 are no longer available to patent owners due to the 1999 amendments. When a reexamination is declared, it is particularly important for patent owners to ensure all issues of claim interpretation are understood, and that all evidence and amendments are presented timely.

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