WALKING DEAD PATENT CLAIMS IN AN IPR
| July 31, 2020
UNILOC 2017 LLC v. HULU, LLC, NETFLIX, INC
July 22, 2020
This precedential decision is made particularly interesting based on the dissenting opinion by Judge O’Malley pointing out that the CAFC’s affirmance of a district court’s ineligibility determination in a related district court proceeding makes the case moot, as there are no remaining challenged claims to replace with substitute claims. More specifically, when Uniloc did not seek Supreme Court review of the district court’s ineligibility determination, the appeal should have been dismissed as moot (“[A]n appeal should … be dismissed as moot, when, by virtue of an intervening event, a court of appeals cannot grant any effectual relief whatever in favor of the appellant.” Calderon v. Moore, 518 U.S. 149, 150 (1996) (quotation marks omitted). The majority opinion, however, treats the merits of the case (since Hulu had not filed anything contending that the PTAB had lost authority) and finds that §101 can be considered in an IPR with respect to substitute claims.
Background
To better understand the issues surrounding this case, it is necessary to piece together the complete background from both the majority and dissenting opinions. In 2016, Uniloc filed several lawsuits in the Eastern District of Texas alleging infringement of the claims of its U.S. Patent No. 8,556, 960 (the ‘960 patent). In March 2017, the district court dismissed the cases for failure to state a claim, holding all claims patent ineligible under §101. Uniloc appealed and the CAFC summarily affirmed the district court decision on August 9, 2018. Uniloc did not seek Supreme Court review.
The PTAB had instituted an inter partes review (IPR) of claims 1-25 of the ‘960 patent in August 2017. On August 1, 2018, the PTAB issued a final written decision (FWD) finding claims 1-8, 18-22, and 25 unpatentable over prior art. Prior to the FWD, Uniloc had filed a Motion to Amend asking the PTAB to enter substitute claims 26-28 for claims 1, 22 and 25 if the PTAB found the latter unpatentable. Hulu opposed the motion, arguing among other things that the substitute claims were directed to patent-ineligible subject matter. Uniloc replied that Hulu was not permitted to raise §101 in an IPR and did not respond substantively to the §101 issue.
The PTAB concluded that it could analyze the §101 issue with respect to the substitute claims. The PTAB denied Uniloc’s Motion to Amend concluding that Hulu had shown by a preponderance of the evidence that the substitute claims were directed to non-statutory subject matter under §101, which was the sole ground for denying the motion to amend. Uniloc had opposed the motion merely by arguing that §101 cannot be considered without addressing the merits of §101.
Uniloc requested rehearing of the PTAB’s decision on August 31, 2018, as to only the proposed amended claims, which was denied on January 18, 2019. At the time of this denial, the time for seeking Supreme Court review of the August 9, 2018 CAFC decision had run. It could be said that at this point all claims of the ‘960 patent were dead. As such, by treating the merits of the case, these dead claims have the possibility of being resurrected by entry of substitute claims.
The panel consisted of Wallach, Taranto and O’Malley. Wallach filed the opinion for the majority and O’Malley filed the dissenting opinion.
The Majority Opinion
The majority opinion noted that Hulu had filed nothing as of August 31, 2018, contending that the PTAB had lost any authority to consider the substitute claims “given the final federal-court invalidation of the original claims – a contention that would have called for vacatur of the Final Written Decision rather than a denial of rehearing.” The majority opinion held that the case is not moot as it is possible to “grant effectual relief”, reasoning that if Uniloc is correct that the PTAB is statutorily barred from rejecting a substitute claim based on §101, then it is entitled to adding those claims because §101 was the only ground for finding unpatentability. The majority further pointed out that Hulu had waived its arguments that the final federal-court judgment of invalidity of the claims took the authority away from the USPTO to consider the substitute claims. Hulu did not argue to the PTAB in response to Uniloc’s petition for rehearing (which was filed after the federal-court invalidity judgment became final) that the PTAB had lost authority.[1] The majority noted that Congress did not carry forward pre-AIA § 317(b) concerning the termination of inter partes reexamination based on parallel judicial proceedings.
Having concluded that the CAFC had jurisdiction, the majority concluded that the PTAB was authorized by statute to assess substitute claims for eligibility under §101. The majority held that the PTAB correctly concluded that it is not limited by §311(b) in its review of proposed substitute claims in an IPR. The majority explained that the “determination is 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).” Among the reasoning noted in the opinion, “if a patent owner seeking amendments in an IPR were not bound by § 101 and §112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification.”
O’Malley’s Dissent
O’Malley began her dissent by pointing out:
Typically, when this court has finally adjudged a patent claim as invalid, it also refuses to consider any appeal that demands relief dependent on that claim and vacates any such relief that has been awarded by another tribunal.
As such, O’Malley considers that the majority breathes life into a dead patent “and uses the zombie it has created as a means to dramatically expand the scope of inter partes review”. As such, O’Malley considers the PTAB to have been estopped from issuing substitute claims in place of the invalidated claims, and that even if the PTAB could issue such claims, it is improper to consider §101.
O’Malley first points out that the case is moot based on an intervening event (the final federal-court decision of unpatentability of all claims). O’Malley explains, contrary to the majority, that relief is only possible in the event of a remand to allow the PTAB authority to issue substitute claims.
After our affirmance of the district court’s ineligibility determination, and once the time expired for Uniloc to seek Supreme Court review of that affirmance, it did not possess any patent rights that it could give up in exchange for a substitute claim.
As such, the question is whether the Board can consider a request for substitute claims where, in a parallel proceeding with a final judgment, the original claims have been held invalid.
O’Malley further considers that the patent owner can only propose narrowed claims that address the issues raised in the petition, and therefor IPRs are limited to §§ 102 and 103. The language of the statute clearly prohibits consideration of patentability challenges other than §§ 102 and 103.
O’Malley further notes that IPRs were intended to be an efficient, cost-effective means of adjudicating patent validity. The majority opinion “opens substitute claims to an examination equivalent to that undertaken during patent prosecution, in an inter partes environment.”
One last notable quote:
This case was dead on arrival—there were no live claims remaining in the ’960 patent. I see the dead patent for what it is—a legal nullity incapable of supporting any further proceedings. I would end the case with that revelation. The majority, however, views the ’960 patent as an opportunity and takes it. It declares that dead patents can walk, at least as far as needed to die again on the same § 101 sword that killed it two years ago. That sword, however, does not exist in the IPR context. The Board can cancel claims and find proposed substitute claims unpatentable, certainly. It simply does not have statutory authority to do so based on § 101. Accordingly, I dissent.
Takeaways
This case likely would have been considered moot had Hulu at least filed some argument when the federal-court decision had become final and therefore the PTAB no longer had authority to act. Furthermore, Uniloc could have placed itself in a better position during the IPR by responding substantively that its substitute claims meet the standards for eligibility even though it was not yet clear whether § 101 could be considered. A different outcome is certainly possible had the timing of the related proceedings had been different.
[1] In inter partes reexamination (pre-AIA), a petition to dismiss the proceeding can be filed upon a final judgment in a concurrent federal proceeding. The author had successfully ended two inter partes reexaminations by filing such petitions.
CAFC Remands Back To PTAB Instructing Them To Conduct The Analysis And Correct The Mistakes In Wearable Technology IPR Case
| July 22, 2020
Fitbit, Inc., v. Valencell. Inc.
July 8, 2020
Before Newman, Dyk and Reyna. Opinion by Newman
Background:
Apple Inc., petitioned the Board for IPR (Inter Partes Review) of claims 1 to 13 of the U.S. Patent No., 8,923,941 (the ‘941 patent) owned by Valencell, Inc. The Board granted the petition in part, instituting review of claims 1, 2 and 6 to 13, but denying claims 3 to 5.
Fitbit then filed an IPR petition for claims 1, 2 and 6 to 13, and moved for joinder with Apple. The Board granted Fitbit’s petition and granted the motion for joinder.
After the PTAB trial, but before the Final Written Decision, the Supreme Court decided SAS Insitute, Inc., v. Iancu, 138 S. Ct 1348 (2018), holding that all patent claims challenged in an IPR petition must be reviewed by the Board, if the petition is granted. Thus, the Board re-instituted the Apple/Fitbit IPR to add claims 3 to 5.
The Board issued a Final Written Decision that held claims 1, 2 and 6 to 13 unpatentable, and claims 3 to 5 not unpatentable. Apple withdrew and Fitbit appealed the decision on claims 3 to 5. Valencell challenged Fitbit’s right to appeal claims 3 to 5.
Issues:
I. JOINDER AND RIGHT OF APPEAL
“Valencell’s position was that Fitbit did not have standing to appeal the portion of the Board’s decision that related to claims 3 to 5, because Fitbit’s IPR petition was for claims 1, 2 and 6 to 13.” Citing Wasica Finance GmbH v. Continental Automotive Systems, Inc., 853 F.3d 1272, 1285 (Fed. Cir. 2017), Valencell argued that Fitbit had “waived any argument it did not present in its petition for IPR.” That is, Valencell argued that Fitbit does not have the status of “party” for the purpose of the appeal because “Fitbit did not request review of claims 3 to 5 in its initial IPR petition.”
Fitbit countered that although it did not “seek to file a separate brief after claims 3 to 5 were added to the IPR” the briefs were not required in order to present the issues, and the CAFC agreed that the circumstances do not override Fitbit’s statutory right of appeal.
The CAFC concluded that “Fitbit’s rights as a joined party applies to the entirety of the proceeding” including the right of appeal.
II. CONSTRUCTION OF THE CLAIMS ON APPEAL
Claims 3 to 5 at issue are as follows:
3. The method of claim 1, wherein the serial data output is parsed out such that an application-specific interface (API) can utilize the physiological information and motion-related information for an application.
4. The method of claim 1, wherein the application is configured to generate statistical relationships between subject physiological parameters and subject physical activity parameters in the physiological information and motion-related information.
5. The method of claim 4, wherein the application is configured to generate statistical relationships between subject physiological parameters and subject physical activity parameters via at least one of the following: principal component analysis, multiple linear regression, machine learning, and Bland-Altman plots.
- CLAIM 3
The Board did not review patentability of claim 3 on the asserted grounds of obviousness holding that the claim is “not unpatentable” based solely on their “rejection of Fitbit’s proposed construction of the term application-specific interface (API).
Specifically, Fitbit argued that the “broadest reasonable interpretation of “application-specific interface (API)…include[s] at least an application interface that specifies how some software component should interest with each other.” Fitbit’s interpretation was based heavily on the use of “API” which followed application-specific interface. API meaning ‘application programming interface.’
Valencell argued for a narrower meaning, based upon the specification and the prosecution history. In particular, during prosecution the applicant had relied upon the narrow scope to distinguish from a cited reference.
The Board concluded the narrower claim construction was correct, and rejected Fitbit’s broader construction. The CAFC agreed with the Boards conclusion as to the correct claim construction.
However, following the Boards rejection of Fitbit’s claim construction they did not review the patentability of claim 3, as construed, on the asserted ground of obviousness. The Board explained that because “Petitioner’s assertions challenging claim 3 are based on the rejected construction…the evidentiary support relied upon is predicated upon the same” and so “[W]e do not address this claim further.”
CAFC held this was erroneous, vacated the Board’s decision and remanded for determination of patentability in light of the cited references.
- CLAIMS 4 AND 5 – ANTECEDENT BASIS OF ‘THE APPLICATION’
The Board held that claims 4 and 5 were “not unpatentable” because “the Board could not determine the meaning of the claims due to the term “the application” lacking antecedent basis.
The mistake had occurred due to the cancellation of claim 2, and erroneous renumbering of claim 4. Both Fitbit and Valencell agreed to this. Board declined to accept the parties’ shared view, stating:
Although we agree that the recitation of the term “the application” in claim 4 lacks antecedent basis in claim 1, we declined to speculate as to the intended meaning of the term. Although Petitioner and Patent Owner now seem to agree on the nature of the error in claims 4 and 5 [citing briefs], we find that the nature of the error in claims 4 and 5 is subject to reasonable debate in view of the language of claims 1 and 3–5 and/or that the prosecution history does not demonstrate a single interpretation of the claims.
The CAFC disagreed with the Board, holding that although “the Board states that the intended meaning of the claims is “subject to reasonable debate,” we perceive no debate. Rather, the parties to this proceeding agree as to the error and its correction.”
The CAFC concluded that on remand the Board shall fixed the error and determine patentability of corrected claims 4 and 5:
The preferable agency action is to seek to serve the agency’s assignment under the America Invents Act, and to resolve the merits of patentability. Although the Board does not discuss its authority to correct errors, there is foundation for such authority in the America Invents Act, which assured that the Board has authority to amend claims of issued patents. See 35 U.S.C. § 316(d). . . . The concept of error correction is not new to the Agency, which is authorized to issue Certificates of Correction.
Comments:
A joined party has full rights to appeal a PTAB final decision.
During an IPR, the Board has authority to correct mistakes in the claims of an issued patents, in particular those where a certificate of correction would be fitting.
Always, be careful when renumbering claims for antecedent issues.
CAFC Finds Claim Limitations Missing in the Prior Art May Still Be Obvious with Common Sense
| July 13, 2020
B/E AEROSPACE, INC. v. C&D ZODIAC, INC
June 26, 2020
Lourie, Reyna, and Hughes, Opinion by Reyna.
Summary:
On appeal from an inter partes review proceeding wherein the petitioner, C&D Zodiac, Inc. (“Zodiac”), successfully challenged two patents owned by B/E Aerospace, Inc. (“B/E”), U.S. Patent No. 9,073,641 (“the ’641 patent”) and U.S. Patent No. 9,440,742 (“the ’742 patent”) B/E asserted that the PTAB had failed to consider all the limitations of the claims. The patents involved space-saving technologies for aircraft enclosures, such as lavatory enclosures, designed to “reduce or eliminate the gaps and volumes of space required between lavatory enclosures and adjacent structures.”
The CAFC concluded that the Board’s final determination of obviousness by predictable result of a known element and common sense was correct and therefore affirmed the Board’s decision.
Details:
Claim 1 of the ’641 patent was designated as representative of the challenged claims.
1. An aircraft lavatory for a cabin of an aircraft of a type that includes a forward-facing passenger seat that includes an upwardly and aftwardly inclined seat back and an aft-extending seat support disposed below the seat back, the lavatory comprising:
a lavatory unit including a forward wall portion and defining an enclosed interior lavatory space, said forward wall portion configured to be disposed proximate to and aft of the passenger seat and including an exterior surface having a shape that is substantially not flat in a vertical plane; and
wherein said forward wall portion is shaped to substantially conform to the shape of the upwardly and aftwardly inclined seat back of the passenger seat, and includes a first recess configured to receive at least a portion of the upwardly and aftwardly inclined seat back of the passenger seat therein, and further includes a second recess configured to receive at least a portion of the aft-extending seat support therein when at least a portion of the upwardly and aftwardly inclined seat back of the passenger seat is received within the first recess.
The appeal focused on the “first recess” and “second recess” limitations, labeled as elements 34 and 100, respectively, in Figure 2 of the ‘641 patent reproduced below.
The IPR had only one instituted ground: that the challenged claims were obvious over the “Admitted Prior Art” and U.S. Patent No. 3,738,497 (“Betts”). The “Admitted Prior Art” included Figure 1. Betts discloses an airplane passenger seat with tilting backrest. Rather than a flat forward-facing wall, Betts discloses a contoured forward-facing wall to receive the tilted backrest. The Court noted that the “lower portion 30” of Betts slants rearwardly to provide space for a seatback 12 and the top 32 of the storage space 16 also slants rearwardly to not interfere with the seatback 12.
The PTAB had ruled that the Bett’s contoured wall design met the “first recess” limitation and that skilled artisans (airplane interior designers) would have been motivated to modify the flat forwardfacing wall of the lavatory in the Admitted Prior Art with Betts’s contoured, forward-facing wall to preserve space in the cabin.
While the cited art does not disclose the “second recess” to receive passenger seat supports, the Board agreed with Zodiac that creating a recess in the wall to receive the seat support was an obvious solution to a known problem and found that Zodiac “established a strong case of obviousness based on the Admitted Prior Art and Betts, coupled with common sense and the knowledge of a person of ordinary skill in the art.”
B/E’s appeal argued that the Board’s obviousness determination is erroneous because it improperly incorporated a second recess limitation not disclosed in the prior art.
Analysis
The CAFC determined that only the “second recess” limitation was at issue. They found no error in the PTAB’s approaches to finding the “second recess” obvious. First noting that the prior art yields a predictable result, the “second recess,” because a person of skill in the art would have applied a variation of the first recess and would have seen the benefit of doing so. The Court noted the evidence provided by Zodiac’s expert and quoted the often cited KSR recitation: “The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. . . . If a person of ordinary skill in the art can implement a predictable variation § 103 likely bars its patentability.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 416 (2007).
The Court further affirm the Board’s conclusion that the challenged claims would have been obvious because “it would have been a matter of common sense” to incorporate a second recess in the Admitted Prior Art/Betts combination. B/E argued that the Board legally erred by relying on “an unsupported assertion of common sense” to “fill a hole in the evidence formed by a missing limitation in the prior art.” The Court again cited KSR, noting that common sense teaches that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. Id at 421. (“A person of ordinary skill is also a person of ordinary creativity, not an automaton.”). They found the PTAB’s “invocation of common sense was properly accompanied by reasoned analysis and evidentiary support” noting that the Board dedicated more than eight pages of analysis to the “second recess” limitation and relied on detailed expert testimony.
The Court noted their decision in Perfect Web Techs, Inc. v. InfoUSA, Inc., that “[c]ommon sense has long been recognized to inform the analysis of obviousness if explained with sufficient reasoning.” 587 F.3d 1324, 1328 (Fed. Cir. 2009). They concluded that the Board properly adequately explained their reasoning that the missing claim limitation (the “second recess”) involves repetition of an existing element (the “first recess”) until success is achieved (reasoning that the logic of using a recess to receive the seat back applies equally to using another recess to receive the aft extending seat support).
The CAFC therefore affirmed the PTAB’s finding of the challenged claims unpatentable.
Take Aways
Patent holders need to be cautious in relying on simple limitations. Such limitations may be considered obvious even if not clearly recited in the prior art. Consideration of whether the use of common sense by a skilled artisan would result in the inclusion of the limitation needs to be taken into consideration.
