The CAFC reviewed the PTAB’s application of the time-bar under § 315(b) and the obviousness determination
| June 20, 2018
WesternGeco LLC v. ION Geophysical Corporation, ION International S.A.R.L. (collectively, “ION”); In re WesternGeco, LLC.
May 7, 2018
Before Wallach, Chen and Hughes. Opinion by Chen.
This is the latest Federal Circuit (“CAFC”) decision in a series of patent litigations since 2009. In this case, the CAFC reviewed two main issues appealed from six inter partes review (“IPR”) decisions.
Firstly, the CAFC reviewed the Patent Trial and Appeal Board’s (“PTAB”) decision regarding the time-bar determination. Under § 315(b), the U.S. Patent and Trademark Office “may not institute an IPR where the petition ‘is filed more than 1 year after the date on which the petitioner, the real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.’” However, the PTAB found that ION was not sufficiently close to the third party, Petroleum Geo-Services, Inc. (“PGS”), “such that both should be bound by the trial outcome and related estoppels.” Thus, there was no privity between ION and PGS, and the time-bar was not applicable here. The CAFC affirmed the PTAB’s decision and this case was reviewed on the merits.
Secondly, the CAFC reviewed the PTAB’s determination of obviousness in the IPRs. Regarding U.S. Patent No. 7,080,607 (the “’607 Patent”), the CAFC affirmed the PTAB’s claim construction because WesternGeco’s argument relied on a part of the specification which only described preferred embodiment and could not rebut the PTAB’s rationale. With respect to U.S. Patent No. 7,293,520 (the “’520 Patent”), the CAFC said the PTAB’s obviousness determination was correct because WesternGeco failed to show evidence of impermissible hindsight to prove obviousness. As for U.S. Patent No. 7,162,967 (the “’967 Patent”), the CAFC affirmed the PTAB’s decision because the PTAB showed substantial evidence of obviousness which WesternGeco could not rebut. Also, WesternGeco did not show a nexus between the ’967 and ’520 Patents’ claims and any objective evidence of nonobviousness. The CAFC fully affirmed the PTAB’s conclusion.
Japanese Summary
本件は2009年に始まった特許訴訟で争われた一連の訴訟の最新のCAFC判決であり、CAFCは6つのIPRから控訴された2つの争点について判断した。
第一の争点は米国特許庁審判部(PTAB)による特許法第315条(b)項のTime-barの判断の正否であった。特許法第315条(b)項は、米国特許商標庁は、申立人、利害関係のある実際の当事者(real party in interest)、又は申立人と当事者関係(privity)のある者が当該特許の侵害を主張する告訴を受けた日から1年を超えて申立がなされた場合、IPRを開始することはできないと規定している。本件では、PTABは、ION社はPGS社のIPRの結果に拘束されるほど十分にPGS社と密接な関係をもっていないので、ION社とPGS社の間に当事者関係がないとした。CAFCはPTABの判断を支持し、本件の実体的事項を検討する(on the merits)とした。
第二の争点は、先のIPRにおけるPTABの自明性判断であった。607特許に関しては、WesternGeco社が自社の主張に引用した明細書の箇所は、実施例を述べているだけであり、PTABの解釈を反駁できなかったので、CAFCはPTABのクレーム解釈を認めた。520特許については、WesternGeco社は、PTABが「不当な後知恵(impermissible hindsight)」を用いたという証拠を示さなかったので、CAFCはPTABの自明性の判断を支持した。967特許については、PTABは自明である明白な証拠を示しており、WesternGeco社はそれに反論できなかった。さらに、WesternGeco社は967特許と520特許のクレームと、非自明性の証拠の因果関係(nexus)を示さなかったのでCAFCはPTABの解釈を支持した。
Details
- Time-bar and Privity Under §315(b)
Litigation History
This case is the latest CAFC judgment in this series of patent litigations that began in 2009. WesternGeco sued ION in 2009 in the Southern District of Texas for infringing four of WesternGeco’s patents: U.S. Patent No. 6,691,038 (the “’038 Patent”) and the ’607, ’520 and ’967 Patents. At that time, WesternGeco subpoenaed PGS and PGS appeared as a third party. The jury verdict in 2012 found the case in favor of WesternGeco.
On appeal in 2015,[1]</sup. the CAFC reversed the award of lost profits resulting from conduct that occurred outside of the United States. WesternGeco petitioned the U.S. Supreme Court and the Court granted the petition, vacated the CAFC judgement and remanded the case. On remand in 2016,[2] the CAFC affirmed the District Court’s judgment in most aspects, except for “willful infringement by ION and remanded for further consideration of enhanced damages under § 284.”
WesternGeco, in turn, sued PGS in the Southern District of Texas on the same patents for which WesternGeco sued ION. The Court found that PGS infringed the alleged patents. PGS subsequently filed IPRs for review of WesternGeco’s patents and the PTAB reviewed three of WesternGeco’s patents: the ’607, ’520 and ’967 Patents. ION moved to join the IPR proceedings, but WesternGeco and PGS opposed the joinder. The PTAB granted ION’s request to join, but restricted ION’s participation so that it only received notifications of filings and could attend hearings. There was two round of IPRs between WesternGeco and PGS, however,ION did not join the second round . After the second round of IPRs, the PTAB issued six final written decisions for the three patents.
WesternGeco then appealed the IPR decisions to the CAFC. After briefing was complete, PGS settled with WesternGeco. The court ordered WesternGeco and ION to file a joint status report. Upon review of the report, the CAFC ordered ION to file a new brief and allowed WesternGeco to file a reply brief.
Meanwhile, the CAFC decision in 2016 was appealed to the U.S. Supreme Court. On April 16, 2018, oral argument[3] was held on the issue of whether a patentee could recover profits lost in a foreign country when a patent was infringed under 35 U.S.C. § 271(f).
UPDATE: The U.S. Supreme Court Decision in WesternGeco v. ION Geophysical Corp., No. 16–1011, June 22, 2018
The U.S. Supreme Court ruled that it was “a permissible domestic application of § 284” to award lost profits damages to WesternGeco because ION’s conduct was a “domestic act of supplying the components that infringed WesternGeco’s patents” and it clearly occurred in the United States. The CAFC judgment in 2016 was reversed and the case was remanded for further proceeding.
Privity between ION and PGS
Under 35 U.S.C. § 315(b), an IPR may not be instituted when the petition “is filed more than 1 year after the date on which the petitioner, the real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”
WesternGeco argued that ION and PGS had privity and their relationship was sufficiently close to trigger the time-bar. WesternGeco showed several examples of existence of privity, such as purchase agreements.
The PTAB found that ION and PGS had a contractual relationship and a “fairly standard customer-manufacturer relationship regarding the accused product.” However, the PTAB said the relationship was not “sufficiently close that both should be bound by the trial outcome and related estoppels.”
The PTAB also said the purchase agreements are not enough to establish privity between ION and PGS because “the evidence did not show any obligation of ION to defend PGS from a patent infringement lawsuit, reimburse or pay for a lawsuit, cover any damages liability for any adverse patent infringement verdict against PGS, or initiate an invalidity challenge in one or more fora.” In sum, the PTAB found no evidence to suggest that PGS was directed, funded, controlled by ION or that PGS’s IPR petitions were influenced by ION.
In January the CAFC decision in Wi-Fi One v. Broadcom Corp. (878 F.3d 1364) (2018) held that “‘time-bar determinations under [35 U.S.C.] § 315(b) are reviewable by this court’ and overruled our prior contrary precedent.” The CAFC said that substantial evidence supports the PTAB’s finding that ION lacked the opportunity to control PGS’s IPR petitions and the time-bar is not applicable in this case. The CAFC affirmed the PTAB’s finding that PGS and ION are not in privity under § 315(b). The CAFC considered this case on the merits and reviewed the PTAB’s determination of obviousness.
- Obviousness
The Patents
The challenged patents are directed to technologies that search for oil and gas underneath the ocean floor by controlling and positioning a ship’s streamers towed in an array behind the ship. The streamers emit acoustic signals and detect the reflected signals from the ocean floor. The data of the reflected signal is used for creating the subsurface geology map. The map is helpful to oil companies for oil and gas exploration under the ocean floor. To control the positioning of the streamers is important for detecting accurate survey data.
’607 Patent: “predicting positions” – Claim Construction
The PTAB construed “predicting position” as “estimating the actual locations” of the positioning devices of the streamer. The reason for the PTAB’s construction is that the specification explained “that its system runs ’position predictor software’ to predict the positions of the streamer positioning devices.”
WesternGeco argued that “predicting position” in the ’607 Patent claim 1 means “behavior-predictive model-based control logic” by relying on the specification, which said “[t]o compensate for these localized current fluctuations, the inventive control system utilizes a distributed processing control architecture and behavior-predictive model-based control logic to properly control the streamer positioning devices.”
Although WesternGeco relies on a specific part of the specification to support its argument, the CAFC found that the part relied upon was merely describing a preferred embodiment. The CAFC said that “claims are not limited to preferred embodiments, unless the specification clearly indicates otherwise.” The CAFC affirmed the PTAB’s claim construction of claim 1 of the’607 Patent.
The CAFC also stated that “the plain language of the claim does not mention a ‘behavior predictive’ model or require a specific type of prediction scheme.” In addition, the CAFC said “[a]lthough the claim limits what must be predicted (positions of at least two streamer positioning devices), it imposes no limit on how those positions are predicted.” Therefore, the CAFC found the challenged claims of the ’607 Patent were unpatentable.
The ’520 Patent: Impermissible Hindsight
The PTAB canceled the claims directed to “feather angle mode” (claims 2, 3, 5, 19, and 22) as obvious over U.S. Patent No. 5,790,472 (“Workman”). The PTAB found that “one of ordinary skill in the art would have been motivated to modify Workman’s control system and to use a specific feather angle for streamer positioning to maintain data collection quality.” WesternGeco argued that the PTAB’s conclusion was impermissible hindsight.
The PTAB said that “Workman discloses a ‘straight and parallel con-figuration,’ meaning that the streamers are linear and parallel to each other.” Also, a PGS expert testified that “one of skill in the art would want to control and maintain consistent separations between streamers during seismic surveys.” The expert testimony was based on “the perspective of one of ordinary skill in the art as of the priority date,” and WesternGeco did not rebut the testimony.
The CAFC said that substantial evidence shows that a skilled artisan “would have been motivated to modify Workman to attempt to keep streamers straight and parallel, whether in a zero or non-zero feather angle mode, with a reasonable expectation of success.” Therefore, the CAFC agreed with the PTAB’s conclusion because the PTAB appropriately relied on the prior art and expert’s testimony supported by substantial evidence.
The ’967 Patent: Anticipation and Obviousness
The PTAB found that several claims of the ’967 Patent are unpatentable over prior art WO98/28636 (the “’636 PCT”). The PTAB concluded that the ’636 PCT teaches the claimed distributed control system and found that the ’967 Patent’s characterization of the ’636 PCT reinforced the conclusion that the ’636 PCT anticipated the claims.
WesternGeco argued three things: First, “global control system” was not explicitly disclosed in the ’636 PCT reference. Second, the PTAB “improperly mixed the ’636 PCT’s background discussion with its detailed description of the invention.” Third, the PTAB improperly relied on a purported “admission” in the ’967 Patent regarding the ’636 PCT.
The CAFC said that substantial evidence supports the PTAB’s determination that the ’636 PCT anticipates the challenged claims of the ’967 Patent because the PTAB used the’636 PCT’s background “to furnish context for how a skilled artisan would understand the reference’s disclosed embodiments.” Also, the disclosure of the ’636 PCT, as interpreted by the testimony of PGS’s experts, would have rendered the claims obvious, even if it did not anticipate the claims. Therefore, the CAFC agreed that the PTAB’s finding of obviousness.
The ’967 and ’520 Patents: Secondary Considerations
“The patent owner bears the burden of showing a sufficient nexus between the claimed invention and any objective evidence of nonobviousness.” ABT Sys., LLC v. Emerson Elec. Co., 797 F.3d 1350, 1361–62 (Fed. Cir. 2015). Any commercial success, which is one of the secondary considerations to obviousness, “is only significant if there is a nexus between the claimed invention and the commercial success.”
WesternGeco argued that the PTAB disregarded the objective evidence of nonobviousness for the ’967 and ’520 Patents. However, the testimony of WesternGeco’s witness “was directed to ‘lateral steering technology,’ not the inventions at issue.” Also, the product the witness bought from WesternGeco didn’t have any feature claimed in the ’967 and ’520 Patents. In addition to that, the patents’ inventor admitted he did not invent lateral steering in the prior art.
The CAFC agreed with the PTAB’s conclusion which found that WesternGeco did not establish a nexus between the claims at issue and the purported objective evidence of nonobviousness. Furthermore, the CAFC said “even if WesternGeco had satisfied its burden of showing a sufficient nexus between the claimed invention and its objective evidence of nonobviousness, the evidence does not overcome the strong showing of obviousness in this case.”
Takeaway
- To meet the statutory time-bar requirement under 315(b), the patentee needs to show that two entities were “sufficiently close such that both should be bound by the trial outcome and related estoppels.” Cal. Physicians’ Serv. v. Aoki Diabetes Research Inst., 163 Cal. App. 4th. If the evidence had shown that ION would be responsible for something related to the litigation, such as to pay for any litigation defense expenses, the CAFC might have agreed that there wasprivity and the statutory time-bar was applicable.
- For the claim construction, the specification is a very important guide to determine the meaning of a term for claim construction. However, if the patent owner relies on the specification to support its argument, the part of the specification relied on should describe the claim itself. A claim is not limited to a preferred embodiment. If a claim is limited to a preferred embodiment, the specification needs to describe it clearly.
- To prove an impermissible hindsight argument, the patentee needs to show evidence that facts relied on by the PTAB were unavailable to a person ordinary skill in the art as of the priority date.
- Prior art and an expert witness are sufficient to show obviousness of the claim, although it is not enough to show anticipation.
- Each case’s totality of circumstances determines whether the petitioner need to show more than a “nexus between the claimed invention and any objective evidence of nonobviousness” to overcome the strong showing of
[1] WesternGeco LLC v. ION Geophysical Corp., 791 F. 3d 1340, 1343 (Fed. Cir. 2015).
[2] WesternGeco LLC v. ION Geophysical Corp., 837 F.3d 1358, 1364 (Fed. Cir. 2016).
[3] WesternGeco LLC v. Ion Geophysical Corp., CAFC Case No. 16-1011.
