PTAB Should Provide Adequate Reasoning and Evidence in Its Decision and Teaching Away Argument Requires More Than a General Preference
Bo Xiao | August 26, 2020
ALACRITECH, INC. V. INTEL CORP., CAVIUM, LLC, DELL, INC.
July 31, 2020
Before Stoll, Chen, and Moore
Summary
The Federal Circuit reviewed the adequacy of the Patent Trial and Appeal Board’s (Board) obviousness findings under the Administrative Procedure Act’s (APA) requirement that the Board’s decisions be supported by adequate reasoning and evidence. The Federal Circuit agreed with Alacritech’s argument that the Board did not adequately support the finding. The Federal Circuit found no reversible error in the Board’s remaining obviousness determination. The Federal Circuit vacated in part and remanded the Board’s decision.
Background
Alacritech, Inc. owns the patent 8,131,880. Intel Corp., et al., (Intel) petitioned to the Board for inter partes review (IPR) of the patent ‘880. The Board’s final decisions found the challenged claims unpatentable as obvious. Alacritech appealed the Board’s obviousness decision for four independent claims.
The ‘880 patent relates to computer networking and is directed to a network-related apparatus and method for offloading certain network processing from a central processing unit (CPU) to an “intelligent network interface card.” Intel asserted that the challenged claims would have been obvious over Thia1 in view of Tanenbaum2. The Board agreed and held all of the challenged claims unpatentable as obvious in the final written decisions. On appeal in the Federal Circuit, one of the focus was on claim 41 reciting “a flow re-assembler disposed in the network interface” as follows:
| 41. An apparatus for transferring a packet to a host computer system, comprising: a traffic classifier, disposed in a network interface for the host computer system, configured to classify a first packet received from a network by a communication flow that includes said first packet; a packet memory, disposed in the network interface, configured to store said first packet; a packet batching module, disposed in the network interface, configured to determine whether another packet in said packet memory belongs to said communication flow; a flow re-assembler, disposed in the network interface, configured to re-assemble a data portion of said first packet with a data portion of a second packet in said communication flow; and a processor, disposed in the network interface, that maintains a TCP connection for the communication flow, the TCP connection stored as a control block on the network interface. |
Discussion
Alacritech argued that the Board’s analysis was inadequate to support its findings on claims 41-43. Independent claim 43 is similar to claim 41, but recites a limitation in the network interface with “a re-assembler for storing data portions of said multiple packets without header portions in a first portion of said memory.” The dispute was focused on where reassembly takes place in the prior art and whether that location satisfies the claim limitations. The alleged claims incorporate limitations that require reassembly in the network interface, as opposed to a central processor. Intel argued that “Thia . . . discloses a flow re-assembler on the network interface to re-assemble data portions of packets within a communication flow.” In response, Alacritech argued that “[n]either Thia nor Tanenbaum discloses a flow re-assembler that is part of the NIC.”
The Board recited some of the parties’ arguments and concluded that the asserted prior art teaches the reassembly limitations. Alacritech argued that the Board’s analysis did not adequately support its obviousness finding. The Federal Circuit reviewed the adequacy of the Board’s obviousness finding under the APA’s requirement that the Board’s decisions be supported by adequate reasoning and evidence. The Federal Circuit emphasized that the Board’s findings need not be perfect, but must be “reasonably discernable.” However, the Board failed to meet the requirement by explaining why it found those arguments persuasive. The Federal Circuit reasoned that the Board briefly recites two terse paragraphs from the parties’ arguments and, in doing so, “appears to misapprehend both the scope of the claims and the parties’ arguments.” Further, the Federal Circuit turned down Intel’s argument that it should prevail because the Board “soundly rejected” Alacritech’s arguments. But the Board’s rejection does not necessarily support the Board’s finding that the asserted prior art teaches or suggests reassembly in the network interface. The Board should meet the obligation to “articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” The Federal Circuit, therefore, vacated the portion of the Board’s decision.
Alacritech successfully kept the ball rolling due to the Board’s inadequate reasoning and evidence. However, Alacritech did not substantially weaken the obviousness determination, and its teaching away argument on Tanenbaum hit the wall. Tanenbaum suggests on protocols for gigabit networks that “[u]sually, the best approach is to make the protocols simple and have the main CPU do the work.” Such a statement did not disparage other approaches. As pointed out by the Federal Court, “Tanenbaum merely expresses a preference and does not teach away from offloading processing from the CPU to a separate processor.”
The Federal Circuit affirmed the Board’s finding of a motivation to combine Thia and Tanenbaum, explaining that “[a] reference that ‘merely expresses a general preference for an alternative invention but does not criticize, discredit, or otherwise discourage investigation into’ the claimed invention does not teach away.” (Meiresonne v. Google (Fed. Cir. March 7, 2017)) The proposition makes clear that a general preference cannot support teaching away argument. A proper teach away argument requires evidence that shows the prior art references would lead away from the claimed invention.
Takeaway
- The PTAB’s obviousness findings should meet the APA’s requirements to support its decisions with adequate reasoning and evidence.
- A proper teach away argument requires evidence that shows the prior art references would lead away from the claimed invention.
Full Federal Circuit Continues 101 Spin on Driveshaft Eligibility
John Kong | August 14, 2020
American Axle & Manufacturing v. Neapco Holdings – Part II
July 31, 2020
Opinion by: Dyke, Moore and Taranto
Dissent by: Moore
Summary:
A 6-6 split vote for en banc rehearing dooms clarification on the patent eligibility of a driveshaft manufacturing method by the full Federal Circuit. The petition for rehearing en banc for this case engendered 6 amici curiae briefs. The denial of en banc rehearing triggered 2 concurrences and 4 dissenting opinions.
Nevertheless, a new modified panel decision is issued, with different results than the first panel decision. While the first panel decision found representative claims 1 and 22 ineligible under 35 U.S.C. §101, this second panel decision still found claim 22 ineligible for essentially the same reasons as before, but remanded claim 1. Like the first panel decision, this new panel decision also includes a strong dissent by Judge Moore.
The conflicting positions of a split Federal Circuit in this case highlight the turmoil in current 101 jurisprudence.
Procedural History:
American Axle & Manufacturing, Inc. (AAM) sued Neapco Holdings, LLC (Neapco) for infringement of U.S. Patent 7,774,911 (the ‘911 patent) on a method of manufacturing driveline propeller shafts for automotive vehicles. On appeal, the Federal Circuit upheld the District Court of Delaware’s holding of invalidity under 35 U.S.C. §101 in the first panel decision issued October 3, 2019 (hereinafter, AAM I). A combined petition for panel rehearing and for en banc rehearing was filed. A modified, precedential, panel decision was issued on July 31, 2020 in response to the petition for panel rehearing (hereinafter, AAM II) – affirming the ineligibility of claim 22, its dependent claims and claim 36, but remanding claim 1 and its dependent claims to the district court. The petition for en banc rehearing was denied.
Background:
The ‘911 patent relates to a method for manufacturing driveline propeller shafts (“propshafts” that transmit power in a driveline) with liners that attenuate vibrations transmitted through a shaft assembly. During use, propshafts experience three types of vibration: bending mode vibration, torsion mode vibration, and shell mode vibration, each involving different frequencies. To attenuate the noise accompanying such vibration, various conventional methods using weights, dampers, and liners are inserted to frictionally engage the propshaft to dampen certain vibrations. However, such conventional dampening methods were designed to individually attenuate each of the three types of vibration. According to AAM, the ‘911 patent seeks to attenuate two vibration modes simultaneously, which the prior art did not do.
The CAFC focused on independent claims 1 and 22 as being “representative” claims:
| Claim 1 | Claim 22 |
| 1. A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising: providing a hollow shaft member; tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell mode vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending mode vibrations in the shaft member, the at least one liner being tuned to within about ±20% of a bending mode natural frequency of the shaft assembly as installed in the driveline system. | 22. A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising: providing a hollow shaft member; tuning a mass and a stiffness of at least one liner, and inserting the at least one liner into the shaft member; wherein the at least one liner is a tuned resistive absorber for attenuating shell mode vibrations and wherein the at least one liner is a tuned reactive absorber for attenuating bending mode vibrations. |
The district court construed claim 1’s “tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member” to mean “controlling characteristics of at least one liner to configure the liner to match a relevant frequency or frequencies to reduce at least two types of vibration transmitted through the shaft member” (emphasis in original). Claim 22’s “tuning a mass and a stiffness of at least one liner” was construed to mean “controlling the mass and stiffness of at least one liner to configure the liner to match the relevant frequency or frequencies.” Notably, the above claim interpretation for claim 1 was not mentioned in AAM I, and the district court made no distinction between claims 1 and 22 in its decision.
AAM II Panel Decision:
Claim 22
With regard to claim 22, the §101 analysis is essentially the same between AAM I and AAM II.
Under the Mayo/Alice step 1, claim 22 was deemed “directed to” Hooke’s law, mathematically relating mass and stiffness of an object to the frequency with which that object vibrates. Claim 22 merely recites “tuning a mass and a stiffness of at least one liner,” without any particular physical structures or steps for tuning. “[C]laim 22 here does not specify how target frequencies are determined or how, using that information, liners are tuned to attenuate two different vibration modes simultaneously, or how such liners are tuned to dampen bending mode vibrations.” As such, claim 22 is merely claiming a desired result (tuning a liner), without limitation to any particular structures or ways to achieve it. AAM II concludes, “[t]his holding as to step 1 of Alice extends only where, as here, a claim on its face clearly invokes a natural law, and nothing more, to achieve a claimed result.”
Notably absent from AAM II’s Alice step 1 analysis is the majority’s earlier reference in AAM I to Hooke’s law “and possibly other natural laws” in describing what natural law claim 22 is directed to.
Under the Mayo/Alice step 2, claim 22 does not recite an “inventive concept” to transform it into patent eligible subject matter. The majority summarizes AAM’s argument for an inventive concept to be merely a restatement of the desired results (tuned liners that dampen two different vibration modes simultaneously) being an advance. However, an ineligible concept cannot supply the inventive concept. And the remaining steps in claim 22 are merely conventional pre- and post-solution activity.
Claim 1
With regard to claim 1, the majority focused on three differences from claim 22.
One difference is that claim 1’s feature of “tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member” was construed by the district court to mean “controlling characteristics of at least one liner to configure the liner to match a relevant frequency or frequencies to reduce at least two types of vibration transmitted through the shaft member” (emphasis in original). Claim 22 did not require “controlling characteristics…”
Second, such “characteristics” are described in the specification to include variables other than mass and stiffness, including length and outer diameter of the liner 204, diameter and wall thickness of a structural portion 300 and the material thereof, quantity of resilient member(s) 302 and the material thereof, a helix angle 330 and pitch 332 with which resilient members 302 are fixed to the structural portion 300, the configuration of lip member(s) 322 of the resilient member 302, and the location of the liners 204 within the shaft member 200. Claim 22 did not go beyond tuning involving mass and stiffness.
Third, claim 1 requires “positioning the at least one liner.” The majority considered claim 22’s “inserting the at least one liner into the shaft member” as not being equivalent to claim 1’s “positioning” feature, without explanation. On this point, J. Moore, noted in the dissent, that this is improper sua sponte appellate claim construction which neither parties briefed nor argued. J. Moore argued claim 22’s ineligibility should not have been premised on such unsupported sua sponte claim construction.
Because of these differences, the majority held that claim 1 is not merely directed to Hooke’s law “and nothing more.” “The mere fact that any embodiment practicing claim 1 necessarily involves usage of one or more natural laws is by itself insufficient to conclude the claim is directed to such natural laws.”
But, this doesn’t mean that claim 1 is eligible. The majority notes that the district court and Neapco also raised ineligibility based on the judicial exception for an abstract idea. “But the abstract idea basis was not adequately presented and litigated in the district court.” Thus, the majority remanded the claim 1 and its dependent claims to the district court to address this abstract idea issue in the first instance.
J. Moore’s Dissent:
Like in AAM I, J. Moore’s dissent in AAM II is likewise stinging. “The majority’s decision expands §101 well beyond its statutory gate-keeping function and collapses the Alice/Mayo two-part test to a single step – claims are now ineligible if their performance would involve application of a natural law.”
- A new “Nothing More test”
J. Moore asserts that the majority created a new test, a “Nothing More test” – “when claims are directed to a natural law despite no natural law being recited in the claims.” According to the majority, claim 22’s “tuning” feature meant “controlling the mass and stiffness of at least one liner to configure the liner to match the relevant frequency or frequencies” and “[t]hus, claim 22 requires use of a natural law of relating frequency to mass and stiffness – i.e., Hooke’s law.” However, J. Moore notes that “[e]very mechanical invention requires use and application of the laws of physics. It cannot suffice to hold a claim directed to a natural law simply because compliance with a natural law is required to practice the method.”
“Section 101 is monstrous enough, it cannot be that use of an unclaimed natural law in the performance of an industrial process is sufficient to hold the claims directed to that natural law.” “All physical methods must comply with, and apply, the laws of physics and the laws of thermodynamics…[t]he fact that they do does not mean the claims are directed to all such laws.” “This case turns the gatekeeper into a barricade. Unstated natural laws lurk in the operation of every claimed invention. Given the majority’s application of its new test, most patent claims will now be open to a §101 challenge for being directed to a natural law or phenomena.”
The majority’s counterpoint: “If patentees could avoid the natural law exception by failing to recite the law itself [like here – no mention of ‘Hooke’s law’, but varying frequency attenuation (tuning) based on mass and stiffness is on its face Hooke’s law], patent eligibility would depend upon the ‘draftsman’s art,’ the very approach that Mayo rejected.”
However, avoiding the “draftsman’s art” is not the primary focus of §101. Instead, it is on preemption. That is why claims may be patent eligible under §101 if the “claimed advance” reflects an improvement in technology. As J. Moore also noted, “[t]he claims at issue contain a specific, concrete solution (inserting a liner inside a propshaft) to a problem (vibrations in propshafts).” The ‘911 claims are directed to the traditional manufacturing of a drive shaft assembly for a car, which have historically avoided any concern under §101. On this point, see also J. Stoll’s dissent on the denial of en banc rehearing below.
Another problem with the majority’s new “Nothing More test” is that it arguably requires appellate judges to “resolve questions of science de novo on appeal.” J. Moore raises a concern about appellate judges making determinations of scientific fact on appeal, in the first instance, as a matter law. Nothing in the intrinsic record (nothing in the patent and nothing in the prosecution history) mentions Hooke’s law. So, “how can we conclude, as a matter of law, the claim nonetheless clearly invokes Hooke’s law?” To J. Moore, “judges are not fact or technical experts…[t]he only appropriate fact finder is the district court and not on summary judgment.”
Indeed, during litigation both sides’ experts and the district court noted that the claims involve Hooke’s law and friction damping. Yet, the majority concludes that the natural law used is Hooke’s law “and nothing more.” The majority’s counterpoint is that even “[i]f claim 22’s language could be properly interpreted in a way such that it invokes friction damping as it does with Hooke’s law, the claims would still on its face clearly invoke natural laws, and nothing more, to achieve a claimed result.”
“A disturbing amount of confusion will surely be caused by this opinion, which stands for the proposition that claims can be ineligible as directed to a natural law even though no actual natural law is articulated in the claim or even the specification. The majority holds that claims are directed to a natural law if performance of the claimed method would use the natural law.”
- Failure to consider unconventional claim elements under Mayo/Alice step 2
Under the Mayo/Alice step 2 analysis, while the majority asserts that “[w]hat is missing is any physical structure or steps for achieving the claimed result,” J. Moore notes that AAM’s arguments identified “many” inventive concepts that should have at least precluded summary judgment. For instance, AAM argued that liners (a physical and explicitly recited claim element) were never before used to reduce bending mode vibrations. Instead of addressing all the inventive concepts laid out by AAM, “the majority creates its own strawman to knock down” (i.e., sophisticated FEA software and computer modeling that are not claimed).
- Enablement on Steroids
“[T]he majority has imbued §101 with a new superpower – enablement on steroids.” “The majority’s concern is not preemption of a natural law (which should be the focus), but rather that the claims do not teach a skilled artisan how to tune a liner without trial and error. The majority’s blended 101/112 defense is confusing, converts fact questions into legal ones and eliminates the knowledge of a skilled artisan.”
Of course, the majority clarified that there is a “how to” 1 and a “how to” 2. The “how to” 1 is a requirement under 101 that “the claim itself (whether by its own words or by statutory incorporation of specification details under section 112(f)) must go beyond stating a functional result: it must identify ‘how’ that functional result is achieved by limiting the claim scope to structures specified at some level of concreteness, in the case of a product claim, or to concrete action, in the case of a method claim.” The “how to” 2 is a different requirement that applies to the specification under §112, not to the claim. But, see, J. Stoll’s dissent below. At what level of specificity is sufficient to pass muster under the majority’s “how to” 1? How is this to be determined, absent any input by a skilled artisan? Doesn’t this “how to” inquiry involve questions of fact which should not be determined de novo as a matter of law by appellate judges?
Concurring and Dissenting Opinions on the Denial of en banc Rehearing:
J. Dyk’s concurrence argues that this modified panel decision is consistent with precedent and that there was no “new” test.
J. Chen’s concurrence also states that the panel majority’s decision is consistent with long-standing precedent, and there was no new patent-eligibility test. And, “[a]s evidenced by the majority opinion’s conclusion that claim 1 is not directed to a natural law, the narrow holding of this case should not be read to open the door to eligibility challenges based on the argument that a claim is directed to one or more unspecified natural laws.” J. Chen also disagrees about 101 being enablement on steroids, “result-oriented claim drafting raises concerns under section 101 independent from section 112.” “The lesson to patent drafters should now be clear: while not all functional claiming is the same, simply reciting a functional result at the point of novelty poses serious risks under section 101.”
J. Newman’s dissent stated “[t]he court’s new spin on Section 101 holds that when technological advance is claimed too broadly, and the claims draw on scientific principles, the subject matter is barred ‘at the threshold’ from access to patenting.” This is contrary to the warning in Alice to be careful to avoid oversimplifying the claims because ‘[a]t some level, ‘all inventions…embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.’” “The court’s notion that the presence of a scientific explanation of an invention removes novel and non-obvious technological advance from access to the patent system, has moved the system of patents from its once-reliable incentive to innovation and commerce, to a litigation gamble.”
J. Stoll’s dissent makes notable challenges to the majority’s “how to” analysis in §101’s directed to inquiry:
“Even assuming that claim 22 applies Hooke’s law (or any other unnamed law of nature), the claim seems sufficiently specific to qualify as an eligible application of that natural law. The claim identifies specific variables to tune, including ‘a mass and a stiffness of at least one liner.’ It requires that the tuned liner attenuate specific types of vibration, including ‘shell mode vibrations’ and ‘bending mode vibrations,’ and further requires that the tuned liner is inserted in a ‘hollow shaft member.’ With this level of specificity, claim 22 appears to be properly directed to ‘the application of the law of nature to a new and useful end,’ not to the law of nature itself. Yet this level of detail is insufficient in the majority’s view, and it remains unclear how much more ‘how to’ would have been sufficient to render the claim eligible under the majority’s approach.” (citations omitted).
J. Stoll also remarked, “[i]n my view, the result in this case suggests that this court has strayed too far from the preemption concerns that motivate the judicial exception to patent eligibility.”
J. O’Malley’s dissent identifies at least three problems in the majority opinion: “(1) it announces a new test for patentable subject matter at the eleventh hour and without adequate briefing; (2) rather than remand to the district court to decide the issue in the first instance, it applies the new test itself; and (3) it sua sponte construes previously undisputed terms in a goal-oriented effort to distinguish claims and render them patent ineligible, or effectively so.”
Takeaways:
- Even in traditionally eligible industrial and mechanical inventions, potential §101 issues may now be raised depending on the scope of the functional claiming being used, especially if result-oriented. J. Stoll expressed legitimate concerns about the practical effect of this modified panel decision, “[a]lthough the majority has dialed back its original decision to some degree on panel rehearing, one can still reasonably ponder whether foundational inventions like the telegraph, telephone, light bulb, and airplane – all of which employ laws of nature – would have been ineligible for patenting under the majority’s revised approach.”
- But, don’t give up. Whether defending a patent or challenging a patent on §101, the Federal Circuit is clearly split on various issues under 101. Unfortunately, §101 jurisprudence is, as J. Newman remarked, becoming a “litigation gamble.” Nevertheless, depending on who is on your panel, you may get a favorable decision. Only the Supreme Court or Congress can come to the rescue of §101.
- This case is a reminder that claim construction can change the result of the 101 determination.
- As J. Chen noted, functional, result-oriented, claiming, especially at the point of novelty, may trigger serious 101 issues, even in mechanical cases that, until now, were mostly immune to §101 attack.
- Try to include a “kitchen sink” claim. The specificity provided may help overcome such 101 issues.
- Perhaps AAM never expected such results for its independent claims. But, another lesson learned from this case is to try to preserve arguments based on the dependent claims and challenge the characterization of the “representative” claim if possible.
WALKING DEAD PATENT CLAIMS IN AN IPR
Stephen G. Adrian | 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
Adele Critchley | 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.
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