The Patent Trial and Appeal Board has discretion in issuing sanctions and is not limited by the Sanctions Regulations under Rule 42.12
| November 5, 2020
APPLE INC. v. VOIP-PAL.COM, INC.
September 25, 2020
Prost, Reyna and Hughes. Opinion by Reyna.
Summary:
After being sued by Voip-Pal, Apple filed separate IPR petitions against the two patents asserted against Apple. During the IPRs, Voip-Pal sent letters to PTAB judges and the USPTO, among others, criticizing the IPR process and requesting either dismissal of the IPRs or favorable judgment. These letters were not sent to Apple. The PTAB issued a final written decision upholding the validity of the claims. Apple then filed a motion for sanctions due to the ex parte communications. The PTAB held that the letters sent by Voip-Pal were sanctionable and the remedy was to provide a new PTAB panel to review Apple’s request for rehearing. On appeal at the CAFC, but before the oral arguments, a separate CAFC decision issued affirming the invalidity of some of the same claims from the same patents. The CAFC stated that for the same claims involved in the prior case, the claims are invalid, and thus, the appeal is moot. However, for the claims that do not overlap with the claims involved in the prior case, the appeal is not moot. Regarding sanctions, the CAFC stated that the PTAB did not abuse its discretion in the remedy provided to Apple. The CAFC also affirmed the PTAB’s determination of non-obviousness.
Details:
Voip-Pal sued Apple for infringement of U.S. Patent Nos. 8,542,815 and 9,179,005 to Producing Routing Messages for Voice Over IP Communications. The patents describe routing communications between two different types of networks. Apple filed two separate IPR petitions for the patents. Apple agued that the patents were obvious over the combination of U.S. Patent No. 7,486,684 (Chu ‘684) and U.S. Patent No. 8,036,366 (Chu ‘366). The original PTAB panel instituted the IPRs. Later the original PTAB panel was replaced with a second PTAB panel. No reason for the change in panels was provided in the record.
While the IPRs were proceeding, the CEO of Voip-Pal sent six letters to various parties copying members of Congress, the President, federal judges, and administrative patent judges at the PTAB. The letters were not sent to Apple. The letters criticized the IPR system and requested judgment in Voip-Pal’s favor or dismissal of Apple’s IPRs.
The second PTAB panel then issued its final written decision for both IPRs. The claims were found to be not invalid as obvious over Chu ‘684 and Chu ‘366. Specifically, the PTAB said that Apple did not provide evidentiary support for their argument on motivation to combine.
Apple moved for sanctions against Voip-Pal due to the CEO’s ex parte communications with the PTAB and the USPTO arguing that the communications violated the Administrative Procedure Act and violated Apple’s due process rights. Apple requested an adverse judgment against Voip-Pal or that the final written decision be vacated and assigned to a new panel with a new proceeding. Apple also appealed the final written decision by the second PTAB panel.
The CAFC stayed the appeal and remanded to the PTAB to consider Apple’s sanctions motions. A third and final PTAB panel replaced the second PTAB panel for the sanctions proceedings. The final PTAB panel found that Voip-Pal’s ex parte communications were sanctionable. But the final PTAB panel rejected Apple’s request for a directed judgment or a new proceeding with a new panel. The final PTAB panel provided their own sanctions remedy of presiding over Apple’s request for rehearing. The final PTAB panel stated that this “achieves the most appropriate balance when considering both parties’ conduct as a whole.”
After briefing for the rehearing, the final PTAB panel denied Apple’s petition for rehearing because Apple had “not met its burden to show that in the Final Written Decision, the [Interim] panel misapprehended or overlooked any matter.” The final PTAB panel also stated that “even if [the final PTAB panel] were to accept [Apple’s] view of Chu ‘684 … [the final PTAB panel] would not reach a different conclusion.” The CAFC then lifted the stay on the appeal.
Prior to oral argument at the CAFC, Apple filed a post-briefing document entitled “Suggestion of Mootness.” Apple raised the issue of mootness because in a separate proceeding involving the same patents (Voip-Pal.com, Inc. v. Twitter, Inc., 798 F. App’x 644 (Fed. Cir. 2020), the CAFC affirmed that some of the claims of the patents are invalid as ineligible subject matter.
At the oral argument, Apple argued that the appeals for the overlapping claims are moot. Voip-Pal did not dispute mootness of the appeals for the overlapping claims. Since these claims were rendered invalid as ineligible subject matter in the Twitter case, the CAFC stated that appeals for these claims are rendered moot. For the remaining, 15 non-overlapping claims, Apple argued that they are essentially the same as the claims held ineligible in the Twitter case and that “basic principles of claim preclusion (res judicata) preclude Voip-Pal from accusing Apple” of infringing the non-overlapping claims in future litigation.
The CAFC stated that:
Under the doctrine of claim preclusion, “a judgment on the merits in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action.” Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 326 (1955). The determination of the “precise effect of the judgment[] in th[e] [first] case will necessarily have to be decided in any such later actions that may be brought.” In re Katz Interactive Call Processing Pat. Litig., 639 F.3d 1303, 1310 n.5 (Fed. Cir. 2011).
Thus, any res judicata effect of a first proceeding is “an issue that only a future court can resolve” and any preclusive effect that the Twitter case could have against the same or other parties must be decided in any subsequent action brought by Voip-Pal. The CAFC concluded that the question of obviousness for the non-overlapping claims is not moot.
Regarding the sanctions order, the CAFC stated that the final PTAB panel’s sanction order was not an abuse of discretion. Apple argued that the final PTAB panel’s sanction order violated the administrative procedure act (“APA”) because the PTAB panel issued a sanction not explicitly provided by 37 C.F.R. § 42.12(b), and thus, the PTAB panel exceeded its authority. However, the CAFC pointed out that § 42.12 provides that:
(a) The Board may impose a sanction against a party for misconduct, . . . .
(b) Sanctions include entry of one or more of the following [eight enumerated sanctions]:
The CAFC stated that because of the term “include,” the list of sanctions is non-exhaustive. The use of “may” in the rule also indicates that the PTAB has discretion to impose sanctions in the first place. Therefore, the PTAB is not limited to the eight listed sanctions in § 42.12(b). The CAFC also stated that the PTAB’s decision to allow Apple to petition for rehearing before a new panel was a reasonable course of action that provided Apple with a meaningful opportunity to respond to Voip-Pal’s letters.
Regarding Apple’s due process argument, the CAFC stated that Apple failed to identify any property interests in the course of its due process arguments, and that property interests identified for the first time on appeal are waived. An argument of a due process violation requires identification of a property interest that has been deprived. The CAFC also stated that the PTAB introduced the six letters into the record and gave Apple an opportunity to respond during the panel rehearing stage, but Apple chose not to address the substance of the letters.
Apple also argued that the PTAB erred when it determined that Apple failed to establish a motivation to combine Chu ‘684 with Chu ‘366 stating that the PTAB improperly applied the old teaching, suggestion, motivation test rather than the flexible obviousness analysis required under KSR. However, the CAFC stated that Apple’s argument was that a skilled artisan would have viewed Chu ‘684’s interface as less intuitive and less user friendly than that of Chu ‘366, and thus, a skilled artisan would have a desire to improve Chu ‘684’s system. But the PTAB determined that Apple’s expert did not provide adequate support for the proposition that a skilled artisan would have regarded Chu ‘684’s teachings as deficient. Thus, Apple failed to “articulate reasoning with some rational underpinning.” The CAFC stated that the PTAB applied the proper evidentiary standard in determining non-obviousness of the claims.
Comments
This decision shows that the PTAB has discretion in issuing sanctions and they are not limited to the list enumerated in 37 C.F.R. § 42.12. Also, issue preclusion can only be applied to a future action. The effect of a judgment in a first case must be decided in any later actions that may be brought. For demonstrating obviousness, make sure you include evidentiary support for an argument of obviousness.
The Federal Circuit Affirms PTAB’s Obvious Determination Against German-Based Non-Practicing Entity, Papst Licensing GMBH & Co., Based on Both Issue Preclusion and Lack of Merit
| July 19, 2019
Papst Licensing GMBH & Co. v. Samsung
May 23, 2019
Dyk, Taranto, and Chen. Opinion by Taranto
Summary
German-based non-practicing entity Papst Licensing GMBH & Co. is the owner of U.S. Patent No. 9,189,437 entitled “Analog Data Generating and Processing Device Having a Multi-Use Automatic Processor.” The ‘437 patent issued in 2015 and claims priority to an original application filed in 1999 through continuation applications, and is one of a family of at least seven patents based on the same specification and/or priority that have been asserted in litigations by Papst against various entities to seek licenses. Here, Samsung successfully brought an Inter Parties Review (IPR) proceeding before the Patent & Trademark Appeal Board (PTAB) in which the PTAB held that claims of the ‘437 were invalid as obvious over prior art. Papst appealed the PTAB’s decision, and, on appeal, the Federal Circuit affirmed the PTAB’s decision based on both issue preclusion and obviousness.
Details
Procedural Background
German-based non-practicing entity Papst Licensing GMBH & Co. (“Papst”)
is the owner of U.S. Patent No. 9,189,437 entitled “Analog Data Generating and
Processing Device Having a Multi-Use Automatic Processor.” The ‘437 patent issued in 2015 and claims
priority to an original application filed in 1999 through continuation
applications, and is one of a family of at least seven patents based on the same
specification and/or priority that have been asserted in litigations by Papst
against various companies to seek licenses.
In response to such litigations, various combinations of companies filed
numerous petitions for Inter Partes Review (IPR) to review many claims of the
family of patents. In this case,
Samsung successfully initiated an IPR proceeding before the Patent &
Trademark Appeal Board (PTAB) in which the PTAB held that claims of the ‘437
were invalid as obvious over prior art.
Factual Background
The patent at issue on appeal is U.S. Patent No. 9,189,437 is entitled “Analog Data Generating and Processing Device Having a Multi-Use Automatic Processor.” The specification describes an interface device for communication between a data device (on one side of the interface) and a host computer (on the other). The interface device achieves high data transfer rates, without the need for a user-installed driver specific to the interface device, by using fast drivers that are already standard on the host computer for data transfer, such as a hard-drive driver. In short, the interface device sends signals to the host device that the interface device is an input/output device for which the host already has such a driver – i.e., such that the host device perceives the interface device to actually be that other input/output device.
For reference, claim 1of the ‘437 patent is shown below:
1. An analog data generating and processing de-vice (ADGPD), comprising:
an input/output (i/o) port;
a program memory;
a data storage memory;
a processor operatively interfaced with the i/o port, the program memory and the data storage memory;
wherein the processor is adapted to implement a data generation process by which analog data is acquired from each respective analog acquisition channel of a plurality of independent analog acquisition channels, the analog data from each respective channel is digitized, coupled into the processor, and is processed by the processor, and the processed and digitized analog data is stored in the data storage memory as at least one file of digitized analog data;
wherein the processor also is adapted to be involved in an automatic recognition process of a host computer in which, when the i/o port is operatively interfaced with a multi-purpose interface of the host computer, the processor executes at least one instruction set stored in the program memory and thereby causes at least one parameter identifying the analog data generating and processing device, independent of analog data source, as a digital storage device instead of an analog data generating and processing device to be automatically sent through the i/o port and to the multi-purpose interface of the computer (a) without requiring any end user to load any software onto the computer at any time and (b) without requiring any end user to interact with the computer to set up a file system in the ADGPD at any time, wherein the at least one parameter is consistent with the ADGPD being responsive to commands is-sued from a customary device driver;
wherein the at least one parameter provides information to the computer about file transfer characteristics of the ADGPD; and
wherein the processor is further adapted to be involved in an automatic file transfer process in which, when the i/o port is operatively interfaced with the multi-purpose interface of the computer, and after the at least one parameter has been sent from the i/o port to the multi-purpose interface of the computer, the processor executes at least one other instruction set stored in the program memory to thereby cause the at least one file of digitized analog data acquired from at least one of the plurality of analog acquisition channels to be transferred to the computer using the customary device driver for the digital storage device while causing the analog data generating and processing device to appear to the computer as if it were the digital storage device without requiring any user-loaded file transfer enabling software to be loaded on or in-stalled in the computer at any time.
a. The Board’s IPR Decision Related to the ‘437 Patent
Before the PTAB, the board held that the relevant claims of the ‘437 – claims 1-38 and 43-45 – were invalid as obvious over U.S. Patent No. 5,758,081 (Aytac), a publication setting forth standards for SCSI interfaces (discussed in the ‘081 patent) and “admitted” prior art described in the ‘437 patent.
The Aytac patent describes connecting a personal computer to an interface device that would in turn connect to (and switch between) various other devices, such as a scanner, fax machine, or telephone. The interface device includes the “CaTbox,” which is connected to a PC via SCSI cable, and to a telecommunications switch.
In its determination of obviousness, the Board adopted a claim construction that is central to Papst’s appeal. In particular, claim 1 of the ‘437 patent requires an automatic recognition process to occur “without requiring any end user to load any software onto the computer at any time” and an automatic file transfer process to occur “without requiring any user-loaded file transfer enabling software to be loaded on or installed in the computer at any time.”
The Board interpreted the “without requiring” limitations to mean “without requiring the end user to install or load specific drivers or software for the ADGPD beyond that included in the operating system, BIOS, or drivers for a multi-purpose interface or SCSI interface.” In adopting that construction, among those that can be required to be installed for the processes to occur, relying on the specification and claims as making clear that the invention contemplates use of SCSI drivers to carry out the processes.
The Board also rejected Papst’s contention that “the ‘without requiring’ limitations prohibit an end user from installing or loading other drivers.”
b. The Board’s IPR Decision Related to the ‘144 Patent
With respect to another U.S. Patent in Papst’s family of patents – i.e., U.S. Patent No. 8,966,144, which is based on the same specification as the ‘437 patent – the PTAB had issued a similar IPR decision, in which the same claim limitations of “without requiring …” were similarly interpreted as in the present board decision and in which the claim limitation was similarly found to be obvious over the same prior art as applied in the present board decision.
Following the PTAB decision related
to the ‘144 patent, Papst appealed the decision to the Federal Circuit. However, on the eve before oral arguments,
Papst voluntarily dismissed its appeal, whereby the PTAB’s decision related to
the ‘144 patent became final.
Discussion
On appeal, the Federal Circuit affirmed the PTAB’s decision based on both issue preclusion and obviousness.
- Issue Preclusion
The Federal Circuit explained that “[t]he Supreme Court has made clear that, under specified conditions, a tribunal’s resolution of an issue that is only one part of an ultimate legal claim can preclude the loser on that issue from later contesting, or continuing to contest, the same issue in a separate case. Thus:
subject to certain well-known exceptions, the general rule is that “[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.”
The Federal Circuit noted that “we have held that the same is true of an IPR proceeding before the Patent Trial and Appeal Board, so that the issue preclusion doctrine can apply in this court to the Patent Trial and Appeal Board’s decision in an IPR once it becomes final.”
The well-known exception, noted by the Federal Circuit, involved that: the court recognizes that “[i]ssue preclusion may be in-apt if ‘the amount in controversy in the first action [was] so small in relation to the amount in controversy in the second that preclusion would be plainly unfair.”
However, the Federal Circuit emphasized that that was not the case here, and, the court also emphasized that, in the ‘144 case Papst even brought the litigation through to the eve of oral argument, which highlights that that was not the case. Notably, the Federal Circuit also emphasizes that: “More generally, given the heavy burdens that Papst placed on its adversaries, the Board, and this court by waiting so long to abandon defense of the ’144 patent and ’746 patent claims, Papst’s course of action leaves it without a meaningful basis to argue for systemic efficiencies as a possible reason for an exception to issue preclusion.”
With respect to issue preclusion, the Federal Circuit explained that the Board in the ’144 patent decisionresolved the same claim construction issue in the same way as the Board in the present IPR. It characterized “the issue in dispute” as “center[ing] on whether the ‘without requiring’ limitations prohibit an end user from installing or loading other drivers.” Moreover, the Federal Circuit also explained that “the Board also ruled that use of SCSI software does not violate the ‘without requiring’ limitations, because the patent clearly showed that such software may be used,” and that “[t]hat ruling was not just materially identical to the Board’s claim construction ruling in this case; it also was essential to the Board’s ultimate determination, which depended on finding that the installation of CATSYNC, as disclosed in Aytac, was not prohibited by the ’144 patent’s “without requiring” limitation and that Aytac taught that the transfer process could be performed with SCSI software.”
Thus, the Federal Circuit held that issue preclusion applied in this case related to the ‘437 patent.
- Obviousness
On appeal, Papst presents two arguments that are addressed by the Federal Circuit First, Papst argues that the board improperly construed the limitation “without requiring” as meaning that the claimed processes can take place with SCSI software (or other multi-purpose interface soft-ware or software included in the operating system or BIOS).. Second, Papst argues that the board improperly concluded that Aytac teaches an automatic file transfer that can take place with only the SCSI drivers, without the assistance of user-added CATSYNC software.
With respect to the obviousness evaluation, the Federal Circuit found the Board’s conclusion regarding the construction of the “without requiring” limitations of the ‘437 patent to be correct based on the “ordinary meaning” of the words employed. The Federal Circuit explained that “[t]o state that a process can take place “without requiring” a particular action or component is, by the words’ ordinary meaning as confirmed in Celsis In Vitro, to state simply that the process can occur even though the action or component is not present; it is not to forbid the presence of the particular action or component.”
In addition, the Federal Circuit also agreed with the Board’s conclusion that SCSI interface software was permitted software in the claim construction because of the description in the specification of the ‘437 patent. The Federal Circuit expressed that: “The specification is decisive. Reflecting the recognition that SCSI interfaces were ‘present on most host devices or laptops’ at the time” and that “the specification explains that the invention contemplates use of SCSI software.”
Moreover, the Federal Circuit agreed that the “Board’s finding that a relevant skilled artisan would understand that the Aytac’s CaTbox can perform an automatic file transfer using SCSI without the CATSYNC software that Papst says is required, ” noting that Samsung’s expert Dr. Reynolds testified that only the SCSI protocol and the ASPI drivers are needed to transfer a file in Aytac, similar to the function of the ’437 patent.
Thus, the Federal Circuit affirmed the board’s determinations of obviousness related to the ‘437 patent.
Takeaway
When asserting patent infringement of multiple similar patents in a patent family, there is an increased risk of facing issue preclusion issues.
No Claim Preclusion. No Issue Preclusion. No Problem. The Kessler Doctrine Fills the Gap.
| March 26, 2014
Brain Life, LLC v. Elekta Inc.
March 24, 2014
Before O’Malley, Bryson, Wallach. Opinion by O’Malley
Summary:
In a prior case, Medical Instrumentation Diagnostics Corporation (MIDCO) brought a patent infringement suit against Elekta asserting the apparatus claims and the method claims of US Patent No. 5,398,684 (“the ‘684 patent”). The method claims were later dropped from the suit “without prejudice.” MIDCO ended up losing the infringement action. Brain Life, the successor-in-interest of the ‘684 patent, brought a suit against Elekta alleging infringement of the method claims of the same patent against the same products except for one additional product.
The CAFC held that claim preclusion did not bar the suit with regard to alleged acts of infringement occurring after the judgment in the first suit brought by MIDCO. The CAFC also held that issue preclusion did not bar the suit with regard to the method claims because the method claims were not “actually litigated.” However, under the “Kessler Doctrine,” Elekta has a right to use the products held not to be infringing the ‘684 patent in the first action freely and without harassment. Thus, the CAFC affirmed the District Court’s determination that the suit is barred with regard to the products involved in the first action, albeit, on different grounds from the District Court. The CAFC vacated the District Court’s decision and remanded the case with regard to the product that was not previously litigated in the MIDCO case.
