IPR Estoppel: It’s Not A Second Bite at the Apple, if You Didn’t Get a First Bite

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In Network-1 Technologies, Inc. v. Hewlett-Packard Co., [2018-2338, 2018-2339, 2018-2395, 2018-2396] (September 24, 2020), the Federal Circuit affirmed-in-part and reversed-in-part the district court’s claim construction and remanded, vacated the district court’s JMOL on validity and remanded, and affirmed the district court’s decision with respect to improper claim broadening.

U.S. Patent No. 6,218,930, titled “Apparatus and Method for Remotely Powering Access Equipment over a 10/100 Switched Ethernet Network,” discloses an apparatus and methods for allowing electronic devices to automatically determine if remote equipment is capable of accepting remote power over Ethernet.

On appeal Network-1 argued that the district court incorrectly construed the claim terms “low level current” and “main power source,” and that this error entitled it to a new trial on infringement. The Federal Circuit agreed that the district court erred in its construction of “main power source,” and as a result of that error, Network-1 was entitled to a new trial on infringement.

On appeal HP argued that the district court erroneously granted JMOL with respect to the ’930 patent’s validity based on its determination that HP was estopped under 35 U.S.C. § 315(e) from presenting obviousness challenges as a consequence of its joinder to the Avaya IPR. The district court reasoned that HP reasonably could have raised” its invalidity arguments during the IPR that HP joined. The district court stated that allowing HP to raise arguments “that it elected not to raise during the IPR would give it a second bite at the apple and allow it to reap the benefits of the IPR with-out the downside of meaningful estoppel.

The Federal Circuit began by point out that under 35 U.S.C. § 315(e) party is only estopped from challenging claims in the final written decision based on grounds that it “raised or reasonably could have raised” during the IPR. However, the Federal Circuit noted, because a joining party cannot bring with it grounds other than those already instituted, that party is not statutorily estopped from raising other invalidity grounds.

In fact, HP initially tried to join the IPR and raise additional grounds, which the PTAB correctly denied, it was HP’s second attempt to join the IPR based only on the grounds already instituted, that was granted.

Thus, since party like HP that joins an IPR cannot raise any additional grounds, it is not estopped as to any ground not actually raised in the IPR. The Federal Circuit observed that its not a second bite at the apple, when the first bite was denied. The Federal Circuit remanded the case rather than simply reversing because there was an outstanding request for a new trial.

On appeal HP argued that by adding two dependent claims during reissue, the Network-1 improperly broadened the original claim from which they depend. The Federal Circuit rejected the idea that adding dependent claims broadens the underlying independent claim, and thus affirmed the district court’s determination that claim 6 was not improperly broadened.

§315(c) Does Not Allow Board to Join IPRs or to Add Issues to an IPR via Joinder

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In Facebook, Inc. v. Windy City Innovations, LLC, [2018-1400, 2018-1401, 2018-1402, 2018-1403, 2018-1537, 2018-1540, 2018-1541] (September 4, 2020), the Federal Circuit affirmed-in-part, vacated-in-part, and remanded the Board’s final written decisions on the ’245 and ’657 patents in IPR2016-01156 and IPR2016-01159, affirmed the Board’s final written decision on the ’552 patent in IPR2016-01158, and affirmed-in-part the Board’s final written decision on the ’356 patent in IPR2016-01157; and dismissed as moot Facebook’s appeal of the Board’s final written decision on the ’356 patent with respect to claims 14 and 33.

Windy City Innovations filed a complaint accusing Facebook of infringing U.S. Patent Nos. 8,458,245, 8,694,657, 8,473,552, and 8,407,356 (“the ’356 patent”). The ’245, ’657, ’552, and ’356 patents share a common specification, claim priority to the same parent application, and generally relate to methods for communicating over a computer-based network.

Exactly one year after being served with Windy City’s complaint Facebook timely petitioned for inter partes review (“IPR”) of several claims of each patent (IPR2016-01156, IPR2016-01157, IPR2016-01158, IPR2016-01159). At that time, Windy City had not yet identified the specific claims it was asserting. The PTAB instituted IPR of each patent. After Windy City identified the claims it was asserting in the district court, Facebook filed two additional petitions for IPR (IPR2017-00659, IPR2017-00709) of additional claims of the ’245 and ’657 patents, along with motions for joinder to the already-instituted IPRs on those patents. By the time of these filings, the one-year time bar of §315(b) had passed, but the PTAB nonetheless instituted Facebook’s two new IPRs, granted Facebook’s motions for joinder, and terminated the new IPRs.

The Board delivered a mixed result, holding that Facebook had shown by a preponderance of the evidence that some of the challenged claims are unpatentable as obvious but had failed to show that others were unpatentable as obvious. Many of the claims the Board found unpatentable were claims only challenged in the late-filed petitions. Facebook appealed, and Windy City cross-appealed on the Board’s obviousness findings and challenging the Board’s joinder decisions allowing Facebook to join its new IPRs to its existing IPRs and to include new claims in the joined proceedings.

The Federal Circuit held that the Board erred in its joinder decisions in allowing Facebook to join itself to a proceeding in which it was already a party, and also erred in allowing Facebook to add new claims to the IPRs through that joinder. Because joinder of the new claims was improper, it vacated the Board’s final written decisions as to those claims. However the Federal Circuit lacked authority to review the Board’s institution of the two late-filed petitions, so it remanded them to the Board to consider whether the termination of those proceedings finally resolved them.

The Federal Circuit began by rejecting Facebook’s argument that the Board’s joinder decision was not reviewable. The Federal Circuit said that the plain language of § 315(c) requires two different decisions. First, the statute requires that the Director determine whether the joinder applicant’s petition for IPR “warrants” institution under § 314. The Federal Circuit said that it may not review this decision, whether for timeliness or to consider whether the petitioner is likely to succeed on the merits. Second, to effect joinder, § 315(c) requires the Director to exercise his discretion to decide whether to “join as a party” the joinder applicant. The statute makes clear that the joinder decision is made after a determination that a petition warrants institution, thereby affecting the manner in which an IPR will proceed. The joinder decision is a separate and subsequent decision to the intuition decision. Nothing in § 314(d), nor any other statute, overcomes the strong presumption that the Federal Circuit has jurisdiction to review that joinder decision.

Windy City argued that § 315(c) does not authorize same-party joinder and that it does not authorize joinder of new issues material to patentability, such as new claims or new grounds. Facebook disputed both points, arguing that § 315(c) authorizes same-party joinder and that it does not prohibit joinder of new issues. The Federal Circuit agreed with Windy City on both points. The clear and unambiguous text of § 315(c) does not authorize same-party joinder, and does not authorize the joinder of new issues. Beginning with the statutory language, § 315(b) articulates the time-bar for when an IPR “may not be instituted.” 35 U.S.C. § 315(b). But § 315(b) includes a specific exception to the time bar. By its own terms, “[t]he time limitation . . . shall not apply to a request for joinder under subsection (c).” Subsection (c) provides that after an inter partes review has been instituted, the Director, in his or her discretion, “may join” “as a party to that inter partes review” “any person” who has filed “a petition under section 311 that the Director . . . determines warrants the institution of an inter partes review under section 314.

The Federal Circuit held that the clear and unambiguous meaning of § 315(c) does not authorize joinder of two proceedings, and does not authorize the Director to join a per-son to a proceeding in which that person is already a party. The Federal Circuit found the Board’s interpretation of § 315(c) is contrary to the unambiguous meaning of the statute for a second reason. The Federal Circuit said that the language in §315(c) does no more than authorize the Director to join 1) a person 2) as a party, 3) to an already instituted IPR. This language does not authorize the joined party to bring new issues from its new proceeding into the existing proceeding. §315(c) authorizes joinder of a person as a party, not “joinder” of two proceedings.

“Upper” and “Lower” Claim Limitations Leaves Patent Owner Feeling Down

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The Tops Company, Inc. sued Koko’s Confectionery & Novelty for infringement of U.S. Patent No. 6,660,316, and for trade dress infringement.

The claims of the ‘316 patent required upper and lower chambers:

However the district found on summary judgment that while Koko’s Squeezy Squirt Pop had two chambers, they were not upper and lower chambers, nor were they equivalent to upper and lower chambers.

Directional references in claims such as upper and lower, left and right, top and bottom, etc., can cause problems are best avoided unless the directions are important. While Topps may still prevail on appeal, the wording of the claims has complicated their enforcement efforts.

Inventorship, Unlike a Claim, is a “Nose of Wax”

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In Egenera, Inc. v. Cisco Systems, Inc., [2019-2015, 2019-2387] (August 28, 2020), the Federal Circuit affirmed the district court’s claim construction but vacated the invalidity judgment of U.S. Patent No. 7,231,430, based on judicial estoppel and remanded for further proceedings.

Prior to claim construction, during an inter partes review proceeding, Egenera separately petitioned the USPTO to remove one of the eleven listed inventors from the ’430 patent (the presence of the inventor prevented Egenera from antedating the cited prior art). Following the district court’s claim construction and a trial on inventorship, Egenera asked the district court to add the removed inventor back to the patent (because the removed inventor was found to have conceived one of the claim limitations. The district court determined that judicial estoppel prevented Egenera from relisting the inventor and held the ’430 patent invalid for failing to name all inventors.

The Patent Act allows a listing of inventors to be corrected either upon petition to the Director (35 U.S.C.§ 256(a)), or upon court order, see §256(b)), and a patent cannot be invalidated if inventorship can be corrected instead. The Federal Circuit noted that its precedent provides that “error” in §256 includes “all varieties of mistakes—honest and dishonest”—rather than only unintentional inaccuracy. § 256 is a savings provision, functioning to prevent invalidation when correction is available; it is the inequitable-conduct rules that provide a safety valve in the event of deceit.

The Federal Circuit held that §256 does not exclude “considered acts,” or even “deceptive intention,” from the meaning of “error.” “Error” is simply the incorrect listing of inventors.

The district court here concluded that Egenera was judicially es-topped from adding Mr. Schulter’s name back to the patent after it held a trial establishing him to be an inventor—thereby invalidating the patent for improper inventorship. Judicial estoppel is an equitable doctrine that prevents a litigant from taking a litigation position inconsistent with one successfully asserted in an earlier court proceeding. The purpose of the doctrine is to protect the integrity of the judicial process. A a court examines (1) whether a party’s earlier and later positions are “clearly inconsistent”—that is, “mutually exclusive”; (2) whether the party “succeeded in persuading a court to accept” the earlier position; and (3) whether the party would “derive an unfair advantage or impose an unfair detriment” on the other side if not estopped.

Because inventorship is a complex legal conclusion that depends on claim construction, once claim construction was performed, the Federal Circuit found that it was not inconsistent to correct inventorship after the claims were construed. Thus, the district court erred in determining that the first factor of clearly inconsistent positions was met.

The Federal Circuit also found that Engera did not meet the second factor, persuading the court to accept its earlier position. The Federal Circuit observed that no persuasion was involved in getting the USPTO to remove the inventor. Finally the Federal Circuit found no unfair advantage to Engera.

Concluding that the district court legally erred as to each factor, the Federal Circuit held that the district court abused its discretion by applying judicial estoppel, vacating the district court’s invalidity judgment and the accompanying cost award, and remanding for further proceedings.

Pointed Tip is Not a Substantially Flat Surface

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In Neville v. Foundation Constructors, Inc., [2020-1132] (August 27, 2020), the Federal Circuit affirmed summary judgment of the asserted claims of U.S. Patent Nos. 7,914,236 and 9,284,708 relating to foundation piles.

The parties disputed the construction of two claim limitations relating to the “end plate,” which separate the claims at issue into two groups. The first set of claims require an “end plate having a substantially flat surface disposed perpendicular to the centerline of the tubular pile. The second set of claims require “at least one protrusion extending outwardly from the end plate.”

The Patented Product vs. Accused Product: Can you find the end plate with the flat surface?

The district court granted summary judgment of non-infringement as to accused products having finding the accused products “lack (1) an end plate having a substantially flat surface and (2) an end plate with at least one protrusion extending outwardly from it. The district court reasoned that the plain meaning of “end plate having a substantially flat surface” did not encompass “an interior surface facing into the rest of the pile tip.” The district concluded that the patent applicant intended the “substantially flat surface” of the end plate to refer to the side of the end plate facing outward, citing each of the patent figures, as well as from how Plaintiff used the phrase ‘substantially flat surface’ to distinguish the claims from the prior art.

The Federal Circuit agreed that read in light of the specification, the phrase “substantially flat surface disposed perpendicular to the centerline of the tubular pile” does not refer to any interior-facing surface. As suggested by the word “end,” the relevant surface of the end plate is the external one. The Federal Circuit found that the specification reinforces the view that the invention is directed to the exterior surface of the end plate as being “substantially flat.” The Federal Circuit found that the prosecution history likewise confirms that the substantially flat surface of the end plate does not refer to an interior surface.

For similar reasons, the Federal Circuit agreed with the district court that the accused pile tip does not include “at least one protrusion extending outwardly from the end plate.” Nothing in the specification remotely suggests that, contrary to the plain meaning of a “protrusion” and “ex-tending outwardly,” the protrusion could be an indistinguishable part of the end plate from which it protrudes.

The Federal Circuit found that the district court correctly ruled that the “single, conically-shaped” end piece of the accused pile tips does not meet the claimed “protrusion extending outwardly from the end plate.

Clear Claim Language Trumped Written Description in Construction

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In Baxalta Inc. v. Genentech, Inc., [2019-1527] (August 27, 2020), the Federal Circuit vacated the district court’s judgment of non-infringement of the asserted claims of U.S. Patent No. 7,033,590 because the district court erred in construing the terms “antibody” and “antibody fragment,” and remanded.

Generally, antibodies are Y-shaped structures comprising two heavy chains (H chains) and two light chains (L chains). Baxalta argued “antibody” should be construed as a molecule having a specific amino acid sequence comprising two heavy chains (H chains) and two light chains (L chains). Genentech argued “antibody” should instead be construed as an immunoglobulin molecule, having a specific amino acid sequence that only binds to the antigen that induced its synthesis or very similar antigens, consisting of two identical heavy chains (H chains) and two identical light chains (L chains).

The district court determined that the term antibody standing alone without other structural terms can have different meanings to those skilled in the art, and that both Baxalta’s and Genentech’s proposed constructions were acceptable definitions. However, the district adopted Genentech’s narrower definition based on an express definition in column 5 of the patent.

The Federal Circuit said that contrary to the district court’s construction, nothing in the plain language of claim 1 limits the term “antibody” to a specific antibody consisting of two identical heavy chains and two identical light chains or an antibody that only binds the antigen that induced its syn-thesis or very similar antigens. The dependent claims confirm that “antibody” is not so limited.

The Federal Circuit said that the district court’s construction which excludes explicitly claimed embodiments is inconsistent with the plain language of the claims. The district court rejected this inconsistency, suggesting that the proper result here is “invalidation of the inconsistent claims rather than an expansion of the independent claims.” The plain language of these dependent claims weighs heavily in favor of adopting Baxalta’s broader claim construction, and rejected the district court’s construction which renders dependent claims invalid.

As to the definition in the specification that the district court found limiting, the Federal Circuit said that when considered in the context of the remainder of the written description and the claims, it read the excerpt in column 5 as a generalized introduction to antibodies rather than as a definitional statement. The Federal Circuit also noted that these general statements do not include terms we have held to be limiting in other contexts such as “the present invention includes . . .” or “the present invention is . . .” or “all embodiments of the present invention are . . . .” The Federal Circuit further disagreed that the prosecution history supported the narrow construction, recognizing that that the prosecution history “often lacks the clarity of the specification and thus is less useful for claim construction purposes.”

The construction of antibody fragment followed the construction of antibody, and because the district court erred in construing the terms “antibody” and “antibody fragment” and entered judgment of non-infringement based on its erroneous constructions, the Federal Circuit vacated and remand for further proceedings consistent with the correct constructions of the terms.

Local Rules, unlike the Pirate Rules, Are More than Mere Guidelines, and Ignoring Them Can Cause a Loss of Rights

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In Sowinksi v. California Air Resources Board, [2019-1558] (August 21, 2020), the Court of Appeals for the Federal Circuit affirmed the dismissal of Sowinski’s Complaint for infringement of U.S. Patent No. 6,601,033 on grounds of res judicata.

In 2015 Sowinski sued the California Air Resources Board (“CARB”) and several individual and corporate defendants associated with CARB in California Superior Court for among other things infringement of U.S. Patent No. 6,601,033.  After the case was removed to the United States District Court for the Central District of California, it was dismissed with prejudice and without leave to amend, because Sowinski failed to file a response to defendants’ motion to dismiss.  The dismissal was affirmed by the Federal Circuit. In 2018 Sowinski again filed suit on the ‘033 patent, limiting his damages claim to the period after dismissal of the 2015 action, and the district court dismissed it on grounds of res judicata.

The Federal Circuit said that res judicata arises when the prior case or claim was previously tried and the merits were adjudicated. Sowinski argued that the case was not a final judgment on the merits, because the dismissal was based on the technicality of a local deadline.  However, there is precedent that dismissal for failure to prosecute should be treated as an adjudication on the merits for purposes of preclusion.  Further, FRCP 41(b) states that a dismissal for failure to prosecuting or comply with the FRCP or a court order can operate as an adjudication on the merits.  Thus the Federal Circuit concluded that the district court properly precluded the claim.

As to Sowinski’s claim for damages subsequent to the dismissal, the Federal Circuit noted that preclusion does not apply to new or changed products or methods, but does apply when the accused products or methods are essentially the same.

Although Dr. Sowinski stresses the inequity that he did not obtain resolution of the question of infringement, CARB pointed out that he had the opportunity to do so. The Federal Circuit said that application of preclusion encourages reliance on judicial decisions, bars vexatious litigation, and frees the courts to resolve other disputes.

Local Rules, unlike the Pirate Rules in Pirates of the Caribbean, are more than mere guidelines, and ignoring them can cause a loss of rights.

Constitutional Rights — Use Them or Lose Them

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In Security People, Inc. v. Iancu, [2019-2118] (August 20, 2020), the Federal Circuit affirmed the dismissal of Security People’s challenge to the constitutionality of the cancellation of its U.S. Patent No. 6,655,180 in an inter partes review.

The district court dismissed Security People’s complaint for lack of subject matter jurisdiction, noting that the district court lacked subject matter jurisdiction because Congress established a specific means for judicial review of IPR decisions, rendering collateral APA suits in district court inappropriate.  Security People alleged two errors in this decision: First, the Board lacks authority to consider constitutional claims, and thus it could not then assert a constitutional challenge for the first time on appeal because retroactivity challenges raise issues requiring factual resolution. Second, Security People argued that its challenge was not yet ripe until cancellation of its patent claims, which required affirmance of the Board’s decision by this court, and that it had to exhaust those non-constitutional claims before raising its constitutional claims.

The Federal Circuit disagreed.  The Federal Circuit said that Security People could have and should have raised constitutionality during the proceeding, observing that it is not unusual for an appellate court reviewing the decision of an administrative agency to consider a constitutional challenge to a federal statute that the agency concluded it lacked authority to decide. The presence of disputed factual questions does not change that calculus.

The Federal Circuit also found that Security People was wrong about when the USPTO’s action became final, noting that the USPTO’s decision making process was complete after issuance of the Final Written decision.

The moral of the story is that you cannot wait to assert you Constitutional rights, and must do so at the earliest possible instance.  It is better to be told that your assertion is too early, than to find out latter that it was too late.

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Standard-Essentiality is a Question for the Factfinder

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In Godo Kaisha IP Bridge 1 v. TCK Communication Technology, [2019-2215] (August 4, 2020), the Federal Circuit affirmed the jury determination of infringement based on patentee’s theory that (1) the patent claims are essential to mandatory aspects of the Long-Term Evolution (“LTE”) standard; and (2) the accused products practice that standard.

Defendant argued in a JMOL that the district court should have decided the question of the claims’ essentiality to the standard in the claim construction context and that the court needed to decide that question as a matter of law. The Federal Circuit found no error in the submission of these questions to the jury in the context of an infringement trial.

The Federal Circuit agreed that standard-essentiality is a question for the factfinder. The Federal Circuit added that determining standard-essentiality of patent claims during claim construction, moreover, hardly makes sense from a practical point of view. Essentiality is, after all, a fact question about whether the claim elements read onto mandatory portions of a standard that standard-compliant devices must incorporate. This inquiry is more akin to an infringement analysis (comparing claim elements to an accused product) than to a claim construction analysis (focusing, to a large degree, on intrinsic evidence and saying what the claims mean).

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In Illumina, Inc. v. Ariosa Diagnostics, Inc., [2019-1419] (August 3, 2020), the Federal Circuit modified the Court’s original opinion on March 17, 2020.  The Federal Circuit reversed the district court’s determination that claims 1–2, 4–5, and 9–10 of U.S. Patent 9,580,751 and claims 1–2 and 10–14 of U.S. Patent 9,738,931 were invalid under 35 U.S.C. § 101 as directed to an ineligible natural phenomenon.

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