Administrative Economy in Action: IPR that Found Patent Invalid is Retroactively Terminated

In Atlanta Gas Light Company v, Bennett Regulator Guards, Inc, [2021-1759] (May 13, 2022) the Federal Circuit dismissed Atlanta Gas’ appeal for lack of jurisdiction.

This was the third time this case made it to the Federal Circuit from the PTAB, In its final written decision, the Board, in the underlying inter partes review proceeding, rejected patent owner Bennett Regulator Guards, Inc.’s argument that petitioner Atlanta Gas Light Company was time barred from petitioning for inter partes review under 35 U.S.C. § 315(b). It then determined that the challenged claims were unpatentable over the prior art. Bennett appealed,and in the first appeal, the Federal Circuit disagreed with the Board’s time-bar determination, holding that Atlanta Gas should have been barred; vacated the Board’s unpatentability determination; and remanded with directions to dismiss the IPR (and to further consider a sanctions order that the Board had not yet finalized.)

Before the Board acted on this mandate, however, the Supreme Court held that time-bar determinations were unreviewable in Thryv, Inc v. Click-To-Call Technologies, LP, 140 S. Ct. 1367 (2020), and vacated the Federal Circuit’s decision overruling the Board’s time-bar determination.

On remand from the Supreme Court, the Federal Circuit affirmed the Board’s unpatentability
determination on the merits (while saying nothing about the time bar) and again remanded for the Board to reconsider and finalize its order regarding sanctions. On remand from the Federal Circuit, the Board terminated the proceeding due in part to its reconsideration of its decision on the time bar.

Atlanta Gas appealed, but the Federal Circuit concluded that it lacked jurisdiction to review the Board’s decision to vacate its institution decision, a decision it made based in part on
its evaluation of the time bar and changed Patent and Trademark Office policy. Accordingly, the Federal Circuit dismissed Atlanta Gas’s appeal for lack of jurisdiction.

Posted in IPR

Wayback Machine Helps Prove Exhibit was Prior Art

In Valve Corporation v. Ironburg Inventions Ltd., [2020-1315, 2020-1316, 2020-1379] (August 17, 2021), the Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded two PTAB decisions determining that some claims of U.S. Patent No. 9,289,688 were shown to be unpatentable, while other claims of the ‘688 patent and the claims of U.S. Patent No. 9,352,229 were not shown to be unpatentable.

The ’688 patent is directed to an improved controller for a games console that is intended to be held by a user in both hands in the same manner as a conventional controller that comprises additional controls located on the rear of the controller. The ’229 patent is directed to a handheld controller for a games console, wherein the controller further includes at least one additional control located on a back of the controller.

An issue in both of the appeals is whether an Exhibit to the petition relied on by Valve was shown to be a printed publication and thus prior art under 35 U.S.C. § 102(a)(1). Valve asserted that the Exhibit was a printed copy of an online review of an Xbox 360 controller published on October 20, 2010. Valve argued that the Exhibit was prior art because it was a printout of the same online article by Dave Burn that was cited and enclosed in the prosecution histories of the ’688 patent and ’229 patent.

The Board rejected Valve’s showing on the ground that the Exhibit had not been shown to be the same as the asserted prior art documents in the prosecution histories. This is essentially a determination that Valve failed to prove that the Exhibit was what Valve what claimed it to be, which is an issue of authentication. See Fed. R. Evid. 901(a) (“To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must pro-duce evidence sufficient to support a finding that the item is what the proponent claims it is.”). The Federal Circuit noted that the Exhibit could be authenticated by a comparison with an authenticated specimen by an expert witness or the trier of fact, and that such authentication by comparison is rountine, and that the Board had an obligation to make such a comparison. The Federal Circuit concluded that the Exhibit is substantively the same as articles in the prosecution histories.

The Federal Circuit further rejected the argument that the Exhibit has been shown to be publically accessible before the priority date. The Federal Circuit said that there was overwhelming evidence that the article in another of Ironburg’s patents was prior art, and thus the Exhibit, which is substantively the same, is also prior art. There was testimony from one of the co-inventors, that he provided information to the author of the article for promotional purposes. The timing of the publication of the article was confirmed by the patent examiner via the Wayback Machine, which the Federal Circuit found was highly persuasive evidence of public accessibility. The Federal Circuit also noted that the inventors did not dispute the publication date of the article when it was cited against them during prosecution. Finally, the Federal Circuit found that the fact that Examiner found the reference after a “brief” search was highly probative evidence of public accessibility.

The Federal Circuit reversed and remanded for consideration tha tthe Exhibit was in fact prior art.

Valve also appealed the Board’s determination that Valve failed to prove that claim 29 of the ‘688 patent and claims 1-15 and 18-24 of the ‘229 patent were unpatentable. The claims required an elongate member that “is inherently resilient and flexible.” The reference showed a member that was resiliently biased with a spring. The Board found that the spring was not part of the elongate member, and the Federal Circuit found no error in this determination.

Ironburg appealed the determination that claims of the ‘688 patent were anticipated, arguing two limitations: (1) “a first surface disposed proximate an outer surface of the case,” and (2) “a second surface opposing the first surface.”

Under the ordinary meaning of these terms, the Federal Circuit found a “first surface disposed proximate an outer surface of the case” requires that the first surface of the additional control and the outer surface of the case be arranged close or near to each other, but does not re-quire them to be facing each other, rejecting Ironburg’s construction. As to the “opposing” limitation, the Federal Circuit agreed with the Board’s construction that the “opposing” limitation is met by two surfaces that face each other or are opposite each other, and that this did not require that the surface be flat as contended by Ironburg.

Posted in IPR

Federal Circuit Ignores Forum Selection Clause that Could Have Prevented IPR

In New Vision Gaming & Development, Inc., v. SG Gaming, Inc., [2020-1399, 2020-1400](May 13, 2021) the Federal Circuit vacated PTAB decisions that U.S. Patent Nos. 7,451,987 and 7,325,806, as well as proposed substitute claims, are patent ineligible under 35 U.S.C. § 101, and remanded the case for further proceedings consistent with Arthrex.  The Federal Circuit said that because Arthrex issued after the Board’s final-written decisions and after New Vision sought Board rehearing, New Vision had not waived its Arthrex challenge by raising it for the first time in its opening brief before this Court.

Judge Newman agreed that Arthrex applied but dissented because the Court did not address the forum selection clause in the license between the parties.  The parties agreed that “any dispute between any of the parties that cannot be resolved amicably” should be resolved in the state and federal courts in the State of Nevada, and thus Judge Newman argued that the forum question requires resolution, for if the parties are committed to a Nevada forum instead of the PTAB, there is no basis for new PTAB proceedings on remand.

Thus, while Judge Newman agreed that the Board’s decision must be vacated under Arthrex, she respectfully dissented from remand without resolving the issue of forum selection.

Posted in IPR

Judgment of Non-Infringement Moots Appeal of PTAB Decision Sustaining Validity

In ABS Global, Inc. v. Cytonome/St, LLC, [2019-2051] (January 6, 2021), the Federal Circuit dismissed the appeal of a PTAB decision in an inter partes review sustaining the patentability of certain claims of U.S. Patent No. 8,529,161, finding that it was unlikely that the ‘161 patent would be asserted against the petitioner in the future.

Two weeks after the Board’s final written decision, the district court granted in part ABS’s motion for summary judgment, concluding that ABS’s accused products did not infringe any of the ’161 patent claims. In June 2019, nearly two months after the district court’s summary judgment decision, ABS appealed the Board’s final written decision. Cytonome’s response brief, filed about three months later, included an affidavit by Cytonome’s counsel stating that Cytonome “has elected not to pursue an appeal of the dis-trict court’s finding of non-infringement as to the ’161 pa-tent and hereby disclaims such an appeal.” Cytonome then argued that, because it disavowed its ability to challenge the district court’s summary judgment that ABS did not infringe the ‘161 patent claims, ABS lacked the requisite injury in fact required for Article III standing to appeal the Board’s final written decision regarding validity of the claims of the ’161 patent.

The Federal Circuit, applying the voluntary cessation doctrine, concluded that Cytonome’s disavowal of its right to appeal the district court’s noninfringement judgment mooted ABS’s appeal of the IPR. The Federal Circuit first observed that Cytonome’s assertion of the ’161 patent against ABS—cannot reasonably be expected to recur. Although Cytonome’s
affidavit disavowing its appeal is unquestionably narrower than a covenant not to sue, Cytonome’s disavowal was “coextensive with the asserted injury” in fact. The Federal Circuit said that Cytonome’s disavowal estops Cytonome from asserting liability against ABS for infringement of the ’161 patent claims in connection with the accused products, thereby allowing ABS to make, use, and sell those products freely.

The Federal Circuit found that Because Cytonome has demonstrated that its disavowal encompasses all of its allegedly unlawful conduct, it was incumbent on ABS to indicate that it engages in or has sufficiently concrete plans to engage in activities not covered by the disavowal. The Federal Circuit concluded that ABS’s IPR appeal is moot because there is no injury sufficient to support an ongoing case or controversy.

Posted in IPR

Petitioner Can Substantiate Prior Art When Challenged by Patent Owner

In Vidstream LLC v. Twitter, Inc., [2019-1734, 2019-1735] (November 25, 2020) affirmed the PTAB determination that claims 1-35 of U.S. Patent No. 9,083,997 on Recording and Publishing Content on Social Media Websites were invalid for obviousness.

The issue on appeal was whether a book authored by Anselm Bradford and Paul Haine is prior art against the ‘997 Patent. The Federal Circuit said whether a document is prior art under 35 U.S.C. § 102(a) is a legal determination, based on the specific facts. While the book bore a copyright date of 2011, the copy relied upon by Petitioner bore a date of 2015. When challenged by VidStream, Twitter provided additional information to support the 2011 date. VidSream complained that this evidence was provided too late because was not provided with the IPR petitions, and petitioner may not submit new evidence or argument in reply that it could have presented earlier.

Twitter responded that the information filed with its replies was appropriate in view of VidStream’s challenge to Bradford’s publication date, and that this practice is per-mitted by the PTAB rules and by precedent, which states:

[T]he petitioner in an inter partes review proceeding may introduce new evidence after the petition stage if the evidence is a legitimate reply to evidence introduced by the patent owner, or if it is used to document the knowledge that skilled artisans would bring to bear in reading the prior art identified as producing obviousness.

VidStream also argued that it was deprived of a fair opportunity to respond to the evidence submitted with Twitter’s replies. Twitter pointed out that VidStream was not prejudiced, for the Board authorized VidStream to file a sur-reply, and it did so.

The Board denied VidStream’s Motion to Exclude, holding that it was appropriate to permit Twitter to respond to VidStream’s challenge by providing additional evidence to establish the Bradford publication date. The Federal Circuit concluded that the Board acted appropriately, for the Board permitted both sides to provide evidence concerning the reference date of the Bradford book, in pursuit of the correct answer.

The Board found that although no one piece of evidence definitively establishes Bradford’s public accessibility prior to May 9, 2012, the evidence, viewed as a whole, sufficiently does so. The Federal Circuit agreed, noting the evidence well supports the Board’s finding that Bradford was published and publicly accessible before the ’997 patent’s 2012 priority date, and affirmed the Board’s ruling that Bradford is prior art against the ’997 patent.

Posted in IPR

Finding Claims Non-obvious Was Not Error; It Was the Application of the Proper Evidentiary Standard

In Apple Inc. v., Inc., [2018-1456, 2018-1457] (September 25, 2020), the Federal Circuit affirmed the PTAB’s determination that claims of U.S. Patent No. 8,542,815 and 9,179,005 were not invalid for obviousness, and the PTAB’s imposition of sanctions against VOIP-PAL.

The ‘815 and ‘005 patents describe the field of invention as “voice over IP communications and methods and apparatus for routing and billing” and relate to routing communications between two different types of networks—public and private.

The Federal Circuit noted that the appeal was moot as to 18 claims that a court held were directed to unpatentable subject matter. As to the 15 remaining claims, the Federal Circuit rejected Apple’s argument of mootness, and considered the merits of the non-obviousness determination.

Apple argued that the Board violated the Administrative Procedures Act (“APA”) and its due process rights when the Board imposed non-enumerated sanctions for Voip-Pal’s ex parte communications. The Board’s actions are reviewed for abuse of discretion, and the Board abuses its discretion if the sanction (1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law; (3) rests on clearly erroneous fact findings; or (4) involves a record that contains no evidence on which the Board could rationally base its decision.

37 C.F.R. § 42.12(b) provides that sanctions “include” those enumerated subsection (b). The Federal Circuit said that “key” here was that Section 42.12(b) uses the term “include,” which signifies a non-exhaustive list of sanctions. The Federal Circuit held that the plain reading of Section 42.12(b) provides the Board with discretion to issue sanctions and that the Board did not commit an APA violation when it issued a sanction not explicitly listed under Section 42.12. The Federal Circuit noted that the Board’s decision to (a) allow Apple to petition for rehearing before a new panel, and (b) provide Apple with a meaningful opportunity to respond to Voip-Pal’s letters was a reasonable course of action and one that it would not not disturb, and did not find that Apple was deprived of due process.

Apple argued on appeal that the Board legally erred in rejecting its motivation-to-combine argument by improperly applying the now-rejected teaching, suggestion, motivation test rather than the flexible obviousness analysis required under KSR. The Federal Circuit found that the Board did not fault Apple for not citing explicit teachings, suggestions, or motivations to combine the prior art. Rather, the Federal Circuit said, the Board noted that Apple’s expert provided only “conclusory and insufficient” reasons for combining the prior art and failed to articulate reasoning with some rational underpinning. The Board did not legally err but rather held Apple to the proper evidentiary standard.

Constitutional Rights — Use Them or Lose Them

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.

Posted in IPR

Federal Circuit to PTAB: Show Your Work

In Alacritech, Inc., v. Intel, [2019-1467, 2019-1468] (July 31, 2020) the Federal Circuit vacated the Board’s obviousness determination as to claims 41–43 of U.S. Patent No. 8,131,880  because the Board did not adequately support its finding that the asserted prior art combination teaches or suggests a limitation recited in claims, and remanded for further proceedings regarding those claims.

The ’880 patent relates to computer networking, and is specifically directed to offloading certain network-related processing tasks from a host computer’s central processing unit (CPU) to an “intelligent network interface card” (INIC). According to the ’880 patent, one of the tasks that can be offloaded from the CPU to the INIC is the reassembly of data from packets received by the host computer from the network.

The Federal Circuit said that to support Federal Circuit review, the Board is obligated to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.  The Federal Circuit said that it does not require perfect explanations, and it will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.  However, the Federal Circuit found that the Board’s analysis of the disclosure of the reassembly limitations in claims 41–43 falls short of that which the APA and our precedent require.

The Federal Circuit found that the Board’s analysis did not acknowledge the parties’ dispute over where the reassembly occurs, much less explain how the prior art teaches or suggests reassembly in the network interface. As such, the Federal Circuit said that it could not reasonably discern whether the Board followed a proper path in determining that the asserted prior art teaches or suggests the reassembly limitations, and by extension, that the subject matter of claims 41–43 would have been obvious.  The Federal Circuit further noted that because the Board’s reasoning appears to be untethered to either party’s position, it could not infer that the Board’s obviousness determinations flowed directly from its rejection of the patent owner’s arguments, or adoption of the Petitioner’s arguments.

The Federal Circuit vacated the Board’s obviousness determination as to claims 41–43 and remanded for further proceedings consistent with this opinion.   

Posted in IPR

Petitioner Can’t Complaint About Improperly Appointed PTAB

In Ciena Corp. v. Oyster Optics, LLC, [2019-2117] (May 5, 2020), the Federal Circuit affirmed the PTAB final written decision that Ciena had failed to demonstrate by a preponderance of the evidence that any of the challenged claims were un-patentable.  On appeal, Ciena argued that, under Arthrex, the Board’s decision must be vacated and remanded for a new hearing before a differently constituted panel because the members of the Board panel that issued the decision were not appointed in compliance with the Appointments Clause. The Federal Circuit said that problem with Ciena’s request is that, unlike the patent owner in Arthrex, Ciena requested that the Board adjudicate its petition. It, thus, affirmatively sought a ruling from the Board members, regardless of how they were appointed. The Federal Circuit said that Ciena was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it. Under those circumstances, the Federal Circuit found that Ciena has forfeited its Appointments Clause challenge.

Congress’ carelessness in creating the PTAB continues to vex the PTAB and the Courts. The Federal Circuit’s quick fix, although understandable, has not helped matters.

Posted in IPR

Losing the Right to Challenge a Patent is not Enough to Confer Standing to Appeal IPR Decision

In Argentum Pharmaceuticals LLC v. Novartis Pharmaceuticals Corp., [2018-2273] (April 23, 2020), the Federal Circuit dismissed the appeal, noting that the appellant remaining after settlement lacked Article III standing to appeal the PTAB’s IPR decision.

The Federal Circuit said that although it had jurisdiction to review final decisions of the Board under 28 U.S.C. § 1295(a)(4)(A), an appellant must meet the irreducible constitutional minimum of standing. This is true even if there is no such requirement in order to appear before the administrative agency being reviewed.

The Federal Circuit said that to prove standing, Argentum bears the burden of showing that it has (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The Federal Circuit added that Argentum must supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court, by creating a necessary record in this court, if the record before the Board does not establish standing.

To establish injury in fact, an appellant must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical. An injury is particularized if it affects the appellant in a personal and individual way.

Argentum argued that it demonstrated at least three concrete injuries in fact. First, without an opportunity to appeal, it faces a real and imminent threat of litigation as it jointly pursues a generic version of Novartis’ Gilenya® product; but the Federal Circuit found that any ANDA would not be filed by Argentum, but by its manufacturing and marketing partner. Second Argentum argued that it will incur significant economic injury as its investments in developing a generic version of Gilenya® and preparing an ANDA would be at risk, but the Federal Circuit found that Argentum had not provided sufficient evidence to establish an injury in fact through economic harm. Third, Argentum argued that Argentum would be estopped under 35 U.S.C. § 315(e) from raising the patentability and validity issues in a future infringement action, but the Federal Circuit said that it had already rejected invocation of the estoppel provision as a sufficient basis for standing.

Accordingly, the Federal Circuit held that Argentum has failed to prove that it has suffered an injury in fact necessary to establish standing.

Posted in IPR