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.

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

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

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.