Jetting along the Thin Line between Appellate Standing and Admitting Infringement

The US Court of Appeals for the Federal Circuit found that an inter partes review (IPR) petitioner that had not been accused of infringement had standing to appeal a final decision in an IPR because the petitioner alleged facts establishing that there was a substantial risk of infringement of the challenged claims. General Elec. Co. v. Raytheon Techs. Corp., Case No. 19-1319 (Fed. Cir. Dec. 23, 2020) (Hughes, J.)

Raytheon owns a patent directed to a configuration for mounting a turbofan gas turbine engine to an aircraft pylon. Turbofan engines rely on four main component sections—the fan, compressor, combustor and turbine—to generate thrust from the continuous ignition of a mixture of fuel and pressurized air. The compressor and turbine sections are further divided into high-pressure and low-pressure segments. Each of these segments consists of stages, which include a matched set of rotating blades and stationary airfoils. The patent claims recite a “first” spool, which the parties equate with a low-pressure spool, turbine and compressor, and a “second” spool, consisting of the high-pressure spool, turbine and compressor. The claimed “second” spool includes “at least two stages.”

General Electric (GE) competes with Raytheon in the commercial aviation engine market and petitioned for IPR, challenging several claims based on two prior art references, Wendus and Moxon. Wendus discloses all elements recited in the challenged claims, except that it teaches a single-stage high-pressure turbine instead of the claimed “at least two-stage” high-pressure turbine. Moxon states that to improve fuel efficiency, “a move to one instead of two HP turbine stages is thought unlikely.” The Patent Trial and Appeal Board found that all elements recited in the challenged claims were found in the prior art but found that the claims were not proven to be non-obvious, in part because Wendus expressly considered at least some of the one-stage versus two-stage tradeoffs and specifically chose the one-stage option. This express consideration meant that Wendus taught away from combination with Moxon, the Board reasoned. GE appealed.

Before reaching the merits of the appeal, Raytheon moved to dismiss the appeal for lack of standing, arguing that it had never sued or threatened to sue GE for infringing the patent. Accordingly, the standing dispute centered on whether GE had sufficiently alleged an injury in fact. The Federal Circuit explained that “when an appellant relies on potential infringement liability . . . it must establish that it has concrete plans for future activity that creates a substantial risk of future infringement or would likely cause the patentee to assert a claim of infringement.” In the context of an appeal of an IPR proceeding, “it is generally sufficient for the appellant to show that it has engaged in, is engaging in, or will likely engage in activity that would give rise to a possible infringement suit.” GE presented evidence that it spent $10 to $12 million in 2019 developing a geared turbofan architecture and design and that it offered its geared turbofan design to Airbus in response to a request for information. GE also presented a sworn statement from its chief IP counsel indicating that “GE fully expects that [Raytheon] would accuse this engine of infringing the [] patent.” While the Court acknowledged that GE did not admit to infringement, it surmised that “the most reasonable inference [] is that GE believes its [new] design raises a substantial risk of infringement.” These factual allegations were sufficient to establish standing.

On the merits of the appeal, the Federal Circuit found that the Board lacked substantial evidence to support its finding of non-obviousness. Specifically, the Court found that while the Wendus reference may be read to suggest a general preference for a one-stage high-pressure turbine, this general preference alone was not enough to conclude that “Wendus discourages the use of a two-stage high-pressure turbine,” as per the Board’s rationale. The Board reasoned that one of ordinary skill in the art would have known that modifying the Wendus engine to include a two-stage turbine would have increased the weight and cost of the engine. While a skilled artisan may understand this downside to a two-stage engine, Wendus itself does not criticize the use of a two-stage turbine for weight or cost reasons. “Wendus does not make a single negative statement about the use of a two-stage high-pressure turbine.” Accordingly, the Court found that substantial evidence did not support the Board’s conclusion that Wendus teaches away from modifying the engine to include a two-stage option.

Practice Note: To establish standing, GE provided a declaration that it fully expected Raytheon to accuse its prototype engine of infringement. While the Federal Circuit stated that “IPR petitioners need not concede infringement to establish standing to appeal,” it noted that “GE does itself no favors by making its allegations so coyly.” Accordingly, it is important for IPR appellants that have not been accused of infringement to carefully balance the need to submit evidence sufficient to meet the standing requirements with an aversion towards admitting to infringement.

Revenge of the Grammar Nerds: Grammatical Canons Overturn $8.6 Million Jury Infringement Verdict

Addressing whether the phrase “a plurality of” should apply to each element in a series, the US Court of Appeals for the Federal Circuit entered judgment of non-infringement, finding that the district court’s claim construction that did not require a plurality of each recited component was at odds with the claim language based on the application of grammatical rules. SIMO Holdings, Inc. v. Hong Kong uCloudlink Network Technology Limited, Case No. 19-2411 (Fed. Cir. Jan. 5, 2021) (Taranto, J.)

SIMO sued uCloudlink for patent infringement based on sales of certain GlocalMe WiFi hotspot devices and a wireless phone model. Generally, these hotspots and patented technology seek to reduce costs for calls and internet access for people traveling internationally.

The sole patent claim at issue covered an apparatus that performed certain communications protocol data transfer and authentication functions that enabled an international traveler to take advantage of a non-subscribed carrier without incurring roaming charges. At issue was the interpretation of that claim language, specifically whether the preamble, which recited a series of technological components (e.g., memory, processors, programs and, importantly here, “non-local calls database”), was a limiting part of the claim, and, if so, whether the language that recited “a plurality of” these components meant that the claimed invention must have a plurality of each of these components, or just more than one of all of them taken together. This was a determining factor for infringement, as it was essentially undisputed that the uCloudlink devices did not have one (let alone multiple) non-local calls databases. The district court concluded that the preamble language was limiting but, parsing the grammar involved and noting that specification “states that the non-local calls database is optional,” concluded that a non-local calls database was not a necessary component, and that summary judgment of infringement was warranted. UCloudlink appealed.

The Federal Circuit agreed that the preamble was limiting, but disagreed that a structure not having a recited element could infringe. The claim in issue recited “[A] wireless communication client or extension unit comprising . . .” followed by a list of components including the non-local call database. Notwithstanding that the database was found in the preamble, the Court concluded that it was limiting because it followed the term “comprising” and provided the necessary structure for the invention, which otherwise would have had no limiting description of the physical components of the apparatus. Moreover, the Court noted that subsequent claim language, which recited “the wireless communication client” and “the extension unit,” referred to those items identified in the preamble after “comprising.”

The Federal Circuit relied on many grammatical canons, its own precedent, various Scalia & Garner textualist interpretation books and the law-school writing-class favorite, Strunk & White. Applying these sources together, the Court reiterated that nouns in series are generally each treated as modified by a phrase that precedes the series (here, “a plurality of”), and that such a rule is particularly forceful when the series ends in an “and” rather than an “or.” And, with no article preceding “non-local calls databases,” which ended the list, there was nothing that set the phrase apart from the rest of the series. Finally, after the list, certain components were expressly called out as already existing in a plurality (e.g., “the plurality of programs”), which moved the interpretive needle toward concluding that a plurality of each member of the series—including the non-local call databases—was required.

Notably, the Federal Circuit’s interpretation excluded some embodiments from the specification. This conflict was dismissed by the Court, which noted that exclusion of some embodiments can be appropriate where required by the claim language and where such embodiments are otherwise claimed (here, other claims lacked a requirement of “non-local call databases”), particularly where such embodiments are not identified as preferred.

Practice Note: For claims drafters, the opinion provides an important reminder to ensure precision in ordinary grammatical usages to reflect the intended meaning.

Patent Owners Disavowal of Appeal from District Court’s Noninfringement Judgement Moots IPR Appeal

Addressing the standard for mootness in inter partes review (IPR) proceedings following a district court noninfringement judgment, the US Court of Appeals for the Federal Circuit held that a petitioner’s IPR appeal was moot after the patent owner decided not to appeal the final judgment of noninfringement. ABS Global, Inc. v. Cytonome/ST, LLC, Case No. 19-2051 (Fed. Cir., Jan. 6, 2021) (Stoll, J.) (Prost, C.J., dissenting in part).

In June 2017, Cytonome/ST filed a complaint against ABS asserting infringement of six patents, including the patent of interest in this case. ABS filed a petition for IPR of all claims of the patent. In April 2019, the Patent Trial and Appeal Board (PTAB, the Board) issued its final written decision invalidating certain claims of the patent. Two weeks later, the district court granted ABS partial summary judgment, holding that the accused products did not infringe any of the asserted patent’s claims. In June 2019, ABS appealed the PTAB’s final written decision. In a briefing before the Federal Circuit, Cytonome/ST’s counsel filed an affidavit stating that Cytonome/ST “has elected not to pursue an appeal of the district court’s finding of non-infringement as to the patent and hereby disclaims such an appeal.” In June 2020, the district court entered final judgment, including as to non-infringement of the patent.

The Federal Circuit dismissed ABS’ appeal of the PTAB’s final written decision on the ground that the appeal was moot in view of the district court’s non-infringement judgment. The Court characterized the question as one under the voluntary-cessation doctrine. In the context of intellectual property infringement cases, the voluntary-cessation doctrine requires the property owner claiming mootness to prove that the “allegedly wrongful behavior could not reasonably be expected to recur,” i.e., that it will not assert the intellectual property right against the same accused products again. If it does, the burden shifts to the accused infringer to show that it “engages in or has sufficiently concrete plans to engage in activities” that would not be covered by the property owner’s non-assertion decision.

Applying the doctrine, the Federal Circuit concluded that Cytonome/ST could not reasonably be expected to assert infringement of the patent against ABS because ABS had already secured a district court judgment that the accused products do not infringe and Cytonome/ST disclaimed any appeal of the non-infringement judgment. In effect, ABS was insulated from liability for infringement, including for future infringement for products that are “essentially the same” as ABS’ currently accused products pursuant to the Kessler doctrine. Further, the Court found that ABS had not demonstrated it could reasonably expect Cytonome/ST to sue it for infringement of the patent in the future as ABS had not shown it had current or concrete future plans to engage in activities not covered by Cytonome/ST’s disavowal: “Cytonome’s disavowal of its right to appeal the summary judgment of noninfringement ‘estops Cytonome from asserting liability against ABS for infringement of the…patent claims in connection with the accused products, thereby allowing ABS to make, use, and sell those products freely’ and is ‘coextensive with the asserted injury in fact.’” It was not enough, in the Court’s view, for ABS to simply provide evidence of a pattern of serial litigation against it by Cytonome/ST on other patents. Because the mootness elements were present and the Court concluded that ABS forfeited any argument for vacatur by not raising it until oral argument, the Court dismissed ABS’ appeal for lack of jurisdiction.

Chief Judge Sharon Prost dissented in part to address the matter of remedy. In Prost’s view, the proper remedy was to vacate the PTAB’s decision because mootness resulted from Cytonome/ST’s decision to disclaim an appeal of the district court’s non-infringement judgment. That voluntary cessation on Cytonome’s part, in Prost’s view, entitled ABS to vacatur of the PTAB’s decision to avoid the “strange” result of Cytonome/ST being able to later claim estoppel on the basis of a decision ABS had appealed.

Supreme Court to Consider Doctrine of Assignor Estoppel in Patent Cases

The Supreme Court of the United States agreed to review assignor estoppel in patent cases. Minerva Surgical, Inc. v. Hologic, Inc., et al., Case No. 20-440 (Supr. Ct. Jan. 8, 2021) (certiorari granted). The question presented is:

Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.

Csaba Truckai is the inventor of two patents relating to endometrial ablation that were ultimately acquired by Hologic. Truckai later founded Minerva and developed a system that competed with Hologic’s system. The district court ruled that Minerva could not challenge the validity of the patents because Truckai was barred by assignor estoppel from attacking his own patents. A jury found that Minerva infringed both patents and awarded Hologic more than $4.7 million. On appeal, the US Court of Appeals for the Federal Circuit affirmed, confirming that assignor estoppel bars an assignor from asserting invalidity of an assigned patent in district court, and “declined Minerva’s invitation to ‘abandon the doctrine’ of assignor estoppel entirely.”

State University Challenges Board on Sovereign Immunity in Inter Partes Review

The US Court of Appeals for the Federal Circuit reiterated that “[s]overeign immunity does not apply to IPR proceedings when the patent owner is a state.” Board of Regents of the University of Texas System v. Baylor College of Medicine, Case No. 20-1469 (Fed. Cir. Dec. 10, 2020) (per curiam).

Baylor College of Medicine petitioned for inter partes review (IPR) of two patents owned by the Board of Regents of the University of Texas System (UT). UT moved to dismiss the petitions on state sovereign immunity grounds. The Patent Trial and Appeal Board denied the motion, citing Regents of the University of Minnesota v. LSI Corp. (IP Update, Vol. 22, No. 7).

UT appealed, arguing that University of Minnesota was wrongly decided, but admitted that the panel was bound by it. Predictably, the panel affirmed the Board.

Practice Note: UT’s strategy implies that it intends to use its case as a vehicle to seek en banc (and possibly Supreme Court) review of the University of Minnesota decision.