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If You Can’t Build it, They Won’t Come: No Obviousness Based on Fanciful Engine Design

Reaffirming that a person of ordinary skill in the art must have been able to actually create a disclosure at the time of invention in order for it to serve as an obviousness reference, the US Court of Appeals for the Federal Circuit reversed a decision by the Patent Trial & Appeal Board (the Board) in an inter partes review (IPR), concluding that a patent covering certain turbofan engine technology was not rendered obvious by a prior art publication that could not be realized into practice. Raytheon Techs. Corp. v. General Electric Co., Case No. 20-1755 (Fed. Cir. Apr. 16, 2021) (Chen, J.)

The issue on appeal was relatively straightforward. In an IPR, GE challenged as obvious a Raytheon patent that covered a specific design of geared gas turbine engine that provided for a “power density” higher than previously invented turbine engines. The patent defined “power density” as a “sea-level-takeoff thrust” divided by the engine turbine volume. During the IPR, GE relied on a 1987 NASA technical memorandum as art and argued that the reference, which envisioned superior performance characteristics based on an advanced engine that was made entirely of composite materials, rendered the challenged claims obvious. The parties did not dispute that this engine was unattainable in 1987, and may still be impossible today, because the envisioned composite materials do not yet (and may never) exist. The memorandum disclosed several performance factors, but not power density, sea-level-takeoff thrust or turbine volume. Nonetheless, GE argued, and the Board agreed, that the memorandum disclosed performance parameters that would have permitted an ordinarily skilled artisan to derive power densities that would have fallen within the range claimed in Raytheon’s patent.

On appeal, the Federal Circuit agreed with Raytheon, concluding that the imaginary engine of the NASA memorandum could not serve as an invalidating reference. In reversing the Board, the Federal Circuit reiterated two bedrock principles of obviousness law:

  • An obviousness reference must be enabled by the knowledge of an ordinarily skilled artisan at the time of the invention (but need not be self-enabling).
  • An invention cannot be rendered obvious by a non-self-enabling reference if no other prior art evidence or reference enables the non-self-enabling reference.

In addition, when a reference’s enablement is challenged, the party offering the reference bears a burden to establish that the reference, itself or in combination with other contemporaneous knowledge, was enabled.

Applying these principles here, the Federal Circuit determined that GE had not met its burden to show that the memorandum was indeed enabled. The Board, wrongly in the Court’s view, focused solely on whether an ordinarily skilled artisan was taught the parameters to ascertain a power density, rather than whether the prior art disclosed a turbofan engine possessing the requisite power density. Finding no evidence in the record to conclude that “a skilled artisan could have made the claimed turbofan engine with the recited power density,” the Court reversed.

Practice Note: Although this case does not break new obviousness ground, it reinforces the general [...]

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No Second Bite at the Apple: Injury Must Be Imminent and Non-Speculative to Support Standing

The US Court of Appeals for the Federal Circuit ruled that a party did not have Article III appellate standing to obtain review of a final ruling of the Patent Trial & Appeal Board because the underlying district court proceedings had been dismissed with prejudice after a settlement and license agreement were reached. Apple Inc. v. Qualcomm Inc., Case Nos. 20-1561; -1642 (Fed. Cir. Apr. 7, 2021) (Moore, J.)

After Qualcomm sued Apple in district court, Apple filed petitions for inter partes review (IPR) of the asserted patent claims. The Board instituted on both petitions but found that Apple did not prove the challenged claims were obvious. Apple appealed the Board’s final written decisions finding non-obviousness.

While the IPR proceedings were pending, the parties settled their litigation worldwide. The settlement included a license to Apple and payment of royalties to Qualcomm. The parties filed a joint motion to dismiss Qualcomm’s district court action with prejudice, which the district court granted.

At the Federal Circuit, Qualcomm argued that Apple waived any argument to establish its appellate standing by failing to address or submit supporting evidence in its opening brief. However, the Federal Circuit exercised its discretion to reach the issue of standing, explaining that the issue of standing was fully briefed, there was no prejudice to Qualcomm, and the question of standing impacted these and other appeals. Qualcomm sought leave to file a sur-reply addressing Apple’s evidence and arguments on standing, and agreed that if its motions to file a sur-reply were granted, it would not suffer any prejudice, and that evaluating the evidence may resolve standing in other pending cases. The Court granted Qualcomm leave to file a sur-reply.

Apple argued that it had appellate standing based on its ongoing payment obligations that conditioned certain rights in the license agreement, the threat that Apple would be sued for infringing the two patents-at-issue after the expiration of the license agreement, and the estoppel effects of 35 USC § 315 on future challenges to the validity of the asserted patents. The Federal Circuit disagreed.

LICENSE RIGHTS

Distinguishing the 2007 Supreme Court case MedImmune v. Genentech (where standing was found based on license agreement payment obligations after analyzing evidence for injury in fact or redressability), the Federal Circuit explained that Apple did not allege that the validity of the patents-at-issue would affect its contract rights and ongoing royalty obligations. The license agreement between the parties involves tens of thousands of patents. Apple did not argue or present evidence that the validity of any single patent (including the two patents-at-issue) would affect its ongoing payment obligations, or identify any related contractual dispute that could be resolved through determining the patents-at-issue’s validity. Accordingly, the Court concluded that Apple failed to establish Art. III standing under MedImmune.

THREAT OF POST-LICENSE SUITS

Apple’s second argument was based on the possibility that Qualcomm might sue Apple for infringing the patents-at-issue after the license expired. The Federal Circuit found the mere possibility of any such suit [...]

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Joined Parties Have Rights Too

In vacating an unpatentability decision by the Patent Trial and Appeal Board (Board), the US Court of Appeals for the Federal Circuit found that the rights of a joined party to an inter partes review (IPR) proceeding applies to the entirety of the proceedings and includes the right of appeal. Fitbit, Inc. v. Valencell, Inc., Case No. 19-1048 (Fed. Cir. July 8, 2020) (Newman, J.).

Apple petitioned the Board for IPR of certain claims of a patent owned by Valencell. The Board granted the petition in part, instituting review of certain claims and denying review of other claims. After institution of the Apple IPR, Fitbit filed an IPR petition for the instituted claims and moved for joinder with Apple’s IPR. The Board granted Fitbit’s petition, granted the motion for joinder and terminated Fitbit’s separate proceeding.

After the Apple/Fitbit IPR hearing, but before any Final Written Decision was issued, the Supreme Court decided SAS Institute v. Iancu (IP Update, Vol. 21, No. 5), holding that the America Invents Act requires that all patent claims challenged in an IPR petition must be reviewed by the Board if the petition is granted. Accordingly, the Board re-instituted the Apple/Fitbit IPR to add the previously denied patent claims. The Board’s Final Written Decision found the originally instituted claims unpatentable, but the newly instituted claims not unpatentable. After the decision, Apple withdrew from the proceeding. Fitbit appealed the decision as to newly instituted claims that had been found not unpatentable.

On appeal, Valencell challenged Fitbit’s right to appeal as to the newly instituted claims. 35 U.S.C. § 319 provides that “[a]ny party to the inter partes review shall have the right to be a party to the appeal.” Valencell argued that Fitbit does not have the status of “party” for purposes of appeal because Fitbit did not request review of the newly instituted claims in its initial IPR petition, did not request leave to amend its initial petition after the Supreme Court’s decision in SAS Institute and did not submit a separate brief with respect to the non-instituted claims after the joined IPR was re-instituted. Valencell also argued that because the Board stated that Fitbit would have “limited participation, if at all, and required Fitbit to seek authorization from the Board before filing any papers,” Fitbit was not a full participant in the joined IPR.

Fitbit responded that Valencell did not object to Fitbit’s joinder and did not object to or seek to qualify Fitbit’s continued participation after the Board re-instituted the joined IPR to include the new claims, so there was only one IPR. Fitbit also cited the Board’s statement in granting its joinder motion that the “[d]ecision addressing the status of each challenged claim in this proceeding applies to all parties.” Fitbit acknowledged that it did not seek to file a separate brief after the new claims were added to the IPR, but claimed no separate brief was needed to present the issues.

The Federal Circuit agreed with Fitbit, finding that the circumstances [...]

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Stick to Your Guns: PTAB Should Rarely Issue New Grounds of Unpatentability

The Patent Trial and Appeal Board (PTAB) Precedential Opinion Panel (POP) issued a precedential opinion in an inter partes review (IPR) to resolve two questions:

  • May the PTAB raise a ground of unpatentability not developed by the petitioner?
  • If it does so, must the PTAB provide the parties notice and an opportunity to respond to the new ground of unpatentability?

Hunting Titan, Inc. v. DynaEnergetics Europe GmbH, Case No. IPR2018-00600 (USPTO July 6, 2020) (Boalick, CAPJ) (granting request for POP rehearing). The POP held that while the PTAB may raise new grounds of unpatentability, it should refrain from doing so except in rare instances. If it does raise new grounds of unpatentability, the PTAB must provide the parties notice and an opportunity to respond to the new grounds.

Titan filed a petition requesting IPR of a patent owned by DynaEnergetics directed to a perforating gun assembly for wellbore tools. One of the grounds alleged anticipation by a prior art reference (Schacherer). The PTAB instituted review, and DynaEnergetics timely moved to amend the claims. Opposing the motion to amend, Titan argued that the substitute claims were obvious over various prior art references, including the Schacherer reference. Titan did not argue anticipation as to the substitute claims. In its final written decision, the PTAB held that the amended claims were unpatentable because they were anticipated by Schacherer. DynaEnergetics moved for reconsideration and POP review.

The POP granted review to provide precedential guidance on new grounds of unpatentability. Citing to the recent US Court of Appeals for the Federal Circuit decision in Nike, Inc. v. Adidas AG, the POP determined that the PTAB may raise new grounds of unpatentability in certain cases, but those cases should be exceedingly rare. The POP reasoned that the adversarial nature of an IPR proceeding puts the competing parties in a better position to identify and argue the strongest grounds. The POP rejected the notion that the PTAB should independently examine the patentability of every proposed substitute claim, as if it were a reexamination proceeding, by culling through the prior art to determine if better unpatentability arguments could have been presented. Only in rare cases that are no longer adversarial, such as when a petitioner does not oppose a motion to amend or when a petitioner ceases to participate in an instituted IPR that proceeds to a final judgment, would it be reasonable for the PTAB to consider new grounds of unpatentability. Although the POP did not articulate every exceptional scenario, it suggested that when the record “readily and persuasively” establishes that substitute claims are unpatentable, it would be reasonable for the PTAB to rely on a new ground of unpatentability. Titan’s IPR was not an exceptional case, so the POP reversed the panel’s decision as to the substitute claims.

The POP also explained that the parties must be given notice and an opportunity to respond to any new grounds the PTAB may raise. With respect to substitute claims, notice cannot come from the grounds [...]

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Prior Art-Based Invalidity Analysis May Be Possible for Indefinite Claim

Addressing a decision by the US Patent and Trademark Office’s Patent Trial and Appeal Board (Board) declining to find certain claims unpatentable because they contained means-plus-function elements without any corresponding disclosed structure, the US Court of Appeals for the Federal Circuit affirmed the Board’s decision except as to one challenged claim where the means-plus-function element was recited as an alternative to a non-means-plus-function element. Cochlear Bone Anchored Solutions AB v. Oticon Medical, AB, Case Nos. 19-1105, -1106 (Fed. Cir. May 15, 2020) (Taranto, J.).

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Stated Purpose More Decisive than Definition in Construing Claims

The US Court of Appeals for the Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) obviousness decision, finding the decision was infected by an erroneous claim construction that failed to consider the purpose of the claimed invention. Kaken Pharmaceutical Co., LTD v. Iancu, Case No. 18-2232 (Fed. Cir. Mar. 13 2020)(Taranto, J.).

Kaken owns a patent claiming a method for topically treating fungal infections in nails. Fungal infections of the nail plate and nail bed are notoriously difficult to treat because topical treatments cannot penetrate the thick keratin in the nail plate. The patent describes an effective topical treatment with an antifungal, KP-103, having good permeability, retention capacity and activity in the nail plate. The patent specification notes that topical treatments known in the prior art were largely ineffective at penetrating the nail plate and treating onychomycosis.

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Federal Circuit Confirms Time Bar Under § 315(b) Is Waivable

Notwithstanding the jurisdictional nature of the time bar under § 315(b), the US Court of Appeals for the Federal Circuit determined that a party may waive a time bar argument if it failed to raise the issue with the Patent Trial and Appeal Board (PTAB) during the inter partes review (IPR) proceeding. Acoustic Tech. Inc. v. Itron Networked Solutions, Inc., Case No. 19-1061 (Fed. Cir. Feb. 13, 2020) (Reyna, J.).

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Petitioner’s Reply Argument in IPR Is Not an Impermissible New Theory

Addressing whether the Patent Trial and Appeal Board (PTAB or Board) too narrowly read its rules limiting reply briefs in an inter partes review (IPR) to preclude a petitioner’s argument as a “new theory of unpatentability,” the US Court of Appeals for the Federal Circuit concluded that the Board abused its discretion by not considering petitioner’s arguments. Apple Inc. v. Andrea Electronics Corp., Case Nos. 18-2382, -2383 (Fed. Cir. Feb. 7, 2020) (Plager, J.).

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IPR Institution Limited By the Petition, But Not Limited as to the Express Teachings of the Prior Art

In an appeal from the Patent Trial and Appeal Board (PTAB), the US Court of Appeals for the Federal Circuit held that although the PTAB erred by instituting review based on a ground not advanced in the petition, the PTAB correctly found the patent at issue was invalid and affirmed the final written decision. Koninklijke Philips N.V. v. Google LLC, Case No. 19-1177 (Fed. Cir., Jan. 30, 2020) (Prost, C.J.).

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No En Banc Review of Non-Institution Decision After Remand of Partial Institution

Addressing a panel decision that affirmed a Patent Trial and Appeal Board (PTAB) holding denying institution of an inter partes review (IPR) after an earlier partial institution decision, the US Court of Appeals for the Federal Circuit denied both a panel rehearing and a rehearing en banc over a dissent from Judge Newman. BioDelivery Sciences International, Inc. v. Aquestive Therapeutics, Inc., Case Nos. 19-1643, -1644, -1645 (Fed. Cir. January 13, 2020) (Newman, J, dissenting).

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