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Sins of the Fathers? Grandparent IPR Factors into Current Institution Decision

US Patent & Trademark Office (PTO) Director Kathi Vidal vacated and remanded a Patent Trial & Appeal Board decision denying institution of an inter partes review (IPR) because the Board improperly applied the precedential Advanced Bionics framework in rendering its decision. Keysight Tech., Inc. v. Centripetal Networks, Inc., IPR2022-01421 (PTAB Decision Review Aug. 24, 2023) (Vidal, Dir.)

Keysight Tech. petitioned for an IPR proceeding against a patent owned by Centripetal Networks, challenging the validity of all claims. After the Board denied institution, Director Vidal issued a sua sponte director review decision, vacating and remanding the Board’s decision.

The Centripetal patent is the great-grandchild of, and shares the same disclosure as, an earlier Centripetal patent that was subject to an IPR proceeding during the pendency of the presently challenged patent. The Final Written Decision (FWD) in the earlier IPR found all claims of the patent unpatentable. The patent owner included that FWD in an Information Disclosure Statement (IDS) submitted during the prosecution of the presently challenged patent, and the examiner initialed it as having been considered.

In its decision denying institution, the Board cited the guidance of Advanced Bionics, which articulates a framework that requires that the Board determine the following:

  • Whether the same or substantially the same prior art or arguments made in the petition were previously presented to the PTO during prosecution of the challenged patent
  • Whether the PTO erred in a manner material to the patentability of the challenged claims when it allowed the claims of the patent.

If both factors are met in the affirmative, the Board should not exercise its discretion to deny institution.

Here, the Board found that the first factor of the Advanced Bionics framework was met because the petitioner’s arguments in its petition were the same or substantially the same as those in the FWD in the IPR of the grandparent patent. However, the Board found that the second part of the framework was not satisfied and therefore denied institution.

Although Director Vidal agreed with the Board’s findings under the first factor, she vacated the Board’s findings pursuant to the second factor after determining that this factor was also met. Director Vidal found that the PTO erred in a manner material to the patentability of the challenged claims for the following reasons:

  • The challenged patent and the grandparent were directed to the same subject matter.
  • The prior art references submitted to the PTO during the prosecution of the challenged patent were the same as those asserted in earlier IPR and were considered by the examiner through the patent owner’s IDS.
  • In the grandparent IPR, the Board held all of the claims of the patent unpatentable due to these same prior art references.
  • The examiner’s statement of reasons for allowing the challenged patent was that the claims were directed to limitations that appeared in both the currently challenged claims and the claims found unpatentable in the grandparent patent.

As the director noted, the overlap between the claim limitations in the [...]

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Context Is Key in Claim Construction

The US Court of Appeals for the Federal Circuit reiterated that intrinsic evidence trumps extrinsic evidence in determining the meaning of claim terms. Sequoia Technology, LLC v. Dell, Inc. et al., Case Nos. 21-2263; -2264; -2265; -2266 (Fed. Cir. Apr. 12, 2023) (Stoll, Lourie, Dyk, JJ.)

Sequoia Technology owns a patent directed to data storage methods involving storing the same data across multiple physical disk drives to make up a virtual disk drive. Sequoia asserted the patent against several companies, all based on a product sold by Red Hat. During litigation, the parties disputed the construction of the terms “computer-readable recording medium,” “disk partition” and “logical volume.” Related to the latter two claim construction issues, the parties construed the term “used or not used” in the context of an extent’s usage in an “extent allocation table.”

The district court adopted Red Hat’s construction of “computer-readable recording medium” to include transitory media (i.e., signals or waves). The district court found no clear language in the specification that excluded transitory media and found Red Hat’s extrinsic evidence to be persuasive, “particularly given the lack of any substantive rebuttal from Sequoia’s expert.” For “disk partition” and “logical volume,” the district court agreed with Red Hat and construed “disk partition” to mean a “section of a disk that is a minimum unit of a logical volume” and “logical volume” to mean an “extensible union of more than one disk partition, the size of which is resized in disk partition units.” These constructions require that a logical volume is constructed by whole disk partitions, not subparts of disk partitions such as extents. The district court also construed the phrase “used or not used” in the limitation “extent allocation table for indicating whether each extent in the disk partition is used or not used,” adopting Red Hat’s construction that “used or not used” means that an extent “is or is not storing information.”

Following claim construction, the parties stipulated that under the district court’s claim construction of “logical volume” and “disk partition,” the accused products did not infringe the asserted claims. The parties also stipulated that under the district court’s construction of “computer-readable recording medium,” certain claims were subject matter ineligible under 35 U.S.C. § 101 as including transitory media. Sequoia appealed.

The Federal Circuit concluded that the district court erred in construing “computer-readable recording medium.” Starting with the claim language, the Court noted that the claim recited a “computer-readable recording medium storing instructions” and not simply a “computer-readable medium.” The Court reasoned that an ordinarily skilled artisan would understand transitory signals to be incompatible with the claimed invention because such fleeting signals would not persist for sufficient time to store instructions. Turning to the specification, the Court explained that although the specification did use open-ended “including” language to describe a computer-readable medium, the relevant portion of the specification defined computer-readable media as “including compact disc read only memory (CDROM), random access memory (RAM), floppy disk, hard disk, and magneto-optical disk,” all of which are non-transient [...]

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When It Comes to Claim Construction, Prosecution History and Specification Rule

Addressing claim constructions across two patents that ultimately led to noninfringement findings by a district court, the US Court of Appeals for the Federal Circuit affirmed one construction because it was supported by the prosecution history but reversed another because it was unsupported by the specification. SSI Techs., LLC v. Dongguan Zhengyang Elec. Mech. Ltd., Case Nos. 21-2345, 22-1039 (Fed. Cir. Feb. 13, 2023) (Reyna, Bryson, Cunningham, JJ.)

SSI owns two patents directed to sensors for determining the characteristics of fluid in a container such as a fuel tank. One patent, referred to as the transducer patent, describes an exemplary sensor system containing a “level” transducer and a “quality” transducer. The two transducers use ultrasonic sound waves and time of flight to determine both a level of fluid in a given tank and a quality (i.e., concentration of diesel exhaust fluid). The other patent, referred to as the filter patent, describes a similar system but attempts to address the problem of erratic measurement results that may occur because of air bubbles embedded in the fluid. This patent claims a “filter” covering the sensing area that substantially prohibits gas bubbles from entering the sensing area.

Dongguan Zhengyang Electronic Mechanical (DZEM) produces systems that determine the quality and volume of diesel exhaust fluid that are used in emission-reduction systems for diesel truck engines. SSI accused DZEM of infringing both patents. In the district court action, DZEM brought a motion for summary judgment of noninfringement based on the court’s construction of certain terms that appear in the asserted claims. With reference to the transducer patent, the claims recite the need to “determine whether a contaminant exists in the fluid based on . . . a dilution of the fluid [] detected while the measured volume of the fluid decreases.” The district court determined that this claim element required that the contaminant determination actually consider the measured volume of the fluid. The district court predicated its determination on the prosecution history, having found that this term was amended to include the disputed term and that the applicant’s intention was to incorporate the specific error-detection capability recited in the specification. The parties had previously agreed that the DZEM products did not base the contamination determination on any consideration of the measured volume. As a result, the district court granted DZEM’s motion for summary judgment of noninfringement on the transducer patent.

Regarding the filter patent, the district court adopted DZEM’s construction of the term “filter,” which was “a porous structure defining openings, and configured to remove impurities larger than said openings from a liquid or gas passing through the structure.” DZEM’s accused sensors includes a rubber cover with four apertures. The district court found that the rubber cover was not “porous” because the apertures were “relatively large” when compared with the disclosed embodiments in the specification. As a result, the court granted DZEM’s motion for summary judgment of noninfringement on the filter patent. SSI appealed.

SSI challenged both constructions. Regarding the transducer patent, SSI argued that [...]

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Rounding Error: Intrinsic Evidence Informs Plain and Ordinary Meaning

Vacating a stipulated infringement judgment based on an incorrect claim construction, the US Court of Appeals for the Federal Circuit explained that it is improper to isolate claim language from the intrinsic evidence when determining the plain and ordinary meaning of a disputed term. AstraZeneca AB v. Mylan Pharms. Inc., Case No. 21-1729 (Fed. Cir. Dec. 8, 2021) (Stoll, J.) (Taranto, J., dissenting).

AstraZeneca sued Mylan Pharmaceuticals for infringement of three patents listed in the US Food and Drug Administration’s (FDA) orange book covering the Symbicort® pressurized metered-dose inhaler for the treatment of asthma and COPD. 3M submitted an abbreviated new drug application (ANDA) to the FDA to manufacture and sell a generic version of the Symbicort® inhaler and certain interests to the ANDA were later transferred to Mylan. After receiving a Paragraph IV letter from Mylan, AstraZeneca filed an infringement suit.

Shortly before trial, the district court held a claim construction hearing to determine the meaning of “0.001%,” the claimed concentration of PVP (one of the active ingredients). The district court construed the term based on its “plain and ordinary meaning, that is, expressed with one significant digit.” Based on this definition, Mylan stipulated to infringement and the district court entered judgment. The district court held a bench trial on invalidity, ultimately determining that Mylan did not prove that the claims were invalid as obvious. Mylan appealed the stipulated judgment stemming from the claim construction determination and the judgment of no invalidity.

First, Mylan challenged the district court’s claim construction of “0.001%.” AstraZeneca argued that the district court improperly construed the term to encompass a range from 0.0005% to 0.0014%. Mylan contended that, in view of the specification and the prosecution history, the term was to be defined precisely at 0.001% with only “minor variations” allowed. The Federal Circuit agreed, finding that Mylan’s proposed construction was more properly aligned with the patent’s description as further informed by the prosecution history.

The Federal Circuit stated that the proper construction of 0.001% only allowed minor variations from 0.00095% to 0.00104%. There was no dispute that the term 0.001% would ordinarily encompass the range of 0.0005% to 0.0014%. AstraZeneca argued that this “ordinary meaning” would control absent lexicography or disclaimer. The Court disagreed, finding that it would improperly isolate the term from the claim language, specification and patent prosecution history. The Court explained that the “ordinary meaning” is not the ordinary meaning in the abstract but is instead the “meaning to the ordinary artisan after reading the entire patent,” and therefore the claims must be read in view of both the written description and the prosecution history. The Court’s rationale for narrower construction was based on the intrinsic record reflecting that the written description and prosecution history showed that very minor differences in PVP concentration would impact stability.

The Federal Circuit found that the written description explained that stability was one of the most important factors and that even very minor differences in PVP concentration could impact stability. The written description also [...]

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Prosecution History Prevents Patent Owner from “Intercepting” Win on Appeal

In reviewing whether the Patent Trial & Appeal Board (Board) correctly interpreted the meaning of “intercepting” in the context of Voice over Internet Protocol (VoIP) technology, the US Court of Appeals for the Federal Circuit found that the claim language and prosecution history supported the Board’s decision. The Court thus affirmed the Board’s construction and subsequent finding of obviousness. Uniloc 2017 LLC v. Apple Inc., Case Nos. 20-1403, -1404 (Fed. Cir. May 12, 2021) (Prost, C.J.)

Uniloc owns a patent directed to a system and method for using various VoIP features, such as caller-ID, call waiting, multi-line service, and different levels of service quality known as the “codec specification.” The patent explains that in order to generate revenue for these features, service providers must maintain control over which subscribers have paid for these additional features. To achieve that control, the system employs an enforcement mechanism that sits between the sender of the communication and the intended recipient. The enforcement mechanism ensures that both parties are authorized to use the particular features by intercepting the signaling message, determining whether the client is authorized, and filtering the signaling message based on the authorization. The majority of the claims require authorization related to only one service type. However, one of the claims (claim 18) requires authorization related to at least two service types.

Apple filed a petition for inter partes review (IPR), alleging that all claims of the patent were invalid as obvious over a prior art patent referred to as Kalmanek. Kalmanek discloses signaling messages that are routed through at least one “gate controller,” which can authenticate the identity of the calling party and authorize the services sought. The services include at least caller-ID and enhanced levels of call quality. Kalmanek’s process is accomplished by sending a SETUP message, which the calling party sends to the gate controllers and then to the intended recipient. After receipt, the called party sends a SETUPACK message along a return path to the gate controllers and then to the caller.

During the IPR, Apple asserted that the term “intercepting” a signaling message associated with the call, as recited in all independent claims, should be interpreted to mean “the signaling [message] is received by a network entity located between the endpoints of the call.” Uniloc disagreed and argued that the term should be interpreted as excluding the receipt of a signaling message by the intended recipient of the message. The Board agreed with Apple’s construction and subsequently found that all terms were invalid as obvious with the exception of claim 18. With respect to claim 18, the Board concluded that Apple failed to meet its burden to show that Kalmanek disclosed authorization related to a codec service. Furthermore, the Board opined that even assuming Apple had properly advanced such an argument, it would have lost on the merits.

On appeal, Uniloc challenged the Board’s construction of the “intercepting” term, and Apple cross-appealed the Board’s finding with respect to the non-obviousness of claim 18. The Federal Circuit affirmed [...]

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Knowledge of Patent, Evidence of Infringement Are Necessary, but Not Sufficient, to Establish Willfulness

Addressing claim construction, enablement, damages and willfulness, the US Court of Appeals for the Federal Circuit found that evidence of a defendant’s knowledge of the asserted patent and proof of infringement were, by themselves, legally insufficient to support a finding of willfulness. Bayer Healthcare LLC v. Baxalta Inc., Case No. 19-2418 (Fed. Cir. Mar. 1, 2021) (Stoll, J.)

Bayer owns a patent on certain recombinant forms of human factor VII (FVIII), a protein that is critical for blood coagulation. Recombinant FVIII is useful as a treatment for coagulation disorders, primarily Hemophilia A. Natural FVIII has a short half-life, making therapeutic administration expensive and inconvenient. Adding polyethylene glycol (a process known as PEGylating) to FVIII at random sites was found to increase the protein’s half-life but reduce its function. Bayer invented FVIII that is PEGylated in a specific region (the B-domain) so that it retains its function and maintains the longer half-life.

After Baxalta developed a PEGylated FVIII therapeutic, Adynovate®, Bayer sued Baxalta for infringement of its patent. During claim construction, the district court construed the claim preamble “an isolated polypeptide conjugate” to mean “a polypeptide conjugate where conjugation was not random,” finding that Bayer had disclaimed conjugates with random PEGylation. The district court also construed “at the B-domain” to mean “attachment at the B-domain such that the resulting conjugate retains functional FVIII activity,” rejecting Baxalta’s proposal of “at a site that is not any amine or carboxy site in FVIII and is in the B-domain” because Bayer had not disclaimed PEGylation at amine or carboxy sites. Before trial, Baxalta moved for clarification of the term “random” in the construction of the preamble, but the district court “again” rejected Baxalta’s argument that Bayer defined “random” conjugation as “any conjugation at amines or carboxy sites.”

Before trial, Baxalta moved to exclude the testimony of Bayer’s damages expert regarding his proposed reasonable-royalty rate. The expert had defined a bargaining range and proposed to testify that the royalty rate should be the midpoint of the range based on the Nash Bargaining Solution. The district court permitted the expert to testify as to the bargaining range but excluded the opinions regarding the midpoint as insufficiently tied to the facts of the case.

After trial, the district court granted Baxalta’s pre-verdict motion for judgment as a matter of law (JMOL) of no willful infringement. Subsequently, the jury returned a verdict that the claims were infringed and not invalid for non-enablement, and awarded damages based on an approximately 18% royalty rate for the period for which the parties had presented sales information. Baxalta moved for JMOL or a new trial on infringement, enablement and damages. Bayer moved for pre-verdict supplemental damages for the period between the presented sales data and the date of judgment, and for a new trial on the issue of willfulness. The district court denied all of Baxalta’s motions and Bayer’s motion for new trial, but granted Bayer’s motion for supplemental damages, applying the jury’s ~18% rate to sales data for the later period. [...]

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Stick to the Fax: Conflicting Statements Made During Prosecution Lead to Indefiniteness

In deciding whether use of the term “passive link” to define a connection between a computer terminal and a fax machine rendered a patent claim indefinite, the US Court of Appeals for the Federal Circuit affirmed the district court’s finding of invalidity based on conflicting statements made by the patent owner during prosecution. Infinity Computer Products, Inc. v. Oki Data Americas, Inc., Case No. 20-1189 (Fed. Cir. Feb. 10, 2021) (Prost, C.J.)

Infinity owns a patent directed to providing a circuit for interfacing a personal computer with a facsimile machine to enable the facsimile to be used as a scanner or a printer for a personal computer. The patent seeks to accomplish all of the objectives of a scanner or a printer in a simple, straightforward manner through the use of a circuit of highly simplified design and low cost. The patent claims recite that this functionality is accomplished “through a bi-directional direct connection via a passive link between the facsimile machine and the computer.” Infinity asserted the patent against Oki in district court.

The term “passive link” does not appear in the patent specification. Infinity introduced this term during prosecution to overcome rejections based on a prior art patent to Perkins. During prosecution, Infinity unsuccessfully argued that unlike Perkins, the claimed invention permits uninterrupted transfer of signals between the facsimile and the computer without the use of intervening circuitry. Infinity engaged in multiple rounds of amendment and response with the examiner before finally overcoming the rejections based on Perkins by arguing that the invention “creates a passive link between the facsimile machine and the computer [and] therefore does not require any intervening apparatus as does Perkins.” Perkins used a modem, characterized by Infinity as the “intervening apparatus,” internal to the computer. Infinity argued that the modem “should be regarded as a peripheral device to the computer which processes data before it is transmitted to the I/O bus of the computer,” effectively drawing the boundary of the “passive link” at the I/O bus of the computer.

After allowance, the patent was the subject of three ex parte re-examination proceedings. The patent was a continuation-in-part of a parent application, and in order to overcome a prior art reference asserted in the re-examination proceeding, Infinity argued that the claimed “passive link” element was entitled to the priority date of an earlier parent application. Infinity specifically noted that the patent’s description of “the RJ11 telephone cable and use thereof in communicating data between the fax machine 30 and the PC computer 40 meets the definition of ‘passive link.'” In doing so, Infinity pointed to certain figures in the parent application specification that disclosed fax modem circuitry internal to the computer, effectively drawing the boundary of the “passive link” at the computer’s external port—before the I/O bus.

The district court found that there was a discrepancy on the boundary of the “passive link” because during prosecution it was defined as at the I/O bus of the computer, but during the ex parte re-examination it [...]

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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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