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Analogous Art Includes Reference a Skilled Artisan Would Reasonably Consult

Addressing the standard for determining whether a prior art reference constitutes analogous art for purposes of an obviousness analysis, the US Court of Appeals for the Federal Circuit vacated and remanded a Patent Trial and Appeal Board decision that a reference was not analogous. The Court explained that the Board did not consider the purpose and problems to which the prior art and challenged patent relate. Donner Tech., LLC v. Pro Stage Gear, LLC, Case No. 20-1104 (Fed. Cir. Nov. 9, 2020) (Prost, C.J.)

Pro Stage owns a patent directed to an improved guitar effects pedalboard. Guitar effects pedals are electronic devices that affect the amplified sound of a guitar. The pedals are controlled by foot operation switches in order to leave the user’s hands free to play the instrument. When multiple pedals are used, they must be interconnected by cables, which are typically daisy-chained between each separate pedal. Once interconnected, the pedals are placed on a wooden pedalboard and covered with foam so that the cables are not exposed. This leads to difficulty when swapping or adding new pedals because the foam must be removed from the board and the cables repositioned. Pro Stage’s patent attempts to remedy this issue by elevating one side of the pedalboard from the stage floor and providing a mounting surface and cable connection openings such that cables can pass beneath the mounting surface, as demonstrated by the patent figures shown below.

Donner petitioned for inter partes review of the patent, challenging various claims as obvious under 35 USC §103. Donner asserted three grounds of invalidity, all relying at least in part on the teachings of the Mullen patent. Mullen relates to an improved structure for supporting one or more electrical relays and for providing wiring-channel space for receiving wires connected to the relays in order to connect the relays to various control circuits. As part of its petition, Donner claimed that certain embodiments of Mullen (below), disclose a structure that is analogous to the structure claimed in the challenged patent.

The Board rejected that Donner’s obviousness challenges, finding that Donner did “not put forth any argument or evidence to explain what would have compelled a pedalboard inventor in 1999 or 2000 to consider potential solutions arising from early 1970s-era relay technologies,” notwithstanding arguments, expert and other testimony, and other evidence submitted by Donner to the contrary. Donner appealed.

The Federal Circuit reversed, explaining the relevant tests to analyze whether a prior art reference is analogous. The two separate tests are (1) whether the art is from the same field of endeavor, regardless of the problem addressed, and (2) if the reference is [...]

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Size Matters in Obviousness Analysis

The US Court of Appeals for the Federal Circuit affirmed in part and reversed in part two Patent Trial and Appeal Board (Board) decisions, finding that the Board erred in its construction of certain claim terms relating to an artificial heart valve that does not require removal of the damaged native heart valve. St. Jude Medical, LLC v. Snyders Heart Valve LLC, Case Nos. 19-2108, -2109, -2140 (Fed. Cir. Oct. 15, 2020) (Taranto, J.).

St. Jude filed two petitions for inter partes review (IPR) of a patent for an artificial heart valve and a system for inserting the valve. Both petitions were instituted by the Board and resulted in final written decisions. In the first decision, the Board found that St. Jude failed to establish unpatentability of the challenged claims, rejecting St. Jude’s contention that all challenged claims were anticipated by and obvious over the Leonhardt prior art reference. In the second decision, the Board found that certain claims were anticipated by the Bessler prior art reference, but rejected St. Jude’s contentions as to all other claims. St. Jude appealed, arguing that the Board erred in the first decision by erroneously construing the term “band” and erred in the second decision by finding that St. Jude failed to prove that a skilled artisan would have made a particular combination of Bessler and the Johnson prior art. Snyders cross-appealed in the second decision as to the claims the Board found were anticipated by Bessler.

The Federal Circuit affirmed the Board’s conclusions in the first decision, finding that not only was the Board’s construction of the term “band” proper, but that it was actually broader than St. Jude’s proposed construction—and that St. Jude expressly accepted the Board’s construction. The Board construed the heart valve band to mean “a structure generally in the shape of a closed strip or ring” (replacing St. Jude’s “circular” with “closed”). In the prior art, Leonhardt discloses a graft material which extends the length of the entire structure. The Federal Circuit agreed with the Board’s finding that Leonhardt’s graft material was “like a sleeve” as opposed to “a closed strip or ring.” St. Jude argued that an ordinary skilled artisan’s understanding of the term “band” does not include a length restriction, that a Leonhardt’s material was just a long band, and that the Board effectively changed its construction of the term. The Federal Circuit, however, was not persuaded by St. Jude’s unlimited-length definition of “band,” instead turning to dictionary definitions that included terms like “thin” and “narrow,” and looking to the patent specification that did not explicitly disclaim any length restrictions. The Court ultimately rejected St. Jude’s arguments, finding that St. Jude should have proposed a claim construction that precluded any limitations on length if it wished to argue such. The Federal Circuit affirmed the Board’s findings as to first decision.

The Federal Circuit next addressed Snyder’s cross-appeal. Snyder disputed the board’s construction of the “size[] and shape[]” of a frame that the patent requires must be inserted [...]

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Supreme Court to Consider Whether PTAB Judges Are Unconstitutionally Appointed

The Supreme Court of the United States agreed to consider whether Patent Trial and Appeal Board (PTAB) judges are unconstitutionally appointed. The United States of America v. Arthrex, Inc., Case Nos. 19-1452, -1458, -1459 (Supr. Ct. October 13, 2020) (certiorari granted).

In what quickly turned into a controversial decision, the US Court of Appeals for the Federal Circuit held the appointment of administrative patent judges at the PTAB unconstitutional. Arthrex, Inc. v. Smith & Nephew, Inc.  The Federal Circuit found that PTAB judges were appointed as if they were “inferior officers” but vested by the PTAB with authority that is reserved for Senate-confirmed “principal officers.” Smith & Nephew, Arthrex and the United States of America petitioned the Supreme Court for review of the decision.

The questions presented are:

  1. Whether, for purposes of the Appointments Clause, US Const. Art. II, § 2, Cl. 2, administrative patent judges of the US Patent and Trademark Office are principal officers who must be appointed by the president with the Senate’s advice and consent, or “inferior officers” whose appointment Congress has permissibly vested in a department head.
  2. If administrative patent judges are principal officers, whether the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 USC 7513(a) to those judges.



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No Refunds: Cancellation of Patent Claims in IPR Isn’t a Taking

The US Court of Appeals for the Federal Circuit found that cancellation of a patent in an inter partes review (IPR) proceeding is not a taking and does not grant the patentee any compensable claim against the United States. Christy, Inc. v. United States, Case No. 19-1738 (Fed. Cir. Aug. 24, 2020) (Hughes, J.).

After Christy sued two competitors for infringement of a patent directed to a vacuum, one of the competitors filed petitions for IPR. The Patent Trial and Appeal Board (PTAB) instituted the IPRs and ultimately found a majority of the patent claims unpatentable. Christy appealed to the Federal Circuit, which affirmed the PTAB’s invalidity decision.

Christy then filed a class action suit in the US Court of Federal Claims to recover from the government the issuance and maintenance fees Christy had paid for the patent, investments Christy had made in the patented technologies, attorneys’ fees from defending the IPR proceedings, the value of the patent claims, royalties and other payments for use of the patents. The government moved to dismiss all six claims for lack of subject matter jurisdiction and failure to state a claim. The court partially granted the motion to dismiss, but found that it had jurisdiction to consider Christy’s Fifth Amendment takings claim. The court found that Christy did not state a claim for relief on the merits, and reasoned that the cancellation of claims in an IPR did not amount to a compensable taking of Christy’s property interest. The court held that it did not have jurisdiction to consider Christy’s alternative illegal exaction claim, since a statute granting authority to the US Patent and Trademark Office (PTO) to refund mistakenly excessive patent-related fees displaced the court’s Tucker Act jurisdiction. In any case, the court found that on the merits, Christy’s issuance and maintenance fees were properly owed at the time they were paid, and were not paid by mistake. The government did not require Christy to pay any alleged damages on the government’s behalf, or at all, and so Christy’s theory that damages were illegally exacted was found “devoid of merit.” Christy appealed.

On appeal, Christy argued that the claims court erred in finding 1) that Christy failed to state a compensable taking claim based on the cancellation of patent claims, 2) that the claims court lacked subject matter jurisdiction over the illegal exaction claim, and 3) that Christy failed to state a plausible illegal exaction claim. The Federal Circuit disagreed, affirming the claims court and reiterating its finding in Golden v. United States that the AIA did not displace Tucker Act jurisdiction over IPR-based takings claims, and that cancellation of patent claims in an IPR cannot be a taking under the Fifth Amendment. Thus, the Court found that the claims court correctly found that it had jurisdiction over Christy’s takings claim, but that such cancellation was not a taking.

The Federal Circuit next considered Christy’s illegal exaction claim. Illegal exaction occurs when money is “improperly paid, exacted, or taken from the claimant [...]

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Federal Circuit Has Jurisdiction over Constitutional Questions in AIA Appeals

Addressing for the first time whether a district court has jurisdiction to hear constitutional challenges to the Patent Trial and Appeal Board’s (Board) final written decisions in an inter partes review (IPR) proceeding, the US Court of Appeals for the Federal Circuit found that the Federal Circuit has jurisdiction over AIA appeals, including constitutional questions. Security People, Inc. v. Iancu, Case No. 2019-2118 (Fed. Cir. Aug. 20, 2020) (Hughes, J.).

Security People’s patent was challenged in an IPR, and the Board issued a final written decision invalidating all challenged claims. Security People appealed the Board’s decision to the Federal Circuit, which affirmed. The Supreme Court then denied Security People’s petition for certiorari. After the Supreme Court denied certiorari, Security People filed a lawsuit in the Northern District of California, challenging the Board’s final written decision as unconstitutional. The district court dismissed Security People’s claim because it lacked subject matter jurisdiction, citing the America Invents Act’s (AIA) provision giving the Federal Circuit jurisdiction over appeals from Board decisions in IPRs. Security People appealed.

Security People argued that because the Board lacks authority to consider constitutional claims, only a district court can hear factual issues underlying a constitutional challenge. Security People also argued that its constitutional challenge was not ripe until the Federal Circuit finally resolved the Board’s decision, and that it had to exhaust its claims on the merits before raising its constitutional claims.

The Federal Circuit disagreed. The Court found that in the rare instances where fact finding would be necessary for resolving a constitutional challenge, the Federal Circuit had authority to decide those factual issues through judicial notice. The Court explained that “finality” of the agency’s decision did not require the merits appeals to fully conclude before addressing constitutional issues, because the Board’s decision-making is complete when it issues a final written decision. In short, Security People was required to bring its constitutional challenge at the same time it challenged merits of the Board’s decision. The Court found its reasoning supported by the text, structure and history of the AIA, which gave the Federal Circuit wide authority to review Board decisions without any exception for constitutional challenges. The Court also reasoned that the Administrative Procedures Act’s (APA) general authorization to review agency action in the district courts does not override the specific framework in the AIA providing judicial review to the Federal Circuit. Indeed, there is no need to look to the APA’s general authorization in this regard, because the Federal Circuit is an adequate forum to resolve any issues challenged with respect to the Board’s final written decisions.




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Challenge to PTAB’s Finding of Non-Obviousness Fails to Pay Out

Addressing whether the Patent Trial and Appeal Board (PTAB) ran afoul of the Administrative Procedure Act (APA) in finding that a dependent claim was valid despite the patent owner’s lack of validity arguments beyond those advanced for the corresponding and invalid independent claim, the US Court of Appeals for the Federal Circuit affirmed the PTAB’s ruling and found no APA violation. FanDuel, Inc. v. Interactive Games LLC, Case No. 19-1393 (Fed. Cir. July 29, 2020) (Hughes, J.) (Dyk, J. concurring in part and dissenting in part).

Interactive Games owns a patent directed to a method for allowing users to gamble remotely via a mobile device, according to certain game configurations. Specifically, the independent claim is directed to altering a user’s game outcome based on the gaming configuration associated with the location of a user’s mobile gaming device. A dependent claim adds the additional limitation of “accessing a lookup table which contains an ordered list of locations and associated game configurations.”

FanDuel petitioned for inter partes review (IPR) of the patent as obvious based on three references. The first reference (Carter) disclosed a mobile wagering system capable of determining a gambler’s location and restricting access based on the location. Carter’s system used a database that correlated various locations with applicable access levels. Importantly, the reference generally indicated that the system may employ various components such as “memory elements, processing elements, logic elements, look-up tables, and the like.” The second reference (Walker) disclosed enabling or disabling certain features on a mobile gaming device based on a user’s location. And the third reference (the webpage) included a list of slot payouts by casino, city and state, alphabetically organized by state. FanDuel also submitted an expert declaration that the use of look-up tables was well known in the art and that it would have been an obvious design choice to store Carter’s jurisdictional information in an “ordered list” similar to the webpage.

In its Preliminary Patent Owner Response, Interactive incorporated its validity arguments for the independent claim into its arguments for the dependent claim, but did not otherwise advance any substantive arguments specific to the dependent claim. The PTAB instituted IPR for all challenged claims. Following institution, Interactive submitted a patent owner response, which again did not advance any substantive arguments specific to the dependent claim. While Interactive did submit an expert declaration, the statements made by FanDuel’s expert specific to the dependent claim were uncontested. Ultimately, the PTAB found the independent claim invalid, but found the dependent claim valid. FanDuel appealed.

FanDuel argued that the PTAB’s decision with respect to the dependent claim violated the APA because the PTAB changed its obviousness theory midstream. FanDuel alleged that no further record development was presented regarding the dependent claim after institution, and therefore a finding of validity in light of the PTAB’s decision to institute amounted to a changed position by the PTAB, to which FanDuel was entitled notice and an opportunity to respond.

The Federal Circuit disagreed and affirmed the PTAB’s decision. In finding [...]

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PTAB May Reject Substitute Claims Under Any Basis of Patentability

The US Court of Appeals for the Federal Circuit considered for the first time whether a district court’s invalidity determination, when made final after all appeals are exhausted, divests the Patent Trial and Appeal Board (PTAB) of jurisdiction in a co-pending inter partes review (IPR) proceeding involving the same claims, and held that it does not. The Court also held that in an IPR proceeding, the PTAB is free to reject proposed substitute claims for failing to meet the subject matter eligibility requirements of § 101. Uniloc 2017 LLC v. Hulu, LLC, Case No. 19-1686 (Fed. Cir. July 22, 2020) (Wallach, J.) (Dyk, J., dissenting).

Hulu filed an IPR petition challenging claims of Uniloc’s patent directed to adjustable software licensing for digital products. After the PTAB instituted review, Uniloc filed a motion for substitute claims, conditional on whether the PTAB found the original claims unpatentable. Before the PTAB issued its final determination and before it ruled on the motion for substitute claims, a district court, in a related proceeding, held Uniloc’s asserted claims invalid as directed to patent-ineligible subject matter. Shortly thereafter, the PTAB issued a final written decision finding the challenged claims unpatentable over the prior art, and it found the substitute claims unpatentable under § 101. Uniloc appealed the PTAB’s use of § 101 to invalidate its substitute claims.

While Uniloc’s appeal of the Hulu IPR was pending, the Federal Circuit affirmed the district court’s invalidity finding as to the original claims. With respect to the Hulu appeal, the Federal Circuit ordered the parties to address whether the appeal was moot in view of the ultimate finality with respect to invalidity of the original claims, thereby divesting the PTAB of jurisdiction over the IPR.

The majority held that the finality of the district court’s invalidity finding did not necessarily divest the PTAB of authority to consider substitute claims. It determined that the mootness issue was waivable, and that Hulu had waived the argument because it failed to raise mootness during the pendency of the IPR at the time the district court issued its decision. Even if Hulu had not waived the argument, the majority found that the PTAB’s authority to consider substitute claims does not depend on any live dispute about the original claims, as long as the motion to amend in the IPR was timely filed.

As to the PTAB’s rejection of the claims under § 101, the majority held that although the PTAB is restrained in an IPR proceeding to invalidating a patent’s original claims only under the anticipation and obviousness grounds raised in the petition, the PTAB may use other invalidity tools as a “new ground of rejection” for substitute claims, including for lack of patentable subject matter under § 101. The majority also suggested that other grounds of patentability would be within the scope of the PTAB’s authority, including rejections under the various subsections of § 112. The majority was concerned that limiting the PTAB’s review might force it to issue substitute claims that fail to meet all the statutory [...]

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Delicate Balance: Details of Parallel Proceeding Tip Scales for Discretionary Denial

The Patent Trial and Appeal Board (Board) designated two decisions informative as they relate to weighing factors for determining how a parallel district court proceeding may impact the Board’s determination of whether to discretionarily deny institution under § 314(a).

In Apple Inc. v. Fintiv, Inc., Case No. IPR2020-00019, Paper 15 (USPTO May 13, 2020) (Horner, APJ) (designated informative on July 13, 2020), the Board had previously requested supplemental briefing in a pre-institution order in this case (itself now designated by the Board as precedential) regarding six factors for weighing the impact of the parallel district court proceeding on whether to discretionarily deny institution.

As to factor (1), whether the district court action is stayed or evidence exists that a stay may be issued, the Board weighed this factor as neutral because neither party had requested a stay and the district court had given no indication as to whether it would entertain a stay. Absent definitive statements by the district court as to the specific case, the Board declined to infer how a judge might rule if a motion were to be filed.

Under factor (2), the proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision, the Board found this factor weighed slightly in favor of a discretionary denial. Even though the district court’s initial trial date had been pushed back, the new date was still two months earlier than the Board’s one-year deadline for issuing a final written decision. In addition, the new date appeared to be relatively certain, and mere speculation about the further delays being typical was not enough to weigh this factor in favor of a discretionary denial.

As to factor (3), the court’s and parties’ investment in the parallel proceeding, the Board found this weighed somewhat in favor of discretionary denial. Even though expert reports had not been served, the district court had already issued a detailed Markman order construing seven claim terms, and the parties had already served their final invalidity contentions.

Under factor (4), the extent of overlap of the issues raised in the petition compared to those raised in the parallel proceeding, the Board found this factor favored discretionary denial because the Petitioner was pursuing the same prior art on the same claims in district court.

Under factor (5), the parties in the district court action were the same as the IPR, so this factor weighed in favor of discretionary denial.

As to the catch-all factor (6), including considering the merits of the challenge, the Board found that there were key weaknesses in the petition that helped tip the scales toward discretionary denial. In sum, the Board found that the weight of the factors tipped toward exercising its discretion to deny institution.

In Sand Revolution II, LLC v. Continental Intermodal Group–Trucking LLC, Case No. IPR2019-01393, Paper 24 (USPTO June 16, 2020) (Flax, APJ) (designated informative on July 13, 2020), the Board came to slightly different conclusions for some of the factors, ultimately granting the Petitioner’s request [...]

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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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