by Dennis Crouch

Christy, Inc. v. US (Fed. Cir. 2020)

David McCutchen is the inventor of U.S. Patent No. 7,082,640 – a shop-vac that can reverse the air flow (back-flush) in order to clear the filter.  The video below shows how this is implemented.  McCutchen passed-away in 2019, but assigned his patent to his company – Christy, Inc. – which is apparently named after his daughter (Christy).

The patent here issued in 2003 — well before the AIA was even a concept.  However, when Christy attempted to enforce its patent against Black & Decker, the company turned around and petitioned for inter partes review. The PTAB cancelled most of the patent claims — a judgment affirmed on appeal without opinion.

At that point, Christy filed a class-action lawsuit in the Court of Federal Claims (CFC) against the U.S. Government — alleging that the cancellation constituted a 5th Amendment taking that required compensation.

nor shall private property be taken for public use, without just compensation.

U.S. Const. 5th Amendment.  In Oil States, the Supreme Court explained that patents are a “public right” also known as a “public franchise” rather than being pure “private property.” However, the Oil States majority was careful to cabin-in that decision only to the question presented in the case.

We emphasize the narrowness of our holding. We address the constitutionality of inter partes review only. . . . [O]ur decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.

Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365, 1379 (2018).  In its decision in Christy, the CFC sided with the Gov’t and found that IPR cancellation is not a compensable taking. This result comports with the Court’s prior decisions in Celgene Corp. v. Peter, 931 F.3d 1342, 1360 (Fed. Cir. 2019), cert. denied, 19-1074, 2020 WL 3405867 (U.S. June 22, 2020) and Golden v. United States, 955 F.3d 981 (Fed. Cir. 2020).   I’ll note that the not-a-taking holding is based upon the Federal Circuit’s legal conclusion that “IPRs do not differ sufficiently” from inter partes and ex parte reexaminations available pre-AIA.

The illegal exaction theory is interesting — Christy asks for a refund of its issuance and maintenance fees.  Since this is a class-action, that amount could add-up if we look at all of the patent claims cancelled via IPR.

On appeal, the Federal Circuit found that the CFC does have jurisdiction to hear the illegal exaction case under the Tucker Act, but found that the case lacks merit.

An illegal exaction occurs when money is “improperly paid, exacted, or taken from the claimant in contravention of the Constitution, a
statute, or a regulation.” Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005).  Given that the Board did not violate Christy’s Fifth Amendment rights by canceling its patent claims, Christy asserts no constitutional provision, statute, or regulation that the PTO violated by failing to refund Christy’s issuance and maintenance fee payments for the ’640 patent. Instead, Christy is left to contend that the PTO’s requiring Christy to pay issuance and maintenance fees for the ’640 patent was in error, and therefore the fees should be refunded. . . .

Christy’s argument fails because the law requires payment of these issuance and maintenance fees without regard to any later result of post-issuance proceedings, see, e.g., 35 U.S.C. §§ 41, 151. Christy identifies no statute, regulation, or constitutional provision compelling the fees’ refund if claims are later canceled in post-issuance proceedings.

Slip Op.

Thryv v. Click-To-Call is set for oral arguments before the Supreme Court on December 9, 2019 on the question of:

Whether 35 U.S.C. § 314(d) permits appeal of the PTAB’s decision to institute an IPR upon finding that 35 U.S.C. § 315(b)’s time bar did not apply.

Petition.  Section 315(b) sets out a one-year time-bar for filing an IPR petition:

(b) Patent Owner’s Action.— An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

35 U.S.C. § 315(b).  The time-bar limits PTO discretion in instituting IPR proceedings.  However, Section 314(d) places a big caveat — making the decision of whether to institute “final and nonappealable.”

(d) No Appeal.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

35 U.S.C. § 314(d).  Thus, the question before the Supreme Court is the extent of the no-appeal rule.   The Federal Circuit has allowed appeals in this (and parallel cases) and has also given an expansive interpretation to 1-year time bar.

At oral arguments Petitioner Thryv  (who is looking to invalidate the patent) will get 15 minutes as will the Federal Government who also argues that nonappealable means no appeal.  “[T]he Board’s institution decision, including its application of Section 315(b), [is] unreviewable.” Gov’t brief.  The patentee Click-To-Call will have 30 minutes in response.

In its request for divided argument, the Government lays out a distinction of interests between itself and of Thryv:

Although petitioner and the federal respondent have both filed briefs urging reversal of the Federal Circuit’s judgment, the two parties have distinct perspectives on the question presented in this case. Click-to-Call has alleged that petitioner’s predecessor in interest Ingenio, Inc. infringed the patent subject to the inter partes review in this case. Petitioner thus has a direct financial interest in the Board’s decision finding certain claims in that patent to be unpatentable. The federal respondent has a broader institutional interest in the scope of judicial review of the Board’s institution decisions and the proper operation of the inter partes review scheme. The USPTO’s distinct institutional interest is reflected in Congress’s affording the USPTO the right to intervene in any appeal from a decision by the Board in an inter partes review, 35 U.S.C. 143 — a right that the USPTO exercised in this case. The government thus believes that participation by both petitioner and the federal respondent in the oral argument in this case would be of material assistance to the Court.

[Motion for Divided Argument]

= = = =

Claim 1 of U.S. Patent 5,818,836:

1. A method for creating a voice connection over a circuit switched network between a first party and a second party using an on-line data service to initiate the connection, comprising the steps of:

a) establishing an electronic communication between the first party and the second party through the on-line data service between a first party and a second party;

b) requesting a voice communication through the on-line service;

c) transmitting a message from the online data service to a voice system requesting the voice connection between said first party and said second party;

c) establishing a first telephone call for the first party;

d) establishing a second telephone call for the second party; and,

e) connecting said first telephone call with said second telephone call.

by Dennis Crouch

LG Electronics v. Iancu (Fed. Cir. 2018) [ORDER]

In a R.36 Affirmance, the Federal Circuit upheld the PTAB obviousness judgment. The USPTO promptly filed a request for a bill of costs for $387.60.  The Federal Circuit has now rejected that request since the PTO was an intervenor, not a party.

LG Electronics (LG) sued Advanced Micro Devices, Inc. (AMD) for infringement back in 2014 and AMD responded with the filing of this inter partes review (IPR) petition. U.S. Patent 7,664,971. The PTAB found all the challenged claims obvious and LGE appealed, but AMD did not defend the case on appeal since the parties settled the underlying infringement dispute.  At that point, the PTO “exercised its right to intervene” under 35 U.S.C. 143.

The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board in a derivation proceeding under section 135 or in an inter partes or post-grant review under chapter 31 or 32.

After affirming on the merits, the PTO asked for its costs Federal Circuit Rule 39.  Under the rule, costs just include copying, service of process, clerk fees, etc. — and here added up to $388.

The Federal Circuit rule states that “if a judgment is affirmed, costs are taxed against the appellant.” However, the rule includes a caveat when costs are “for or against” the US. In that case, costs are assessed “only if authorized by law.”  28 U.S.C. § 2412(a) allows for costs when the Government is a party to litigation.  Here, however, the Government was an intervenor.

This appeal was not brought by or against the United States. It was a dispute arising between two private parties, AMD and LG. The PTO was an intervenor, which, although having a right to intervene, see 35 U.S.C. § 143, had no obligation to intervene. No one asked it to intervene. It was in effect a volunteer. Section 2412(a) is therefore not applicable to this case.

The court found no other particular statute authorizing costs to the government — and thus the court “decline[d] to award costs in these circumstances.”

by Dennis Crouch

In Oil States, the patentee lost its broad challenge to the AIA Post Issuance trial system. However the majority opinion penned by Justice Thomas hinted that other collateral attacks on the system could find more success.  Particularly, the court wrote that “our decision [finding that patents are public rights] should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.”

A Costly Screen: The takings clause is an interesting limit on government power. Rather than serving as an absolute limit, the clause creates a costly screen.  Although the government has power to take private property for public use, it is required to provide “just compensation” for every such taking.  “[N]or shall private property be taken for public use, without just compensation.” U.S. Const. 5th Amendment (1791).

If the government cancels my land ownership rights to instead create a public commons — the takings clause would require just compensation.  Imagine for a moment that the PTO’s cancellation of established patent rights is also categorized as a taking — the PTO would need to provide just compensation to the patentee.  The question now being raised in various cases — including the recent petition in Advanced Audio Devices, LLC v. HTC Corp.

One starting point: It is certainly a taking for the government to cancel patent rights in merely because it wants to use the invention or to give the public free access to the invention.  IPRs also involve cancelling patent rights.  However, in IPRs the patents are cancelled based upon a different justification — a non-patentability determination rather than merely a desire for unfettered public use of the invention.  The question though is whether this different justification will serve as a cognizable distinction.

The Advanced Audio petition adds the additional twist that its patents were filed pre-AIA.  Thus, the patentee asks the following question:

Whether inter partes review (“IPR”) of patents filed before enactment of the Leahy-Smith America Invents Act (“AIA”) violates the Takings Clause of the Fifth Amendment to the U.S. Constitution.

[Advanced Audio Devices SCOTUS Cert Petition (Final)].  Similar arguments are being raised in other cases, including the class action Christy v. USA.

Just Compensation for Cancelling My Patent

The following guest post is written by Brad D. Pedersen, Patent Practice Chair at Patterson Thuente.  It originally ran in the PT newsletter.

In Oil States, Justice Thomas authored the 7-2 majority decision affirming the constitutionality of IPR proceedings over challenges based on Article III separation of powers and the 7^th Amendment Right to Trial by Jury.  Depending upon which camp you are in, this will be seen as either generally favorable (petitioners) or generally unfavorable (patent owners).

In the parallel SAS Institute decision, Justice Gorsuch authored the 5-4 majority decision strictly construing what the Patent Trial and Appeal Board must rule upon in a Final Written Decision at the end of an IPR trial. In overturning USPTO rulemaking, Justice Gorsuch held that the Board is not authorized to render so-called “partial institution” decisions. Instead, the statute is clear that the Board must address all of the claims that are being challenged by a petition in a Final Written Decision at the end of an IPR trial. Regardless of which camp you are in, this decision is a mixed and messy bag of results.

The SAS Institute decision creates immediate chaos and uncertainty for the hundreds, if not thousands, of IPR proceedings for which an IPR trial has been instituted but all appeals are not yet finalized. Will IPR cases already on appeal be remanded, en mass, by the Federal Circuit back to the Board to effectively rework each Final Written Decision?  Will parties be allowed to introduce evidence and/or arguments in pending IPR trials relative to claims for which an IPR trial was not instituted, and would this apply if pending appeals are remanded? If non-instituted claims must now be addressed in each Final Written Decision, does that effectively end the partial approach to patentee estoppels set forth in the Federal Circuit’s Shaw Industries decision (817 F.3d 1293)?

On the brighter side. the mixed and messy SAS Institute decision may be the push Congress needs to revisit the America Invents Act and address the many issues relating to fairness, procedures, claim construction, claim amendments, and burdens of proof that commentators have raised regarding IPR proceedings.

In the interim, it is likely that the USPTO will be forced to provide some type of stop-gap measure in response to the SAS Institute decision. The Office will need to promulgate rules as quickly as they can on how to deal with claims challenged in a petition that were not part of the claims for which an IPR trial was instituted. One approach to such a stop-gap solution would be to promulgate rules that no new evidence or arguments can be introduced by the parties during an IPR trial for any claims which did not meet the threshold test for institution, and that the Board will repeat the same analysis set forth in the Decision to Institute relative to such non-instituted claims as part of any Final Written Decision.  USPTO rule promulgation, however, is never a quick and clean process, so it may be at least several months before even stop-gap measures will be in place.

Together, the two decisions on IPRs handed down by the Supreme Court today forecast an active and uncertain summer in the world of IPRs.

By Jason Rantanen

Oil States Energy Services v. Greene’s Energy Group: Inter partes review does not violate Article III or the 7th Amendment.  Patents are public rights for purposes of this question.  This holding is a self-proclaimed narrow one that “should not be misconstrued as suggesting that patents are not property for the purposes of the Due Process Clause or Takings Clause.” Thomas for the majority; Breyer with a concurring opinion (joined by Ginsburg and Sotomayor), Gorsuch dissenting (joined by Roberts).  Opinion here: Oil States v. Greene’s Energy

SAS Institute v. Iancu: When the USPTO institutes an inter partes review, it must decide the patentability of all of the claims the petitioner challenged, based on the plain text of § 318(a).  Gorsuch for the majority; Ginsburg dissenting (joined by Bryer, Sotomayor, and Kagan); Breyer dissenting (joined by Ginsburg and Sotomayor, and Kagan in part).  Opinion here: SAS v. Iancu

Off to teach Administrative Law, so more to come later.

Update: Prof. Tom Cotter has a longer summary on his Comparative Patent Remedies blog: http://comparativepatentremedies.blogspot.com/2018/04/us-supreme-court-upholds-inter-partes.html

MBHB Partner Dr. Michael Borella has an upcoming free webinar: Patent Eligibility in 2018: Current Status and Best Practices:

Topics include: Overview of the most recent Federal Circuit case law regarding Section 101; Where this law is relatively clear, and where it is not; The impact of the USPTO not making any significant updates to its subject matter eligibility guidelines; Best practices for drafting and prosecuting software and business method inventions in light of the above.

Advanced registration is required.

by Dennis Crouch

The final group of amicus briefs were filed this past week in Oil States v. Greene’s Energy — This round supporting the Government’s position that Inter Partes Review (IPR) proceedings are consistent with the US Constitution.

As per usual, the briefs are largely divisible into two categories: (1) direct merits arguments focusing on congressional power to enact the IPR regime; and (2) policy briefs arguing that IPRs do important work.  I’ll note here that the focus of the policy briefs is on efficient and timely adjudication. I have not seen any of the briefs so far that recognize the third reality – that the PTAB is invaliding patents that would have been upheld by a court.  For some reason amicus consider it appropriate to identify court failures in efficiency but not to identify failures in the substantive decisionmaking.  The closest on-point is likely Apple’s Brief which promotes the “well-informed and correct” outcomes of the PTAB. 16-712bsacAppleInc.

Overall, the collection of briefs here is quite strong. The most compelling brief in my view is that filed by the well-known team of Duffy and Dabney on behalf of several groups, including the Internet Association. They write:

No decision by this Court has ever held unconstitutional a system of adjudication by an Executive Branch agency on the grounds that the system violates Article III or the Seventh Amendment. This case should not be the first.

Patents are a type of public franchise that Congress has subjected to Executive Branch determination since the founding of the Republic. …

Petitioner and its amici draw inapt comparisons between patent rights and fee simple grants in physical land, but even if patent rights could be analogized to land, the most appropriate analogy would be to leases in public lands, which are subject to administrative revocation. Like leases, patent rights are limited in time, subject to periodic payments to maintain the rights, revert to the public upon expiration, and have the attributes of personal property. Indeed, Petitioner and its amici rely on the statement in 35 U.S.C. § 261 conferring on patents the “attributes of personal property,” but if anything, that statute undermines Petitioner’s case because it strengthens the analogy between patents and leases.

16-712 bsac The Internet Association et al.

A second key brief in the set was filed by a group of law professors led by Professors Lemley (Stanford); Reilly (Kent); and Rai (Duke).  The group makes the argument that – as a creature of congressional statute rather than common or natural law – congress also has the full power to establish a system for revocation. 16-712, BSAC 72 Professors of Intellectual Property Law.  The idea behind these statements is to step around the Supreme Court’s Stern decision that expresses “skepticism about Congressional efforts to withdraw from Article III courts ‘any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty’ or ‘is made of the stuff of the traditional actions at common law tried by the courts at Westminster in 1789.'”  The law professor’s interpretation of these cases though is that rights whose source is statute (rather than common or natural law) can largely be further determined by Congress.  This argument skirts around prior discussions that have focused on the reality that patent cases were “law tried by the courts at Westminster in 1789.”

Adding to these legal and historical arguments is the second law professor brief – an interesting and important brief written by Professors Golden (Texas) and Lee (Fordham). 16-712 bsac Professors of Administrative Law.  An important contribution of the brief is the recognition that congress’s failure to immediately create an IPR regime back in 1779 should not be seen as preventing action today:

[At that time] Trial courts were better suited to fact-finding and evidence-taking regarding prior art than Congress or Cabinet officers. And like Britain’s Privy Council, which exercised its summary revocation power as late as 1779 and retained but did not exercise that power in the nineteenth century, Congress and Cabinet officers had other pressing responsibilities.

Golden’s Brief also side-steps the public rights debate – arguing that “any lingering concerns about encroachment on Article III judicial power are answered by the existence of a right to an appeal to the Federal Circuit that is de novo on questions of law and meaningful on questions of fact.”  See also, Prof. Hollaar, noting that the question presented is “misleading in important respects, including the inaccurate suggestion that Article III courts do not provide substantial oversight in inter partes reviews.”  16-712 bsac Professor Lee A. Hollaar; and from Intel, et al.: “At the time of the Constitution’s adoption, there was no established rule that only courts could invalidate patents.”  16-712bsacIntel.

Still, Golden and others argue that invalidating patents is a public rights question – and thus easily within Congressional power to control through administrative action.  On this point, however, the Auto Makers group (including BMW, Ford, GM, Mercedes, Toyota, VW, Volvo, and others), argue that this case is not an appropriate case for revisiting the public-rights doctrine — a project that would have significant and wide-ranging impact on administrative law in general. 16-712bsacAllianceofAutoMfrs.

Public Knowledge and EFF came together to file their brief with a serious pursuit of historical issues worth reading:

Pre-ratification practices in England, the colonies, and the early states consistently treat patents as a privilege granted as a matter of sovereign discretion, with the objective in granting patents being not merely to reward inventors but also to induce economic productivity to the benefit of the state and the public. And as matters of sovereign discretion, the patents of England, the colonies, and the states included conditions intended to advance economic and public interests—including, in many cases, conditions for automatic, non-judicial revocation.

EFF brief-oil-states.  Following this approach (although without the same historical research). Arris group and others argue that patent rights should not be considered Blackstonian Property.  16-712bsacArrisGroupEtc_.   Finally, on the history angle, the Dell & Facebook brief argues that the Privy Council, rather than Scire Facias,  revocation is “the closest historical analogue” to the IPR system. 16-712 bsac Dell.

Many of the briefs IPRs should be seen as the patent office correcting its own mistakes. See, GE’s brief, for example, 16-712 bsac General Electric Company; also, 16-712 bsac BSA The Software Alliance; 16-712 bsac Unified Patents Inc.; and 16-712 bsac SAP America, Inc., et al. Although not seriously questioned here, a the banking group Askeladden addes to the argument that IPR procedures are good enough to ‘statisfy the standards for the adjudication of public rights in non-Article III forums.” 16-712bsacAskeladdenLLC

On the policy side, AARP is seeking lower health-care prices for its members and has generally sided with policies that increase competition and decrease the power of patent rights. In its brief, AARP argues that IPRs are an effective tool for this goal. 16-712 bsac AARP.  I-MAK makes a parallel argument in its brief. 16-712 bsac I-MAK (“Unmerited secondary patents stifle generic competition and inflate drug prices.”). See also, 16-712bsacAAM; and  16-712 bsac America’s Health Insurance Plans;  16-712 bsac Mylan Pharmaceuticals Inc_ (“Mylan’s experiences with inter partes review highlight the pro-competitive nature of inter partes review.”). As simply middle-men in the world of commerce, the Retail Association argues that its members likewise need this somewhat more efficient mechanism for eliminating low-quality asserted patents. 16-712 bsac Retail Litigation Center; 16-712 bsac Volkwagen Group of America, Inc. (“IPR proceedings has been successful in providing a low-cost but accurate process for adjudicating patent validity.).  Adding on here, TSMC argues that IPR provide an important outlet for manufacturers to protect their stream of commerce in cases where declaratory judgment jurisdiction does not exist. 16-712bsacTaiwanSemiconductorManufacturingCo.

Following these policy arguments, the not-for-profit org KEI particularly explains how the top-side briefs incorrectly argue that the IPR system harms national innovation and wealth.  KEI’s point is irrefutable – allowing enforcement of no-invention patents doesn’t help anyone.  brief-oil-states KEI_amicus_Oil_States.

Overall, this is a powerful group of briefs that leave me believing that – in the end – the Supreme Court will leave the IPR regime in place and in power.

I have seen lots of information regarding situations where the PTAB found challenged claims obvious during an IPR despite a contrary position by a district court.  My query is whether there are examples (and perhaps statistics) on flip-side – perhaps where PTAB refused to grant an IPR petition but then the claims were invalidated in court on the same grounds?

Responsive merits briefs have been filed in Oil States v. Greene’s Energy:

• 16-712 – Government Brief
• 16-712 – Greene’s Energy Brief

The Government presents the question as follows:

Whether inter partes review comports with Article III and the Seventh Amendment.

Rather than seeing a patent right as property, the Government brief identifies patents as simply “revocable privileges” or “governmentally-conferred franchises” whose creation are not associated with any natural right of an inventor but instead are simply tools of public policy designed to “benefit the public by providing an incentive to innovate.”

For the government and patent challengers, it is important to distinguish patents on inventions from traditional “land patents” since those may not be revoked administratively.  According to the government, the distinguishing point is that the government previously owned title to land, but patent rights are a government creation:

The government in issuing a patent [for invention] does not (as with a land patent) convey title to something it previously owned, but instead grants a limited franchise whose scope and contours are wholly defined by the government itself.

Regarding the 7th Amendment challenge – the Government writes that the 7th amendment right does not apply to situations where resolution of a conflict is properly assigned to an administrative (non-Article-III) resolution.

As Greene’s Energy writes – and all parties appear to agree: “The nature of U.S. patent rights … is at the core of the constitutional question before the Court.”    What I think may be the decisive is buried in Greene’s FN4: “At the very least, patents are quasi-private rights, that is, ‘statutory entitlements * * * bestowed by the government on individuals.'”  quoting B & B Hardware v. Hargis Indus., 135 S. Ct. 1293 (2015) (Thomas concurring in trademark context).

= = = =

I’ll note here that to make its policy-case that there are too many patent applications for the PTO to properly handle, the Government perpetuated the USPTO’s false statement that “In 2015, the USPTO received more than 600,000 applications—more than three times as many as it had received two decades earlier.”  That statement includes 273,000 192,000 requests for continued examination (RCEs) as “applications.”

by Dennis Crouch

Over the past several of years, the court has appeared to be increasingly divided on the question of when a district court (or PTAB judge) must offer an express construction of beyond simply assigning a claim its “plain and ordinary meaning” without further definition.  In NobelBiz v. Global Connect, the Federal Circuit ruled that disputed claims must be construed (despite some precedent to the contrary).  That result means that NobelBiz’s jury win is vacated and remanded.

Please Define What you Mean by Ordinary Meaning

Now in its en banc filing, the patentee has asked three questions:

1. May a district court ever assign a “plain and ordinary meaning” construction? Or is an express construction required whenever a litigant asserts an O2 Micro “dispute,” as dictated by NobelBiz and Eon?
2. May the Federal Circuit narrow claim scope without finding lexicography or prosecution disclaimer, by parsing the intrinsic record and relying on “extra-record extrinsic evidence,” as occurred in NobelBiz?
3. May a district court refer the question of infringement to a jury when claim terms are assigned their plain and ordinary meaning?

The briefing is well done and does good job of highlighting the distinct approaches by the various Federal Circuit judges.  Even if they disagree on the appropriate rule, all of the Federal Circuit judges should agree that this is an issue that needs resolution.

[Panel Opinion with Newman Dissent][Petition for Rehearing En Banc]

Oil States v. Greene’s Energy (Supreme Court 2017)

Briefing continues in the Oil States constitutional challenge to the IPR System.  Amicus briefs supporting either the petitioner or neither party were due August 31 with at least 31 filings –  Respondents’ brief (both Greene’s Energy and USPTO) will be due October 23 with supporting amicus shortly thereafter.

• Petitioner Merits Brief [Brief][Discussion of Brief]
• Amicus in Support of Petitioner
  • Alliacense (N.Heller) [Brief][Discussion of Brief]
  • Grass Root Inventors (R.Greenspoon) [Brief]
  • 27 Law Professors (Mossoff) [Brief]
  • CATO Institute [Brief]
  • Affected Patent Owners [Brief]
  • Eagle Forum [Brief]
  • Unisone Strategic IP [Brief]
  • Security People [Brief]
  • Abbvie [Brief]
  • BIO and AUTM [Brief]
  • Blackwell [Brief]
  • Karshtedt [Brief]
  • Evolutionary Intelligence [Brief]
  • Gary Lauder [Brief]
  • IEEE-USA [Brief]
  • InterDigital [Brief]
  • Liquid Power [Brief]
  • Pacific Legal and Private Property Interest Groups [Brief]
  • PhRMA [Brief]
  • Prof. Ely [Brief]
  • UNM [Brief]

• Amicus in Support of Neither Party
  • Gomez-Arostegui [Brief][Discussion of Brief]
  • Association of Amicus Cousel [Brief]
  • NYU Civil Jury Project [Brief] (Important Brief by Chemerinsky)
  • IPO [Brief] (Patents are private rights)
  • Shire Pharma [Brief]  (IPRs harm the biotech industry)
  • 3M [Brief] (ending IPRs won’t harm the patent system)
  • AIPLA [Brief] (IPR system is OK; although property, patents are public rights for the Article III analysis)
  • BPLA (Boston) [Brief] (IPRs serve an important goal) 
  • PTAB Assn [Brief] (IPR “Benefits all parties”)
  • IPLAC (Chicago) [Brief] (Patents issued after AIA might be treated differently than those issued before-hand) 
• Petitions-stage Briefs
  • 16-712-petition
  • 16-712-respondents-BIO
  • 16-712-Reply-Brief-for-Petitioner
  • 16-712-Government-BIO
  • 16-712-Reply-to-Federal-Respondent

I have not reviewed all of these these briefs, yet, but have a few notes above.  As expected, the vast majority of these top-side briefs support the petitioner. I have highlighted above the few briefs, including that by AIPLA, that support keeping the current system.

by Dennis Crouch

Nidec Motor v. Zhongshan Broad Ocean Motor (Fed. Cir. 2017)

Serial Filings: Important statement here from the Court against allowing a PTAB IPR patent challenger to continue to file additional IPR petitions after the 1-year deadline of 315(b) via the joinder process of 315(c); and also against stacking of PTAB Board to achieve particular results on rehearing.  The court’s statement though is entirely dicta – it actually affirmed the PTAB decision here where these actions occurred. 

On appeal in this case is the PTAB’s cancellation of the claims of Nidec’s Patent No. 7,626,349.  The patent covers an HVAC with an improved motor controller that uses sinus-wave powering (rather than square-waves) for reduced noise.

In September 2013, Nidec sued Broad Ocean for infringement and Broad Ocean followed with an IPR petition in July 2014 (within the one-year deadline).  The Board (acting on behalf of the PTO Director) partially instituted the IPR – but denied on the grounds relating to a Japanese Publication since Broad Ocean had attested to the translation accuracy.  In February 2015 (a month after the original petition decision), Broad Ocean filed a second petition – this one including the required affidavit.

The PTAB originally denied the new petition – holding that it was filed after the 1-year statutory deadline following the lawsuit initiation. 35 U.S.C. § 315(b).  That original panel decision was split, with Judges Wood and Boucher in the majority, and Tartal in dissent.  Tartal argued that the late-filing should be allowed to be joined (under § 315(c)) to the original IPR proceeding in a way that avoided the 1-year filing deadline.    Statutes at issue:

315 (b)Patent Owner’s Action.— An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner … is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

315 (c) Joinder.— If the Director institutes an [IPR], the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director … determines warrants the institution of an inter partes review under section 314.

On the rehearing, the PTAB Chief (acting on behalf of the PTO Director) shuffled the Board seemingly to change the result – adding two additional judges – Medley and Arbes – with the result that the dissenting opinion became the majority who offered an interesting explanation of the statute.  Section 315(c) textually appears to focus on joinder of additional people.  However, the text actually allows for “joinder of any person” – and according to the majority that should be interpreted to allow the “same person” to join himself to his prior filing (and in the process bring-along additional claims).

§ 315(c) permits the joinder of any person who properly files a petition under § 311, including a petitioner who is already a party to the earlier instituted [IPR]. We also conclude that § 315(c) encompasses both party joinder and issue joinder, and, as such, permits joinder of issues, including new grounds of unpatentability, presented in the petition that accompanies the request for joinder.

After joinder, the Board went on to find the challenged claims obvious (based upon challenges instituted in the original petition) and anticipated (based upon challenges in the second petition)

Unfortunately for the appeal, the Federal Circuit determined that it “need not resolve” the joinder issue because the obviousness finding were proper and were based upon the original petition.

Because there is no dispute that Broad Ocean timely filed the First Petition (containing the obviousness ground), the issues on appeal relating only to the Board’s joinder determination as to anticipation ultimately do not affect the outcome of this case

The court opinion affirming obviousness was written per curiam. An important concurring opinion was filed by Judge Dyk and joined by Judge Wallach suggesting that the PTAB’s joinder decision is wrong and that stacking of panels is problematic.  The opinion’s designation as concurring appears to be an implicit recognition that the additional opinion is dicta.

They write:

[W]e write separately to express our concerns as to the [PTO] position on joinder and expanded panels since those issues are likely to recur. Although we do not decide the issues here, we have serious questions as to the Board’s (and the Director’s) interpretation of the relevant statutes and current practices. . . .

The issue in this case is whether the time bar provision allows a time-barred petitioner to add new issues, rather than simply belatedly joining a proceeding as a new party, to an otherwise timely proceeding. Section 315(c) does not explicitly allow this practice. We think it unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding, whether the petitioner seeking to add new issues is the same party that brought the timely proceeding, as in this case, or the petitioner is a new party. . . .

Second, we are also concerned about the PTO’s practice of expanding administrative panels to decide requests for rehearing in order to “secure and maintain uniformity of the Board’s decisions.” . . .

[Although t]he Director represents that the PTO “is not directing individual judges to decide cases in a certain way”[,] we question whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.

Part of the reason why this is all dicta is that the PTO Director’s decision whether or not to initiate proceedings is – by statute – not appealable.

Shinn Fu vs. Tire Hanger (Fed. Cir. 2017)

After receiving substantial criticism for refusing to allow claim amendments during Inter Partes Reviews (IPRs), the USPTO began to to relax its standards somewhat.  In this case, however, the Federal Circuit (C.J. Prost) has rejected the PTO’s expanded approach – holding that “the Board did not properly consider the arguments petitioner set forth in its opposition to the patent owner’s motion to amend.”

[16-2250.Opinion.6-29-2017.1][U.S. Patent No. 6,681,897][IPR2015-00208]

Tire Hanger’s patent covers a way of temporarily hanging a wheel that has been removed from a car on a mechanic’s lift.  Upon Shinn Fu’s request, the PTAB (acting on behalf of the Director) instituted the IPR and the patentee subsequently (and successfully) petitioned for an amendment to the claims in order to overcome the prior art.  Eventually, the PTAB agreed with the patentee that that amended claims were patentable — leading to this appeal by Shinn Fu.

In its decisions, the Board did not address Shinn Fu’s particular arguments regarding the reasons-to-combine the references and thus “did not meet its obligation here.”  Although the Board did generally address why it was not combining the references, it failed to particularly explain the problem’s with Shinn Fu’s arguments on that point.

= = = = =

Perhaps the most important portion of the opinion comes in footnote 3.  There, the court writes about Shinn Fu’s reliance on additional references in its opposition – added after the amendment:

Although the Board faulted Shinn Fu for relying on additional references in its opposition, it is not surprising that it pursued this course of action in light of Tire Hanger’s amendments. In particular, those amendments added limitations that necessitate human involvement throughout the process. Indeed, the Board recognized this as the fundamental purpose of the amended claims in its Final Written Decision.

Although not a direct decision, the point from the court here is that an amendment by the patentee should likely open the door to allowing the patent challenger to add further references to its obviousness challenge.

Knowles Electronics v. Matal (Fed. Cir. 2017)

In an interesting sua sponte order, the Federal Circuit has demanded briefing on whether the USPTO has the right to intervene in an appeal from an inter partes reexamination decision by the Patent Trial and Appeal Board (PTAB).

Analog Devices filed for the inter partes review against Knowles’ U.S. Patent No. 8,018,049 covering a Silicon Condenser Microphone Package.  The PTAB agreed with the challenge and found a substantial number of the claims unpatentable.

The setup here is that the patentee is appealing the PTAB unpatentability decision, but Analog has dropped its case.  As such, the PTO has stepped-in as an intervenor in the case.  The Federal Circuit then asks:

When the prevailing party in an inter partes reexamination proceeding before the USPTO’s Patent Trial and Appeal Board (“Board”) declines to appear before this court to defend the decision below, is the USPTO’s Director required to possess Article III standing in order to intervene?

If yes, does the Director possess such standing in this appeal?

Additionally, if the Director does in fact possess standing; must the Director defend the Board’s decision? Alternatively, what are the ramifications if the Director declines to defend the Board’s decision?

Although the case here focuses on the vestige inter partes reexamination system, it has obvious and direct implications for the replacement inter parties reviews.

[Order: KnowlesOrder]