Vacating the Entire Patent Office Proceedings on Equitable Grounds

by Dennis Crouch

Valspar Sourcing, Inc. (Sherwin Williams) v. PPG Indus. (Fed. Cir. 2019) (nonprecedential) (Valspar II)

This short decision reads like a study of my parenting style — “You should have understood my meaning based upon my facial expression!”  From a patent-law perspective, the Federal Circuit here has vacated an entire IPR proceeding because the challenger lacks standing to appeal.  Note here that the “R” is reexamination rather than review and the decision is nonprecedential.

This case involves two inter partes reexaminations filed by PPG back in 2012. U.S. Patents 7,592,047 and 8,092,876.  On reexamination, the examiner rejected all the claims; then the Board (PTAB) reversed all of those rejections (favoring the patentee).

On appeal, the Federal Circuit refused to hear the case on standing grounds — holding that Valspar had granted a covenant-not-to-sue that mooted the appeal.  PPG Industries, Inc. v. Valspar Sourcing, Inc., 679 Fed. Appx. 1002 (Fed. Cir. Feb. 9, 2017)(nonprecedential) (Valspar I).  Still, although it did not hear the merits of the case, the court still vacated the PTAB Final decisions in the interests of “justice.” In particular, the court appeared to be looking to punish Valspar for filing its covenant-not-to-sue late in the appeal — “tardily and unilaterally.”

“If a judgment has become moot, this Court may not consider its merits, but may make such disposition of the whole case as justice may require.” Walling v. James V. Reuter, Inc., 321 U.S. 671 (1944). . . .

“A party who seeks review of the merits of an adverse ruling, but is frustrated by the vagaries of circumstance, ought not in fairness be forced to acquiesce in the judgment. The same is true when mootness results from unilateral action of the party who prevailed below.” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18 (1994). . . .

VACATED, and . . . DISMISSED

Valspar I.  Here, the vacatur is seen as an equitable remedy and, it turns out that the Federal Circuit was not interested in punishing the patentee for its late action, but only to ensure that the mootness holds.

Following Valspar I on “remand” and with its decision upholding the patent vacated, the Board went the other way and ordered the examiner to issue reexamination certificates cancelling all of the challenged claims.  In particular, the Board found that the vacatur of its prior decision terminated the appeal and thus the examiner was required by law to issue the reexamination certificate upholding the claims.

The Federal Circuit, now in Valspar II, found the Board’s approach inequitable — the very opposite of equitable.

The ordered vacatur was designed to protect the challenger from being forced to acquiesce to an unreviewable adverse ruling by the Board. But by effectively canceling all the challenged claims, the Board’s approach unfairly converted the vacatur shield into a sword for the challenger. That is an inequitable result—especially here, where the Board previously determined that the challenged claims are not invalid.

Had we intended such an incongruous result, we would have made that intent explicit in our opinion. The Board should have interpreted the scope of the vacatur based on the context provided by this court’s opinion. . . . With this context, it was clear that this court’s intent was to nullify the entire inter partes reexamination without any collateral effect on other litigation.

Valspar II.  On remand here, the Board is instructed to either (1) do nothing or (2) “To the extent the Patent Office interprets our mandate to require further action, such action should be limited to concluding the reexaminations by vacating the proceedings without any further adjudication, and without the issuance of any reexamination certificate.”

Issues Here: To my knowledge, the Federal Circuit has not begun vacating Inter Partes Review proceedings based upon lack of appellate jurisdiction, but this decision shows how it is within the court’s equitable power.

Query: Is anyone else a little bit creeped out by the Sherwin Williams logo?

= = = =

Andy Baluch (Smith Baluch) represented the patentee Valspar on appeal; Tony Figg (Rothwell Figg) represented PPG.

= = = =

Note that Valspar has an ongoing lawsuit against PPG that asserts continuations of the disclaimed patents here.

54 thoughts on “Vacating the Entire Patent Office Proceedings on Equitable Grounds

  1. 6

    Query: Is anyone else a little bit creeped out by the Sherwin Williams logo?

    Yes. I must have seen the logo before but never actually noticed it.

    Wow.

    1. 6.1

      Seconded

  2. 5

    End the chaos. Congress should put the USPTO back to examining and issuing patents, unless the inventor requests a correction.

    1. 5.1

      Let’s end the PTO’s involvement after the patent has issued. No reexams for any reason. No corrections. Nothing. The patent should remain static after it has been issued. If you don’t get something in during examination, too bad.

      1. 5.1.1

        There already is a “No New Matter” rule — or are you thinking of something else?

        1. 5.1.1.1

          I too would be interested in learning more About what Squirrel means by “get somerthing in” during prosecution.

          1. 5.1.1.1.1

            Presumably referring to <2 year broadening reissues?

            1. 5.1.1.1.1.1

              Perhaps – but doubtful, as even in that case the “No New Matter” Rule is still in effect.

        2. 5.1.1.2

          I am not thinking about new matter rule. I am proposing that patents, once issued, become absolutely static without the opportunity to change anything. No corrections. No broadening reexams. No narrowing reexams. No IPRs. By “don’t get something in during examination,” I mean no attempt to alter the claims after issuance in any manner.

          1. 5.1.1.2.1

            …so you don’t care what may actually BE in the application then…

            1. 5.1.1.2.1.1

              I care whats in the application up to the point that the application is granted. Afterwards, I do not care. You had your chance to capture the scope of protection you wanted.

              1. 5.1.1.2.1.1.1

                Lol – you mean that you wish that one had their chance.

                You obviously have little to no actual experience with innovation and the use of patent families.

                The patentee deserves full credit for their part of the Quid Pro Quo bargain, and your view would be to cheat that bargain based on the notion of “single shot.”

                You are just not in touch with reality, and would be an enemy of Actual Innovators.

                (not at all a surprise given the general tone of your posts)

                1. I’m not suggesting that continuation and divisional applications be eliminated. Simply that once an patent is granted, it never changes. If there is more subject matter to capture, but you did not file a continuation, in the words of Aristotle: Too bad, so sad.

                2. Meh, now you appear to be caught up in mere administrative protocols, and STILL seeking to deny the full bargain of the Quid Pro Quo.

                3. Absolutely – and part of that is the Congressionally set ability to FULLY earn what IS in the bargain (with a broadening amendment within two years).

                  You want to rest on a procedural point that simply does not support what you really want.

                4. All that is necessary to fully earn the bargain is for the patent to issue. Negotiate the scope you want during the original prosecution. Anything more than that is going beyond what the bargain requires. It may be nice for the inventors, but it is not required.

                5. Again, you show that you have zero actual experience with “negotiation of scope.”

                  Also, you seem to have missed the point of the post at 3:31.

                  Try again.

                6. Yet, you’ve given not actual reason why the current approach is superior. You can’t give me a reason that is not abusive of the patent system. My approach would foster predictability and finality. The fact that you could change your patent after its been granted to increase the scope of the claim has always been BS.

                7. And you have only given me feelings NOT in alignment with what Congress has set up, and have provided NO basis as to why you would NOT provide that a FULL AND FAIR bargain be meted out.

                  What I have presented — the actual law mind you — is superior precisely BECAUSE it is a better attempt at the FULL AND FAIR bargain.

                  Being “final” and being “predictable” is not enough. THAT is one of the reasons WHY continuations and divisionals are provided for. You have expressed no problem with having those.

                  All that you have done is want a finality, one that does not reflect the human condition.

                  Further, that final line has zero reflection with the reality of human conditions and negotiations that DO impact other vehicles associated with the process (continuations and divisions) with which you state that you do not have a problem.

                  You fail to grasp the reality of the situation and how the law reflects that situation and instead ONLY insert your feelings.

                  increase the scope of the claim has always been BS – is nothing more than feelings.

                  You should understand why a person like me with informed opinions puts little to no weight to a person like you with uniformed opinions.

                8. I full well acknowledge what the law is. That is why I phrased this discussion as what I think the law should be.

                  You have yet to explain why being able to have a broadening reissue is FULL and FAIR. For the public, who are on the other side of the bargain, it is more FULL and FAIR to have an issued patent be final. The public is at least an equal member to the bargain as the inventor. The inventor already has a FULL and FAIR opportunity to capture the scope you want during the original prosecution. Why do you wait to capture your desired subject matter until after the patent has issued?

                  As far as I can tell, your argument for broadening reexamination is based simply on your feelings

                9. You mention that I offer no explanation, even as you offer none for the feelings of:

                  For the public, who are on the other side of the bargain, it is more FULL and FAIR to have an issued patent be final.

                  Which of course is not substantiated by any objective reasoning. The public receives the entirety of the published item that is a granted patent (and don’t even get me started on how the public gets that Quid without the traditional Quo UNLESS an applicant can and does opt for the non-publication route).

                  You want the full measure, and yet you would deny the full measure of what the patentee deserves.

                  What you portray as “full and fair” to capture scope is not the “full and fair” of what has been provided. You confuse what may be negotiated for (and EVEN the Office recognizes that such negotiations simply are not the PROPER end of the story) with what is deserved.

                  This is also a view of someone who has never been through the invention/patent process AS THE patentee. For that matter, I doubt that you have ever been a principal in a matter of negotiations, as you seem to not understand the concept.

                10. What I love about your replies is that they are absolute and utter nonsense from beginning to end. Not once have your actually given a reason to justify broadening reissues. You just constantly repeat your empty platitudes.

                  Ok, let’s step back a moment. What do you believe hinders the applicant getting the full and fair scope of their invention during regular prosecution that cannot be addressed through divisional and continuing applications?

                11. To the contrary, Squirrel, my replies have been solid from beginning to end.

                  YOU are confusing the fact that THAT solidness is simply not aligned with your feelings as some type of “nonsense.”

                  Such is simply not so.

                  What I repeat is simply not empty platitudes, but the foundational aspects of the law. You are free to not like them. You are NOT free to dismiss them as somehow NOT being the foundations that they are.

                12. Again, a reply devoid of meaning. You didn’t even attempt to answer my question I posed in an attempt to understand your position.

                13. As to your:

                  Ok, let’s step back a moment. What do you believe hinders the applicant getting the full and fair scope of their invention during regular prosecution that cannot be addressed through divisional and continuing applications?

                  You again show that you do not understand the context of negotiations, nor the context of being on the patentee’s side in the process.

                  First, the mechanisms are NOT mutually exclusive, and they EACH serve a similar end of reaching towards that foundation that you would so casually (and errantly) dismiss.

                  Could a broadening reissue be equivalent in scope to a continuation?

                  The answer is: “of course.”

                  So what is the difference between the two?

                  The answer is: “procedure.”

                  The OPTION of one or the other is a matter of mere procedure then and NOT one of sum total substance.

                  To gain the same effect — an effect that you accept in one set of procedures — is merely reflective that there exists a variety of circumstances in the world, and that in some circumstances, obtaining that same end result merely merits different paths, different means.

                  The patent system is meant to be inviting to both the sophisticated (who know well how to manage portfolio efforts through continuations and divisionals) as well as to the NOT sophisticated, who may not have had the knowledge/time/money/inclination at the timing of grant to file a continuation application. Heck, even mere oversight should not be punished in the Quid Pro Quo deal.

                  Which circles us back to the nature of the Quid Pro Quo deal.

                  Do you understand what that deal is?

                  Or do you consider my remarking of what that deal IS to be something to be dismissed out of hand (perhaps, as you put it, just another “empty platitude”)?

                  Here again — the issue is NOT me, but thee.

                14. Here again, your:

                  Again, a reply devoid of meaning. You didn’t even attempt to answer my question I posed in an attempt to understand your position.

                  is what is devoid of meaning.

                  You are FAR too quick to jump to defend your indefensible position.

                  You need to stop, read, contemplate, and then integrate the 9:22 am post instead of merely dismissing it out of hand.

                15. Again, a reply devoid of meaning.

                  Yes, “again.” And again, and again, and again, ad sæcula sæculorum. That is all one can ever get—vacuous sloganeering masquerading as argument—from that particular interlocutor.

                  Do you make a dozen sequential arguments to a fruit fly, in hopes that this time she will leave off from her pointless circling of your wristwatch and engage the merits of your discussion? As soon expect that outcome as a meaningful reply in the present exchange.

                16. I’m not suggesting that continuation and divisional applications be eliminated. Simply that once an patent is granted, it never changes. If there is more subject matter to capture, but you did not file a continuation, in the words of Aristotle: Too bad, so sad.

                  Such an approach might be fair, but I do not believe that it is prudent. The overwhelming majority of patents never amount to much. That is to say, of the tens of thousands that issue each year, only a handful turn out to be commercially important enough to enforce. Both the applicants and the public (as represented by the PTO) are therefore rationally unwilling to expend the resources necessary to sort out exactly what is the fair scope for a given inventor, in view of that inventor’s advance over the prior art.

                  Rather, the initial prosecution experience is rationally only a sort of quick-&-dirty review to weed out the egregiously unpatentable. In view of what is really at stake for most applicants (i.e., little to nothing), this makes sense. No sense in spending millions to sort out the precise details of a document that will end up being filed in a drawer, never to see the light of day again.

                  While the overwhelming majority of applications will never amount to anything, however, a handful will turn out to be of enormous importance to the whole U.S. society. It is difficult to spot those significant few at the time of first examination, but with time their importance comes more clearly into focus. It is only sensible, therefore, that the law allows a cost-effective mechanism for both the patentee (reissues) and the aggrieved public (re-exams, IPRs, PGRs, & CBMs) to further refine the scope of the grant well after the initial examination, once the societal significance of the patent in question has had enough time to reveal itself.

                  A rule that foreclosed either reissues or the various post-grant revocation processes would force both the public and the applicant to invest a great deal more resources into the initial examination process, for no obvious socially beneficial reason. This might be fair, but it would also be wasteful and imprudent.

                17. Greg is as wrong as the squirrel, and even more of a sniveling inte11ectual coward for whining from the sidelines.

                  Gee Greg, maybe post another link from the past that shows you backpedaling after I am “mean to you” by applying some critical thinking to your musings.

    2. 5.2

      What’s wrong with an administrative agency correcting its mistake? Lots of other governmental agencies do it besides the USPTO, both the Federal and State level. Social Security (Federal) and unemployment (State) come to mind first. Considering how little time Examiner’s have to search and analyze the prior art, they are bound to miss things. The number of 102 rejections that come out of PTAB decisions illustrates that (it may not be a huge percentage, but it’s notable).

      1. 5.2.1

        DVan,

        You appear to have a rather incomplete understanding of both administrative law and property law.

        Once an item becomes an item of property (and full Constitutional protections inure to that property), it is simply NOT a matter of merely “an administrative agency fixing its mistakes.”

        I suspect that you have been indulging in the anti-patent Kool-Aid.

        1. 5.2.1.1

          I’m very pro-patent. I work like crazy to get them for my clients.

          As for property law, you’re basing your statement on the incorrect assumption that intellectual property exactly like real property under the 5th Amendment. No court has ever held that. In fact, Oil States specifically states that patents are “public rights”. The dissent disagreed, but that’s irrelevant. As such, equating IP and real property and subject to same protections is wrong. If Congress changes that, and they’re the only ones who can, I’ll definitely celebrate as will many of my clients.

          As for administrative law, the States and Federal government have quite often been able to correct their own mistakes through administrative processes. There are lots of cases (State level) where someone incorrectly received various public benefits (e.g., unemployment, public assistance, food stamps, etc.), and the State has come and taken it back after an administrative determination (even years later). The same happens at the Federal level quite often also (e.g., Social Security is the easiest example – Matthews v Eldridge SCOTUS case). If the recipient receives Due Process first, then the government is free to take back a public benefit. Happens in lots of agencies outside of the USPTO. Why should they be any different? Lots of people wish it was different, but that doesn’t make it that way.

          You might want to run down the Due Process rabbit hole, but that does not require an Article III court. The SCOTUS held that it only requires notice and the right to be heard is required (Matthews v Eldridge). NOT, the right to be heard in an Article III court with all of the protections that go with it. Matthews even held that at the administrative level, the hearing can be after the benefit is revoked. They can revoke the benefit and give you the hearing later.

          Whether we like it or not, that’s what the courts have held. Wanting patents to be identical to real property for legal purposes isn’t going to make it that way. Wanting Due Process to require all the protections of an Article III court isn’t going to make it that way. My advice to clients is simple: plan for the situation the way it currently is, and work to change it to what you want. Congress is thinking about doing something. Hopefully it will be beneficial to the patent system as a whole.

          1. 5.2.1.1.1

            Patents ARE a vested property right (even the Oil States CHANGE to a form of Franchisee-Franchisor relationship does not change the fact that patents — by law — have the attributes of personal property (and as such, DO obtain the rest of the protections under the Constitution — at the moment of their vesting).

            Your understanding of both admin and property law remains flawed.

            1. 5.2.1.1.1.1

              … by the way, it is more than just a little bit of a strawman to attempt to put words into my mouth as patents “being identical” with the form of property of real estate.

              Such is not my position, and such is not determinative of the results here.

              1. 5.2.1.1.1.1.1

                And “having the attributes of personal property” does not make them personal property regardless of how far you want to stretch those attributes. Oil States was rather clear about the public rights doctrine with respect to patents. Try reading it again. It would be great if they were, but according to the only decision that matters at this time, they aren’t.

                Your understanding of the public rights doctrine as stated in Oil States is the only flaw in this analysis.

                1. You are misreading Oil States – as even Greg notes that the Franchise remains a personal property right.

                  It is NOT my understanding of what Oil States portends that is in error in our conversation.

                  (and notably, the Supreme Court MAY NOT directly obviate the words of Congress for that personal property effect)

                2. And “having the attributes of personal property” does not make them personal property…

                  Huh?!? Of course patents are personal property. Oil States observed that “patents are ‘public franchises'” (Oil States Energy v. Greene’s Energy Group, 138 S. Ct. 1365, 1368 (2018)), and franchises are personal property. See, e.g., Norris v. Norris, 731 S.W.2d 844, 845 (Mo. 1987) (“Personal property can be either tangible or intangible… [I]ntangible personal property is that which… is merely the representative or evidence of value, such as certificates of stock, bonds, promissory notes, and franchises,” emphases added); accord, In re Estate of Berman, 187 N.E.2d 541, 544 (Ill. App. 1963); In re Estate of Macfarlane, 459 A.2d 1289, 1291 (Pa. 1983).

                  It is you who are misunderstanding Oil States here. Oil States did not say that patents are “public rights,” but rather that the question of patent validity is a matter of public rights. Patents themselves are public franchises, which are a species of personal property, as shown above.

                3. It’s more than a little amusing that at the same time that Greg pipes up in agreement with me, he posts a flashback that shows why he really does not engage with me — don’t stop with his amusing exchange, but look deeper at his back-pedaling after his story (when some critical thinking is applied).

                  His latest whinings are just that: whining.

  3. 4

    I am assuming AIA 35 USC 328 below prevents this from happening in an IPR?:
    “(a) Final Written Decision- If a post-grant review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 326(d).
    (b) Certificate- If the Patent Trial and Appeal Board issues a final written decision under subsection (a) and the time for appeal has expired or any appeal has terminated, the Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable.”

    1. 4.1

      What makes you say that? The PTAB could just vacate the institution decision, as they did on remand in SAS to avoid considering all of the grounds raised in the petition. Vacating the institution decision entirely avoids Section 328, and the PTAB has been expanding use of vacatur of institution decisions for just this reason.

      1. 4.1.1

        How could the PTAB vacate an institution decision without also reversing any actual decision it has made in that IPR finding any claim UNpatentable?

      2. 4.1.2

        If any Adverse IPR Final decision could be eliminated by simply granting the petitioner a free non-assertion license that would eliminate Article III jurisdiction of the Fed. Cir. appeal, why would not that be done more often? [Answer?: because a normal Fed. Cir. panel would not order the cancellation of the IPR final decision on that basis?]

        1. 4.1.2.1

          Paul,

          Does not your question presume a causal relationship that is just not there for the IPR regime?

          Consider that the IPR regime expressly was built so that the Part I of the mechanism was such that NO standing by a Petitioner is required (making the “offer of a non-assertion license” quite meaningless.

          There simply is NOT present the same dynamics.

    2. 4.2

      Good question. Answer: maybe?

      Pre-AIA Section 316(a), pertaining to inter partes reexams, contains language similar to AIA 35 USC 328. The Board management held (in response to petitions mentioned in the opinion) that claims had been “finally determined to be patentable” even though the Board had reversed the examiner’s rejections; the Board’s decision reversing the rejections had been vacated by the first Fed. Cir. panel. (That posture could not happen in an IPR.) But the second Fed. Cir. panel got caught up in SCOTUS cases and neglected to address the actual statute that applied. Might that be why the Chief Judge did not sign on? Anyhow, nonprecedential.

      1. 4.2.1

        That should read claims had been “finally determined to be _un_ patentable,” consistent with the language of 316(a) and 328. The Director _might_ have issued a certificate cancelling the claims but we don’t know that. The Board’s remand to the examiner merely noted that the rejections stood because the Fed. Cir. had vacated the Board’s decision reversing the rejections. The Board’s remand could not control further proceedings before the examiner; the examiner _might_ have withdrawn the rejections. Or the Director, upon petition, may have ordered the rejections withdrawn. In any event, cancelling the claims appeared to be an acceptable course after the first Fed. Cir. panel vacated “the Final Decisions of the PTAB” without further instructions. Just a strange, interesting case.

        1. 4.2.1.1

          And looking further — the Fed. Cir.’s jurisdiction statement is a bit iffy in Valspar II. The Board’s remand papers did not indicate it was a final agency decision; the decision could have been modified on rehearing (or further rehearing). But the Fed. Cir. took the decision as final and ripe for review. Notably, the patentee’s Notice of Appeal indicated that it was, in the alternative, a request for mandamus.

          Realistically, all the patentee could complain of was that the Board remanded the proceeding to the examiner; the Board had no control over the proceeding after that. The Board’s remand did not, and could not, require that the claims be cancelled.

          Why the Director did not intervene to straighten out the mess, we don’t know.

          1. 4.2.1.1.1

            It’s still rather new for the Fed. Cir. to be reviewing decisions from the PTO that hold claims patentable. They can be forgiven for not thinking about what comes next after vacating a PTAB decision. All in all, it appears the Fed. Cir. realized its mistake and Valspar II is nothing more than granting a very, very late rehearing in Valspar I to modify its decision. Nonprecedentially, of course.

  4. 3

    Demonstrating again why inter partes reexaminations needed to be replaced, as they were, by the AIA, with time deadlines and APJ trials not subject to PTO lack of coordination between the Examining Corps and the PTAB. Are any more old inter partes reexaminations left still stuck in the system besides these?

  5. 2

    Right. The opinion here (Valspar II) was written by Judge Stoll and joined by Judge Newman and Chief Judge Prost. Except that Prost did not join the Part I of the opinion that described Valspar I. Valspar I was actually written by Judge Newman and Judge Stoll was on that panel (along with Judge Chen). The record does not indicate whether this was all random or not.

    1. 2.1

      I think the description of Valspar I is in Part I of the Background section. Judge Prost does not join Part I of the Discussion section, which is the statement of the law (mostly SCOTUS cases).

  6. 1

    It’s a bit odd that the Chief Judge, without saying why, did not join the opinion’s statement of the law. Maybe it came out in the oral hearing? Anyhow, nonprecedential.

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