by Dennis Crouch
Uniloc 2017 LLC v. Hulu, LLC & Netflic, Inc. (Fed. Cir. 2020)
A divided Federal Circuit has authorized the PTAB to consider patent-eligibility challenges during inter partes review (IPR) proceedings in the context of a patentee’s motion to amend the claims. Uniloc had moved to amend with substitute claims and Hulu opposed. The PTAB then denied the motion to amend — concluding that the proposed claims were not subject matter eligible under Section 101. The PTAB’s subsequent rehearing denial was designated as precedential — holding that any ground of unpatentability can be considered in the context of a motion to amend.
The PTAB holding is controversial because inter partes review proceedings are strictly limited to cancellation of claims “on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.” 35 U.S.C. 311(b).
On appeal, the Judge Wallach wrote the majority opinion joined by Judge Taranto. Judge O’Malley dissented.
In his opinion, Judge Wallach looks to the statute and concludes that the limitations on the “grounds” for challenging a patent via IPR do not apply to whether the PTAB allows amendments to the claims.
The PTAB correctly concluded that it is not limited by § 311(b) in its review of proposed substitute claims in an IPR, and that it may consider § 101 eligibility. The determination is supported by the text, structure, and history of the IPR Statutes, which indicate Congress’s unambiguous intent to permit the PTAB to review proposed substitute claims more broadly than those bases provided in § 311(b).
Slip Op. Rather, under Section 318, the PTO appears to be required to determine whether any new claim is patentable before issuing a certificate saying as much.
Any proposed amended or new claim determined to be patentable and incorporated into a patent following an [IPR] shall have the same effect as that specified in section 252 for reissued patents. . . 35 U.S.C. 318(c).
[E]very reissued patent shall have the same effect and operation in law, on the trial of actions for causes thereafter arising, as if the same had been originally granted in such amended form. . . 35 U.S.C. 252.
The implication here is that any new or amended claim must be fully reviewed for patentability–under all of the patentability doctrines–before being allowed. This is different from the limitations of Section 311 that are directed toward cancellation of already existing claims. The majority did not reach the issue of whether the PTO determination should be given deference — since the “text, structure, and history of the IPR Statutes are unambiguous.”
Note here that this outcome is in sharp tension with the language of Aqua Products Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc). In that case, the plurality opinion explained that challenges to amended claims should be limited since the PTO requires that substitute claims be narrower than the original claims. Here, the majority rejected this portion of Aqua Products–explaining that the en banc case did not have a majority opinion and that aspect of the case was thus merely dicta of a handful of judges.
No opinion in Aqua Products garnered a majority, leaving the only holding as a burden of proof determination, concluding that the USPTO had improperly adopted regulations assigning the burden of proof with respect to proposed substitute claims.
Writing in dissent, Judge O’Malley would have dismissed this appeal as moot. In particular by the time the PTAB issued its rehearing denial, the Federal Circuit had already held these claims invalid in the parallel infringement proceeding.
After our affirmance of the district court’s ineligibility determination, and once the time expired for Uniloc to seek Supreme Court review of that affirmance, it did not possess any patent rights that it could give up in exchange for a substitute claim. It owned nothing and could not, therefore, substitute its old claims for new ones. If Uniloc were to prevail in this appeal and return to the Board, the Board would be without power to effectuate a substitution. . . .
To analogize to ownership of real property, if a
court finally determines that a deed to property is defective such that the property belongs to someone else, the former “owner” cannot “substitute” that property for a new parcel—even if the owner is in the middle of closing a sale. The former “owner” has nothing to give up and, indeed, never had anything to bargain with in the first place.
Dissent. Judge O’Malley then explains that the majority kept this case alive in order to enact misguided policy:
Here, rather than follow that usual procedure, the majority breathes life into a dead patent and uses the zombie it has created as a means to dramatically expand the scope of inter partes review (“IPR”) proceedings. . . .
After concluding that an invalid patent can serve as a vehicle to reach the merits of this appeal, the majority announces that, when it comes to substitute claims, the Board can engage in a full-blown examination. This revelation runs contrary to the plain language of the statute and the policy of efficiency that underlies the IPR system.