by Dennis Crouch
Network-1 Techs. v. Hewlett-Packard Co. (Fed. Cir. 2020)
In this case, the E.D. Tex. jury came back with a win for the defendant — finding that HP did not infringe Network-1’s US6218930 and that the patent was invalid. Post-Verdict, the district court flipped on validity — holding that HP was estopped from raising its obviousness challenge because it had joined an (unsuccessful) IPR against the patent.
The invention here relates to logic for sending a power-supply on the same twisted-pair used for data transmission (Power over Ethernet or PoE). The basic approach is that the ethernet cable will start-off with a low-level current. If a particular access-device signals that it can handle higher power, then the server will raise the power level being sent. The patent here issued in 2001 (1999) priority and the lawsuit was originally filed in 2011.
Statutory Estoppel: The big issue in the case for the patent world is statutory estoppel. One reason why this lawsuit took so long to complete was that there were two intervening reexaminations and one inter-partes-review. HP was time-barred from bringing its own IPR, but was able to join one filed by Avaya. The instituted IPR challenged the patent claims for anticipation and obviousness based upon two prior art references Matsuno and De Nicolo. Although the PTAB granted the IPR, it eventually upheld the validity of the challenged claims.
One result of losing an IPR challenge is estoppel under 35 U.S.C. § 315(e)(2).
(2) Civil actions and other proceedings. The petitioner in an IPR … that results in a final written decision … may not assert … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
Id. Following the IPR final written decision, the district court eventually determined that HP was generally estopped from raising an obviousness challenge (this ruling unfortunately came post-verdict after the obviousness challenge had already been raised).
On appeal, the Federal Circuit vacated — finding that the district court too broadly applied estoppel. In reading the statute, the appellate panel concluded that “a party is only estopped from challenging claims in the final written decision based on grounds that it ‘raised or reasonably could have raised’ during the IPR.” Slip Op. In this case, HP was time-barred from brining new claims and was limited to simply joining the claims brought by Avaya. “Because a joining party cannot bring with it grounds other than those already instituted, that party is not statutorily estopped from raising other invalidity grounds.” Id.
What is a “Ground.” The USPTO has a way that it treats a “ground” in inter partes review, but how should the term really be construed? The estoppel provision applies to “any ground” raised in the IPR, but the statute does not go on to define the meaning of the term “ground.” Here, the court interpreted the term as any invalidity contention against the challenged claims in the IPR based upon the prior art that served as the basis for the IPR. The court writes:
When the Board reached a final written decision …, HP was statutorily estopped from raising invalidity grounds based on Matsuno and De Nicolo against claims 6 and 9 in a district court action. HP, however, was not estopped from raising other invalidity challenges against those claims because, as a joining party, HP could not have raised with its joinder any additional invalidity challenges.
Slip Op. Remember, the jury found the patent invalid and that verdict was rejected by the court on JMOL (JNOV). That JMOL decision has been vacated. On remand, the district court will now need to decide whether to (1) give effect to the verdict; or (2) hold a new trial on validity.
The Federal Circuit got this right according to the Statute — and it also serves as a signal to folks who are deciding whether to join a pending IPR that the estoppel consequences will be quite limited.
Claim Construction: On appeal, the Federal Circuit provides the patentee with potential shot at winning by shifting the claim claim construction. In particular, the court found error in construction of the term “main power source.” In particular, the district court construed the phrase as requiring a “DC power source” and on appeal the Federal Circuit expanded the definition:
We conclude that the correct construction of “main power source” includes both AC and DC power sources. There is no dispute that the ordinary meaning of “power source” includes both AC and DC power sources. And neither the claims nor the specification of the ’930 patent require a departure from this ordinary meaning.
Slip Op. On remand, we’ll see if a new jury changes its mind based upon this difference.
Claim Broadening: The third question on appeal involved HP’s argument that the patentee had improperly broadened claim 6 during a reexamination in a way prohibited by statute:
No proposed amended or new claim enlarging the scope of a claim of the patent will be permitted in a reexamination proceeding
35 U.S.C. § 305. A claim is “enlarg[ed]” if it covers any embodiments not covered by any original claim.
- Two prior district courts interpreted Claim 6’s “secondary power source” to be physically separate from the claimed “main power source.”
- In the reexamination, two dependent claims were added to to require that the two power sources be “the same physical device.”
Although claim 6 was not itself amended, the dependent claim strongly suggested that the claim should be interpreted differently. As the lawsuit progressed, Network-1 subsequently disclaimed these newly added claims and the district court gave Claim 6 its narrow interpretation.
On appeal, the Federal Circuit looked at the final result — the scope of Claim 6 has not changed. “Where the scope of claim 6 has not changed, there has not been improper claim broadening, and HP’s argument fails.”
The court went on to explain that the addition of those dependent claims would not have changed the scope of claim 6.
Thus, even were dependent claims 15 and 16 broader than unamended, independent claim 6, the remedy would not be to find claim 6 invalid as broadened, but to invalidate added claims 15 and 16 [for improper broadening].
Slip Op. This decision sits well here, but will lead to further odd results when applied to ordinary prosecution because it allows for dependent claims that are broader than the independent version.