Supreme Court on Patent Law: November 2023

by Dennis Crouch

The Supreme Court is set to consider several significant patent law petitions addressing a range of issues from the application of obviousness standards, challenges to PTAB procedures, interpretation of joinder time limits IPR, to the proper scope patent eligibility doctrine. Here’s a brief overview of each case, followed by more details:

1. MacNeil v. Yita (No. 23-494): This case examines the Federal Circuit’s reversal of a PTAB obviousness decision.  Petitioner argues that the appellate court substituted its own findings in the reversal rather than vacating and remanding.  This could be an important case for revitalizing the importance of secondary indicia of non-obviousness.
2. Intel v. Vidal (No 23-135): This case challenges the “Fintiv rule” that restricts the initiation of inter partes review in cases where parallel district court litigation is pending.  The PTO is changing its approach, but Intel argues that the Agency isn’t going far enough.
3. VirnetX v. Mangrove Partners Master Fund (No. 23-315): This case questions the Federal Circuit’s interpretation of time limits for joining IPR partes. Apple joined the petition long after it would have been barred from filing its own.  Although I sympathize with the petition, I believe the Federal Circuit got the statutory interpretation correct.
4. Realtime Data v. Fortinet (No. 23-491): Here, Realtime Data challenges what it sees as lower court improper expansion of eligibility doctrine.  It asks the court to reiterate that eligibility is generally quite broad, subject to some quite narrow judge-made exceptions.
5. Tehrani v. Hamilton Technologies (No. 23-575): This case involves a dispute over the PTAB’s obviousness finding and the Federal Circuit’s affirmation, particularly focusing on the qualifications of an expert witness, the proper interpretation of claim terms, etc.  There is some really interesting parts of the petition and case, but the petition largely re-argues the evidence — typically a losing approach at the Supreme Court.
6. Vanda v. Teva (No. 23-___): I expect Vanda to challenge the Federal Circuit’s decision on the obviousness of its patents covering methods of using a particular drug. Vanda will argue that the court was too quick to jump to its obviousness conclusion.  If cert is granted, this would be a very important case.
7. Traxcell Techs. v. AT&T (No. 23-574): This case examines whether attorney fees can be awarded based on pursuing litigation deemed “baseless” after a magistrate judge’s non-infringement recommendation but before the district judge finalizes that recommendation.

More detail on each case below:

MacNeil v. Yita, No. 23-494

This case arises from inter partes review proceedings initiated by Yita LLC  challenging the MacNeil IP LLC’s U.S. Patent No. 8,382,186 which covers MacNeil’s commercially successful WeatherTech® vehicle floor tray product.

In two final written decisions dated January 3, 2022, the PTAB determined that Yita had established a prima facie case of obviousness as to the challenged claims of the ’186 Patent based on the first three Graham factors, but failed to demonstrate obviousness overall because MacNeil provided strong evidence of secondary considerations under the fourth Graham factor that was sufficient to overcome Yita’s prima facie case.

Specifically, the Board found MacNeil was entitled to a presumption that its evidence of commercial success, long-felt need, and industry praise related to its WeatherTech® product reflective of the inventiveness of the claims of the ’186 Patent.  The Board also found that Yita failed to provide evidence to rebut this presumption.  On appeal, the Federal Circuit reversed, finding that the Board committed legal errors in its secondary considerations analysis, and that “[b]ecause the Board determined that a relevant artisan would have been motivated to combine the teachings of [the prior art]…the Board’s judgment that those claims are not unpatentable for obviousness must be reversed.”

In its petition for writ of certiorari, MacNeil argues it was improper for the Federal Circuit to substitute its own factual findings and reverse the PTAB instead of remanding the case back to the PTAB to reassess the evidence under the proper legal standard for evaluating secondary considerations and their application to the obviousness analysis. MacNeil contends doing so violates the Supreme Court’s “ordinary remand rule” established in I.N.S. v. Orlando Ventura, 537 U.S. 12, 16 (2002), and expanded upon in Gonzales v. Thomas, 547 U.S. 183 (2006). MacNeil asserts this reflects an expanding practice by the Federal Circuit of reversing PTAB decisions instead of vacating and remanding as generally required by Supreme Court precedent.

Intel v. Vidal, No 23-135

This case involves a challenge to a PTO rule, known as the “Fintiv rule,” that sets restrictive standards governing when the Patent Trial and Appeal Board (PTAB) will deny institution of inter partes review (IPR) proceedings. Specifically, the Fintiv rule makes it much harder to institute IPR when there is a pending federal court case alleging infringement of the same patent claims, even if the IPR petition was timely filed.  The petitioners – including Intel, Edwards Lifesciences Corp., and Edwards Lifesciences LLC – brought suit alleging that the Fintiv rule exceeds the PTO’s statutory authority under the America Invents Act (AIA) and is arbitrary and capricious under the Administrative Procedure Act (APA). Their key allegations are:

1. The AIA allows IPR to proceed alongside litigation so long as the IPR petition is timely, but the Fintiv rule constricts access to IPR based solely on the existence of parallel litigation.
2. The rule rests on irrational factors, such as speculation about when the district court case might go to trial, leading the Board to wrongly predict trial dates and deny IPR petitions that should have been granted.

The Federal Circuit affirmed the PTO approach, interpreting §314(d) to set forth a broad “unreviewability principle” that bars review of any PTO rule “where the invoked provisions of law directly govern institution.”

The petition argues that: Review is needed to prevent the PTO from adopting unlawful and arbitrary institution rules with no oversight.

VirnetX . v. Mangrove Partners Master Fund, No. 23-315

This case concerns the proper interpretation of the time limits for joinder under the inter partes review (IPR) provisions of the America Invents Act (AIA), as well as the applicability of the Federal Vacancies Reform Act (FVRA) to judicial review authority delegated to the Commissioner of Patents.

Petitioners VirnetX and Leidos argue that the Federal Circuit erred in allowing Apple to join Mangrove’s IPR proceedings after Apple’s one-year time limit for filing an IPR petition had expired. The AIA provides that a party may join an existing IPR if it “properly files a petition under section 311.” 35 U.S.C. § 315(c). Petitioners contend that an untimely petition requesting an IPR after the one-year time limit is not “properly filed” within the meaning of § 315(c). They cite Supreme Court precedent construing the term “properly filed” in the habeas context as requiring compliance with applicable filing deadlines. See Artuz v. Bennett, 531 U.S. 4, 8 (2000); Pace v. DiGuglielmo, 544 U.S. 408, 417 (2005). Allowing joinder in contravention of the AIA’s time limits thwarts Congressional intent to prevent “serial harassment” through repeated administrative and judicial challenges to validity. H.R. Rep. No. 112–98, pt. 1, at 48 (2011).  Petitioner’s no-late-joinder argument is supported by an Amicus brief filed by BIO.

The Federal Circuit rejected this argument based on dicta in Thryv, Inc. v. Click-To-Call Techs., LP, 140 S. Ct. 1367, 1374 (2020), which stated in passing that “the § 315(b)-barred party can join a[n existing IPR] proceeding initiated by another petitioner.” Petitioners contend that the Federal Circuit misapplied Thryv and that the plain language of § 315(c) precludes joinder of time-barred parties. Interpreting § 315(c) to allow joinder regardless of time limits renders § 315(b).

Petitioners also argue that the FVRA precluded the Commissioner of Patents from exercising the PTO Director’s authority to review PTAB decisions after Arthrex. The FVRA provides the “exclusive means” of authorizing acting officials to perform duties of Senate-confirmed offices. 5 U.S.C. § 3347(a). Relying on § 3348(a)(2), which limits “functions and duties” covered by the FVRA to those established by law as exclusive to a particular officer, the Federal Circuit held that the FVRA does not apply to “delegable” duties like PTAB review.  As amicus Cato Institute argues, prior to the FVRA’s enactment courts routinely entertained suits to invalidate actions taken by unlawfully designated officials, subject to defenses like ratification.

Realtime Data v. Fortinet, No. 23-491 

This case arises from multiple patent infringement lawsuits filed by Realtime Data LLC (d/b/a IXO) against various technology companies, including Fortinet, Inc., Reduxio Systems, Inc., and others in the District of Delaware. Realtime asserted seven patents relating to improvements in computer system operations through the use of novel data compression techniques. The district court granted motions to dismiss filed by the defendant technology companies, holding on the pleadings that all 211 patent claims across the asserted patents were invalid under 35 U.S.C. § 101 as claiming only abstract ideas and no inventive concept.  On appeal, a panel of the U.S. Court of Appeals for the Federal Circuit affirmed the dismissal in a 2-1 split decision.   The new petition for certiorari asks the Supreme Court to recognize that the lower courts had improperly expanded the abstract idea exception beyond its appropriate scope.  Realtime points to Judge Newman’s dissent from the Federal Circuit decision, noting her argument that analysis of enablement and other statutory patentability requirements were improperly imported into the § 101 subject matter eligibility analysis.

Realtime further argues that recent Supreme Court precedent calls into question reliance on older cases like O’Reilly v. Morse as support for expansive application of § 101 exceptions, since Morse was grounded in enablement rather than eligibility. See Amgen, Inc. v. Sanofi, 142 S. Ct. 1713 (2022). Given this clarification, Realtime contends that the Court should reaffirm that § 101 sets forth a broad statutory rule enacted by Congress, with only narrow and circumscribed judicial exceptions, clarifying the proper analysis to restore the statute’s intended breadth of protection for technological inventions.

Tehrani v. Hamilton Technologies, No. 23-575

In this case, Professor Fleur T. Tehrani is seeking to reverse the Federal Circuit’s invalidation of claims from her U.S. Patent No. 7,802,571 relating to a system for automated control of mechanical ventilation.  The system is pretty cool and uses software algorithms to continually adjust ventilator settings including fractional inspired oxygen (FIO2) and positive end-expiratory pressure (PEEP) for a patient’s next breath. The PTAB found the claims obvious based on several prior art references, and that determination was affirmed on appeal.

The petition includes a long list of Federal circuit errors.  First, she contends the court wrongly designated expert Dr. Richard Imbruce as a “person of ordinary skill in the art” (POSITA) qualified to opine on the technology, when he lacks pertinent credentials such as an engineering degree. (Imbruce has a PhD in lung function). Second, she asserts the court failed to properly construe the claim term “for a next breath of the patient” as meaning “for the next breath” rather than “for any next breath,” which would allow reliance on intermittent prior art systems.

Additionally, Tehrani argues the reference combinations cited against the claims “are not possible and are against scientific principles.” She contends the court erred by effectively endorsing “impossible combinations” of incompatible prior art methods such as closed-loop control with manual look-up tables. She further alleges the court improperly relied on a study presenting “untrue results” (Anderson) and a potentially “fatal” positive feedback system (U.S. Patent No. 5,338,575).

Vanda v. Teva, No. 23-___

This petition has not yet been filed, but the patentee Vanda has indicated that it is planning to petition for certiorari focusing on obviousness.  In its decision, the Federal Circuit affirmed invalidation of claims from four Vanda patents covering methods of using the drug tasimelteon to treat circadian rhythm disorders, finding the claims obvious based on prior art. In its failed en banc petition, Vanda argued that the panel disregarded evidence of nonobviousness. Specifically, Vanda contends the court erred in its analysis related to administering tasimelteon without food, relying on an ongoing clinical trial as evidence of a reasonable expectation of success, and finding obviousness based on possible drug interactions from a similar compound.

Traxcell Techs. v. AT&T, No. 23-574

This petition, filed by William P. Ramey, III seeks review of whether an attorney fee award against a party in a patent case under 35 USC §285 can be based on pursuing “baseless” litigation after a magistrate judge’s noninfringement recommendation, but before that recommendation was made final by the district judge.  Here, in a first case against Huawei, the Magistrate had recommended a narrow claim construction and non-infringement summary judgment. And, before the district court finalized that recommendation, the patentee sued AT&T.  The district court eventually sided against the patentee in both cases.  It found the AT&T case “exceptional” and awarded $900k in fees in because “Traxcell should have known its patent infringement theories were unsupported” once the magistrate judge recommended summary judgment for Nokia in the first case.  The Federal Circuit did not issue an opinion in the case but only affirmed under its oft-used R.36 judgment without opinion approach.