Federal Circuit Weighs in on IPR Again, and Judge Newman Regains Her Footing as Pro-Patent Crusader

cafc1The Federal Circuit issued another substantive, IPR-related opinion today in Prolitec, Inc. v. ScentAir Techs., Inc., 2015-1020 (Fed. Cir. Dec. 4, 2015) (appealing from IPR2013-00179). The Board had determined that each of the two claims at issue was unpatentable and the Federal Circuit affirmed. On appeal, Patent Owner made five challenges to the PTAB’s decision in the underlying IPR – three claim construction arguments, a related argument against anticipation, and an argument directed to its Motion to Amend in the IPR. It is worth discussing here one of the claim construction arguments, the Federal Circuit’s treatment of the Motion to Amend, and a broad-based and strong dissenting opinion filed by Judge Newman.

Regarding claim construction, Patent Owner argued that the term “mounted” was not properly construed to require a permanent joining of two parts. In support, Patent Owner pointed out that the purpose of the invention was to provide a disposable cartridge for one-time use and that each embodiment in the patent required a permanent means of bonding. The Federal Circuit disagreed. As to the purpose of the invention argument, the Court cited to broad language from the specification, that taught that “it may be desirable that the cartridge is configured to be used only one time prior to being discarded.” Op. at 5. The Court specifically noted that “[t]he problem for [Patent Owner] is that the use of ‘may’ signifies that the inventors did not intend to limit the patent as [Patent Owner’s] expert opined.” Id. at 5-6. As to the fact that each embodiment required permanent bonding, the Court pointed to more permissive language which taught that the two parts “may be jointed to each other by heat or ultrasonic welding spin welding, or by use of an adhesive.” Id. at 6 (emphasis in original).

In short, this is another example of a situation where the blind pursuit of breadth in the drafting of the patent specification hurt a Patent Owner by requiring that its patent claim(s) be construed broader than what was likely necessary to cover the commercial embodiment of the invention. The prior art seemed to show non-permanent joining of the key parts and, as such, if Patent Owner intended the patent-at-issue to cover permanent joining, it should have made that point of novelty clear in the specification and/or the patent claims.

Regarding the Motion to Amend, Patent Owner had attempted to substitute “permanently joined” into the subject claims, substituting its above-referenced claim construction for the claim element. Petitioner opposed, pointing to a reference in the prior art (cited in the original examination of the patent) that taught permanent joining. Patent Owner did not dispute that the subject prior art reference disclosed that limitation, but argued that other claim limitations were not found in the reference. The Board denied the Motion to Amend, finding that Patent Owner failed to demonstrate that the proposed claim was patentable. On appeal, Patent Owner made two arguments that came up short. The first argument was that it was not required to prove patentability over prior art references cited in the original file history because they were not of record in the IPR. This was an issue that was left open by the Federal Circuit in Microsoft v. Proxyconn789 F.3d 1292 (Fed. Cir. 2015). In that case, the Court had indicated that it was not deciding on the reasonableness of the Board’s jurisprudence regarding the scope of the requirement that Patent Owner show patentability over all “prior art of record” (which, at the time, arguably required a showing of patentability over the entire universe of uncited prior art). Op. at 14. Subsequent to the Federal Circuit’s decision in Proxyconn, the PTAB narrowed its guidance on what constituted “prior art of record” to include material contained in the prosecution history of the patent-at-issue. The Federal Circuit agreed with the Board’s approach in this regard, finding that the Patent Owner’s burden to show patentability over the art from the original prosecution history “is not in conflict with any statute or regulation. Moreover, it is not unreasonable to require patentee to meet this burden.” Id. As such, the Board’s denial of the Motion to Amend was affirmed.

Lastly, Judge Newman seemed to return to her pro-Patent Owner role, after signing onto the decidedly pro-Petitioner decision in Belden v. Berk-Tek, by filing a broad and strong dissentSpecifically, Judge Newman disagreed with the majority’s decision in five ways. First, she argued that the PTAB improperly refused entry of the amendment-at-issue, given that Patent Owner had complied with all the statutory and regulatory requirements. Judge Newman’s view is that the proposed amendment resolved the key dispute in the proceeding about claim breadth and, as such, “refusal to enter the amendment is contrary to both the purpose and the text of the America Invents Act.” Dissenting Op. at 3. Second, Judge Newman disagreed with the majority regarding the burden of proof for amended claims. It was not proper, per the dissenting opinion, for the Board and majority to shift the burden for amended claims to Patent Owner. Instead, the AIA places the burden of proof, throughout the proceeding – for amended and unamended claims – on Petitioner. Third, Judge Newman argued that it is the Federal Circuit’s duty to assure that the preponderance of the evidence standard is met in PTAB proceedings. As such, it is erroneous to apply the highly-deferential substantial evidence standard to AIA post-grant appeals. Fourth, Judge Newman criticized the majority opinion for not remanding the case to the Board given that the PTAB changed its view of the scope of “prior art of record” during the pendency of the case.

Lastly, Judge Newman took issue with the majority’s affirmance of the anticipation finding in view of the fact that the anticipatory reference was Patent Owner’s prior incarnation of the subject device. Per Judge Newman: “A finding of anticipation requires that the same invention was previously known and described, not that a claim can be construed so broadly and incorrectly as to embrace a prior art device.” Id. at 11.

Judge Newman is back to her old self, but another Patent Owner has found its patent rights in rubble.

PTAB Finds Different Claim Terms Have the Same Meaning

20670078_sOne of the classic canons of claim construction is that different claim terms in a patent are presumed to have different meanings.  The Board found an exception to that general rule in Air Liquide Large Indus. v. Praxair Technology, IPR2015-01075, Paper 11.  The technology involved storing hydrogen in a salt cavern. The issue involved the broadest reasonable interpretation of “substantially impermeable barrier” and “permeation barrier,” two terms used in separate independent challenged claims.  Petitioner argued, with specification and expert support, that permeation barrier meant something formed in the cavern walls to reduce the permeation of the cavern after it is formed.

“Substantially impermeable barrier” was not defined in the specification. Petitioner’s expert found it simply meant the walls of the cavern. The PTAB criticized this because it ignored the claim language required the barrier to be “formed” by maintaining a certain pressure. The PTAB thus construed found the term also meant a barrier formed in the cavern from sufficient pressure to become substantially impermeable to hydrogen.

In doing so, the PTAB recognized it was “construing two terms, used in different independent claims…, to refer essentially to the same thing.”  Mindful of the canon against this, the Board found some saving grace:  “We understand there may be a slight difference between the terms, but, on the present record, this distinction does not come into play and, as such, it is proper to construe these terms to be the same insofar as they are both directed to a formed barrier as construed above.”

Federal Circuit Issues Second Reversal in Favor of a Patent Owner

cafc1The Federal Circuit has picked up the pace of issuing actual written opinions regarding PTAB decisions, instead of its previous, steady diet of Rule 36 Judgments. Today, the Court issued its second opinion reversing a Board decision canceling various claims in an inter partes review based on a claim construction issue in Straight Path IP Group, Inc. v. Sipnet EU S.R.O. (Fed. Cir. Nov. 25, 2015). In general, the decision comprises two key parts: 1) a fact-intensive claim construction analysis that turned on the fact that the claim language-at-issue had a plain meaning and the specification was deemed too limited to change that plain meaning; and 2) a warning that the Court will not hear new arguments on appeal.

Claim Construction Analysis: The crux of the claim construction dispute related to a claim limitation that requires “a query as to whether the second process is connected to computer network.”  (emphasis added). Patent Owner argued that the proper claim construction required a present-tense status. Id. at 6. Petitioner argued, and the Board agreed, that the proper claim construction “simply requires being registered with the server.” Id. As characterized by the Court: “what the Board meant was that, to come within the query claim language, all the query from the first unit need do is request whatever the connection server has listed about a second unit’s on-line status, even if the listed information is not accurate at the time of the query, i.e., even if it lists the second unit as online when, at the time, it is in fact not online.” Id. 

The Court’s reversal of the Board’s decision had two components. First, the Court found that the plain language of the claims undermined the Board’s determination. That plain language, “is connected to the computer network” was deemed to plainly seek a determination of whether the unit was connected at that timeId. at 7. As such, it was unreasonable for the Board to conclude that the subject query was satisfied, regardless of its current accuracy. Id. 

Second, the Court faulted the Board for failing to address that “facially clear meaning,” and instead turning immediately to the specification; which analysis of the specification was also incorrect. Id. at 8. The Court instructed that, when the claim language has a plain meaning, “the specification plays a more limited role than in the common situation where claim terms are uncertain in meaning in relevant respects.” Id. Thus, the Board’s analysis, that relied on a single passage from the patent to redefine the claim terms, was inaccurate given that there was no express or implicit redefinition of what “is connected” should mean. Id. at 9.

It is noteworthy that Judge Dyk filed a dissenting opinion, arguing that the majority erred in requiring absolute currency with regard to the real-time limitation of the challenged claims. Instead, Judge Dyk would have relied on the specification, as the Board did, because it is “always highly relevant to the claim construction analysis,” per Phillips. Dissent at 2.

New Argument on Appeal: The Court noted that the second challenge by Patent Owner to the Board’s decision rested on the Board’s failure to construe the term “process.” The Court refused to hear that challenge, though, finding that Patent Owner did not preserve the contention. Specifically, Patent Owner failed to request a construction for that term in its Patent Owner Preliminary Response, Patent Owner Response, or at the Oral Hearing. Failing to do so, the Board could not be found to have committed error in failing to construe the limitation.

Thus, this case is a rare win for a Patent Owner at the Federal Circuit, but more importantly more guidance from the Court on the ever-evolving IPR landscape.

PTAB Addresses Antecedent Basis Issues in IPR

34108250_sClaims that have terms lacking antecedent basis can present an opportunity for defendants in litigation, including creating a potential invalidity defense under 35 USC §112. It is interesting, therefore, to review the Board’s treatment of these issues in the context of an inter partes review, such as its decision to institute in Google Inc. v. At Home Bondholders’ Liquidating Trust, IPR2015-00662, involving US Patent No. 6,014,698.

In the Decision to Institute Trial, the Board dealt with two antecedent basis issues. In the first instance, the Board considered a claim limitation that required “said banner location signal,” where the claim from which it depended only referred to a “location signal.” Because a person of ordinary skill in the art would read the claim in view of the specification, and the language was similar, the Board concluded that the person of skill would understand “said banner location signal” to refer to the “location signal” of the parent claim.

A later claim in the patent presented a tougher issue for the Board, however. In that case, the dependent claim required that “said banner includes an advertisement.” The parent claims, however, did not recite a “banner” at all. Petitioner suggested that perhaps the claim contained a drafting flaw, and should have depended from a different claim altogether. Alternatively, Petitioner assumed that the “banner” limitation corresponded to the “second portion of information” recited in the parent claim.

The Board declined to adopt either interpretation of the claim, deciding instead that the claim was indefinite and not susceptible to interpretation. Regarding the theory that the claim contained a drafting error, the Board found no basis on which to interpret it to depend from a different claim. Regarding the alternative theory, the Board was not persuaded that a person of skill would have understood the “banner” to refer to the “second portion of information.” In contrast to the above example involving “location signal,” here the terms were substantially different and the Board was unwilling to assume that they corresponded.

Because the Board was unable to determine the scope of the claim, it denied the Petition relative to that claim.

PTAB Decision Illustrates Advantage of Defining Terms in Specification

38531686_sGiven the difficulty Patent Owners are having in surviving IPR proceedings, the discussion often turns to ways in which patents can be drafted to help survive an IPR Petition. In this regard, the recent decision in Aker Biomarine AS et al. v. Neptune Tech. et al., (IPR2014-00003), teaches that, in the right circumstances, a patent applicant may find it beneficial to include explicit definitions of claim limitations in its patent specification. In Aker Biomarine, at issue was Patent Owner’s use of the term “about” from the claims of the subject patent in conjunction with a value from the claims. Because the Patent Owner had defined the meaning of “about” in the specification, several of its claims survived the IPR proceeding.

More specifically, the patent explicitly defined the term “about” in the specification, as follows:

“As used herein and in the claims, where the term “about” is used with a numerical value, the numerical value may vary by at least ±50%. Preferably, the variation will be ±40% or ±30% and  more preferably ±20% or ±10%. Even more preferred variations are in the range ±5%, ±4%, ±3%  or ±2%. Most preferably, the variation is in the range of ±1%.” (emphasis added) Decision at 10.

Petitioner contended that “about” should be construed to modify an absolute value by an amount of “at least ±50%,” as set forth in the above-referenced definition. For example, if a claim contained the limitation, “about 5%,” in light of the definition contained in the specification, that allowed for a 50% variance, this limitation should be construed to mean a range of -45% to 55% – that is, subtracting 50% from 5% to find the lower end of the range and then adding 50% to 5% to find the upper end of the range.

Patent Owner argued that Petitioner’s proposed construction would be nonsensical to the ordinary artisan given the possibility of producing negative percentages, as in the example above. Instead, Patent Owner contended that the ordinary artisan would interpret phrases like “±50%” as seen in the definition to be determined from the numerical value used with the variation.  For example, 5% ±50% indicates a range of 2.5% to 7.5% (50% of 5% = a variation of 2.5% in each direction).  Id. at 11.

The Board agreed with Patent Owner regarding what value to which the 50% variance should be applied. For example, relative to claim 5 of the subject patent, that required a concentration of free fatty acids of about 5% w/w of the lipids in subject extract, the Board construed “about 5%” to mean a range of 2.5% to 7.5%. Because the prior art failed to disclose free fatty acids in this range, claim 5 was not shown to be unpatentable.

PTAB Declines to Limit Claim Based on Disclosure of Only One Embodiment

29673420_s (1)The effect of the Broadest Reasonable Interpretation claim construction standard in inter partes review proceedings, forcing a decision that may be different than what could have been expected in district court litigation, has proven tangible in several PTAB decisions. For example, in K-40 Electronics, LLC v. Escort, Inc., IPR2013-00240, the Board construed the challenged claims broadly, despite the fact that the specification only disclosed a single embodiment that may have otherwise dictated a more narrow claim construction. The decision involved US Pat. No. 6,670,905, directed to the combination of a radar detector and location positioning device.  Decision at 3.

Of interest in this proceeding was the Board’s construction of the claim terms “interface connector” and “communication circuitry.”  Patent Owner argued that the two terms should be construed to require a circuit supporting a wired, digital connection – the only embodiment disclosed in the ‘905 specification. More specifically, Patent Owner argued that the claim should be interpreted to exclude wireless interfaces. Id. at 8.

Indeed, the specification did only articulate specific, wired standards: “The interface connector used by the receiver may take other forms than the known USB standard. It may use any computer interface standard (e.g., IEEE 488), or an automotive wiring standard, the J1854, CAN, BH12 and LIN standards, or others.”

Although only specific embodiments of wired connections were discussed, the Board disagreed with Patent Owner and declined to narrow the construction of the limitations-at-issue, focusing on the italicized language above. Specifically, because the specification suggests that “other” connections were contemplated, wireless connections were covered by the claims. Id. at 8.  Further, the Board noted that it will not read additional limitations into a claim unless a special definition is set forth the specification of the patent.  Accordingly, with no special definition present, the Board declined to limit the claim based on the disclosure of only one embodiment in the ‘905 specification. Id. at 9.

Pyrrhic Victory: IPR Petition Denied Because Claims Indefinite

14253925_sPatent Owner won a Pyrrhic victory in Facebook v. TLI Communications, IPR2014-00566, wherein the Board denied the Petition, but for a reason that calls into question the future viability of the patent-in-suit. Namely, the Board found that it could not construe the means-plus-function claim limitation at issue and, as such, the claim is indefinite and not amenable to construction.

More specifically, the Board sought to construe “means for allocating classification information” from the patent-at-issue. Order at 7. Petitioner stated that the specification did not disclose any algorithm for performing the allocating function. Id. at 10. Of course, a lack of sufficient disclosure of structure, pursuant to 35 U.S.C. § 112, ¶ 6, renders a claim indefinite, and thus not amendable to construction. Id. 13. The Board quoted the Federal Circuit on this point: “If a claim is indefinite, the claim, by definition, cannot be construed.” Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1332 (Fed. Cir. 2010). Because the claims were not amenable to construction, the Board was unable to conclude that there is a reasonable likelihood that Petitioner would prevail in its challenge of claim and dependent claims therefrom, and Institution was denied. Paper 14 at 18.  As such, Patent Owner’s patent survives…for now.

Dissents and Concurrences Popping up in IPR Proceedings

974041_sThe PTAB has been remarkably consistent to date in its decisions regarding the variety of issues in inter partes review practice. Issues both simple and complex have typically been resolved by one panel and future panels, deciding the same type of issue, fall in line. Of late, however, we have begun to see some divergence in views among the various panels, both in terms of one panel disagreeing with an earlier panel, and even some disagreement within a single panel. This latter situation presented itself in two recent Final Written Decisions in Vibrant Media, Incorporated v. General Electric Company, IPR2013-00172 and Smith & Nephew, Inc. v. Convatec Technologies, Inc., IPR2013-00097.

Vibrant Media involved US Pat. No. 6,092,074 and, more particularly, claims 1-12 of that patent. All three members of the PTAB panel determined that claims 1-8 and 12 were unpatentable. A disagreement between those panel members arose, however, relative to claims 9-11. Claim 9 is directed to a computer system comprising multiple steps.  Claims 10 and 11 depend from Claim 9 and add further steps to the system. The three judges agreed that the claims recited both an apparatus and method steps, an improper combination pursuant to 35 USC § 112, ¶2. But, while the majority acknowledged that mixed system and method claims would not be in compliance with 35 USC § 112, ¶2 for infringement purposes, it did not believe such infirmity in the claims prevented it from reaching the patentability of those infirm claims. The alternative would have been to terminate the IPR as to those claims. Order at 9. The dissent criticized this decision, arguing that an obviousness analysis could not be performed on indefinite claims, as a comparison of the invention as a whole to the prior art would be impossible given the indefinite scope of the claims.  Id. at 51-52. The dissenting judge would have terminated the proceeding relative to claims 9-11, not ruling on their patentability.

Smith & Nephew, involving US Pat. No. 6,669,981, was notable for a disagreement regarding a claim construction, resulting in a concurring opinion from one of the PTAB panel members. The ‘981 patent pertains to methods of enhancing the photostability of silver in antimicrobial materials for use in wound dressings and other medical devices. Of particular interest in the proceeding was a concurrence-in-part, which disagreed with the majority’s interpretation of the claim term “photostable”.  The ‘981 specification defined the term “photostable” as a “controlled colour change to a desired color with a minimal change thereafter.”  Decision at 62.  At issue for in the concurrence was the definition of “desired color.”

The majority interpreted “desired color” to encompass any color which is desirable for any purpose, including aesthetic purposes. The concurrence thought this definition was too broad based on what was known in the art, and that “desired color” should reflect the technical viewpoint that color is a measure of photostability. Id. at 62. Specifically, the concurrence pointed to prior art which taught that purple was not a “desired colour” because the color purple was chemically indicative of the degradation of the antimicrobial properties of the wound dressing.  Accordingly, the concurrence believed that “desired colour” should not include purple, but rather be restricted to the art-recognized color of grayish-white.  Id. at 63. Further, the concurrence disagreed with the majority’s interpretation of “minimal” change (in color), believing (unlike the majority) that a change in color of the wound dressing from a desired color to and undesired color would not be a “minimal” change.  Id. at 64. But, despite the disagreement in claim construction, the concurrence ultimately agreed with the outcome of the analysis the majority reached on the merits.

Board Disagrees with Claim Construction of Prior Proceeding Before the PTO

22227585_sOne of the more disheartening trends to Patent Owners in inter partes review proceedings is the strong willingness of the PTAB to give little or no deference to prior Patent Office proceedings relative to the patent-at-issue. This creates considerable uncertainty relative to these important assets. This issue arose again in Toshiba Corp. v. Intellectual VenturesIPR2014-00317, US Patent No. 5,687,132, wherein the PTAB disagreed with a claim construction adopted in an earlier reexamination proceeding. The ‘132 patent relates to multiple-bank computer memories.

In the prior reexamination proceeding, the Examiner found that the claims at issue each included a requirement for a single memory, as opposed to two separate memories. Importantly, this feature was not found in the prior art and, thus, Patent Owner argued that the IPR Petition should be denied.

Pursuant to 35 U.S.C. § 325(d), in deciding whether to institute inter partes review, the “Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.”  Under this provision, the Board was within its authority to deny the Petition based on the Examiner’s reasoning in the reexam.  However, the Board opted not to take this route, as it disagreed with the Examiner’s claim construction.

At issue was the claim term “a memory.”  As mentioned, the Examiner found that “a memory” required there be a single memory, not two separate memories.  The Board, however, disagreed, noting that established precedent holds that articles “a” and “an” are construed to mean “one or more” absent clear intent to limit to “one.”  In the ‘132 patent, Patent Owner showed no clear intent to limit the scope of the claims to only one memory, and further explicitly stated that the invention is not limited to such an embodiment.  Therefore, the Board disagreed with the Examiner in the reexamination and construed “a memory” to mean “one or more memories.”

Because on this construction by the Board, Patent Owner’s arguments against anticipation failed and the Board granted the petition for inter partes review.

Failure to Identify Structure of Means-Plus-Function Limitation Results in Denial of Ground

Reference booksParties have tried different strategies in addressing claim construction in inter partes review petitions. Some have relied strictly on a generic “broadest reasonable interpretation” argument; others have followed a more traditional Phillips analysis – both strategies having achieved varying levels of success.  What is clear, however, is that when a challenged claim is in means-plus-function format, the IPR rules require that a Petitioner set forth the structure that corresponds to the recited function of the challenged claims.  Panel Claw, Inc. v. SunPower Corp., IPR2014-00388.

Among the limitations at issue in Panel Claw were “means for interengaging adjacent photovoltaic assemblies into an array of photovoltaic assemblies.” and “means for interlocking one said photovoltaic assembly to another said photovoltaic assembly.”  Of course, recitation of the term “means” in a claim limitation creates a rebuttable presumption that 35 U.S.C § 112, ¶ 6 governs construction of the claim. Further, when the presumption is that a limitation is a means-plus-function limitation, under 37 C.F.R. § 42.104(b)(3), Petitioner is required to identify the structure in the specification that corresponds to the recited function.

In Panel Claw, however, Petitioner argued first that the limitations which recited the term “means” were purely functional and therefore cover any suitable means for accomplishing the stated function. This argument contradicted a determination in a related lawsuit (SunPower Corp. v. Sunlink Corp., Case No. 08-Case IPR2014-00388 cv-2807 (N.D. Cal.)) which deemed the limitations at issue to be means-plus-function limitations. Further, Petitioner then failed to assert a back-up argument identifying any corresponding structure to the limitations-at-issue.

The Board found that limitations at issue were means-plus-function limitations, the constructions of which were governed by 35 U.S.C § 112, ¶ 6. By failing to identify corresponding structures, Petitioner violated 37 C.F.R. § 42.104(b)(3) and, as such, the challenged claims containing the means language were deemed patentable.