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.