The Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act was introduced on June 22, 2023, with the aim to reform the U.S. Patent Trial and Appeal Board (PTAB).  The PREVAIL Act serves as a supplement to the proposed STRONGER Patents Act, introduced in 2019.

The drafters have identified three key goals of the PREVAIL Act:[1]

  1. Restore fairness to the PTAB to promote innovation and competitiveness.
  2. Improve PTAB rules to protect inventors from costly, unnecessary litigation.
  3. Ensure UPSTO has resources it needs to administer a patent system that promotes innovation.

First, the PREVAIL Act aims to “restore fairness” by altering the requirements of challenges before the PTAB. Currently, there is no standing requirement under the IPR statute, allowing third parties to file requests for IPRs independent of infringement allegations.[2]  The drafters identify this as a potential loophole which may be exploited to force patent owners to defend against unlimited challenges. Therefore, the Act would explicitly require challengers to have been sued or threatened with a patent infringement lawsuit prior to filing a PTAB challenge. Additionally, the Act proposes establishing a rebuttable presumption against joinder for a time-barred party—i.e.,  a party that did not raise a PTAB challenge within one year of being sued for patent infringement is prohibited from joining a PTAB proceeding brought by another party.  The drafters have also identified multiple petitions as a source of increased cost to patent owners.  Accordingly, the Act has been drafted to require a party to raise all arguments in one challenge before the PTAB.  In practice, this proposed change may create an issue with respect to the length limitations of petitions.  Given the technical complexity of many patents, challengers require extensive explanations to present arguments sufficient for institution, and, therefore, multiple petitions can be useful.  Thus, if the proposed change is adopted, the USPTO may need to reconsider its current word limit.  With respect to the PTAB’s analysis of instituted challenges, the Act proposes changing the burden of proof for invalidity from a “preponderance of the evidence” standard to district courts’ “clear and convincing” standard.  Further, the drafters believe that PTAB proceedings require more transparency and, therefore, the Act requires the USPTO Director to issue separate written opinions when rehearing PTAB decisions and prohibits the Director from influencing PTAB panel decisions.  While it may be a stretch to presume the Director “meddl[es] in a PTAB panel’s decision” simply because there are no express rules preventing such, it may be beneficial to all patent owners and potential challengers to have the Director’s written opinions publicly available.[3] 

Second, the Act intends to prevent unnecessary litigation and the associated costs.  A majority of PTAB proceedings—at least 85% according to the Act—have co-pending proceedings in other forums (e.g., federal district court).  While the drafters believe that patent challengers “get several bites at the apple” (i.e., able to raise duplicative challenges in both forums), this is slightly misguided as a district court commonly stays the case pending a PTAB decision and any decided upon arguments (and sometimes unraised arguments) are estopped from being brought again before the district court.[4]  Granted, district courts are inconsistent as to the application of IPR estoppel, requiring the Federal Circuit to weigh in on a consistent basis.[5]  Moreover, estoppel of the challenger’s arguments does not inherently reduce the overall litigation costs.  Thus, the PREVAIL Act proposes requiring a party to explicitly choose between making the validity challenges before the PTAB or another forum.  Additionally, the Act requires a party that is already involved in a separate proceeding to expressly agree not to pursue their PTAB petition claims in the other forum.  To further limit litigation costs and prevent judicial inefficiency, the Act proposes that the PTAB is required to deny any petition or dismiss a proceeding if another forum has already upheld the validity of the patent at issue.  Also, the Act would require the PTAB to reject any proposed challenge or request to reexamine a patent when the underlying arguments have previously been considered by the USPTO.  To this point, it is unclear whether an examiner’s considerations during prosecution will be sufficient to trigger this automatic bar.

Lastly, the Act aims to rectify some of the Patent Office’s financial concerns and support small businesses.  The drafters have surmised that approximately $409.8 million in user fees have been diverted from the Patent Office.  Accordingly, the Bill proposes the elimination of fee diversion to other federal agencies and programs by establishing a new revolving fund in the U.S. Treasury to ensure the Patent Office has sufficient funding for timely and quality examination.  The Bill also hopes to address financial concerns at the other end of prosecution as small businesses may not always have the resources needed to successfully navigate the patent system.  The PREVAIL Act would require the Small Business Administration to draft two reports examining the impact of patents and abusive demand letters on small businesses.  Moreover, the Bill is drafted to expand access to patent-searching databases currently available only in-person at public search facilities.

In sum, the PREVAIL Act proposes numerous changes that may increase the efficiency of PTAB proceedings while remedying financial concerns for both the USTPO and patent owners.  However, it may be necessary to rein in some of the requirements that potentially alter the functionality of raising a challenge before the PTAB.  If patent challengers are restricted to the point where an action before the PTAB becomes less desirable than an invalidity challenge in another forum, then the overall purpose of the PTAB is lost.

Patent owners and challengers should not hold their breath waiting for the Act to come into effect nor should they proceed differently in anticipation of the proposed changes to the PTAB process.  The STRONGER Patents Act (which the PREVAIL Act intends to supplement) has remained dormant since its introduction as a bill in July 2019.[6]  Comparably, the text of the Prevail Act has yet to be submitted to the Library of Congress;[7] thus, the Act is in its infancy and will likely grow into a different form should it become law. 

[1] Prevail Act Fact Sheet, https://www.coons.senate.gov/download/prevail-act-fact-sheet

[2] See 35 U.S.C. § 311.

[3] Prevail Act Fact Sheet.

[4] Id.

[5] See, e.g., Ironburg Inventions Ltd. v. Valve Corp., 64 F.4th 1274 (Fed. Cir. 2023).

[6] See Stronger Patents Act of 2019, S. 2082, 116th Cong. § 1 (2019). https://www.congress.gov/bill/116th-congress/senate-bill/2082/text (as of 7/10/2023)

[7] A bill to amend title 35, United States Code, to address matters relating to patent subject matter eligibility, and for other purposes, S.2140 , 118th Cong. (2023). https://www.congress.gov/bill/118th-congress/senate-bill/2140/actions?s=3&r=1&q=%7B%22search%22%3A%5B%22Coons%22%5D%7D (as of 7/10/2023)

The food tech industry has grown rapidly in the last ten years due to innovations in the alternative animal product space and a growing customer desire for more sustainable options.[1] With this rapid growth and an increasing number of entrants to the field comes an increased likelihood of intellectual property clashes. In this article, we will discuss the IPR petitions that Motif FoodWorks Inc. (“Motif”) filed against competitor Impossible Foods Inc.’s (“Impossible Foods”) patents and the PTAB’s recent decision to institute inter partes review (IPR) for U.S. Patent No. 9,943,096 B2.

Background

Impossible Foods is one of the early entrants to the food tech industry and has a large global patent portfolio. The heart of Impossible Food’s portfolio are hemeproteins.[2] Motif is a Massachusetts-based start-up that recently launched an alt-meat burger using an ingredient named HEMAMI—a hemeprotein that is identical to bovine myoglobin.[3] Both companies use “precision fermentation,” a process that uses a genetically engineered microbe such as yeast, fungi, bacteria or algae to produce more sustainable ingredients.

Before Motif filed its IPR petitions, Impossible Foods filed the first U.S. patent infringement lawsuit in the food tech industry against Motif, in March 2022.[4] Impossible Foods initially accused Motif of infringing U.S. Patent No. 10,863,761 (“the ’761 patent”), covering a beef-replica product containing hemoproteins.[5]

In July 2022, Impossible Foods filed a First Amended Complaint, which added allegations that Motif infringed four additional Impossible Foods patents: U.S. Patent No. 9,943,096 (“the ’096 patent”); U.S. Patent No. 10,039,306 (“the ’306 patent”); U.S. Patent No. 11,013,250 (“the ’250 patent”); and U.S. Patent No. 11,224,241 (“the ’241 patent”).[6] In September 2022, Impossible Foods filed a Second Amended Complaint, which added allegations that Motif infringed two more patents: U.S. Patent No. 10,273,492 (“the ’492 patent”) and U.S. Patent No. 10,689,656 (“the ’656 patent”).[7]  

The IPR Petitions

After Impossible Foods filed its complaint in district court, Motif filed a petition for IPR with the PTAB on April 20, 2022, challenging the ’761 patent named in Impossible Foods’ First Complaint. That petition (IPR2022-00887) was not instituted.[8]

Subsequently, after Impossible Foods filed its First and Second Amended Complaints in the district court case, Motif filed several additional petitions for IPR with the PTAB. The new IPR petitions challenge six additional Impossible Foods’ hemeprotein patents.

In December 2022, Motif filed four IPR petitions against Impossible Foods’ patents related to meat alternative products containing hemeprotein, sugars, and sulfur compounds and methods for its use.[9] The challenged patents are the ’096 patent; the ’306 patent; the ’250 patent; and the ’241 patent. Motif argued that these patents should be revoked.[10] Furthermore, Motif argued that this concept cannot be patented in light of prior art because these components have been known to be associated with the taste and smell of meat in the food industry and have been used to simulate meat flavors in meat alternative products by food scientists and flavor chemists before Impossible Foods.[11] In April, Impossible Foods submitted a request to correct the priority claims of the ’096, ’241, ’250, and ’306 patents, claiming that these challenged patents claim the filing date of U.S. Provisional Application 61/671,069 (“the ’069 provisional”), International Application PCT/US2012/046560 (“Brown,” one of Motif’s listed prior art against several of the challenged patents), and U.S. Provisional Application 61/572,205 (“the ’205 provisional”).[12]  The corrected priority, if granted would have affected review of the ’096 and ’241 patents because Motif has argued that the subject matter of certain challenged claims of those patents were disclosed by Brown.[13] After reviewing Motif’s petition, Impossible Foods’ response, exhibits submitted by both sides, and Impossible Foods’s request to correct priority claims, the PTAB concluded that “Petitioner has not shown a reasonable likelihood that it will prevail in showing that at least one of the challenged claims is unpatentable…”[14] for three of the four IPR petitions that Motif filed. However, on June 16, 2023, the PTAB issued its decision “that Petitioner has demonstrated a reasonable likelihood of prevailing with respect to at least one challenged claim of the ’096 patent,” and instituted an IPR to examine the ’096 patent.[15]  

The ’096 patent is titled “Methods and Compositions for Affecting the Flavour and Aroma Profile of Consumables.” Regarding the priority dispute, the PTAB concluded that “[f]or purposes of this Decision on Institution, we determine that Petitioner presents sufficient evidence indicating the ’816 Provisional’s disclosure lacks written description support for the full scope of the challenged claims of the ’096 patent…. Accordingly, for purposes of this Decision, the earliest effective filing date that the ’096 patent claims are entitled to claim is …July 12, 2013.”[16] This decision means that Brown will be viewed as prior art against the ’096 patent during the IPR proceedings. Regarding claim construction, the PTAB pointed to “food flavor additive composition” as a term that will be construed during the course of the IPR proceedings.[17] Finally, the PTAB concluded that Motif has established a reasonable likelihood of prevailing on some of its asserted grounds, which is sufficient to institute review of “all challenged claims and on all grounds presented” under SAS Inst. Inc. v. Iancu.[18]

Takeaways

The PTAB’s recent decision show that the ongoing fight between Motif and Impossible Foods is just getting started and that the food tech industry should pay close attention to PTAB decisions as companies in this space continue to develop their patent portfolio.

Furthermore, the ’096 patent may not be the only Impossible Foods patent to be reviewed by the PTAB. In January 2023, Motif filed two more IPR petitions against Impossible Foods’ patents related to its plant-based alt-meat products.[19] The patents at issue in these petitions are the ’492 patent and the ’656 patent, which relate to genetically modified yeast cells.[20] The PTAB’s decision regarding institution of IPR proceedings for the ’492 patent and the ’656 patent are currently pending. We will continue to monitor developments in the Motif-Impossible Foods IPR proceedings and provide insight and updates as they become available.

[1] See e.g. Good Food Institute, https://gfi.org/blog/2023-outlook-the-state-of-the-plant-based-meat-category/ (last visited May 9, 2023). See also, a previous article we wrote profiling some companies operating in this space.

[2] See, e.g., U.S. Patent No. 10,172,381 (filed Oct. 18, 2017) and U.S. Patent No. 10,273,492 (filed Aug. 16, 2017).

[3] See, e.g. Motif, https://madewithmotif.com/2021/12/08/motif-foodworks-announces-the-commercial-launch-of-hemami-food-tech-earns-generally-recognized-as-safe-gras-status-from-fda/ (last visiting May 9, 2023).

[4] Complaint at 7-11, Impossible Foods Inc. v. Motif FodWorks Inc., No. 1-22-cv-00311 (D. Del. Mar. 9, 2022), ECF No. 1. See also a previous article we wrote covering that litigation.

[5] See Answer at 6, Impossible Foods Inc. v. Motif FoodWorks Inc., No. 1-22-cv-00311 (D. Del. Mar. 9, 2022), ECF No. 10.

[6] First Amended Complaint, Impossible Foods Inc. v. Motif FoodWorks Inc., No. 1-22-cv-00311 (D. Del. Mar. 9, 2022), ECF No. 19.

[7] Second Amended Complaint, Impossible Foods Inc. v. Motif FoodWorks Inc., No. 1-22-cv-00311 (D. Del. Mar. 9, 2022), ECF No. 22.

[8] See Institution Decision, Motif FoodWorks Inc. v. Impossible Foods Inc., IPR2022-00887 (PTAB Apr. 20, 2022).

[9] U.S. Patent No. 9,943,096 (filed Apr. 17, 2018); U.S. Patent No. 10,039,306 (filed Jul. 10, 2015); U.S. Patent No. 11,013,250 (filed Jan. 3, 2019); and U.S. Patent No. 11,224,241 (“the ’241 patent”)

[10] See IPR2023-00206, IPR2023-00209, IPR2023-00208, and IPR2023-00207

[11] See, e.g. Amended Petition, Motif FoodWorks Inc. v. Impossible Foods Inc., IPR2022-00887 at 1-3 (PTAB Dec. 7, 2022).

[12] Patent Owner’s Motion Pursuant to 37 C.F.R. §1.323, Motif FoodWorks Inc. v. Impossible Foods Inc., IPR2023-00206, 2-3 (PTAB Apr. 13, 2023).

[13] See, e.g Patent Owner’s Motion Pursuant to Board Order, Motif FoodWorks Inc. v. Impossible Foods Inc., IPR2023-00206, 3-11 (PTAB Jun. 1, 2023).

[14] See, e.g. Institution Decision, Motif FoodWorks Inc. v. Impossible Foods Inc., IPR2023-00209 at 23 (PTAB Dec. 7, 2022).

[15] See, e.g. Institution Decision, Motif FoodWorks Inc. v. Impossible Foods Inc., IPR2023-00209 at 39 (PTAB Dec. 7, 2022).

[16] Id. at 11-12.

[17] Id. at 15.

[18] See SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348, 1351 (2018) (“When the Patent Office institutes an inter partes review, it must decide the patentability of all of the claims the petitioner has challenged.”)

[19] See IPR2023-00321, IPR2023-00322, and IPR2023-00206

[20] See U.S. Patent No. 10,273,492 (filed Aug. 16, 2017) and U.S. Patent No. 10,689,656 (filed Nov. 10, 2017).

In Intel Corporation v. Pact XPP Schweiz AG, the Court of Appeals for the Federal Circuit (“Federal Circuit”) reversed and remanded the decision of the Patent Trial and Appeal Board (“Board”). In the decision, the Federal Circuit rejected the Board’s rigid application of the “motivation-to-combine” analysis that required an element from one reference must provide an improvement to another reference to justify the combination. Instead, the Federal Circuit held that the “motivation-to-combine” analysis simply required showing that a proposed combination would help resolve an issue and be within the capabilities of a person of ordinary skill in the art (“POSITA”).

Background

Intel Corporation (“Intel”) petitioned for inter partes review (IPR) of claims 4 and 5 of U.S. Patent No. 9, 250, 908 (“the ’908 patent”) held by Pact XPP Schweiz AG (“PACT”).  Claim 4 of the ’908 patent taught a multiprocessor system that used a separated cache and interconnect system that interconnected each of the separated cache segments with each of the processors, each of the processors with neighboring processors, and each of the separated cache segments with neighboring separated cache segments.

Intel argued that it would have been obvious to a POSITA to combine two prior art references (“Kabemoto”) and (“Bauman”) to teach all the limitations of claim 4 under a “known-technique” rational. In particular, Intel reasoned that a POSITA “would have naturally turned to Bauman’s segmented cache to use … in Kabemoto: since Bauman’s separated cache was known to address the same cache-coherence issue that Kabemoto also sought to address.”

PACT did not dispute that the combined references disclosed all the limitations of the ’908 patent, but instead argued that Intel had failed to show that a POSITA would have been motivated to combine the references.

The Board concurred: “If … Kabemoto already addresses [the] problem through the use of a known technique similar to that of Bauman’s, [it] fail[ed] to see why one of ordinary skill in the art would regard Bauman’s technique as an obvious improvement to Kabemoto.”

Thus, the Board, in its final written decision, agreed with PACT that Intel had failed to show a proper motivation to combine the prior art.

Discussion

On appeal, Intel argued the Board’s determination that there was no motivation to combine the teachings of Kabemoto and Bauman to reach the limitations of claim 4 lacked substantial evidence; the Federal Circuit agreed holding that the Board had misapplied the standard.

Under the “known-technique” rational, “if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.” Accordingly, the Federal Circuit held that a proposed combination does not have to be the best option but can merely be a suitable option in order to satisfy a “motivation-to-combine” analysis.

Thus, Intel never had to show that replacing Kabemoto’s secondary cache with Bauman’s secondary cache constituted an improvement. Rather, it was sufficient for Intel to show that there was a known problem of cache coherency in the art, Bauman’s secondary cache helped address the issue, and combining the teachings of Kabemoto and Bauman was not beyond the capabilities of a POSITA. Accordingly, the Federal Circuit reversed the Board’s factual findings and remanded to the Board to address any remaining dispute about the patentability of claim 5.

Key Takeaways

A “motivation-to-combine” analysis does not require showing the combination constitutes an “improvement.” All that is required to be shown is that the combination could help address an issue and is within the scope of a person of ordinary skill in the art.

It seems as if Netflix and Hulu are continuously pumping out new content in their endless battle to win over more monthly subscribers.  However, when a third-party asserts patents covering streaming technology against both streaming giants, the competitors find themselves on the same side of the line.

Such was the case in an inter partes review (IPR) filed by both Netflix and Hulu petitioning U.S. Patent No. 10,225,588 (“the ’588 Patent”), assigned to DivX.  The streaming companies claimed that the ’588 Patent was unpatentable due to obviousness.  Specifically, the petitioners argued that a “relevant artisan” would have combined three prior art patents to address the “piracy concerns, improve the efficiency of adaptive streaming, optimize the balance between bitrate and bandwidth, and improve the end-user experience with fast startup and seek,” as required by the claim limitations in the ’588 Patent. But the Board disagreed—ruling that the petitioners failed to prove the patent obvious because they did not show that an artisan would have had a “reasonable expectation of success” in combining the proposed prior art to arrive at the same system claimed in the ’588 Patent.[1]

Netflix and Hulu appealed the PTAB’s decision to the Federal Circuit, and the Court agreed that the PTAB “committed a fundamental legal error in defining the combination it was evaluating.”  Specifically, the Court found that PTAB committed two errors: (1) failure to adhere to the principle that the petitioner’s contentions “define the scope of the litigation all the way from institution through to conclusion” and (2) the prior art reference must consider everything that it teaches and is not limited to the claimed invention.  Therefore, the Court found that the “Board’s redefinition…was a fundamental legal error.”  In finding the error not harmless, the Federal Circuit remanded the case back to the PTAB for review.[2]

This case is a single example of the less public ongoing battle streaming giants like Netflix and Hulu fight on a routine basis.  While there are standard essential patents (SEPs) vital to the compatibility of streaming technologies and devices that streaming providers license, there are third-parties who believe their streaming technology patents are being infringed behind-the-scenes.

[1] Netflix, Inc. v. DivX, LLC, IPR2022-1083 (PTAB Sept. 23, 2021)

[2] Netflix, Inc. v. DivX, LLC, No. 2022-1083, 2023 WL 2298768 (Fed. Cir. Mar. 1, 2023)

Federal Circuit Rule 36 has been criticized for leaving IP practitioners in the dark as it allows for the court to enter judgment of affirmance without the reasoned analysis of the Court. Generally, the Rule allows for a judgement of affirmance without opinion if one of the enumerated conditions is met and the opinion would not have precedential value. The enumerated conditions are:

(1) the judgment, decision, or order of the trial court appealed from is based on findings that are not clearly erroneous;

(2) the evidence supporting the jury’s verdict is sufficient;

(3) the record supports summary judgment, directed verdict, or judgment on the pleadings.[1]

On April 10, 2023, the Federal Circuit issued three Rule 36 judgments that summarily affirmed the final written decisions by the PTAB for One World Technologies, Inc. v. Chervon (HK) Ltd., Longhorn HD v. Unified Patents, and Uniloc 2017 v. Google.  As perceptible from the summaries below, the Federal Circuit has utilized Rule 36 judgments to affirm PTAB decisions involving a wide range of challenges, arguments, and findings.

One World Technologies, Inc. v. Chervon (HK) Ltd.[2]

The Federal Circuit summarily affirmed four inter partes review (IPR) final written decisions in One World Technologies. The four IPR petitions instituted by the PTAB pertained to gardening tool patent claims. In the IPR proceedings, the PTAB dismissed the petitioner’s challenges based on anticipation and obviousness arguments. The petitioner also presented constitutionality arguments, but the PTAB dismissed said arguments as resolved by the Supreme Court’s decision in United States v. Arthrex (2021).

Longhorn HD LLC v. Unified Patents LLC[3]

In Longhorn HD, the Federal Circuit summarily affirmed the PTAB’s determination of obviousness in view of prior art. The Patent Owner challenged the priority date of the asserted prior art, arguing that the provisional applications from which the prior art claimed priority date failed to meet the requirements of 35 U.S.C. § 119(e)(1) as set out by the Federal Circuit in Dynamic Drinkware v. National Graphics (2015). Under Dynamic Drinkware, the specification of a provisional application must “contain a written description of the invention…in such full, clear, concise, and exact terms” to enable practice of the invention in the non-provisional. The PTAB found the provisional applications to adequately disclose the claimed system and thus dismissed the Patent Owner’s arguments.

Uniloc 2017 LLC  v. Google LLC[4]

In Uniloc 2017, the PTAB invalidated several claims due to a determination of obviousness in view of the combination of two prior arts. The Patent Owner argued that the combination failed to meet the key limitation of their claims, but the PTAB found that the specification and prosecution history of the claims-at-issue were not limited to the Patent Owner’s argument. Therefore, the PTAB found that the combination of the prior art met the limitations.

Summary

Exemplified in the cases above, the Federal Circuit has employed Rule 36 judgments to summarily affirm PTAB proceedings across the board. Although Rule 36 judgments are nonprecedential in nature, IP practitioners are left without an answer or guidance to the appellant’s legal question or other issues raised. While the Court may justifiably feel overburdened by its case load, Rule 36 can create more questions than answers. These questions may lead to more appeals down the line; thus, Rule 36 may not be lightening the load as intended.

As one potential change, the “enumerated conditions” of Rule 36 could be further defined, limiting its application to legal issues the Court has previously analyzed in detail and including said opinions as a list of reference material. Alternatively, a Rule 36 judgment could be accompanied by a simple summary of the Court’s notes and comments regarding the PTAB decision (i.e., a Court redline), which may provide the necessary insight to the reasoning for affirmance.

[1] Rule 36(a) Judgment of Affirmance Without Opinion.

[2] One World Technologies, Inc. v. Chervon (HK) Ltd., No. 2022-1329, 2023 WL 2847519 (Fed. Cir. Apr. 10, 2023) affirming IPR2020-00884, IPR2020-00886, IPR2020-00887, IPR2020-00888

[3] Longhorn HD LLC v. Unified Pats., LLC, No. 2022-1361, 2023 WL 2847506 (Fed. Cir. Apr. 10, 2023) affirming IPR2020-00879

[4] Uniloc 2017 LLC v. Google LLC, No. 2022-1245, 2023 WL 2847507 (Fed. Cir. Apr. 10, 2023) affirming IPR2020-00755

In a precedential opinion issued last month, the Court of Appeals for the Federal Circuit (“Federal Circuit”) held that when the single issue presented on appeal is whether a prior art reference teaches a particular claim element, that is a factual question that the Federal Circuit reviews for substantial evidence. Addressing only this issue in its decision, the Federal Circuit implicitly held that there is no requirement that it also review the ultimate legal question of obviousness. Judge Newman dissented, disagreeing with the majority’s decision.

In Roku, Inc. v. Universal Elecs, Inc., No. 22-1058 (Fed. Cir. Mar. 31, 2023), the Federal Circuit affirmed the Patent Trial and Appeal Board’s (“PTAB”) final written decision that Roku failed to demonstrate that the challenged claims of U.S. Patent No. 9,716,853 would have been obvious.

In its appellant brief, Roku asserted that the issue before the Federal Circuit was “[w]hether the Board’s finding that [the prior art] fails to render obvious the claimed ‘listing comprised of at least two different communication methods’ lacks substantial evidence, where it is undisputed that (i) [the prior art’s] remote-control system creates protocol-specific listings of CEC command codes and IR command codes for each detected device; (ii) CEC and IR were well-known communication protocols; and (iii) a communication protocol is a ‘communication method’ within the meaning of the claims.” Dkt. 12 at 4.

In its decision, the court explained that the appeal turned on a single question – “whether a person of ordinary skill in the art would have understood the prior art’s disclosure of a listing of remote command codes formatted for transmission via two different communication methods to be listing comprised of at least a first communication method and a second communication method different thank the first communication method.” Dkt. 40 at 2. Because the question involved the scope and content of the prior art, the court held that it is a purely factual question that the court reviews for substantial evidence. Id. The court viewed the question “as a Graham factor underlying obviousness- not as a question of the ultimate conclusion of obviousness” so de novo review was not required. Id. at 11 n.1.

The court noted that the factual dispute in this case was “highly contested and closely decided” and that the PTAB was entitled to weigh the evidence in making its ruling. The court emphasized that as an appellate court, its role is not to step into the PTAB’s place and issue new findings. Rather, its role requires the court to review the PTAB’s findings and determine whether substantial evidence supports those findings. The court noted that while it could have decided this issue differently than the PTAB, “it is not the province of this court to do so.” Id. at 12-13.

In her dissent, Judge Newman disagreed with the majority’s reading of the issue before the court on appeal. Judge Newman disagreed with the majority’s approach to only review the PTAB’s specific fact-finding and not the ultimate legal question of obviousness. The majority perceived Judge Newman’s dissent as suggesting that the Federal Circuit should apply de novo review to the question of whether the prior art teaches a particular claim element. Id. at 11 n.1. However, Judge Newman clarified that she does not assert that de novo review should apply to this factual issue, but rather that the actual question on appeal is the legal issue of obviousness for which the court should apply de novo review. Judge Newman’s concern with the majority’s implicit holding is that “if the underlying findings of fact are supported by substantial evidence, then [the court] do[es] not review the ultimate legal question of non-obviousness.” Dkt. 40 at 15. In Judge Newman’s view, de novo review was appropriate for the questions of law presented during the appeal along with review of any underlying facts to determine whether they are supported by substantial evidence. Based on her analysis, Judge Newman concluded that the claims would have been obvious in view of the prior art.

This decision could present potential ramifications for both patentees and petitioners in the future. This decision opened the door to the Federal Circuit giving considerable deference to the PTAB’s obviousness holdings. While underlying factual questions in the obviousness analysis are entitled to some deference, the ultimate conclusion of obviousness is not.  As Judge Newman noted, by not reviewing the PTAB’s obviousness conclusion, the Federal Circuit suggests that if substantial evidence supports the underlying factual findings then it need not review the ultimate conclusion unless the legal basis for that conclusion is a separate issue on appeal.

Given the uncertainty following this decision, a party appealing a PTAB decision should carefully consider what issues it wants the Federal Circuit to review and be aware of what standard of review will be applied. Parties should also be mindful of how those questions are presented to the court during briefing.

In Intel Corp. v. PACT XPP Schweiz AG, the Federal Circuit held that establishing a motivation to combine prior art for KSR analysis based on the “known-technique” rationale does not require showing that the “known-technique” is an improvement. The Court held that it only requires showing that the “known-technique” is a “suitable option.”

PACT XPP Schweiz AG (“PACT”) owns U.S. Patent No. 9,250,908 (“the ’908 patent”). Intel Corp. (“Intel”) petitioned for inter partes review (IPR) of claims 4 and 5 of the ’908 patent, alleging that claims 4 and 5 would have been obvious over the combination of U.S. Patent No. 5,890,217 (“Kabemoto”) and U.S. Patent No. 5,680,571 (“Bauman”). The Patent Trial and Appeal Board (PTAB) at the United States Patent and Trademark Office (USPTO) disagreed and concluded that “Intel failed to show that a person of ordinary skill in the art would have been motivated to combine the teachings of Kabemoto and Bauman.” Intel appealed the PTAB’s decision.

In the IPR, Intel argued that a person of ordinary skill in the art would have been motivated to combine Kabemoto and Bauman because they “related to the same field …” and “address the same problem.” The PTAB rejected Intel’s argument and concluded that “[i]f . . . Kabemoto already addresses [the] problem [of cache coherency] through the use of a known technique similar to that of Bauman’s, [it] fail[ed] to see why one of ordinary skill in the art would regard Bauman’s technique as an obvious improvement to Kabemoto.”

The Court disagreed with the PTAB. The Court held that “[t]hat Kabemoto and Bauman address the same problem and that Bauman’s cache was a known way to address that problem is precisely the reason that there’s a motivation to combine under KSR and our precedent.” The Court explained that “…Intel never had to show that replacing Kabemoto’s secondary cache with Bauman’s secondary cache was an ‘improvement’ in a categorical sense. … Intel just had to show that Bauman’s secondary cache was a ‘suitable option’ to replace Kabemoto’s secondary cache.”

This case suggests that a motivation to combine references may exist if a known technique in one reference for solving one problem can be substituted with another technique in another reference for solving the same problem even if such substitution does not yield an improvement.

The USPTO recently designated CommScope Techs. LLC. v. Dali Wireless, Inc.[1] and Nested Bean, Inc. v. Big Beings Pty Ltd.[2] as precedential PTAB decisions. Both decisions were before the Director of the USPTO, Katherine Vidal. A full list of precedential decisions may be found on the USPTO website.

CommScope Techs. LLC. v. Dali Wireless, Inc. IPR2022-01242, Paper 23 (February 27, 2023)

In CommScope Techs. LLC. v. Dali Wireless, Inc., Director Vidal clarified the analysis the Patent Trial and Appeal Board (“Board”) must undertake when declining to institute an inter partes review (“IPR”) when there is parallel district court litigation.  The Board must first address the Fintiv factors 1-5 before assessing the compelling merits.[3] That is, when the Board’s analysis of the Fintiv factors 1-5 favor denying the IPR, the Board shall then address the compelling merits.

Here, Director Vidal found the Board’s Decision flawed for two reasons. First, the Board failed to address the Fintiv factors before analyzing the compelling merits. Second, the Board “did not provide sufficient reasoning to support its conclusion that the merits are compelling.”[4] Instead, the Board merely pointed to a lower standard under 35 U.S.C. § 314 of whether there was a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition. This was insufficient to meet the compelling merits test which “seeks to strike a balance among the competing concerns of avoiding potentially conflicting outcomes, avoiding wasteful parallel proceedings, protecting against patent owner harassment, and strengthening the patent system by allowing the review of patents challenged with a sufficiently strong initial merits showing of unpatentability.”[5]      .

Takeaway: When there is parallel litigation, the Board must address the Fintiv factors and the proper compelling merits test before denying IPR institution.

Nested Bean, Inc. v. Big Beings Pty Ltd., Case IPR2020-01234, Paper 42 (February 24, 2023)

Director Vidal, in Nested Bean, Inc. v. Big Beings Pty Ltd., addressed the patentability of multiple dependent claims when only one of the parent claims is unpatentable. Here, the Board granted institution of IPR with respect to claims 1-18 of U.S. Patent No. 9,179,711. Claims 3-16 were dependent on either claim 1 or 2. In its final written decision, the Board held that claims 2-16 were unpatentable while the Petitioner did not establish by a preponderance of the evidence that claims 1, 17, and 18 were unpatentable.

Ultimately, Director Vidal determined the Board erred in finding that dependent claims 3-16 were unpatentable with respect to claim 1.  The language of the fifth paragraph of 35 U.S.C. § 112, 35 U.S.C. § 282, and 37 C.F.R. § 1.75(c), “supports reading the statute to require separate consideration of the patentability of alternative dependencies of a multiple dependent claim.”[6] This was an issue of first impression allowing the USPTO Director to interpret section 112, fifth paragraph in this manner.

Takeaway: Multiple dependent claims must be analyzed in view of each parent claim independently.

[1] PR2022-01242, Paper 23 (February 27, 2023).

[2] Case IPR2020-01234, Paper 42 (February 24, 2023).

[3]The Fintiv factors being: 1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted; 2. proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision; 3. investment in the parallel proceeding by the court and the parties; 4. overlap between issues raised in the petition and in the parallel proceeding; 5. whether the petitioner and the defendant in the parallel proceeding are the same party; and 6. other circumstances that impact the Board’s exercise of discretion, including the merits. See Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation.

[4] CommScope Techs. LLC. v. Dali Wireless, Inc. IPR2022-01242, Paper 23 (February 27, 2023) at 5.

[5] Id. at 4.

[6] Nested Bean, Inc. v. Big Beings Pty Ltd., Case IPR2020-01234, Paper 42 (February 24, 2023) at page 18.

In Dionex Softron GMBH vs. Agilent Technologies, Inc., the Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed the Patent Trial and Appeal Board’s (“Board”) decision in an interference proceeding to award priority to Agilent Technologies, Inc. (“Agilent”) over Dionex Softron GmbH (“Dionex”).  In particular, the Federal Circuit affirmed the Board’s application of the “rule of reason” for determining whether there was sufficient corroborating evidence to support an inventor’s testimony regarding the pertinent date of invention.

Background

An interference proceeding is a contest conducted by the Board to determine which party has priority as the first to invent under pre-AIA 35 U.S.C. 135(a).  An inference proceeding exists if the subject matter of a claim of an application is anticipated or rendered obvious in view of the subject matter of a claim of an opposing party’s patent or application. When an interference is declared, there is a description of the interfering subject matter, called a “count’.” Every count must have at least one corresponding claim for each party.

 In order to demonstrate priority as the first inventor to invent, a party must demonstrate both conception and reduction to practice of the claimed invention before the other party. Additionally, “an inventor’s testimony must be corroborated by independent evidence.” Cooper v. Goldfarb, 154 F.3d 1321, 1327 (Fed. Cir. 1998). “However, a ‘rule of reason’ analysis is applied to determine whether an inventor’s testimony regarding reduction to practice has been sufficiently corroborated.” Id. “Sufficient corroboration” does not require “corroboration for every factual evidence contested by the parties” but whether “the evidence as a whole is persuasive.” Id.

An interference proceeding was launched between Agilent and Dionex when Dionex copied Agilent’s amended claims. In the proceeding, Agilent and Dionex separately moved for judgment on the basis of priority due to their respective alleged dates of conception and reduction to practice.  As the later filing party (junior party), Agilent was required to prove priority by a preponderance of the evidence. The Board granted Agilent’s motion and denied Dionex’s motion, finding that Agilent proved conception as of May 1, 2007 and actual reduction to practice as of June 1, 2007- well before Dionex’s earliest alleged conception date of December 4, 2007.

Discussion

On appeal Dionex argued that there was a lack of sufficient evidence to support the Board’s finding of corroboration. Specifically, Dionex argued the corroborating testimony of one of Aglient’s witnesses (“Bäuerle”) was not independent because Bäuerle lacked knowledge regarding features of the invention, such as his failure to demonstrate knowledge of the prototype’s hydraulic configuration and the purpose of “grooves” within the prototype. The Federal Circuit rejected Dionex’s arguments by arguing that Bäuerle was not required to know every detail under the rule of reason.

 Further, the Federal Circuit rejected Dionex’s argument that a document failed to corroborate the co-inventor’s testimony when the document was modified after the purported date of reduction to practice because substantial evidence, including Bäuerle’s testimony, corroborated that the document depicted a prototype meeting the requirements of the claim at the pertinent date.

Lastly, the Federal Circuit rejected Dionex’s argument that a negative interference must be drawn against Agilent due to the failure of one of the co-inventors to testify or lack of corroborating documents that Dionex argued were required to be produced under industry norms.  In particular, the Federal Circuit found that the Board did not abuse its discretion in deciding to not draw a negative inference for the failure to call the co-inventor as a witness when Agilent represented that the testimony would have been cumulative of the other co-inventor’s testimony. Additionally, the Federal Circuit found that the Board was well within its discretion to reject Dionex’s assertion that “industry norms” would have caused Agilent to create documents other than those produced in the interference.

Thus, under the Federal Circuit’s flexible application of the “rule of reason”, the Board has broad discretion to determine whether independent evidence is sufficient to support a priority date during interference proceedings.

As the capabilities of Artificial Intelligence (AI) develop[1], the United States Patent and Trademark Office (USPTO) continues to grapple with a key question: Can an AI be an inventor?

On February 14, 2023, the USPTO posted a notice on Regulations.gov titled “Request for Comments: Artificial Intelligence and Inventorship[2].” This notice, however, is not the USPTO’s first attempt to understand AI’s ever expanding role in innovation.  The USPTO previously requested public comments on AI inventions in 2019, which it responded to in a publication titled “Public Views on Artificial Intelligence and Intellectual Property Policy[3].” Additionally, the USPTO held an AI/ET Partnership meeting in June of 2022 which included a panel discussion titled “Inventorship and the Advent of Machine Generated Inventions.”

Below is a sample of the questions posed to the public. Comments will be accepted until May 15, 2023.

  • How is AI, including machine learning, currently being used in the invention creation process?
  • How does the use of an AI system in the invention creation process differ from the use of other technical tools?
  • If an AI system contributes to an invention at the same level as a human who would be considered a joint inventor, is the invention patentable under current patent laws?
  • What statutory changes, if any, should be considered as to U.S. inventorship law, and what consequences do you foresee for those statutory changes?
  • Are there any laws or practices in other countries that effectively address inventorship for inventions with significant contributions from AI systems?

The notice also indicates the “Journal of the Patent and Trademark Office Society” is planning on publishing an issue focused on inventorship and AI-enabled innovation. The USPTO is encouraging scholars from a variety of subject matters, including computer science, law, and economics, to submit to the publication. Submissions are due directly to the journal at editor@jptos.org by July 1, 2023.

[1]ChatGPT is an AI chatbot phenomenon which can write songs and answer intricate questions. See e.g., Kelvin Chan, What can ChatGPT maker’s new AI model GPT-4 do?, AP NEWS (Mar. 15, 2023)( https://apnews.com/article/chatgpt-gpt4-artificial-intelligence-chatbots-307e867e3fe4464be9c4f884909f3977.

[2] Request for Comments: Artificial Intelligence and Inventorship, 88 FR 9492.

[3] Public Views on Artificial Intelligence and Intellectual Property Policy, USPTO (Oct. 2020), https://www.uspto.gov/sites/default/files/documents/USPTO_AI-Report_2020-10-07.pdf.