In Polaris Innovations Ltd. v. Brent, No. 2019-1483, 2022 WL 4241665 (Fed. Cir. Sept. 15, 2022), the Federal Circuit faced an appeal that had bounced back and forth between the Court and Patent Trial and Appeal Board (“the Board”) several times while it was caught in the administrative ambiguity resulting from the Arthrex decision. Although the Court made several substantive decisions about the patents at issue in the two inter partes review (“IPR”) proceedings, this article will focus on the interaction of settlement, attempted termination, and appeal resulting from the unusual procedural posture of the case.

The timing of the IPR decisions underlying the Federal Circuit appeal created an unusual situation. NVIDIA challenged two patents owned by Polaris Innovations Limited, U.S. Patent Nos. 6,532,505 and 7,405,993, in two IPR proceedings. Polaris appealed to the Federal Circuit after the Patent Trial and Appeal Board determined that all challenged claims were unpatentable. During the appeal, NVIDIA and Polaris settled. As a result of this, the Patent Office intervened to defend the Board’s decision. In this first round of appeals to the Federal Circuit, the Court vacated the decision and remanded in light of Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), which raised Appointments Clause issues affecting IPRs generally. On remand, the IPRs were administratively suspended pending Supreme Court review of the Arthrex decision. When the Supreme Court vacated the Arthrex decision, the Board’s decisions in the IPRs were reinstated.

After the parties settled, Polaris had sought to terminate the IPRs. Now that the IPR decisions were reinstated, Polaris asked the Board to grant Polaris’ still-pending motion to terminate the IPRs. The Board determined that the Final Decisions in each IPR were no longer vacated so no further action by the Board was necessary, and therefore termination was inappropriate. Instead, Polaris could request review by the Director. The Director denied rehearing. Polaris appealed, asking the Federal Circuit to vacate the Board’s final decisions and remand for termination of the IPRs. The Court disagreed.

The Federal Circuit agreed with the Board’s decision that the motions to terminate were untimely. The Board addressed settlement under 35 U.S.C. 317(a):

An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).

Here, settlement and the motions to terminate occurred after a final written decision of the Board.

The Court found that Polaris was incorrect on a few points. First, regardless of the timing, the Board was not obligated to terminate the proceeding. Under certain conditions, the mandatory termination is with respect to “any petitioner,” not the proceeding itself. The statute permits the Board to proceed to a final written decision, even if no petitioner remains in the proceeding.

Second, the Court found the Board correctly identified Polaris’ motion to terminate as untimely. The final written decisions of the IPRs issued more than a year earlier. The decisions were vacated for a period of time while the Supreme Court considered Arthrex, but afterward, the decisions were no longer vacated and were reinstated. When the Board considered the motion to terminate, no new final written decision by the Board was needed. Accordingly, termination of an already completed IPR was not appropriate.

The Federal Circuit also rejected Polaris’ other arguments that the Board’s decision was arbitrary. For example, one such argument was the arbitrariness of the extended time it took the Board to act on the motions to terminate. The Court did not view this as the type of arbitrary decision contemplated by the Administrative Procedure Act.

As the Federal Circuit succinctly summarized “the Board had already decided the merits of the cases in final written decisions that were not vacated at the time the Board made its decision denying Polaris’s motions to terminate. This determination was not arbitrary.” Polaris Innovations Ltd. v. Brent, No. 2019-1483, 2022 WL 4241665, at *7 (Fed. Cir. Sept. 15, 2022).

Recently, the Patent Trial and Appeal Board (PTAB) announced a new interim procedure for decision circulation and internal review. This interim procedure is aimed at promoting feedback, eliminating inconsistencies, and increasing transparency during the decision pre-issuance process. The push for increased transparency comes as a result of last year’s Supreme Court decision in United States v. Arthrex, Inc. In response to the Arthrex decision, the USPTO emphasizes that “the interim process makes clear that the Director is not involved, pre-issuance, in directing or otherwise influencing panel decisions, and the PTAB panel has final authority and responsibility for the content of a decision.”

For its decision circulation and internal review procedures, the PTAB now utilizes a body of judges called the Circulation Judge Pool (CJP). The CJP is modeled after the Federal Circuit’s former Senior Technological Assistant Office and the Federal Circuit’s 10-day circulation process for precedential decisions. The CJP is made up of at least eight non-management PTAB judges intended to be representative of the technical and legal experience of the body of PTAB judges as a whole. Previously, before adopting the new interim process, the Board utilized of one of two internal review procedures: (1) peer review of AIA decisions prior to issuance and (2) PTAB management review of decisions addressing USPTO policy prior to issuance.

Under the new CJP model, before the PTAB issues a decision, a draft decision is circulated to the CJP and at least two CJP judges are required to review the draft decision. The type of decisions reviewed by the CJP include all AIA institution decisions; AIA final written decisions; AIA decisions on rehearing; decisions on remand from the Federal Circuit; inter partes reexamination appeal decisions; and certain categories of ex parte appeal, ex parte reexamination appeal, and reissue appeal decisions as designated by PTAB management.

The role of the CJP is to inform the panel of any inconsistencies with relevant authority, including existing case law, statutes, Director-written guidance, or USPTO policy. The CJP also provides edits and suggestions to improve readability and stylistic consistency. After the CJP reviews the draft, it is within the panel’s discretion to decide whether to incorporate the CJP’s feedback. Under this new model the Director does not participate in the review process prior to issuance of the decision, whereas previously it was required that drafts be review by Board Management.

The USPTO intends for the interim process to promote open decision making by emphasizing that the panel is not required to adopt the CJP’s suggestions and by making it so that members of Board Management do not provide feedback on decisions unless a member of the panel requests such.

Further details about the Board’s interim procedure can be found here.

In Everstar Merch. Co. v. Willis Elec. Co., No. 2021-1882, 2022 WL 1089909 (Fed. Cir. Apr. 12, 2022), the Federal Circuit provided guidance to distinguish between raising a new argument and elaborating on previously raised arguments in proceedings before the Patent Trial and Appeal Board (“Board”). Here it was decided that a minor point in a petition, fleshed out much more during the remaining of the proceeding, was sufficiently raised such that it must be considered by the Board in its final decision.

Everstar Merchandise Co. (“Everstar”) sought Post Grant Review of U.S. Patent No. 10,222,037, owned by Willis Electric Company, Ltd. (“Willis”). Among its arguments, Everstar asserted that two prior art references, Kumada and Debladis ’120, rendered the patent obvious. The parties agreed that the prior art references disclosed all elements of the claims, but disagreed about the motivation to combine the references and whether the prior art references were analogous art. The Board was unwilling to consider Everstar’s arguments that the desire to reduce costs would motivate one to combine the prior art references because the Board found that those arguments were not part of Everstar’s petition, but only raised in its later briefings.

On appeal, the Federal Circuit noted that a petitioner may not assert an entirely new rationale in a post-institution reply, but may elaborate on their arguments on issues previously raised. The court found the Board abused its discretion by declining to consider Everstar’s argument that cost, in addition to increased strength and durability, provided sufficient motivation to combine. Several reasons supported the court’s holding. The patent stated among its benefits were increased wire strength and reduced material costs. Related to this, Everstar noted in its petition that Kumada teaches the inverse relationship between cost and the amount of material used. Willis addressed this relationship in its preliminary response and associated expert testimony. Furthermore, the Board discussed that the prior art references showed a desire to reduce manufacturing costs.

The Federal Circuit further noted that 37 C.F.R. § 42.23(b) allows a petitioner to “respond to arguments raised in the corresponding opposition, patent owner preliminary response, patent owner response, or decision on institution.” A legitimate reply to arguments in these situations is not a new argument. Willis raised cost reduction in its preliminary response and post-institution response. Even if there were ambiguity about whether Everstar’s arguments were present in the petition, Everstar was permitted to respond the arguments presented by Willis and in the Board’s institution decision. Therefore, the Board erred by not fully considering the arguments raised.

Background

In 2018, Hunting Titan, Inc. filed a petition for inter partes review (“IPR”) of U.S. Patent No. 9,581,422 (“the ’422 patent”), which is owned by DynaEnergetics Europe GmbH, a manufacturer of industrial explosives. In pertinent part, Hunting Titan asserted in its petition that claims 1-15 of the ’422 patent were unpatentable because they were anticipated by U.S. Patent No. 9,689,223 to Schacherer et al. (“Schacherer”). After the Patent Trial and Appeal Board (“the Board”) instituted the IPR, DynaEnergetics moved to amend the ’422 patent to add proposed substitute claims 16-22. In opposing DynaEnergetics’s motion to amend, Hunting Titan advanced grounds based only on obviousness, not anticipation. The Board found for Hunting Titan and determined that all of the original claims of the ’422 patent, as well as the proposed substitute claims, were unpatentable as anticipated by Schacherer.[1]

DynaEnergetics requested that the Precedential Opinion Panel (“POP”) rehear and review the Board’s denial of the motion to amend. In particular, DynaEnergetics asked the POP to review the circumstances under which the Board may raise a ground of unpatentability against substitute proposed claims in a motion to amend, when said ground was insufficiently developed or not advanced by the petitioner. In its review, the POP concluded that “only under rare circumstances should the need arise for the Board to advance grounds of unpatentability to address proposed substitute claims that the petitioner did not advance, or insufficiently developed, in its opposition to the motion.” The POP vacated the Board’s denial of DynaEnergetics’s motion to amend, found that Hunting Titan had not shown by a preponderance of the evidence that substitute claims 16-22 were unpatentable, and granted the motion to amend the ’422 patent.

Both parties appealed to the Court of Appeals for the Federal Circuit (“the CAFC”). Hunting Titan appealed the POP’s decision to vacate the Board’s decision denying the motion to amend. DynaEnergetics cross-appealed the Board’s finding that the original claims were anticipated by Schacherer.

CAFC Decision

After affirming the Board’s finding of anticipation with respect to original claims 1-15, the CAFC turned to the larger issue of the POP’s decision to grant DynaEnergetics’s motion to amend.

Hunting Titan contended that the Board had a duty to determine, sua sponte (essentially, on its own initiative), whether the substitute claims were patentable based on the whole record, and that it was an error for the POP to vacate the Board’s decision. The CAFC acknowledged that the Board has a duty to sua sponte raise patentability challenges to proposed substitute claim, but the court stopped short of saying whether the Board must sua sponte raise patentability challenges for amended claims. The CAFC also found it “problematic” that the POP stated the Board should raise patentability issues sua sponte in only “rare” circumstances, and it emphasized the “basic purpose of IPR proceedings: to reexamine an earlier agency decision and ensure ‘that patent monopolies are kept within their legitimate scope.’”

The CAFC agreed with the POP that the Board should advance grounds of unpatentability that a petitioner did not advance or insufficiently developed if the evidence is “readily identifiable.” It noted that the POP highlighted “readily identifiable evidence” as being a situation “where the record readily and persuasively establishes that substitute claims are unpatentable for the same reasons that corresponding original claims are unpatentable.” It seemed to indicate that anticipation based on Schacherer would fall into this “readily identifiable evidence” category. However, on appeal, Hunting Titan did not challenge the POP’s decision to consider only evidence of unpatentability advanced by Hunting Titan in its opposition to DynaEnergetics’s motion to amend. Because Hunting Titan did not challenge that decision, the CAFC ruled the challenge forfeit.

Therefore, the CAFC affirmed the POP’s decision granting the motion to amend, but it emphasized that the affirmance was to be narrowly construed. It further noted that it was not determining the patentability of the proposed substitute claims, nor was it deciding whether the POP abused its discretion in determining anticipation by Schacherer was not readily identifiable. Additionally, the CAFC clarified that it was not making a determination as to whether the Board has an obligation to, sue sponte, determine patentability of proposed substitute claims.

Conclusion

With the issue of sua sponte rejections of substitute claims still an open question, both petitioners and patent owners should take care whenever the issue arises before the Board. Petitioners should be scrupulous about what unpatentability grounds they wish to bring in their opposition motions, while patent owners should be wary that the Board may still sua sponte reject their proposed substitute claims in light of readily identifiable evidence.

[1] IPR2018-00600.

On the first of February, in Qualcomm Inc. v. Apple Inc., the Court of Appeals for the Federal Circuit (“the CAFC”) vacated and remanded the Patent Trial and Appeal Board (“the Board”) on two inter partes review (“IPR”) decisions that held claims 1, 2, 5-9, 12, 13, and 16-22 of Qualcomm’s U.S. Patent No. 8,063,674 (“the ’674 Patent”) unpatentable as obvious.[1]

Background

Qualcomm’s ’674 Patent describes integrated circuit devices containing power detection circuits that can be used for systems with multiple supply voltages. For devices that operate multiple networks at different supply voltages (some of which may be quite high), the devices can save power by turning the power off for certain networks when they are not in use. For example, a device’s core logic network may require a low voltage, while a device’s input/output network may require a high voltage. The ’674 Patent in particular describes “level shifters” that communicate between input/output devices and core logic devices, and it identifies various problems that the level shifters may engender. Stray currents, for instance, may result in level shifters erroneously triggering input/output devices for transmission.

The “Background” section of the ’674 Patent describes a prior art method to solve the stray current problem through the use of power-on and power-off detectors and a power-on/power-off control (POC) signal. However, as expected, the ’674 Patent then goes on to diagnose various problems with this prior art solution and claim its own, ostensibly superior solution.

In 2018, Apple filed two petitions for inter partes review (IPR), each based on the same grounds but challenging different claims in the ’674 Patent. For ground one, Apple challenged the claims as unpatentable as obvious in view of two U.S. patents (Steinacker and Doyle) and one printed publication (Park). In a final written decision, the Board found Apple had not shown the claims to be unpatentable with ground one. For ground two, however, Apple relied on the aforementioned “Background” section of the ’674 Patent (the “applicant admitted prior art” or “AAPA”) in view of a U.S. Patent Application Publication 2002/0163364 to to Majcherczak et. al. (“Majcherczak”).

In response to the second ground, Qualcomm conceded that the combination of Majcherczak and the AAPA taught each element of the challenged claims, but Qualcomm contended AAPA cannot be used to challenge patent validity during IPR. The Board disagreed, stating, in pertinent part, that AAPA is included in Section 311 of the patent statute’s definition of “prior art consisting of patents or printed publications” because AAPA is prior art contained in a patent.

Qualcomm appealed.[2]

 

Discussion

Although Qualcomm’s initially argued that AAPA cannot be considered at all in IPRs, it later stepped back its position to contend that AAPA cannot form the basis of a ground in an IPR. Related to this proceeding, the United States Patent and Trademark Office (“USPTO”), issued Director’s guidance agreeing with Qualcomm that AAPA does not fall within “prior art consisting of patents or printed publications,” while still allowing the use of AAPA in IPRs as evidence of the general knowledge of a skilled artisan. The USPTO did not take a position as to whether Apple’s use of AAPA in this case was impermissible, but instead requested the CAFC to remand to the Board to address the question in the first instance.

The main argument on appeal was whether AAPA constitutes “prior art consisting of patents or printed publications” such that it may form “the basis” of a ground in an IPR under Section 311(b) of the Patent Act. The CAFC agreed with Qualcomm, holding that AAPA does not fall within such a definition of “prior art” and cannot form the basis of a ground in an IPR.

In forming its analysis, the CAFC began with the Section 311(b) of the Patent Act, and the above-quoted language regarding what constitutes “the basis” of any “ground” in an IPR, and that the definition excludes any descriptions of prior art contained within the challenged patent. The CAFC noted that the Supreme Court and the CAFC itself have previously interpreted “patents and printed publications” under Section 311(b) as meaning prior art itself (not descriptions contained within a challenged patent). The CAFC referenced multiple cases supporting its proposition, including Return Mail, Inc. v. U.S. Postal Serv., 139 S. Ct. 1853 (2019) and In re Lonardo, 119 F.3d 960 (Fed. Cir. 1997).

The CAFC also referenced Congress’s intentions in enacting the America Invents Act, which created IPRs. Specifically, the CAFC considered Congress’s intentions when it drafted Section 311(b), which codified IPRs and uses identical language to Section 301(a). At the time of the AIA’s enactment, Section 301(a) had been interpreted as meaning “prior art consisting of patents or printed publications.” The CAFC reasoned that because Section 301(a) had been interpreted as such, and because Congress had based 311(b) on 301(a), that therefore Congress intended the same definition for “prior art and printed publications” to apply to Section 311(b).

The CAFC clarified that AAPA is not categorically excluded from an IPR proceeding. For example, admissions in a patent specification may be relied upon to determine whether a patent’s claims would have been obvious. As the CAFC noted in its opinion, “[T]he assessment of a claim’s patentability is inextricably tied to a skilled artisan’s knowledge and skill level.” Furthermore, relying on admissions in a patent specification maintains the “streamlined administrative proceeding” that Congress intended with IPRs because “[h]olding a patentee to descriptions of the prior art made in its specification does not implicate the type of fact-intensive inquiries Congress was seeking to avoid.”

Subsequently, the CAFC remanded to the Board to determine whether Majcherczak forms the basis of Apple’s challenge, or whether the AAPA forms the basis, which would impermissible violate the statutory limit of Section 311.

 

Conclusion

The exclusion of applicant admitted prior art as a basis for an IPR petition may come as a boon to patent owners, who may now be slightly less concerned about what they disclose in the “Background” section of their patent applications. However, applicants should take care that just because AAPA may not form the basis of an IPR petition does not mean it cannot play a pivotal evidentiary role in the proceeding.

[1] As the CAFC notes, the application that led to the ’674 Patent never contained a claim with an effective filing date on or after March 16, 2013 – therefore, the pre-AIA law of obviousness applies to the patent at issue.

[2] Qualcomm also challenged the constitutionality of the Board, but Qualcomm withdrew its request for relief after the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021).

In late December,  in Intel Corp. v. Qualcomm Inc., 2020-1828 (Fed. Cir. Dec. 28, 2021), the Federal Circuit found the PTAB erred by accepting Intel’s stipulation concerning the indefiniteness of a means-plus-function claim term. In this opinion, the Federal Circuit explains that in Inter Partes Review (IPR) proceedings, patentability determinations cannot be circumvented due to a party stipulation. Instead, the Board is required to carry-out patentability determinations unless it is logically impossible to do so.

Background

At issue here is U.S. Patent No. 8,838,949 (the “’949 patent”) owned by Qualcomm. Intel challenged all of the claims of the ’949 patent as unpatentable for obviousness in a series of three IPRs. The Board found that Intel proved claims 10, 11, 13-15, and 18-23 were unpatentable but not claims 1-9, 12, 16, and 17. Intel subsequently appealed this finding.

Claims 16 and 17 are means-plus-function claims governed by 35 U.S.C. § 112(f). During the IPR related to these claims, IPR2018-01335, Intel agreed with the Board’s suggestion in the institution decision that two of the means-plus-function terms in claim 16 (and dependent claim 17) were indefinite for lack of supporting structure. In the Final Written Decision, the Board interpreted Intel’s agreement as meaning it had not met its burden in demonstrating the unpatentability of these claims. The Board did not engage in any further patentability determination with respect to these claims. On appeal, Intel challenged the merits of the Board’s findings.

Federal Circuit Decision

In an opinion written by Judge Taranto, the Federal Circuit held that the Board’s conclusion that Intel did not meet its burden in demonstrating the unpatentability of the claims was erroneous and thus remand was necessary. The Federal Circuit particularly pointed out that the Board erred by not deciding for itself whether the required structure was present in the specification or, in the alternative, whether the absence of the structure precludes resolution of Intel’s prior art challenges.

The Federal Circuit cited to the Supreme Court to support its holding. In SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Supreme Court construed 35 U.S.C. § 318 as obligating the Board to “issue a final written decision with respect to the patentability of” every claim challenged by the petitioner. The Federal Circuit noted that 35 U.S.C. § 318 does not require the Board reach a determination of patentability if such determination is rendered impossible because of indefiniteness of an essential claim limitation. However, the indefiniteness of a claim does not always preclude the Board from addressing the patentability of these claims. Therefore, indefiniteness of a limitation should only preclude a patentability determination when the indefiniteness makes it logically impossible for the Board to render such a decision. Thus, the Board erred by failing to do so or at least by failing to clearly state in the Final Written Decision that it was impossible to do so.

Judge Taranto points to the overall IPR scheme in support of this holding. In the opinion he explains that the IPR scheme protects the interests of the petitioner, the patentee, and the judicial system by avoiding duplication. Even more, the interests of the public are protected by the IPR scheme as reflected by 35 U.S.C. § 317 which authorizes the Board to answer patentability questions even after a petitioner has withdrawn. According to the Federal Circuit, accepting Intel’s agreement without performing a patentability determination ran contrary to the principles reflected in the IPR scheme that were designed to protect interests beyond that of the petitioner.

 

On January 18, the Supreme Court denied petitions for writs of certiorari from both Apple and Mylan Laboratories. Each company sought to challenge the NHK/Fintiv framework that was developed by the Patent Trial and Appeal Board (“the Board”). As we previously wrote about on this blog in September of last year, the NHK/Fintiv rule comes from two precedential Board decisions (NHK Spring v. Intri-Plex and Apple v. Fintiv) and, essentially, allows the Board to deny institution of an inter partes review (IPR) where a parallel litigation is occurring in federal court.

Apple and Mylan’s petitions arose from similar grounds, namely after the Court of Appeals for the Federal Circuit (“the CAFC”) refused to review the Board’s denial of each company’s respective IPR petitions. In rejecting Apple’s appeals, the CAFC cited to its own decisions where it held that Board decisions regarding institution are unappealable. The CAFC also cited the Supreme Court’s 2020 decision in Thryv v. Click-to-Call Technologies.

Apple’s petition argued that the Board’s NHK/Fintiv rule is unlawful on several grounds, including that it exceeds the authority of the Director of the U.S. Patent and Trademark Office (“the PTO”), that the rule is arbitrary and capricious, and that it was adopted without following the requirements of the Administrative Procedure Act. Mylan petitioned on similar grounds, notably arguing that the failure to follow the Administrative Procedure Act meant that the NHK/Fintiv rule never went through the notice-and-comment rulemaking process, and thus the public was never able to weigh in on the rule’s alleged defects.

The Supreme Court, however, rejected Apple and Mylan’s requests without explanation. This leaves unreviewed the patents challenged by Apple and Mylan, which belong to Optis Cellular Technology and Jannsen Pharmaceuticals, respectively.

The Supreme Court’s denial of certiorari comes a little over a week after the Northern District of California dismissed a suit filed by Apple, Cisco, Google, and Intel that challenged the NHK/Fintiv rule on the grounds that it violates the Administrative Procedure Act. However, the recent rejections of these challenges to the Board’s discretionary denials does not signal the end of attempts to curtail the NHK/Fintiv rule. For example, the Restoring the America Invents Act, which was introduced by Senators Leahy and Cornyn late last year, would limit the Board’s discretionary denials.

On December 28, 2021, the Federal Circuit issued another decision addressing an appellant’s standing to appeal inter partes review (“IPR”) decisions from the PTAB. The patent community has seen several opinions over the last couple of years as the Federal Circuit continues to navigate the complicated waters of what is and is not sufficient to satisfy Article III standing.

As we previously reported, one recent example came in Apple Inc. v. Qualcomm Inc., No 20-1683 (Fed. Cir. Nov. 10, 2021) where the Federal Circuit dismissed the appeal for lack of standing.

Now, the Federal Circuit provided further guidance on the standing issue in its precedential opinion in Intel Corp. v. Qualcomm Inc., No. 2020-1664 (Fed. Cir. Dec. 28, 2021).

Background

The appeal relates to Qualcomm’s U.S. Patent No. 8,229,043 (“the ’043 patent”) which is directed towards radio frequency communication devices. Specifically the patent is directed towards a mixer portion in the receiver front end of the device that improves the signal-to-noise ratio of a receiver.

Intel petitioned for IPR of claims 1-3, 6, 7, 17-19, and 21 of the ’043 patent, listing itself and its customer Apple, Inc. as the real parties-in-interest. The PTAB found that claims 1-3 and 7 were unpatentable and claims 6, 17-19 and 21 were patentable. The PTAB also granted in-part Qualcomm’s motion to amend and replaced claims 2, 3, and 7 of the ’043 patent with substitute  claims 27, 28 and 31, respectively.  Intel appealed the PTAB’s decision as to the patentability of the surviving original claims and the substitute claims. Qualcomm moved to dismiss the appeal for lack of standing.

Federal Circuit’s Analysis

As the Federal Circuit noted in its decision, to establish standing a party must show: (1) an “injury in fact” (2) “fairly traceable” to the defendant’s challenged conduct and (3) “likely to be redressed by a favorable judicial decision.” See Opinion (“Op.”) at 5. An “injury in fact” must be “concrete and particularized and actual or imminent, not conjectural or hypothetical.” Id. at  5 (quoting Spokeo, Inc. v. Robins, 578 U.S. 330, 339 (2016)). This requirement is generally met when an IPR petitioner “has engaged in, is engaging in, or will likely engage in activity that would give rise to a possible infringement suit.” Id. (quoting Grit Energy Sols., LLC v. Oren Techs., LLC, 957 F.3d 1309, 1319 (Fed. Cir. 2020)).

The Federal Circuit denied Qualcomm’s motion to dismiss for lack on standing on grounds that was a party.  Intel manufactures and sells the SMARTi 5 RF transceiver chip and other RF transceiver chips that are used in smartphones. Qualcomm sued Apple for infringement in 2017, accusing the SMARTi 5 RF transceiver in Apple’s IPhone 7 modem of infringing the ’043 patent. The Federal Circuit found that because Qualcomm had mapped the claims of the ’043 patent to an Intel product in the previous lawsuit against Apple, Intel’s actions gave rise to an infringement lawsuit. The Federal Circuit held that it is of no consequence that the lawsuit was not actually filed against Intel because the standard does not require Intel to face a specific threat of infringement to establish standing.

The Federal Circuit further held that it does not matter that the prior lawsuit settled nearly two years ago because while a settlement can remove a party’s standing, Intel was not a party to Qualcomm and Apple’s settlement agreement.  Also, Qualcomm had informed Intel that it was not offering a covenant not to sue on the patent. The fact that Intel continues to sell the relevant products and faces the risk that Qualcomm may file suit also weighed in favor of standing. Based on these facts, the Federal Circuit concluded that Intel’s injury-in-fact goes beyond mere conjecture and thus, Intel had standing to appeal the IPR decision.

Late last year, the PTAB published its final round of statistics for 2021. From October 1, 2020 to November 30, 2021, 1629 petitions were filed at the Patent Trial and Appeal Board (PTAB). The majority of petitions filed are for Inter Partes Review (IPR), with less than 10% of petitions filed for Post Grant Review (PGR).

By technology, the majority of petitions filed, by far, are in the fields of electrical and computer science. Mechanical and business method petitions are second, biopharma petitions third, chemical petitions fourth and finally, design patent petitions last.

Overall, the institution rates of petitions have gone up slightly in fiscal year (FY) 2021 compared to FY 2020. However, it is still lower than usual compared to the last five years. This trend could be due the PTAB’s use of discretionary denials of IPR petitions when there is a parallel litigation in district court under the Fintiv precedent[1] as we previously discussed.

In contrast, settlement rates have gone up compared to the last five years. However, as we noted in our previous article discussing PTAB statistics, it is challenging to draw any definite conclusions from settlement statistics because it is difficult to find out whether the settlements tend to be more favorable to the challenger or patent owner.

Finally, appeal outcomes in FY 2022 so far (October 1, 2021 to November 30, 2021) are very similar to appeal outcomes from FY 2021 (October 1, 2020 to September 30, 2021).

For more information, the PTAB’s most recent statistics can be found here, and archived materials for previous years can be found here (trial statistics) and here (appeals and interference statistics).

[1] See Apple, Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020, designated as precedential May 5, 2020)

On October 26, 2021, Chief Administrative Patent Judge (“APJ”) Scott R. Boalick of the Patent Trial and Appeal Board (“PTAB”) lifted a stay that he issued on May 1, 2020, pausing all activity in PTAB cases that were remanded to PTAB from the Federal Circuit under Arthrex.[1] Within the order lifting the stay, Chief APJ Boalick reiterated the purpose of its original stay order and summarized the Arthrex procedural history, which culminated in the Supreme Court’s decision regarding the Constitutional issue raised by this case.

As we previously discussed, Arthrex appealed a Final Decision from the PTAB invalidating its patent to the Federal Circuit, in part, by challenging the constitutionality of the appointment process of the APJs who preside over post grant proceedings before the PTAB. Subsequently, in October 2019, the Federal Circuit concluded that APJs were unconstitutionally appointed under the Appointments Clause of the U.S. Constitution.[2] The Federal Circuit provided the remedy to this constitutional defect by severing the APJs’ removal protections, thus making them “inferior officers” who can be removed at will by the Director of the USPTO (the “Director”). As we previously discussed, this Federal Circuit decision opened the door for over 100 decisions issued prior to Arthrex to be challenged in rehearings under the Appointment Clause.

In order “to avoid burdening the [PTAB] and the parties until all appellate rights have been exhausted,”[3] Chief APJ Boalick issued a general order in Spring 2020 holding all the rehearings in abeyance. That general order suspended PTAB’s Standard Operating Procedure 9 “Procedure for Decisions Remanded from the Federal Circuit for Further Proceedings” (“SOP 9”), until the Supreme Court reviews Arthrex’s constitutional issue,[4] which it did on June 21, 2021.[5] In its decision, the Supreme Court vacated and remanded the Federal Circuit’s decision that APJs were unconstitutionally appointed. While the Supreme Court did come to the same conclusion as the Federal Circuit – that the pre-Arthrex PTAB system was incompatible with the Appointments Clause – it provided a different remedy: granting review authority to the Director.

Thus far, Arthrex appears not to have as big an impact on the PTAB post grant review process as some patentees may have hoped. To date, requests for Director Review have largely been denied under the interim procedure established after the Supreme Court’s ruling. This is consistent with the PTAB’s record of granting rehearings, which generally sit under 5%-15%. It is unclear however, if the low rate of Director Review is also affected by the fact that Andrew Hirshfeld is currently only an acting director of the USPTO (Acting Director), rather than a presidentially-appointed and Senate-confirmed Director. In fact, there are already some parties questioning the Acting Director’s authority to review final decisions made by the APJs.[6]

Nevertheless, not all cases have been denied Director Review. On November 1, the Acting Director issued the first decision granting a request for review. In this first case,[7] Samsung petitioned for Director Review of the PTAB’s Final Written Decision determining that “all challenged claims of U.S. Patent No. 9,819,057 B2 (“the ’057 patent”) [were] unpatentable.” Samsung challenged the PTAB’s Final Written Decision on four grounds, one of which argued that the PTAB’ final written decision was improper because it did not separately consider two claims that were entitled to a provisional priority date, which antedated the prior art reference at issue. In his review, the Acting Director agreed that priority should be awarded on a claim-by-claim basis, vacated the PTAB’s decision, and remanded the case back to PTAB to address the priority date issue.

Now that the PTAB has lifted its stay, we will likely get a better picture on how PTAB will handle its new Director Review procedure both substantively and procedurally.

 

[1] See General Order Lifting General Order in Cases Remanded Under Arthrex Inc. v. Smith & Nephew Inc., 941 F.3d 1320 (Fed. Cir. 2019) (PTAB Oct. 26, 2020). [Hereinafter General Order Lifting Stay].

[2] See Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019).

[3] See General Order Lifting Stay, note 1, at 1.

[4] See General Order in Cases Remanded Under Arthrex Inc. v. Smith & Nephew Inc., 941 F.3d 1320 (Fed. Cir. 2019) (PTAB May 1, 2020).

[5] See United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021).

[6] See e.g., Appellant’s Response to Post-Anthrex Briefing Order at 3, Corephotonics, Ltd. v. Apple Inc., No. 20-1424 (Fed. Cir. Jul. 7, 2021), ECF No. 64.

[7] Ascend Performance Materials Operations LLC v. Samsung SDI Co., Ltd., IPR2020-00349, Paper No. 57 (Nov. 1, 2021).