The Patent Trial and Appeal Board (PTAB) recently designated its decision in Cambridge v. Sfara (IPR2024-00952) as an informative decision.[1] This designation addresses an important issue in inter partes review (IPR) proceedings: inconsistent claim construction arguments between district court litigation and PTAB petitions.

Claim Construction Inconsistency

The PTAB’s holding centered on Petitioner’s proposed construction of the term “component.” The term “component” appeared repeatedly within the independent claims related to vehicle crash detection. For example, “a first detecting component operable [to] detect a first parameter and to generate a first detector signal based on the first detected parameter.”

In the corresponding district court litigation, Petitioner’s position was that “’component’ terms in the challenged claims should be means-plus-function terms governed by §112(f) and that such terms are indefinite for failure to identify corresponding structure to perform the recited functions.”[2] Petitioner also emphasized that whether means-plus-function applies to the term “component” “will be most significant to the resolution of the case and/or will be case or claim dispositive or substantially conducive to promoting settlement.”[3]

Petitioner’s IPR petition took a very different approach. Instead of arguing that the “component” terms were governed by §112(f), Petitioner instead argued that these terms should be given their plain and ordinary meanings. Moreover, Petitioner’s IPR petition only mentioned their district court means-plus-function argument in a footnote. Failing to address its means-plus-function argument was fatal for Petitioner’s IPR petition.

The Board held 37 C.F.R. § 42.104(b)(3) mandated that the “Petition should have explained why the plain and ordinary meaning of the ‘component’ terms should apply in this proceeding (why the inconsistent positions are warranted) or set forth an alternative means-plus-function claim.”[4] In denying the petition, the Board highlighted Petitioner’s deterministic language from its district court filing (e.g., “will be most significant” and “will be case . . . dispositive”) as an important factor in its decision.[5]

Key Takeaways for Practitioners

The PTAB’s designation of this case as informative serves as a cautionary example for practitioners whose cases are being litigated simultaneously in district courts and IPR proceedings. To the extent practitioners take differing claim construction approaches in the two proceedings, they should offer a clear and justified explanation for why they are doing so.

[1] Found at Precedential and informative decisions | USPTO

[2] Cambridge Mobile Telematics, Inc. v. Sfara, Inc. (majority opinion), IPR2024-00952, Paper 12 (December 13, 2024), at p. 6.

[3] Id. at 7.

[4] Id. at 8.

[5] The deterministic language was from the Joint Claim Construction and Prehearing Statement. Specifically, the Board highlighted the following passage, “construction of the listed “component” terms—specifically, whether those terms are means-plus-function limitations governed by 35 U.S.C. § 112(f), and if so, whether the specification properly discloses corresponding structure for the recited function in those limitations—will be most significant to the resolution of the case and/or will be case or claim dispositive or substantially conducive to promoting settlement.” Id. at 7.

The Federal Circuit’s holding in United Servs. Auto. Ass’n v. PNC Bank N.A., No. 2023-2171, 2025 WL 339662 (Fed. Cir. Jan. 30, 2025) reversed a Patent Trial and Appeal Board (“PTAB”) decision finding no motivation to combine.  The opinion is nonprecedential, but the Federal Circuit’s analysis of the facts in light of recent precedent is instructive for patent practitioners. 

On May 11, 2022, the PTAB granted PNC Bank N.A.’s (“PNC”) petition for inter partes review (“IPR”) of claims 1-20 of U.S. Patent No. 10,769,598 (“the ’598 patent”).  The ’598 patent is directed to remote check deposit technology and owned by the United Services Automobile Association (“USAA”).  In its final written decision, the PTAB found claims 1 and 8-20 obvious over a combination of three prior art references but declined to find dependent claims 2-7 obvious over the same combination.

Dependent claims 2-7 of the ’598 patent require an error processing step to verify that the image of a to-be-deposited check meets certain criteria, i.e., the check is legible, appropriately sized, correctly oriented, etc.  Crucially, claims 2-7 require that an error processing step occurs on the client’s mobile device, before the image is relayed to the bank’s server.

In the IPR, PNC pointed to a client-side error processing step disclosed in one of the three prior art references it successfully asserted in combination against claim 1, arguing that one of ordinary skill in the art would have been motivated to include in the combination “a thin client” that “‘detect[s] whether the check is endorsed’ and ‘check[s] for an imprint image, a scanned serial number, and the like, to indicate that the check had been properly scanned’ before uploading the check image to the payee bank.”  See PNC Bank N.A. v. United Servs. Auto. Ass’n, No. IPR2022-00076, at 58 (P.T.A.B. May 10, 2023) (citing the prior art).  As the PTAB wrote, “Petitioner contends that an ordinary artisan would have been motivated to include Byrne’s error checking in the mobile device of the Garcia-Byrne-Singfield combination.”  Id.

The PTAB disagreed with PNC: “Even if an ordinary artisan could have made the proposed combination, we are not persuaded that Petitioner has sufficiently shown that he would have been motivated to do so.”  Id. at 59 (emphasis original).  The PTAB gave significant weight to USAA’s argument that “there would be substantial reason not to [use client-side error processing].”  Id. at 58.  PNC presented known advantages of incorporating client-side error processing, but the PTAB found that PNC’s expert testimony undercut its argument when they admitted “[t]here are tradeoffs associated with doing the verification processing on either the client or the server.”  Id. at 61 (internal cite omitted).  The PTAB ruled that it could not find a motivation to combine under a preponderance of the evidence.  PNC cross-appealed the ruling on claims 2-7.  USAA appealed the ruling on claims 1 and 8-20.

On appeal, the Federal Circuit affirmed the PTAB’s obviousness ruling on claims 1 and 8-20.  For claims 2-7, the Federal Circuit held that “the Board erred in rejecting PNC’s motivation to combine solely because this alternative arrangement also had claimed benefits.”  United Servs. Auto. Ass’n v. PNC Bank N.A., No. 2023-2171, 2025 WL 339662, at 9 (Fed. Cir. Jan. 30, 2025).  “The Board’s preoccupation with the benefits associated with server-side error processing led it to ignore the undisputed benefits of [client-side error processing].”  Id. at 10.

The Federal Circuit considered recent precedent in articulating a standard for motivation to combine.  “The combination does not need to be the best or preferred approach but need only be ‘desirable in light of the prior art.’”  Id. at 9-10 (quoting Honeywell Int’l Inc. v. 3G Licensing, S.A., 124 F.4th 1345, 1356 (Fed. Cir 2025) (emphasis added).  “[T]he relevant inquiry is simply whether skilled artisan would have been motivated to modify the prior art as claimed.”  Id. at 9 (citing Intel Corp. v. Qualcomm Inc., 21 F.4th 784, 797 (Fed. Cir. 2021) and Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1073 (Fed. Cir. 2015)) (emphasis added).

When applying the law to the facts, the Federal Circuit stated that this is “the precise situation where a person of ordinary skill in the art is ‘left with two design choices,’ in which case we have explained that ‘[e]ach of these two design choices is an obvious combination of prior art elements.’”  Id. (quoting ACCO Brands Corp. v. Fellowes, Inc., 813 F.3d 1361, 1367 (Fed. Cir. 2016)).

Considering the PTAB’s overwhelmingly positive record of affirms on appeal, patent practitioners should pay close attention to the Federal Circuit when it decides to step in.  Here, in reversing the PTAB’s determination, the Federal Circuit provides several articulations of the standard for motivation to combine.  PTAB practitioners should craft their arguments around the Federal Circuit’s preferred language to optimize their chances on appeals and best protect their clients’ interests.

SOURCES

PNC Bank N.A. v. United Servs. Auto. Ass’n, No. IPR2022-00076 (P.T.A.B. May 10, 2023)

United Servs. Auto. Ass’n v. PNC Bank N.A., No. 2023-2171, 2025 WL 339662 (Fed. Cir. Jan. 30, 2025)

On March 4, 2025, the Federal Circuit affirmed the Patent Trial and Appeal Board’s (“PTAB”) decision in Restem, LLC v. Jadi Cell, LLC, No. 23-2054, 2025 WL 679195, at *1 (Fed. Cir. Mar. 4, 2025), finding that the patent challenger failed to prove that the claims were unpatenable and offering two key takeaways.

The Parties and the Patent

Jadi Cell, the patent owner, owned U.S. Patent No. 9,803,176 (“the ’176 patent”). The ’176 patent is directed to “stem cells with specific cell markers…obtained from the subepithelial layer (SL) of mammalian umbilical cord tissue through a two-step process[.]” See id. (citing U.S. Patent No. 9,803,176 (filed Dec. 31, 2012)). Claim 1 of the ’176 patent recites:

1. An isolated cell prepared by a process comprising:

placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate; and

culturing the subepithelial layer such that the isolated cell from the subepithelial layer is capable of self-renewal and culture expansion,

wherein the isolated cell expresses at least three cell markers selected from the group consisting of CD29, CD73, CD90, CD166, SSEA4, CD9, CD44, CD146, or CD105, and

wherein the isolated cell does not express NANOG and at least five cell markers selected from the group consisting of CD45, CD34, CD14, CD79, CD106, CD86, CD80, CD19, CD117, Stro-1, or HLA-DR.

’176 Patent.

Restem, the patent challenger, challenged claims 1-15 of the ’176 patent based on inherent anticipation or, alternatively, obviousness. See Restem, LLC, 2025 WL 679195 at *1.[1]

Claim Construction

Before addressing the inherent anticipation argument, the Federal Circuit first addressed the claim construction of two terms: (1) “placing” step and (2) “isolated cell.” See id. at *1-3.

Regarding the first term, the PTAB did not import additional steps from the specification “because the specification [did] not uniformly require those steps in all disclosed embodiments.” See id. at *1 (citing Joint Appendix). The PTAB consequently determined that the prior art references disclosed the claimed two-step process, but did “not disclose the [specific cell markers] because the prior art processes do not necessarily produce cells with the claimed cell marker expression profile[.]” See id. at *1 (internal citations omitted). Restem argued against this claim construction because it implicitly “require[d] steps beyond the claimed two-step process.” See id. at *2 (citing Appellant’s Brief). However, the Federal Circuit did not agree. See id. Thus, the Federal Circuit found no error in the PTAB’s construction of “placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate” as “to intentionally place umbilical cord tissue comprising the subepithelial layer so that it touches a growth substrate to permit cell culture.” See id. at *1 (citing Joint Appendix).  

Regarding the second term, the PTAB “declined to construe ‘isolated cell,’ but construed ‘expresses/does not express’ to mean ‘the marker is confirmed present/absent relative to a control sample,’ which is ‘consistent with [the PTAB’s] interpretation of ‘isolated cell’ as indicating a cell population[.]’” See id. at *2 (internal citations omitted). Finding the intrinsic evidence unclear, the PTAB used extrinsic evidence and found agreement among the experts. See id. Restem argued that the PTAB should not have construed the second term contrary to its express definition. See id. Although the Federal Circuit agreed with Restem that the PTAB “implicitly construed ‘isolated cell’ as ‘a cell population,’” it determined that this construction was supported by the claim language and prosecution history. See id. at *2-3.

Restem’s Inherent Anticipation Challenge

Relying on precedent, the Federal Circuit clearly stated the law regarding inherent anticipation and product-by-process claims. “Inherent anticipation requires ‘the disclosure of the prior art [be] sufficient to show that the natural result flowing from the operation as taught in the prior art would result in the claimed product.’” Id. at *3 (quoting SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1343-44 (Fed. Cir. 2005) (cleaned up)). A product-by-process claim is defined as “one where the product is defined, at least in part, in terms of the process by which it is made.” Id. (citing SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1315 (Fed. Cir. 2006)). For product-by-process claims, the focus is different in determining invalidity versus infringement. For invalidity, the focus is on the product, not the process. See id. (citing Amgen Inc. v. Hoffman-La Roche Ltd., 580 F.3d 1340, 1369-70 (Fed. Cir. 2009)) (emphasis added). For infringement, the focus is on the process and the product. See id. (citing Amgen Inc., 580 F.3d at 1370) (emphasis added).

Restem’s inherent anticipation argument was that “inherency is automatic for product-by-process claims” because “once the process steps are met, the product is necessarily present.” See id. (citing Appellant’s Brief). However, the Federal Circuit disagreed, explaining that “Restem’s argument conflates the anticipation and infringement analyses for product-by-process claims by improperly shifting the analysis from whether the prior art discloses the claimed product to whether the prior art discloses the claimed process.” Id. (emphasis original).

The PTAB found that the cells claimed in the ’176 patent were distinguished from other stem cells based on the cell marker expression profile. See id. In its review, the Federal Circuit determined this finding was supported by substantial evidence. See id. at *4. Specifically, the Federal Circuit stated that “Restem did not provide any testing evidence to show cells produced by [the prior art’s] process would inevitably, as inherency requires, have the claimed cell marker expression profile.” See id. (citing Joint Appendix and In re Montgomery, 677 F.3d 1375, 1380 (Fed. Cir. 2012)). Thus, the Federal Circuit affirmed the PTAB’s decision that Restem failed to show the claims were unpatentable. See id.

Conclusion

The takeaways from this case are twofold.

First, the analysis for invalidity of product-by-process claims is distinct from the analysis for infringement of product-by-process claims. For invalidity of product-by-process claims, it matters whether the prior art discloses the claimed product, not the claimed process.

Second, this case serves as a helpful reminder to patent practitioners that the prosecution history of a patent can have a significant impact during litigation. Thus, practitioners prosecuting a patent should carefully consider the future impact of arguments set forth during prosecution. Similarly, patent litigators should consider utilizing a patent’s prosecution history to their client’s advantage during litigation.

[1] The PTAB found that claim 9 was not obvious for two reasons, but Restem only challenged the PTAB’s alternative basis. See id. at *4. For this reason, the Federal Circuit held that it “need not reach the [PTAB]’s alternative basis to affirm.” See id.

On Friday, February 28, 2025, the United States Patent and Trademark Office (USPTO) announced the withdrawal of the June 2022 memorandum titled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation,” which had been issued by former USPTO Director Kathi Vidal.

The 2022 Memorandum was intended to clarify the Patent Trial and Appeal Board’s (“PTAB”) application of the 2020 decision in Apple Inc. v. Fintiv (“Fintiv”). The rescinded memorandum outlined three scenarios in which the PTAB would not deny institution of an inter partes review (“IPR”) petition based on Fintiv:

  1. The PTAB will not deny institution when a request for denial under Fintiv is based on a parallel International Trade Commission (ITC) proceeding.
  2. The PTAB will not deny institution under Fintiv if the petitioner stipulates not to pursue the same grounds in a parallel district court proceeding or any grounds that could have reasonably been raised in the petition (known as a Soltera stipulation).
  3. The PTAB will not deny institution under Fintiv if a petition presents compelling evidence of unpatentability.

With the rescission of this guidance, the PTAB’s approach to discretionary denials is likely to change in several ways:

  • The PTAB will now consider whether a petition related to an ongoing ITC proceeding is subject to discretionary denial.
  • The PTAB will no longer consider Soltera stipulations as definitive in determining whether to exercise discretion to deny institution.
  • The Board will evaluate the petition based on the Fintiv factors rather than the “compelling merits” analysis outlined in the 2022 Memorandum.

Going forward, practitioners and patent owners are instructed to refer to the PTAB’s precedential decisions for guidance, including Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential as to § II.A). Additionally, practitioners should also be aware that any portion of a PTAB or Director Review decision relying on the 2022 Memorandum will not be considered binding on the PTAB.

On January 27, 2025, the Federal Circuit held that the Patent Trial and Appeal Board (“PTAB”) “has jurisdiction over IPRs concerning expired patents.” See Apple Inc. v. Gesture Tech. Partners, LLC, 2025 WL 299939, *2 (Fed. Cir. Jan. 27, 2025).

Background and Procedural History

Apple, the inter partes review (“IPR”) petitioner, filed an IPR petition in June 2021. See id. at *1. The patent at issue was U.S. Patent No. 8,878,949 (“the ’949 patent”), related to image capture technology and owned by Gesture. See id. Apple asserted that all claims of the ’949 patent were obvious over the prior art. See id. The PTAB held that several claims of the ’949 patent were unpatentable and that others were not shown to be unpatentable. See id. Both parties appealed the PTAB’s decision to the Federal Circuit. On appeal, the Federal Circuit addressed arguments directed towards both jurisdiction and obviousness. This blog discusses only the jurisdictional portion of the court’s analysis.

Patent Owner Argues PTAB Lacks Jurisdiction over Expired Patents

At the Federal Circuit, Gesture argued “that the [PTAB] could not exercise jurisdiction over this IPR because the ’949 patent expired in May 2020, before Apple filed its petition in June 2021.” See id. at *2. Gesture relied on Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U.S. 325 (2018), stating that “jurisdiction over the expired patent becomes limited to the Article III courts” because patent owners lose their exclusionary rights when a patent expires. See id. Rather, the patent owner’s rights “become[ ] limited to collecting damages that formerly existed through an infringement action in an Article III court[.]” See id. Therefore, Gesture reasoned that the PTAB did not have jurisdiction over the ’949 patent.

Federal Circuit’s Holding

Acknowledging that the Federal Circuit has not “squarely addressed whether the [PTAB] may institute IPRs for patents after they have expired[,]” the court stated affirmatively that “the [PTAB] has jurisdiction over IPRs concerning expired patents.” See id. To support its holding, the Federal Circuit relied on Oil States and the public-rights doctrine. See id. at *3. The Federal Circuit also noted that this is not the first case it has reviewed involving expired patents in an IPR decision, which implicitly shows that the PTAB has jurisdiction over expired patents. See id.

Despite its reliance on the same case, the Federal Circuit rejected Gesture’s argument. The Court summarized the Oil States holding, stating that “IPRs fall within the public-rights doctrine and do not violate Article III.” See id. (citing Oil States Energy Services, 584 U.S. at 337). The Court further emphasized the fact that although an expired patent limits a patent owner’s rights, it does not eliminate their rights. See id. For example, a patent owner of an expired patent can sue for past damages. See id. (citing Genetics Inst., LLC v. Novartis Vaccines & Diagnostics, Inc., 655 F.3d 1291, 1299 (Fed. Cir. 2011). In that light, the Federal Circuit reasoned that “Gesture fail[ed] to explain why an IPR, which ‘would have a consequence on any infringement that occurred during the life,’ of the patent, falls outside the scope of the public-rights doctrine solely because the patentee’s prospective right to exclude others has terminated.” See id. (internal citations omitted) (citing Sony Corp. v. Iancu, 924 F.3d 1235, 1238 n.1 (Fed. Cir. 2019).

Conclusion & Takeaway

With the Federal Circuit’s confirmation that the PTAB has jurisdiction to conduct IPR proceedings over expired patents, PTAB practitioners can now proceed with confidence when challenging an expired patent. Apple, Inc. v. Gesture Tech. Partners makes it clear that the PTAB has jurisdiction over IPR proceedings involving expired patents.

The Federal Circuit’s recent decision in Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. 2023-1636, 2024 WL 5114204 (Fed. Cir. Dec. 16, 2024) concerns an obviousness determination based on a motivation to combine.  Below is a discussion of the case and a key takeaway for patent practitioners and innovators.

Before the Patent Trial and Appeal Board (“PTAB”) in an Inter Partes Review, the Petitioner, Palo Alto Networks, Inc., asserted that the patent-at-issue is invalid as obvious over the prior art, arguing that one skilled in the art at the time would have had a motivation to combine two prior art references.  Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. IPR2021-01150, 19-20 (P.T.A.B. Feb. 16, 2023).  Specifically, one reference disclosed all the limitations of the patent-at-issue except one, and a second reference disclosed the absent limitation.  Id.  The Petitioner urged the PTAB to find a motivation to combine the two references because their combination reflects an “application of known techniques [] to improve similar devices [] to provide predictable results in the same way.”  Id. at 24 (internal citation omitted).

The PTAB ruled in favor of the Patent Owner, holding that the Petitioner failed to adduce a “necessary bridge showing that one of ordinary skill in the art would have appreciated” that the two prior art references could be combined to yield the inventive aspects of the patent-at-issue.  Id. at 26.  The Petitioner then appealed the PTAB’s final written decision to the Federal Circuit.

On appeal, the Federal Circuit vacated and remanded the case because the PTAB did not adequately explain why a person of ordinary skill in the art would not have had a motivation to combine the two prior art references.  Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. 2023-1636, 2 (Fed. Cir. Dec. 16, 2024).  In particular, the Federal Circuit could not “discern with any confidence what the Board meant” by “necessary bridge.”  Id. at 11.  “If the Board meant to say that it found no motivation to combine—and we do not know whether it did—it certainly failed to explain why a person of ordinary skill in the art would not have been motivated to [combine the two prior art references].”  Id.

Patent practitioners and innovators should revisit this case when deciding whether to appeal a PTAB decision to the Federal Circuit, especially if the Board’s determination turns on a motivation to combine.  Remember that the PTAB must clearly state its findings.  A final written decision that mixes analysis with ambiguous or untested terminology (i.e., “necessary bridge”) increases the likelihood of a successful appeal.

Sources:

Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. IPR2021-01150 (P.T.A.B. Feb. 16, 2023)

Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. 2023-1636, 2024 WL 5114204 (Fed. Cir. Dec. 16, 2024) 

With U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal’s return to private practice in December 2024 and the future permanent Director yet to be tapped for nomination, it is a good time to reflect on one of the most impactful processes that grew during Vidal’s tenure — Director Review.  It was not until shortly before the end of Director Vidal’s term, on October 31, 2024, that the USPTO implemented 37 CFR § 42.75 and effectively codified the Interim Director Review Process. The following provides an overview of the origin of Director Review, the process as it has been codified, and a recap of the statistics under Director Vidal’s purview.

Background

Director Review was born from the Supreme Court’s decision in United States v. Arthrex, Inc., where the Court explained that “constitutional principles chart a clear course: Decisions by [administrative patent judges (APJs)] must be subject to review by the Director.” 594 U.S. 1, 24 (2021). The Court further held that “the Director has the authority to provide for a means of reviewing PTAB decisions” and “may review final PTAB decisions and, upon review, may issue decisions [themself] on behalf of the Board.” Id. at 25.

Process

Availability and Filings

A party to a Patent Trial and Appeal Board (PTAB) decision may request Director Review of any decision including Derivation Proceedings (35 U.S.C. §§ 135), inter partes review (35 U.S.C. §§ 314, 318), and post-grant review (35 U.S.C. §§ 324, 328).  The request must be filed either: (1) within 14 days of the entry of a non-final decision or a decision to institute a trial, or (2) within 30 days of the entry of a final decision or a decision not to institute a trial.  37 C.F.R. § 42.71(d).

Generally, the appellee is not permitted to respond to a request for Director Review; however, the Director may authorize such a response as well as the submission of new evidence or arguments if warranted (e.g., in cases addressing issues of first impression or issues involving intervening changes in the law or USPTO procedures, guidance, or decisions).

Determination of Whether to Grant Director Review

A request for Director Review is evaluated by the Advisory Committee, which is established by the Director and comprises at least 11 members from various USPTO business units (e.g., Office of the Under Secretary, Patent Trial and Appeal Board, Office of the General Counsel, etc.).  The Advisory Committee then provides a recommendation to the Director, who may take it into consideration along with the underlying decision and the associated arguments and evidence.

The Director may also grant review sua sponte (on the Director’s own initiative)—although it is typically reserved for issues of “exceptional importance,” which are flagged by the PTAB’s internal post-issuance review team.

 Process Following Determination

Should the Director determine to deny review, an order denying the request will be entered into the record. The Director is not required to (and generally opts not to) provide any reasons for denial.

Should the Director determine to grant review, the Director may issue an initial order granting review and identifying the issue(s) to be addressed by a later order.  Alternatively, the Director may issue a single decision that simultaneously grants Director Review and resolves the identified issue(s).

In cases where the Director remands a decision to the Board, the Board is expected to issue a new decision either by: (1) the due date specified in the Director’s remand order, or (2) absent a due date set by the Director, six months from the date of remand.

Challenging Director Review Decisions

Depending on the underlying decision subject to the Director Review order, parties may seek an appeal to the Federal Circuit.  Specifically, a party may appeal a Director Review decision of a final, rehearing, or other appealable decision under 35 U.S.C. §§ 135 (derivation proceeding), 316 (IPR), or 328 (PGR). Conversely, Director Review decisions of Board decisions on institution are not appealable. See 35 U.S.C. § 314(d).

In the alternative, a party may file one request for rehearing a Director Review Decision.  However, such a request must specifically identify what matter the Director Review decision overlooked and may not serve as an opportunity to raise new issues or arguments.

Director Review under Director Vidal

The following chart provides a breakdown of Director Review under Director Vidal (as of Dec. 15, 2024, available at https://www.uspto.gov/patents/patent-trial-and-appeal-board/status-director-review-requests):

In sum, Director Vidal faced 332 requests for Director Review during her two-and-a-half-year tenure. At a high-level, it is evident that Petitioners have had greater success in receiving grants to requests for Director Review– as opposed to their counterpart Patent Owners — 21.2% grant rate compared to a 1.48% grant rate (dismissed, withdrawn, and pending not considered).  Additionally, Director Vidal notably took the initiative to conduct Director Review sua sponte in 36 cases, begging the question of whether the future Director will similarly take the onus to review without a party’s invitation. 

With the number of requests growing year by year and the recent codification of Director Review, Patent Owners and Petitioners alike may feel encouraged to continue to request Director Review—even in the face of limited success rates as shown above.  But, with Director Vidal’s stepping down, one may only guess how the future Director will wield the power of Director Review. 

See generally 37 CFR § 42.75; see also https://www.uspto.gov/patents/ptab/decisions/director-review-process.

The recent decision by the Federal Circuit in Honeywell International Inc. v. 3G Licensing, S.A., issued on January 2, 2025, overturned the Patent Trial and Appeal Board’s (“the Board”) factual and legal holdings in the final written decision of IPR2021-00908. In this article, we delve into the court’s holding and its impact on upcoming patent disputes.

Background: The ’718 Patent and the PTAB’s Decision

At the center of this case was U.S. Patent No. 7,319,718 (“the ’718 patent”)[1], which relates to coding Channel Quality Indicator (CQI) signals in mobile communication systems. These signals enable cellular base stations to adjust data rates dynamically based on the quality of the connection reported by user devices. Claim 1 of the ’718 patent recites:

Honeywell International Inc. (Honeywell) filed a petition for inter partes review (IPR) challenging the claims of the ’718 patent as being unpatentable as obvious over the Philips reference. The sequence table (above) recited in claim 1 of the ’718 patent is disclosed by the Philips reference except for the last two bits in the last row, which are flipped. The Board ultimately declined to hold any of the challenged claims unpatentable as obvious despite acknowledging the single difference between the Philips reference and the claimed invention.

Federal Circuit’s Critique and Reversal

The Federal Circuit reversed the Board’s decision, finding significant legal and factual errors. Judge Dyk’s majority opinion focused on four key areas where the Board went astray:

1. Misapplication of Motivation to Modify

The Board erred by overemphasizing the ’718 patent inventor’s stated goal of maximizing system throughput. The Federal Circuit clarified that the motivation to modify prior art does not have to be the same as the inventor’s purpose. Instead, any motivation recognized in the technical field, such as the Philips reference’s emphasis on most significant bit (MSB) protection, is sufficient to establish obviousness.

2. Ignoring Clear Teachings of Prior Art

The Federal Circuit held that a person of ordinary skill in the art would find it obvious to swap two bits in the basic sequence of the Philips reference. The Board’s failure to adequately consider these teachings undermined its conclusion.

3. Conflation of Obviousness and Anticipation

The Board’s analysis improperly conflated the standards for obviousness and anticipation. By focusing on whether the Philips reference disclosed the exact modification claimed in the ’718 patent, the Board applied a standard closer to anticipation. The Federal Circuit reiterated that obviousness does not require an identical disclosure and the Board committed legal error by deviating from the invalidity theory set forth in the petition.

4. Overemphasis on Industry Consensus

The Board’s reliance on a lack of industry consensus was misplaced. The Federal Circuit emphasized that obviousness does not require a proposed solution to be the preferred or most popular approach. Instead, the question is whether the modification was desirable in light of the prior art.

Tips for Patent Practitioners

In light of the Honeywell decision, patent practitioners should consider emphasizing the legal standard in their petitions and patent owner responses. The Board may not always apply the correct legal standards, and reusing a statement of the law from a previous filing may not be sufficient. A practitioner should consider tailoring their discussion of the legal standard to their specific case and ensure it is supported by more recent decisions, such as Honeywell. 

[1] Available at https://patents.google.com/patent/US7319718B2/en?oq=.+7%2c319%2c718

At the end of each fiscal year running from October 1 through September 30, the Patent Trial and Appeal Board (“PTAB”) provides a summary of its trial statistics. [1] This information provides practitioners with useful insight into trends at the PTAB regarding petitions filed, institution rates, and outcomes. This blog post highlights the statistics and trends at the PTAB for Fiscal Year 2024 (“FY24”).

Petitions Filed

In FY24, 1,288 petitions were filed. Out of these petitions, 97% were for inter partes review (“IPR”) and 3% were for post grant review (“PGR”). [2] Additionally, the PTAB categorized the petitions filed by technology, which showed: 69% electrical/computer, 22% mechanical and business method, 6% bio/pharma, 3% chemical, and less than 1% design. [3]

The FY24 trends for petitions filed were consistent with the trends over the last three years. In FY23, 98% of petitions filed were for IPRs and 2% were for PGRs. The petitions filed sorted by technology for FY23 were categorized as: 69% electrical/computer, 20% mechanical and business method, 7% bio/pharma, 3% chemical, and 0% design (although 5 design petitions were filed). [4] In FY22, 97% of petitions filed were for IPRs and 3% were for PGRs. The petitions filed sorted by technology for FY22 were categorized as: 65% electrical/computer, 23% mechanical and business method, 7% bio/pharma, 4% chemical and 0% design (although 6 design petitions were filed). [5] In FY21, 93% of petitions filed were for IPRs and 7% were for PGRs. The petitions filed sorted by technology for FY21 were categorized as: 65% electrical/computer, 23% mechanical and business method, 7% bio/pharma, 6% chemical, and 0% design (although 3 design petitions were filed). [6]

Institution Rates

In general, it is helpful for PTAB practitioners to understand the institution rate trends to best advise their clients. However, it is particularly helpful to know the institution rates by technology. Institution rates alone cannot determine the outcome of a petition or patent at the PTAB, but it is one of many factors that may be considered.

In FY24, 68% of petitions were instituted. According to the PTAB, 740 petitions were instituted and 347 petitions were denied institution. [7] When assessing the institution rates by patent, the data showed that 74% of patents were instituted. Specifically, 650 patents were instituted and 229 patents were denied institution. [8] This was a 6% higher institution rate than by petition.

The PTAB also provided data for the institution rates by the type of technology. Although bio/pharma accounted for only 6% of the total petitions filed, 73% of bio/pharma petitions were instituted. Electrical/computer and mechanical and business method technologies also resulted in institution rates of greater than 50% at 69% and 66%, respectively. Chemical petitions had an institution rate of 46% and design petitions had a 0% institution rate. [9]

Outcomes

1,212 petitions reached an outcome  at the PTAB between October 1, 2023 and September 30, 2024. Out of the total petitions, approximately 38% (446 petitions) reached final written decisions. Out of those that reached final written decisions, 26% (312 petitions) of the total petitions were all unpatentable, 6% (67 petitions) were all patentable, and 6% (67 petitions) were a mix of patentable and unpatentable. Additionally, 28% (338 petitions) were denied institution, 32% (387 petitions) settled, 2% (19 petitions) requested adverse judgment, and 2% (22 petitions) were dismissed. [10]

Source: The data for this chart can be found at https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2024__roundup.pdf

Similar outcomes were reported for outcomes sorted by patents. There were 1,037 patents that reached an outcome at the PTAB between October 1, 2023 and September 30, 2024. Out of the total patents, approximately 39% (416 patents) reached final written decisions. Out of those that reached final written decisions, 27% (284 patents) of the total patents were all unpatentable, 6% (67 patents) were all patentable, and 6% (65 patents) were a mix of patentable and unpatentable. Additionally, 24% (252 patents) were denied institution, 30% (312 patents) settled, 2% (16 patents) requested adverse judgment, 2% (17 patents) were dismissed, and 2% (24 patents) had mixed outcomes. [11]

Source: The data for this chart can be found at https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2024__roundup.pdf

The PTAB also provided statistics for outcomes sorted by claims challenged. In FY24, there were 17,827 claims challenged. Out of the total claims challenged, approximately 38% (6,891 claims challenged) reached final written decisions, where 30% (5,400 claims challenged) of the total claims challenged were unpatentable and 8% (1,491 claims challenged) were patentable. Additionally, 24% (4,355 claims challenged) were denied institution, 31% (5,603 claims challenged) were challenged but did not reach a final written decision, 4% (766 claims challenged) were disclaimed, and 1% (212 claims challenged) were dismissed. [12]

Source: The data for this chart can be found at https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2024__roundup.pdf

The statistics show that less than 50% of petitions, patents, or claims challenged reached a final written decision at the PTAB. Of the less than half that did reach a final written decision, a significant percentage were all unpatentable. For example, 416 patents reached a final written decision. Out of the 416 patents to reach a final written decision, approximately 68% of patents were all unpatentable and only about 16% were all patentable.

Additionally, there has been a slight upward trend over the past few years for all unpatentable patents with a final written decision, with the trend appearing to begin to level out from FY22 to FY24. The percentage of total patents to reach an outcome with a final written decision of all unpatentable was 27% in FY24, 28% in FY23, 26% in FY22, 17% in FY21, 24% in FY20, and 20% in FY19. [13]

Conclusion

Overall, the most recent trends at the PTAB provide practitioners with useful information. For example, although bio/pharma petitions accounted for only 6% of total petitions filed, the PTAB’s statistics show that the bio/pharma petitions had the highest institution rates. Similarly, 46% of chemical petitions were instituted despite making up only 3% of total petitions filed. This information may be useful for practitioners assessing the likelihood of success for institution, depending on the technology.

However, the trends for outcomes show that only a small percentage of patents are upheld in whole (6%) or in part (6%). For patent owners, this indicates a lower likelihood of success at the PTAB. Additionally, the success rate for patent owners appears to be on a downward trend, based on the data from recent years. On the other hand, the same data shows that 27% of patents are unpatentable, which indicates a comparatively higher likelihood of success for patent challengers. Ultimately, it is important for PTAB practitioners to understand the most recent PTAB trends to provide the best representation for their clients because the data has the potential to inform both strategy and risk analysis.

More information about the PTAB’s trial statistics for FY24 may be found at: https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2024__roundup.pdf.

Sources:

[1] See Statistics, USPTO, https://www.uspto.gov/patents/ptab/statistics (last visited Dec. 26, 2024).

[2] See PTAB Trial Statistics FY24 End of Year Outcome Roundup IPR, PGR, USPTO, 3 https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2024__roundup.pdf (last visited Dec. 20, 2024).

[3] See id. at 4.

[4] See PTAB Trial Statistics FY23 End of Year Outcome Roundup IPR, PGR, USPTO, 3-4, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2023__roundup.pdf (last visited Dec. 20, 2024).

[5] See PTAB Trial Statistics FY22 End of Year Outcome Roundup IPR, PGR, USPTO, 3-4, https://www.uspto.gov/sites/default/files/documents/ptab__aia_fy2022_roundup.pdf (last visited Dec. 20, 2024).

[6] See PTAB Trial Statistics FY21 End of Year Outcome Roundup IPR, PGR, USPTO, 3-4, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2021__roundup.pdf (last visited Dec. 20, 2024).

[7] See supra, PTAB Trial Statistics FY24 End of Year Outcome Roundup IPR, PGR, at 6.

[8] See id. at 7.

[9] See id. at 8.

[10] See id. at 10.

[11] See id. at 11.

[12] See id. at 12.

[13] See id. at 11 (providing FY24 percentage); see also supra PTAB Trial Statistics FY23 End of Year Outcome Roundup IPR, PGR at 11 (providing FY23 percentage); supra PTAB Trial Statistics FY22 End of Year Outcome Roundup IPR, PGR at 12 (providing FY22 percentage); supra PTAB Trial Statistics FY21 End of Year Outcome Roundup IPR, PGR at 12 (providing FY21 percentage); PTAB Trial Statistics FY20 End of Year Outcome Roundup IPR, PGR, USPTO, 14, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2020_roundup.pdf (last visited Dec. 26, 2024) (providing FY20 percentage); PTAB Trial Statistics FY19 End of Year Outcome Roundup IPR, PGR, USPTO, 14, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2019_roundup.pdf (last visited Dec. 26, 2024) (providing FY19 percentage).

At the end of October, the U.S. Patent Trial and Appeal Board (“PTAB”) issued a final written decision in PGR2023-00023, finding all claims of a patent owned by Halliburton Energy Services unpatentable under 35 U.S.C. § 101.

Profrac Holding Corp and U.S. Well Services, LLC filed a petition for post grant review of all claims of U.S. Patent No. 11,373,058 (“the ’058 patent”) which is directed towards systems and methods for operating an electric fracking pump. Claim 1 recited a computer-implemented method for controlling electrical fracturing equipment for fracturing a well, and the method comprising the following steps:

  1. generating a sequence of stimuli for application to a well environment, the sequence of stimuli comprising one or more of particulate concentrations, chemical concentrations, or a pump rate control;
  2. receiving formation response data comprising data from one or more downhole sensors or surface sensors;
  3. selecting a representative system model based on the received formation response data and sequence of stimuli; and
  4. controlling an electrical fracturing pump based on the representative system model.

The PTAB applied the U.S. Supreme Court’s two-part framework of Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 575 U.S. 208 (2014) in conjunction with the USPTO’s Section 101 Guidance. At the first step, the PTAB had to determine whether the claims were directed to one of the four statutory categories of patentable subject matter under § 101. Based on the language of the claim, the PTAB determined that the claims were directed to a process. At the second step of the framework, the PTAB broke down the analysis into two parts with part A having two prongs. At prong one of step 2A, the PTAB had to determine whether the claims recite an abstract idea. The PTAB found that the steps of “receiving formation response data comprising data from one or more downhole sensors or surface sensors” and “selecting a representative system model based on the received formation response data and sequence of stimuli” constituted mental processes. See PGR2023-00023, Paper 26 at 9 (P.T.A.B. Oct. 29, 2024). Looking to the background of the ’058 patent, the PTAB held that the patent teaches that “a technician may review sensor data” and that the representative system model is “typically manually selected by a technician based on observed sensor data.” Id. at 10. With respect to the “controlling” step, the PTAB agreed with the Patent Owner that it is not a mental step. However, the PTAB noted that the patent explains that the “generating” and “controlling” steps can be performed via a generic computer. Id. at 11. The PTAB therefore found that the claims were directed to an abstract idea.

Under step 2a prong two, the PTAB had to determine whether the claims recite additional elements that integrate the abstract idea into a practical application. The PTAB concluded that the “generating” and “controlling” steps do no more than link the abstract idea to a technical field. Id. at 13. The Patent Owner characterized the advantage of the ’058 patent as the “selection of a representative system model that more accurately reflects the well to which it is applied, thereby improving fracturing operations.” Id. The Patent Owner further argued that the patent solves a problem in the field by “providing techniques for optimizing well treatments using representative system models selected according to formation responses to stimuli indicated by sensor data.” Id. at 14. The PTAB disagreed with the Patent Owner and found that the Patent Owner’s arguments supported finding that the mental process steps are the focus of the claimed advance of the patent and that “the other steps do not integrate the exception into a practical application, but rather apply it to a technical field.” Id. at 14. The PTAB found that the “controlling” step does not add meaningful limitations but instead “simply applies the selected representative system model to a pump.” Id. at 15.

The PTAB then moved on to part B of step 2 which required it to determine whether the claims add a specific limitation beyond the abstract idea that is not “well-understood, routine [and] conventional” in the field. Id. (quoting 2019 Revised Guidance, 84 Fed. Reg. at 56). Relying on the background of the patent, the PTAB agreed with the Petitioner that “it will be understood that much of claim 1 was well-understood, routine, and conventional, whether considered individually or as an ordered combination.” Id. at 16. The PTAB explained that the patent makes clear that “adjusting settings on an electrical fracturing pump” is what the patent “teaches to generate a sequence of stimuli.” Id. The PTAB then concluded that the claims of the patent were directed to an abstract idea without something more and are therefore unpatentable.

The PTAB went on to explain that its decision is supported by the Federal Circuit decision in TDE Petroleum Data Sols., Inc. v. AKN Enter., 657 F. App’x 991 (Fed. Cir. 2016) because, like in TDE Petroleum, the PTAB found that the “receiving” and “selecting” steps of the present claims are “‘ordinary steps of data analysis’ that merely involve ‘collecting information’ and ‘analyzing it.’” PGR2023-00023, Paper 26 at 19 (quoting TDE Petroleum Data Sols., Inc., 657 F. App’x at 993). The PTAB disagreed with the Patent Owner that the claims are closely analogous to the claims found patent eligible by the Federal Circuit in EcoServices, LLC v. Certified Aviation Servs., LLC, 830 Fed. App’x 634 (Fed. Cir. 2020). The PTAB explained that the claims in EcoServices are distinguishable because they were directed to physical hardware whereas the present claims did not include any physical hardware.

The PTAB’s decision in this case presents another example of how the Board continues to navigate Section 101 challenges and apply the USPTO’s framework. The PTAB’s decision further highlights the critical role that patent specification plays in a § 101 analysis. The PTAB looks to the specification to confirm the technological advance of the claims. As evidenced by the PTAB’s decision, the specification can be used to prove patent eligibility just as much as it can be used to disprove it. When drafting applications, patent applicants should pay particular attention to the background section and should be careful in how they describe the technological field or prior art. If the specification admits that some of the claim elements are well-understood or routine in the art, the patent applicant could face difficulties in opposing a §101 rejection or challenge. Patent applicants should also be specific in how they describe the advances and inventiveness of their claimed invention and should include details of how the applicant’s technological solution is implemented.

Furthermore, for patent owners facing a § 101 challenge at the PTAB, this decision demonstrates the importance of how a patent owner characterizes their claimed invention or the improvements their invention provides. Here, the PTAB found that the way the Patent Owner characterized the claimed advance of its patent in its Patent Owner Response “show[ed] why the[] additional elements do not do anything more than link the judicial exception to the technical field.” PGR2023-00023, Paper 26 at 13. In light of this decision, Patent Owners should be careful in their word choice when describing their claimed invention and should strategize ways on how best to present their claimed technological advances to the PTAB.