Earlier this month, the United States Patent and Trademark Office (USPTO) published a notice in the Federal Register providing guidance regarding the proper presentation of prophetic examples and working examples in a patent application. According to the guidance, the proper presentation of prophetic and working examples requires them to be described in a manner such that they are clearly distinguished.

Prophetic examples (a.k.a., paper examples) describe “reasonably expected future or anticipated results.” In other words, they describe experiments or results that have not in fact been performed or obtained. In contrast, working examples describe work that was performed or experiments that were conducted, which yielded actual results.  According to the Manual of Patent Examining Procedure (MPEP), prophetic examples should not be described using the past tense. See M.P.E.P. 608.01(p), subsection II.  Rather they may be written in future or present tense.

Written Description and Enablement Requirements

According to the guidance, prophetic examples may be used to meet the written description requirement and the enablement requirement. Also, a patent application does not need to provide a guarantee that a prophetic example actually works. The presence of a prophetic example alone is a sufficient basis for establishing that the specification is not enabling. However, when a prophetic example is described in a patent application in a manner that is ambiguous or that implies that the results are actual, claims of the patent applications can be rejected for failing to satisfy the enablement and/or written description requirements of 35 U.S.C. 112(a).

Applicant’s Duty of Disclosure

According to the guidance, knowingly describing in a patent application prophetic examples as working examples is fraud.  For example, “[k]nowingly asserting in a patent application that a certain result ‘was run’ or an experiment ‘was conducted’ when, in fact, the experiment was not conducted or the result was not obtained is fraud.”

Given the notice’s emphasis on the importance of clearly distinguishing prophetic and working examples, instead of solely relying on grammatical tense for the distinction, expressly labeling an example in a patent application as either a prophetic example or a working example may be beneficial in certain situations.

This week, in United States v. Arthrex, Inc., the Supreme Court vacated and remanded a decision by the Court of Appeals for the Federal Circuit (“the CAFC”), holding that the administrative patent judges (“APJs”) at the Patent Trial and Appeal Board (“the Board”) are unconstitutionally appointed. While the CAFC came to the same conclusion as the Supreme Court, the CAFC’s response was to make APJs removable at will by the Secretary of Commerce. In the Supreme Court’s words, the CAFC’s solution “satisfied no one.” The Court, in a plurality decision, formulated its own solution: grant the Director of the United States Patent and Trademark Office (“the Director”) the power to review the decisions of the APJs.

Background

Arthrex, Inc., a medical device company headquartered in the United States, is the assignee of a large patent portfolio, including U.S. Patent No. 9,179,907 (“the ’907 patent”). In 2015, Arthrex filed suit in the Eastern District of Texas (“the District Court”), alleging numerous claims of patent infringement by the British multinational Smith & Nephew plc and its U.S. subsidiary ArthroCare Corporation (collectively, “Smith & Nephew”). One of the many patents Arthrex accused Smith & Nephew of infringing was the ’907 patent.

A little over a year after the filing of Arthrex’s complaint, Smith & Nephew petitioned for inter partes review (“the IPR”) of multiple claims of the ’907 patent, including claims 4, 8, 16, and 27. Meanwhile, just a few weeks after Smith & Nephew’s petition, a jury in the District Court found that Arthrex had proved by a preponderance of the evidence that Smith & Nephew infringed claims 4, 8, 16, and 27 of the ’907 patent. Shortly thereafter, Arthrex and Smith & Nephew settled and filed a Joint Stipulated Motion for Dismissal with Prejudice, which the District Court granted. However, the parties agreed that their settlement did not preclude the IPR, and, in 2018, the Board found the challenged claims of the ’907 patent had been shown to be unpatentable.

Arthrex appealed the Board’s decision to the CAFC. In its appeal, Arthrex argued that, under the Appointments Clause of the Constitution, the APJs were unconstitutionally appointed. For context, the Appointments Clause distinguishes between two types of officers. First, are so-called “principal officers,” such as ambassadors and Supreme Court Justices, who must be appointed with the advice and consent of the Senate. Second, are the unfortunately titled “inferior officers,” officers specified by acts of Congress, and whose appointment Congress may place in the President, in the head of an executive department, or in a court. Essentially, Arthrex’s argument was that the APJs are “principal officers” – therefore, an APJ’s appointment by the Secretary of Commerce is unconstitutional.

The CAFC agreed with Arthrex that APJs are “principal officers” because neither the Secretary of Commerce (“the Secretary”) nor the Director had the authority to review APJ decisions or remove an APJ at will. The CAFC “solved” this constitutional violation by making APJs removable at will by the Secretary, rending them “inferior rather than principal officers.” Then, the CAFC vacated and remanded the Board’s decision. Both Arthrex and Smith & Nephew, as well as the United States government (“the Government”), requested a rehearing en banc, which the CAFC denied. Subsequently, each of these parties requested review of the panel’s decisions in three petitions for certiorari, all of which the Supreme Court granted.

The Supreme Court’s Opinion, Parts I and II

Chief Justice Roberts delivered Parts I and II of the Court’s opinion, which was joined by Justices Alito, Gorsuch, Kavanaugh, and Barrett.

The Court’s opinion begins with a brief history of the Appointments Clause before citing to Edmond v. United States, 520 U.S. 651 (1997), wherein the Court held that an “inferior officer” must be “directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.” (Emphasis added). In the context of the Board, the Court writes that APJs, while designated by Congress as “inferior officers,” in fact exercise “significant authority” when they issue decisions on patentability. However, the APJ’s decisions may be reviewed only by a petition for rehearing, and that Congress unambiguously stated that such review is a power designated to the Board. Hence, the Director does not “direct” or “supervise” decisions by the APJs on issues of patentability, and APJs are effectively more akin to “principal” rather than “inferior” officers.

Smith & Nephew, along with the Government, countered by positing that the Director may still affect the Board’s decision process by, for example, deciding whether to initiate an IPR, designating the APJs who will decide a particular case, and potentially vacating his or her earlier decision to institute an IPR.  The Supreme Court rejected these arguments, finding that Smith & Nephew and the Government pointed to the problem, not the solution. By outlining a roadmap for the Director to “evade a statutory prohibition on review without having him take responsibility for the ultimate decision,” the parties highlighted the hazards of the current system.

Next, the Court’s opinion turns to arguments by Smith & Nephew and the Government that there are other contemporary officers in the modern administrative state that are appointed by heads of departments but still exercise final authority. However, the Court rejected the other officers as incomparable. For example, while Smith & Nephew and the Government point to the Board of Veteran Affairs, which may make final decisions but whose decisions are reviewed by the Court of Appeals for Veteran Claims, the Court notes in its opinion that the Court of Appeals for Veteran Claims is an Executive Branch entity.

The Court’s opinion concludes by holding that the APJ’s wield unreviewable authority that is “incompatible with their appointment by the Secretary to an inferior office.” It goes on to state explicitly that “[o]nly an officer properly appointed to a principal office may issue a final decision binding the Executive Branch in the proceeding before us.” Having found the exercising of “significant authority” by the APJs in adjudicating the rights of private parties to be unconstitutional, the opinion then turns to the appropriate way to resolve the constitutional violation.

The Supreme Court’s Opinion, Part III

 Chief Justice Roberts delivered the opinion of the Court with respect to Part III, which was joined by Justices Alito, Kavanaugh, and Barrett.

In fashioning its solution, the Court declined to adopt Arthrex’s proposal to hold the “entire regime” of IPRs unconstitutional. The Court looked to the structure of the Patent and Trademark Office and spotted a “clear course,” wherein APJs would be subject to the Director’s review. By the Court’s reasoning, the Director already had authority from Congress to oversee APJs in all areas except review of the Board’s decisions on patentability. While the current patent statute prevents the Director from rehearing and reversing a final decision by the APJs, the Court’s opinion states that giving the Director “authority to take control” of a Board proceeding would cause the APJs to “properly function as inferior officers.”

The plurality emphasizes that its decision does not render the current patent statute incomplete or unworkable. Essentially, the Court did not alter the patent statute, except to the extent that the Director may supervise APJs in “adjudicating petitions for inter partes review.”

To remedy the present dispute between Arthrex and Smith & Nephew, the Court remanded to the Acting Director of the Patent and Trademark Office for him to decide whether to rehear the original petition.

Concurrences and Dissents

Justice Gorsuch

Justice Gorsuch filed an opinion concurring in part and dissenting in part. His dissent begins by discussing the history of patent rights in the United States. He considers the decision to allow Executive Branch officials to “cancel” issued patents to be a departure from the Constitution’s separation of powers. Hence, allowing those officials to “cancel” issued patents without being accountable to anyone else in the Executive Branch would be an even greater departure, and he joined with the Court’s opinion as to Parts I and II. However, with respect to Part III, Justice Gorsuch declined to join.

In his dissent from the Court’s crafted solution in Part III, Justice Gorsuch points out that Congress did not put any “fallback” provisions in the statute to suggest a solution, and that the present violation is a “combination of separate statutory provisions that conspire to create a constitutional violation.” He goes on to recognize that there are multiple possible solutions, not just the one the Court chose. “In circumstances like these, I believe traditional remedial principles should be our guide.” (Emphasis added). In effect, he would rather “set aside” the Board’s decision in the present case, not “sever” a portion of the statute entirely, as the plurality does.

One key argument Justice Gorsuch makes is that the Court’s decision in Part III to give the Director the authority to review is based on the “standard federal model” for agency adjudication, but he critically notes that Congress specifically drafted the current patent statute to reject this model. “Multiple amici contend that Congress did so specifically to ensure APJs enjoy ‘independence’ from superior executive officers and thus possess more ‘impartiality.’”

The dissent concludes by noting that each decision by the Supreme Court seems to highlight more and more problems that exist within the present statutory scheme, particularly since the Court’s decision in Oil States a few years ago.

Justice Breyer

Justice Breyer filed an opinion, joined by Justices Sotomayor and Kagan, concurring in the judgment in part and dissenting in part.

First, Justice Breyer argues that the Appointments Clause issue is not as fraught as the Court seems to believe. In his view, the Court should interpret the Appointments Clause as giving Congress “a degree of leeway” in establishing and empowering offices. He cites to the Court’s decision in Buckley v. Valeo, noting that “[n]othing in [the provisions at issue] represents an effort by the ‘Legislative Branch [to] aggrandize itself at the expense of the other two branches.’”

Second, Justice Breyer considers the Court’s decision “formalist” and a “judicial-rules-based approach,” and that instead the Court should embark on a “functional examination of the offices and duties in question.” He cites to the case of Wiener v. United States, 357 U.S. 349 (1958) as a good example of how the Court can consider “the practical consequences that are likely to follow from Congress’ chosen scheme.” Under this reasoning, Justice Breyer states, the Court’s result would be undermined because the need for expertise and the importance of avoiding political interference led Congress to grant the APJs a “degree of independence.” He goes on to contend that the Court’s ruling does not have the precedential foundation that the Court claims.

Justice Breyer concludes by lamenting the shift to a more formalist separation of powers doctrine, rather than a functional one, but he agrees with the Court’s chosen remedy because it does address the specific problem of the reviewability of APJ decisions.

Justice Thomas

Finally, Justice Thomas filed a dissenting opinion, which Justices Breyer, Sotomayor, and Kagan joined with respect to Parts I and II.

In Part I, Justice Thomas lays out the hierarchical structure of the Executive Branch, and points out that the APJs are on a relatively low rung. He proposes leaving the system intact, arguing that because “both the Federal Circuit and this Court would take so much care to ensure that administrative patent judges, appointed as inferior officers, would remain inferior officers at the end of the day suggests that perhaps they were inferior officers to begin with.”

In Part II, he cites Supreme Court precedent on the Appointments Clause to the extent that the Court has never developed a “rigid test” for dividing “principal officers” from “inferior ones.” However, he states “[t]here can be no dispute that administrative patent judges are, in fact, inferior,” noting their lower rank to at least two different officers, that they serve in the Patent and Trademark Office run by the Director, and that they are appointed by the Secretary of Commerce. He goes on to critique the majority’s opinion almost point-by-point, concluding with a theory that the “Court appears to suggest that the real issue is that this scheme violates the Vesting Clause.”

In Part III, Justice Thomas dissents from the Court’s remedy. The Court’s remedy, he contends, “makes extra clear what should already be obvious: Administrative patent judges are inferior officers.” At any rate, whether they are or are not principal officers does not support the Court’s proposed remedy, Justice Thomas argues. If the APJs are “principal officers,” then Arthrex would be entitled to a new hearing before officers “untainted by an appointments violation.” If APJs are “inferior officers,” then no constitutional violation has occurred because the Board did not misinterpret its statutory authority or try to prevent Director review.

Lastly, in Part IV, Justice Thomas engages in a lengthy (and in his words “unnecessary to resolve this suit”) analysis of the Court’s Edmond decision, or at least the part cited by the majority, and considers how it “aligns with the text, history, and structure of the Constitution.”

Conclusion

In an immediate sense, the Supreme Court’s decision in Arthrex returns the present case to the Acting Director of the Patent and Trademark Office to decide whether or not to rehear the original IPR petition. The plurality’s decision in Part III seems fairly straightforward: the Director may review the decisions of the Board. However, complicated broader issues remain unaddressed, such as the practicality of the Director reviewing what could be hundreds or thousands of Board decisions, as well as ethical concerns of granting the Director (a political appointee) review authority. Finally, the several dissents and concurrences in this case indicate separation of powers questions that the Court has yet to resolve.

 

Further Reading:
1) https://www.ptablaw.com/2020/06/29/federal-circuit-grants-remand-in-ex-parte-reexam-while-world-waits-for-supreme-court-to-weigh-in-on-arthrex/
2) https://www.ptablaw.com/2019/11/21/the-federal-circuits-determination-that-administrative-patent-judges-are-unconstitutionally-appointed/

Earlier this month, the Patent Trial and Appeal Board granted a request for rehearing in Maxlite, Inc. v. Jiaxing Super Lighting Elec. Appl. Co., Ltd., No. IPR2020-00208, Paper 14 (P.T.A.B. June 1, 2021), thereby instituting a previously-denied Inter Partes Review. In the decision, the Board admitted to abusing its discretion in initially denying Institution.

In Maxlite, the Petitioner submitted a request for rehearing under 37 C.F.R. § 42.71(d), which provides that:

A party dissatisfied with a decision may file a request for rehearing. The burden of showing a decision should be modified lies with the party challenging the decision. The request must specifically identify all matters the party believes the Board misapprehended or overlooked, and where each matter was previously addressed in a motion, opposition, or a reply.

The Petitioner sought rehearing on two grounds. First, “[t]he Board’s denial of Institution was based on an erroneous conclusion of law that improperly shifts the burden to [Petitioner] to bring forth all arguments with respect to why the challenged claims are not entitled to an earlier priority date.” Second, “the Board improperly shifted the burden to [Petitioner] with respect to the ’636 [Chinese] application inventorship issue.”

As for the first issue, the Board incorrectly shifted the burden of production back to the Petitioner notwithstanding that the Patent Owner failed to support the priority date with respect to all limitations of the challenged claims. The Petitioner made the initial showing that the challenged patent was potentially obvious because of a prior art patent. Typically, when a Petitioner makes this showing, the burden then shifts to the Patent Owner to provide evidence that the challenged patent has a priority date before the priority date of the asserted prior art. Here, the Patent Owner relied on the priority date of a Chinese application that was an ancestor to the challenged patent. In doing so, the patent owner made a showing that the ancestor application supported just one of the limitations in the challenged claims. At first, the Board incorrectly found this support sufficient to satisfy the Patent Owner’s burden to claim priority from the ancestor application. However, on rehearing, the Board recognized that this ruling was in error because the Patent Owner needed to show that the ancestor application supports all the limitations in the challenged claims before shifting the burden back to the Petitioner.

As for the second issue, the Board did not address inventorship of the Chinese application when it first denied Institution. On rehearing, the Petitioner contended that the Board “erroneously failed to consider [Petitioners]’s argument that Patent Owner is not entitled under 35 U.S.C. § 119(a) to rely on the [ancestor] application because that application does not share a single common inventor with the [challenged] patent.” According to the Federal Circuit, a foreign application may only create priority under 35 U.S.C. § 119(a) “if that application was filed by either the U.S. applicant himself, or by someone acting on his behalf at the time the foreign application was filed.” However, in MaxLite, the ancestor application and the challenged patent did not share common inventors, nor was there evidence that the ancestor application was filed on behalf of the inventors of the challenged patent. The Patent Owner sought to allege a sufficient nexus between the ancestor application and the challenged patent by showing that both shared a common assignee. On rehearing, the Board found that the Patent Owner’s assertion was insufficient to satisfy its burden of proving inventorship. Instead, the Board found no nexus between the inventors of the ancestor application and the challenged patent. Thus, the Patent Owner did not provide adequate evidence to support a finding that the challenged patent can properly claim the priority of the ancestral application.

This case demonstrates a viable recourse exists for Petitioners who might be dissatisfied with the Board’s denial of Institution. Because the Board is willing to reverse denials of Institution when it abuses its discretion, Parties should keep in mind 37 C.F.R. § 42.71(d) and conduct a thorough review of the Board’s decision. In reviewing the Board’s decision, Parties should especially keep an eye out for issues that the Board might have decided incorrectly or failed to address entirely. While the granted rehearing seen in Maxlite is rare, 37 C.F.R. § 42.71(d) and the Board’s decision provide hope to Parties initially denied Institution.

Earlier this month, in the precedential decision  New Vision Gaming & Development, Inc. v. SG Gaming, Inc., FKA Bally Gaming, Inc., the Court of Appeals for the Federal Circuit (“the CAFC”) vacated and remanded a decision by the Patent Trial and Appeal Board (“the Board”) on the ground that the decision issued after the CAFC’s Arthrex, Inc. v. Smith & Nephew, Inc. decision (where the CAFC made administrative patent judges of the Board “inferior officers” under the U.S. Appointments Clause). New Vision is appealing two covered-business method review final written decisions in which the Board held all claims of the patents at issue patent ineligible under 35 U.S.C. § 101. The CAFC’s opinion, delivered by Judge Moore, is short and largely unremarkable. What is more interesting, however, is Judge Newman’s dissent.

While Judge Newman agreed that Arthrex applied and also agreed with vacatur, she went on to state that the CAFC should have addressed a threshold issue that would have made remand unwarranted: New Vision and SG Gaming had agreed to a forum selection clause. “New Vision and SG Gaming, Inc. mutually agreed, in their patent licensing agreement, that if ‘any dispute’ arose, jurisdiction would be ‘exclusive’ in the appropriate federal or state court in the state of Nevada.”

Judge Newman noted that originally, when the dispute first arose, New Vision sued SG Gaming in Nevada district court, per the agreement, but that SG Gaming then went to the Board and filed the petitions on appeal. When the issue of the forum selection clause was raised, the Board refused to apply it. The Board stated, in its Institution Decision, that it “[does] not discern, nor has Patent Owner pointed to, any portions of chapter 32 or § 18 of the AIA, or authority otherwise, that explicitly provide for a contractual estoppel defense.” Citing the Supreme Court’s 1972 decision in M/S Bremen v. Zapata Off-Shore Co., Judge Newman found that precedent required the forum-selection clause be respected.

Andrew Hirshfield, the Acting Director of the Patent and Trademark Office, intervened in the appeal, arguing that the CAFC had no jurisdiction under 35 U.S.C. § 324(e) (“The determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable.”). Judge Newman disagreed, however, finding that “the Board’s rejection of the parties’ choice of forum is indeed subject to judicial review, for § 324(e) does not bar review of Board decisions ‘separate . . . to the institution decision.’” (citing Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321, 1332 (Fed. Cir. 2020)).

Judge Newman concluded by stating: “[T]he question of forum selection is not thereby resolved; it is merely postponed to determination by a new, constitutionally organized Board. It is both inefficient and unnecessary to require replacement PTAB proceedings if the new PTAB does not have jurisdiction to proceed.” Although she ultimately agreed with the Court’s decision to remand under Arthrex, Judge Newman’s dissent in favor of judicial efficiency is compelling. Future litigants who are subject to a forum-selection clause should bear the dissent in mind when contemplating petitions to the Board. Ultimately, whether the parties’ forum-selection clause plays a part in the case on remand, or in any forthcoming appeals, remains to be seen.

Further Reading: In the case of Kannu v. Samsung (discussed in this post by my colleague Richard Waterman) decided earlier this year by the District Court for the Southern District of New York, the Court held that petitions for inter partes review did not fall within the scope of an agreement’s forum-selection clause.

On April 15, 2021, the United States Patent and Trademark Office (“USPTO”) implemented the COVID-19 Prioritized Examination Pilot Program (“Pilot Program”) to fast-track ex parte appeals of products or processes subject to an applicable FDA approval for COVID-19 use.

Generally, appeals to the Patent Trial and Appeal Board (PTAB) are taken up for decision in the order they are docketed, with an average of 13 months from the time the PTAB receives the appeal to the date of the final decision.

For qualifying appeals, the PTAB has set a target of issuing a decision on the merits of the appeal within six months from the date that a petition for fast-track review is granted.  Appellants can expect a decision on their petition for fast-track status in approximately two business days.

To qualify for fast-track status under the Pilot Program, appellants must meet the following three conditions:

  1. The application must be an original utility, design, or plant non-provisional application claiming a product or process subject to an applicable FDA approval for COVID-19 use;
  2. The appeal must be an ex parte appeal for which a notice of appeal has been filed and a PTAB docketing notice has been issued by the USPTO (i.e., the appeal is pending before the PTAB); and
  3. The appellant must file a petition under 37 C.F.R. § 41.3 and certify that the application involved in the appeal claims products or processes that are subject to an applicable FDA approval for COVID-19 use.

The USPTO is offering the Pilot Program on a temporary basis and will accept petitions for fast-track review until 500 appeals have been accepted into the Pilot Program.

Hearings in ex parte appeals under the Pilot Program will be conducted according to ordinary PTAB hearing procedures.

Currently, the PTAB is conducting hearings by telephone only, until further notice.

In In re: Board of Trustees of the Leland Stanford Junior University (“Stanford”), No. 2020-1012 (Fed. Cir. Mar. 11, 2021), the Federal Circuit was presented another opportunity to analyze patent-eligible subject matter.  In affirming the § 101 rejection of the claims, the court held the mathematical calculations and statistical modeling improvements to determinations of haplotype phase were not sufficient to make the claims patent eligible.

In 2012, Stanford filed Application No. 13/445,925 (“the ’925 application”) directed to methods and computing systems for determining haplotype phase, a process for determining the parental source of an inherited gene.  The invention uses calculations and statistical modeling of large amounts of genetic data to determine haplotype phase.  The methods purportedly improved the number of haplotype phase predictions over those in the prior art by incorporating additional data, such as “linkage disequilibrium data” and “transition probability data.”  According to Stanford, improved haplotype phasing techniques have the potential to revolutionize personalized health care.  The Patent Trial and Appeal Board rejected the claims as covering patent ineligible abstract mathematical algorithms and mental processes and Stanford appealed.

The Federal Circuit held that the ’925 application did not contain patent eligible claims under the Alice framework.  Stanford argued that the specific application of the steps was novel and enabled accurate haplotype phasing at 97.9% of all heterozygous positions, whereas the previous methods only achieved approximately 80%.

The court noted that, even accepting the improvements as true, current legal precedent would not protect the claims no matter how groundbreaking the advance.  The court held that: (1) the claims were directed to ineligible mathematical algorithms; (2) the claims were not transformed into an eligible form by any specialized computer memory or hardware, whether the elements were taken individually or in combination; and (3) without more, the improvements in the mathematical analysis itself was an insufficient innovation to warrant patent protection.

Earlier this month, in the precedential decision Uniloc 2017 LLC v. Facebook Inc., the Court of Appeals for the Federal Circuit (“the CAFC”) upheld the Patent Trial and Appeal Board (“the Board”) on the issue of estoppel (or lack thereof) when multiple parties file multiple, substantially similar petitions challenging a patent’s patentability.

1) The Proceedings Before the Board

The prosecution history is tangled:

First, in November 2016, Apple filed a petition for inter parties review (IPR) of U.S. Patent No. 8,995,433 (“the ’433 patent”) assigned to Uniloc, challenging claims 1-6 and 8.

Second, in May and June 2017, Facebook filed two petitions (“Facebook’s ’1427 and ’1428 petitions”) for inter partes review of the ’433 patent. The ’1428 petition was substantially identical to the Apple IPR, and was filed along with a motion to join Apple’s IPR. The ’1427 petition challenged claims 1-8 of the ’433 patent on new grounds.

Third, in September 2017, LG filed IPR petitions substantially identical to Facebook’s ’1427 and ’1428 petitions, along with a motion to join Facebook’s ’1427 and ’1428 petitions.

Fourth, in October 2017, the Board instituted Apple’s IPR and granted Facebook’s motion to join Apple’s IPR. Then, a few months later, the Board instituted Facebook’s ’1427 and ’1428 petitions. Additionally, the Board instituted IPRs based on LG’s petitions and granted LG’s motion to join Facebook’s ’1427 and ’1428 petitions. At this point, Facebook was party to its own ’1427 and ’1428 petitions and Apple’s IPR challenging claims of the ’433 patent, and LG was party to Facebook’s ’1427 and ’1428 petitions.

Fifth, in May 2018, the Board issued a final written decision in the Apple IPR upholding the patentability of all challenged claims. Later that month, the Board dismissed Facebook in part from the ’1427 petition (with respect to all but claim 7), finding Facebook estopped from maintaining the proceeding with respect to the claims that had been challenged (and upheld) in the Apple IPR. However, LG was not similarly estopped.

Finally, in the Board’s final written decision in the consolidated IPRs for Facebook’s ’1427 and ’1428 petitions, the Board found all challenged claims unpatentable. Uniloc sought rehearing, which was denied. Uniloc then appealed on several grounds, including that 1) the Board erred in not finding LG estopped from challenging claims 1-8 of the ’433 patent and 2) in finding Facebook not estopped from challenging claim 7 of the ’433 patent.

2) Whether the Board Could Review Uniloc’s Estoppel Arguments

On appeal, the CAFC first addressed whether it could review Uniloc’s estoppel argument. Uniloc contended that because Facebook was estopped by the Apple IPR decision from maintaining a challenge to those claims, LG (by virtue of having joined Facebook, who had joined Apple) was an alleged “real party in interest [RPI] or privy of the petitioner” and should have been estopped as Facebook was. This argument was legally complicated because while 35 U.S.C. § 314(d) dictates that the “determination by the Director [of the Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable,” the CAFC’s case history was mixed when it came to reviewability.

The CAFC ultimately found that it was not precluded from reviewing the Board’s decision, citing to the “strong presumption of reviewability of agency action” and its holding in Credit Acceptance Corp. v. Westlake Services, 859 F.3d 1044 (Fed. Cir. 2017). “Critically, the particular circumstances in Credit Acceptance, i.e., one in which no cause for termination at the time of petition existed and the basis for termination developed while the proceeding was ongoing, is exactly that which happened here.” (Emphasis added).

3) Affirmance of Finding that LG Not Estopped from Challenging Claims 1-8 of the ’433 Patent – Serial Joinder Doesn’t Require Finding of Real Party in Interest or Privity

 On the merits regarding whether LG was estopped from challenging claims 1-8 of the ’433 patent on the same grounds that Apple and Facebook had, the CAFC stated that the determinations as to whether a party is a real party in interest or in privity with another are highly fact-dependent. Regarding real party in interest, the test includes “whether a []party exercises [or could exercise] control over a petitioner’s participation in a proceeding, or whether a []party is funding the proceeding or directing the proceeding.” Regarding privity, “it is important to determine whether the petitioner and the prior litigant’s relationship . . . is sufficiently close that it can be fairly said that the petitioner [already] had a fully and fair opportunity to litigation the issues it now seeks to assert.”

The CAFC agreed with the Board that the evidence did not establish “control” for the real party in interest analysis. “[J]ust because LG expressed an interest in challenging the ’433 patent’s patentability . . . does not by itself make LG an RPI to Facebook’s IPR.” Additionally, the CAFC found the record insufficient to establish any sort of “preexisting, established relationship” that would indicate “coordination.” “The mere fact that the Board procedurally required LG and Facebook to consolidate their arguments and evidence in combined filings in this proceeding does not, without more, make them privies . . .”

4) Affirmance of Finding that Facebook Not Estopped from Challenging Dependent Claim 7 of the ’433 Patent, Notwithstanding Estoppel With Respect to Independent Claim 1

Similarly, the Board found that Facebook was not estopped from challenging claim 7 of the ’433 patent. Uniloc asserted that because the Board found Facebook estopped from challenging claims 1-6 and 8, the estoppel should apply to claim 7 because claim 7 depends on claim 1. The CAFC disagreed with Uniloc, finding the plain language of the statute rebutted an estoppel argument.

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) . . . may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 35 U.S.C. § 315(e)(1)(emphasis added).

The CAFC also found its case law on the issue supported the Board’s decision, and found against Uniloc.

5) Conclusion

Uniloc also challenged the obviousness determinations, but the CAFC affirmed the Board, finding the decision supported by substantial evidence. The CAFC’s review of the Board’s institution decision, despite an occasionally confusing case history, may indicate an increased likelihood of reviewing estoppel-related decisions in the future. Further, although here there was a lack of evidence regarding a relationship (either as a real party in interest or in privity) between LG and Facebook, which may distinguish this case from future cases, the precedential nature of this decision may indicate the CAFC’s reluctance to reverse the Board on findings of estoppel, generally. Petitioners should take note of the potential advantages of filing substantially similar petitions when challenging patents facing simultaneous challenges from other petitioners. However, the possibility of being estopped based on another petition also means that petitioners should exercise discretion.

In SynQor, Inc. v. Vicor Corp., Case No. 19-1704 (Fed. Cir. Feb. 22, 2021), the Federal Circuit vacated the inter partes reexamination decision from the Patent Trial and Appeal Board (the “Board”).  As part of the decision, the court held that collateral estoppel (issue preclusion) can apply where the Board’s prior determinations involving different claims of related patents addressed the same issue(s).

In the PTAB’s inter partes reexamination decision, the Board held several original claims and newly-presented claims of the 7,072,190 patent (“the ’190 patent”) unpatentable as obvious.  SynQor raised several arguments on appeal, but only two are of relevance in this discussion.  Namely, in appealing the decision concerning the newly presented claims, SynQor argued the decision should be vacated because the patent had expired during the appeal process.   As to the original claims, SynQor argued that common law issue preclusion arising from the Boards’ decisions in two patent family member reexamination proceedings collaterally estopped the Board from making its obviousness holding in the reexamination of the ’190 patent.  Each is addressed, in turn, below.

On the obviousness of the newly-presented claims, the Federal Circuit found that the issue was moot.  The Court reasoned that because newly-presented claims during reexamination do not go into effect unless a reexamination certificate incorporates them, and further because here a reexamination certificate could not amend the claims due to the ’190 patent’s expiration, the issue of whether the newly-presented claims were obvious or not was moot.  See 37 C.F.R. § 1.520(j) (“[N]o amendment, other than the cancellation of claims, will be incorporated into the patent by a [reexamination] certificate issued after the expiration of the patent.”).  Consequently, the Federal Circuit vacated the Board’s decision as to those claims.

On the original claims and the collateral estoppel issue, the Federal Circuit’s decision requires a bit of background.  Importantly, two other patents in same family as the ‘190 patent were subject to reexamination proceedings, patent numbers 7,564,702 (“the ’702 patent”) and 8,023,290 (“the ’290 patent”).  The same combination of prior art references, Steigerwald and Cobos, was presented in the reexamination proceedings of each of the three patents.  In the ’702 patent and ’290 patent proceedings, the Board found the prior art references incompatible, and therefore determined the claims at issue were not unpatentable.  The Federal Circuit affirmed each of those decisions.  However, in the ’190 reexamination, the Board found the prior art references were compatible in its obviousness decision.  The Board’s inconsistent treatment of the compatibility of the prior art references became the basis of the issue preclusion claims.

The Federal Circuit reviewed the applicable statutory provisions and determined that issue preclusion is available in inter partes reexaminations.  The court noted that prior decisions had held that issue preclusion applies to inter partes reviews.  The estoppel that results from inter partes reexamination indicated that issue preclusion should apply equally there also.  The rights and procedures available in a reexamination proceeding met the requirements for issue preclusion to be available generally.

On the facts, the Federal Circuit held that the issues related to the prior art were the same in all three patent reexaminations.  Because the Board had found the same prior art incompatible in the ’702 and ’290 reexamination, it could not now determine the opposite in the ’190 patent proceeding.  Although the court determined it was not clear that the Board relied on new evidence to reach its different conclusion, the principles of collateral estoppel would still apply even if new evidence exists.  This type of second bite at the apple is the interest in finality that collateral estoppel is intended to prevent.  Therefore, the Federal Circuit vacated the Board’s decision on the original claims.

Earlier this month, in the precedential decision M & K Holdings v. Samsung Electronics Co., the Court of Appeals for the Federal Circuit (“the CAFC”) upheld the Patent Trial and Appeal Board (“the Board”) in finding certain references qualified as printed publications. However, the CAFC found the Board erred in finding that a challenged claim anticipated when the petition for inter partes review (“IPR”) asserted only obviousness.

In 2018, Samsung filed a petition for IPR on certain claims of US Patent No. 9,113,163 (“the ’163 patent”). The ’163 patent is directed to an efficient method for compressing video files, with claims covering methods for constructing a “motion vector candidate list,” selecting a candidate from that list, and making an optimal motion prediction for a current block.

The Board found all claims of the ’163 patent unpatentable. In its conclusions, the Board found three disputed references (“WD4-v3,” “Park,” and “Zhou”) were publicly accessible before the ’163 patent’s priority date, and the Board held claim 3 was anticipated by one of Samsung’s cited references, although Samsung’s petition had not asserted claim 3 was anticipated. M&K subsequently appealed.

M&K based its appeal on the grounds that the Board erred in:

  1. Finding Park and Zhou qualified as printed publications, and
  2. Holding claim 3 unpatentable for anticipation.

1) Did the Board Err by Finding Park and Zhou Qualified as Printed Publications?

In its first contention, M&K specifically argued that the Board erred in finding Park and Zhou qualified as printed publications because a person of ordinary skill exercising reasonable diligence in the art could not have located the references. The CAFC seemed to agree with M&K’s statement of the pertinent inquiry, but also noted that “whether a reference is a ‘printed publication’ under 102 involves a case-by-case inquiry into the circumstances under which the reference was disclosed to the public.”

In this case, the Board found Park and Zhou were presented at development meetings attended by 200 to 300 interested persons with no expectation of confidentiality. Additionally, the Board also found that, no later than the meetings, full copies of Park and Zhou were made available to interested persons. M&K contended the references were not displayed prominently, but the CAFC called this contention a misunderstanding – “the relevant inquiry is whether the channel through which the references were publicized is prominent or well-known among persons of ordinary skill in the art.” M&K also contended that the website where the Park and Zhou references were made available did not have full search functionality, but the CAFC rejected this argument as well, upholding the Board’s finding that the website was effectively indexed by subject matter and had title search functionality.

Ultimately, the CAFC rejected the remainder of M&K’s arguments and concluded that substantial evidence supported the Board’s finding that Park and Zhou qualified as printed publications.

2) Did the Board Err by Holding Claim 3 Unpatentable for Anticipation?

In its second contention, M&K specifically argued that the Board’s reliance on anticipation in finding claim 3 unpatentable (when Samsung’s IPR petition challenged claim 3 only on obviousness grounds) deprived M&K of proper notice. The CAFC began by pointing out that the Administrative Procedure Act (“APA”) imposes “particular procedural requirements on the Board,” and that the proper inquiry for the CAFC is if “the Board departed markedly from the evidence and theories presented by the petition or institution decision, creating unfair surprise.”

In this case, Samsung asserted claim 3 was rendered obvious by the combination of references WD4-v3, Park, and Zhou, but Samsung did not assert anticipation at any point. Indeed, in Samsung’s petition, it admitted (albeit, indirectly) that WD4-v3 did not disclose an element of claim 3.

M&K argued the Board based its decision on an interpretation of claim 3 not offered by either party and not disclosed until the Board’s decision. Samsung countered that essentially, the Board’s analysis was inherent in the obviousness theory because a reference that anticipates a claim also renders that claim obvious.

The CAFC ultimately agreed with M&K because although M&K was aware of the prior art the Board used to invalidate claim 3, M&K was not put on notice that the Board might invalidate claim 3 on anticipation grounds. Further, the CAFC found that, rather than being inherent in Samsung’s obviousness theory, an anticipation finding was actually to the contrary. Therefore, the CAFC vacated and remanded with respect to the Board’s decision on claim 3.

A mixed result can offer lessons for petitioners and patent owners. For patent owners, this case reinforces the need to consider what a person of ordinary skill in the art might uncover through reasonable diligence, not what a website makes prominent or easily accessible. For petitioners, this case emphasizes the importance of providing proper notice, even when a theory may seem to have been disclosed inherently.

In Shoes by Firebug LLC v. Stride Rite Children’s Group, LLC, the Federal Circuit held that the same preamble limits the scope of the claims in one patent, but does not limit the scope of the claims in another patent.

Shoes by Firebug LLC (“Firebug”) owns two U.S. patents – U.S. Patent 8,992,038 (“the ’038 patent”) and U.S. Patent 9,301,574 (“the ’574 patent”). Firebug filed a suit against Stride Rite Children’s Group, LLC (“Stride Rite”) for infringement of the two patents. Stride Rite in response filed petitions for inter partes review (IPR) of claims 1-10 of the ’038 patent and claims 1-10 of the ’574 patent, alleging that the challenged claims would have been obvious over the prior art. The Patent Trial and Appeal Board (PTAB) at the United States Patent and Trademark Office (USPTO) held that the claims of the patents are unpatentable as obvious. In both decisions, the PTAB determined that the preamble of claim 1 of each of the two patents does not limit the claims. Firebug appealed the PTAB’s decisions.

With respect to claim 1 of the ’038 patent, the Federal Circuit agreed with the PTAB and held that the preamble does not limit the scope of that claim because the preamble’s recitation of an “internally illuminated textile footwear” is merely an intended purpose.  The preamble reads as follows:

  1. An internally illuminated textile footwear comprises:
    a footwear;
    the footwear comprises a sole and an upper; …

The Court focused on the body of the ’038 patent claim, which re-introduces “a footwear” that “comprises a sole and an upper” even though the preamble of the claim already recites “footwear.” The Court explained that “[t]he preamble, then, cannot be said to provide essential structure or necessary meaning to the claimed invention because the same element – the footwear – is independently recited in the body of the claim.”

On the contrary, with respect to claim 1 of the ’574 patent, the Court disagreed with the PTAB and held that the preamble limits the scope of the claim. The Court pointed out that the claim relies on the “footwear” limitation introduced in the preamble of the claim as the antecedent basis for “the footwear” subsequently recited in the body of the claim. Relevant portions of the claim are reproduced below:

  1. An internally illuminated textile footwear comprises:
    a sole and an upper;
    an illumination system; …
    the illumination system being housed within the footwear; …

The Court explained that “[w]hile antecedent basis alone is not determinative of whether a preamble is limiting, use of preamble terms to define positive limitations in the body of claims can evince an inventor’s intent that the preamble limit[s] the scope of the claim. This is the case here.” The Court further explained that because the claim requires the illumination system to be housed within the footwear that is already recited in the preamble, the preamble is essential to understanding the structural limitations of the illumination system.

As the Court pointed out, “[w]hether a claim preamble is considered to be a limiting part of the claim matters, inter alia, because, if it is not, the scope of the claim is broader, but the claim is vulnerable to more potentially-invalidating prior art.” This highlights that if a patent owner wants to make sure that the subject matter introduced in a preamble is a limiting part of the claim, the patent owner should positively recite such subject matter in the body of the claim.