On November 9, 2020, the Federal Circuit vacated and remanded a decision by the United States Patent Office Patent Trial and Appeal Board (“PTAB”) in Donner Tech., LLC v. Pro Stage Gear, LLC,[1] holding that the PTAB applied an incorrect standard to determine whether a reference in the case was analogous art.  While the Court’s decision did not resolve whether the reference was in fact analogous art, it reiterated the two-part test defining the scope of analogous art and identified the particular deficiencies of the PTAB’s analysis that warranted vacatur.

Donner Tech. involved an inter partes review of U.S. Patent No. 6,459,023 (“the ’023 patent”), related to mounting boards for guitar pedals and owned by appellee Pro Stage Gear, LLC.  All of Donner’s obviousness challenges rested at least in part on U.S. Patent No. 3,504,311, or the “Mullen” patent, which related to support for electrical relays.  The PTAB had held that Mullen did not fall within the scope of the prior art because Donner had failed to prove Mullen’s electrical relay support was analogous art to the ’023 patent’s guitar pedal mounting board.

The Federal Circuit disagreed.  First citing to precedent from In re Bigio,[2] the Court identified the two required questions for establishing analogous art: “(1) whether the art is from the same field of endeavor, regardless of the problem addressed and, (2) if the reference is not within the field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved.”  Acknowledging that the ’023 patent and Mullen were not from the same field of endeavor, the Court next turned to whether Mullen was reasonably pertinent to one or more of the problems addressed by the ’023 patent and the errors by the PTAB in concluding that it was not.

The Court explained that the second analogous art question “ultimately rests on the extent to which the reference of interest and the claimed invention relate to a similar problem or purpose.”  Thus, the Court stated that the reasonable pertinence question requires an identification and comparison of the problems to which both the invention and the reference relate.  Significantly, the analysis must “be carried out from the vantage point of a [person of ordinary skill in the art, or “POSA”] who is considering turning to the teachings of references outside her field of endeavor.”  Finally, the Court dismissed the argument that a POSA’s poor understanding of the whole reference would cut against finding it an analogous art.  Instead, the Court held that the “relevant question is whether the [POSA] would have reasonably consulted the reference in solving the relevant problem,” and that a POSA might reasonably consult a reference that she would not fully understand every last detail as long as she could understand the portions relevant to solving her problem enough to clean useful information.

A finding of analogous art will not end on the field of endeavor, and will depend more on the answer to the second part of the two-part test.  Counsel participating in argument over analogous art should take care to identify the relevant facts of the case addressing the problems that the patent at issue and reference seek to solve, and those facts that demonstrate the accessibility of the reference to those POSAs trying to solve those problems.

[1] No. 2020-1104 (Fed. Cir. Nov. 9, 2020).

[2] 381 F.3d 1320, 1325 (Fed. Cir. 2004).

On October 20, 2020, the United States Patent and Trademark Office (“USPTO” or “Office”) published in the Federal Register “Request for Comments on Discretion To Institute Trials Before the Patent Trial and Appeal Board” seeking public comments on the appropriate considerations for instituting trials before the Patent Trial and Appeal Board (“PTAB”) under the Leahy-Smith America Invents Act (“AIA”). 85 FR 66502.

As explained in the Federal Register, even in cases where a petitioner satisfied the institution standard, the PTAB may exercise its discretion to deny a petition for review under the AIA.  The USPTO has provided substantial guidance about when the PTAB will exercise its discretion to deny an otherwise potentially meritous petition in its Trial Practice Guide, 77 FR 48756 (Aug. 14, 2012) and in over 40 decisions designated as precedential or informative.[i]

The USPTO is interested in the public’s view on its current policies and practices and whether there are any modifications the Office should make to its approach. Particularly, the USPTO is focused on three areas:

(1) Serial petitions where the same petitioner is challenging the same patent;

(2) Parallel petitions when different parties file petitions at or about the same time on the same patent; and

(3) Petitions directed to patents that are or have been subject to other proceedings in other tribunals including a U.S. district court or the International Trade Commission (“ITC”).

To date, over 743 comments have been posted by individuals, inventors, patent practitioners, businesses, and associations/organizations. Below is a brief overview of some of the major viewpoints.

Serial Petitions

Some commenters request a policy of only allowing one petition per patent in order to protect small businesses from overly burdensome litigation. Some commenters support a rule similar to the USPTO’s current view of allowing one petition per patent except in certain circumstances, such as where there are many claims at issue. Others argue that there should be no specified cap on the number of petitions because a predetermined cap is arbitrary and limits meritous arguments of invalidity.

Parallel Petitions

Many commenters agree that the relationship between petitioners should be considered in limiting petitions from different parties, particularly if the different petitioners are real parties in interest or in privity. Some commenters go a step further to request that each patent is subject to no more than one trial under the AIA, and all challenges to a patent under the AIA should be filed within 90 days of the first petition or be denied.

Other Tribunals

Several commenters believe the PTAB should not consider whether the patent is subject to proceedings in other tribunals because the evidence and constructions in other tribunals are different from those before the PTAB. These commenters believe that all meritous arguments should be allowed, particularly when a patent is being heavily asserted against others. Other commenters push back on specific Fintiv factors, particularly the factor looking at the proximity of the other tribunal’s trial date to the PTAB’s projected deadline for a final written decision. These commenters argue that the timing of trial dates in other tribunals, namely district court trial dates, are often out of the litigators’ hands and are frequently pushed back after the PTAB’s institution decision relying on the trial date. In contrast, other commenters believe that all petitions should be denied where the patent is subject to other proceedings in other tribunals because of the burdensome cost of litigation on small patent owners, which could lead to bankruptcy.

Overall, most commenters appear to support promulgation of some version of a rule regarding discretionary denials of PTAB proceedings. The USPTO has shown a strong interest in increasing transparency and providing clear guidelines regarding the PTAB and USPTO’s policies practices. We can expect the Office to continue to provide meaningful guidance, perhaps including the codification of policies regarding discretionary denials.

Public comments may continue to be submitted until December 3, 2020.

[i] See, e.g., General Plastic Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, 2017 WL 3917706, at *7 (PTAB Sept. 6, 2017) (precedential) (providing a nonexclusive list of factors for “serial” petitions); Valve Corp. v. Elec. Scripting Prods., Inc., IPR2019-00062, -00063, -00084, 2019 WL 1490575, at *1 (PTAB Apr. 2, 2019) (precedential) (explaining when different petitioners challenge the same patent, the PTAB considers any relationship between those petitioners when weighing the General Plastic factors); Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495, at *2 (PTAB Mar. 20, 2020) (precedential) (describing nonexclusive factors considered when a parallel proceeding is co-pending in another tribunal).

In In re: Google Technology Holdings LLC, No. 2019-1828 (Fed. Cir. Nov. 13, 2020), the Federal Circuit elaborated on the policies underlying waiver and forfeiture of appellate arguments.  Ultimately, the court affirmed the Patent Trial and Appeal Board’s (“the Board”) obviousness rejections of the claims at issue because Google had forfeited the arguments it raised on appeal.

Google’s Patent Application No. 15/179,765 is directed to distributed caching for video-on-demand systems.  The examiner rejected the claims as obvious in view of several prior art references.  Google appealed the final rejection to the Board.  The Board was unpersuaded and affirmed the examiner’s obviousness rejections.

On appeal to the Federal Circuit, Google argued that the Board had erred because it misconstrued certain claim terms.  The Federal Circuit took issue that Google had never presented these construction arguments to the Board.  Therefore, Google had forfeited those arguments.

The Federal Circuit noted that waiver is often used to refer to both waiver and forfeiture by the courts—including its own cases—but the rules and concepts behind the separate terms are well established.  Waiver is the “intentional relinquishment or abandonment of a known right.”  Forfeiture is the “failure to make the timely assertion of a right.”

Forfeited arguments are not considered on appeal in the absence of exceptional circumstances, and such circumstances were not present in this case.  The court noted that by failing to present the arguments to the Board, Google deprived an expert body of its important role in reviewing patent application rejections.  Similarly, consideration of new arguments was not consistent with the Federal Circuit’s place as an appellate court, one charged with reviewing the Board’s decisions, not considering them in the first instance.  Furthermore, considering new arguments raised on appeal would encourage sandbagging by others attempting to gain a strategic advantage.

After determining that Google’s arguments before the Board could not be read to raise the arguments presented in the appeal, the court declined to address the merits of Google’s proposed claim constructions.  The Board’s rejections of the claims was affirmed.

Moderna, one of the global leaders in developing a safe and effective vaccine to combat COVID-19, appears poised to get through clinical trials with a vaccine that is based on mRNA technology. As was recently announced, Pfizer demonstrated a 90% effectiveness with its vaccine, which is also based on mRNA technology. If all stays on course, Pfizer and Moderna may be the first two market entrants with vaccines, using the non-traditional mRNA technology.

But in order for at least Moderna’s mRNA technology to function properly, it needs a “delivery system.” Specifically, Moderna’s COVID-19 vaccine introduces “mRNA-1273” molecules into the recipient via a delivery system that protects the mRNA in the bloodstream and allows for entry into cells. Once inside the cells, the mRNA-1273 molecules act like computer code and instruct the cells to produce the characteristic COVID-19 spike proteins. The immune system identifies the spike proteins as antigens and builds its defenses against those antigens in preparation for the potential exposure to the actual COVID-19 virus.

Arbutus Biopharma owns certain patents relating to lipid-nanoparticle “delivery systems” for mRNA molecules. These delivery systems essentially wrap the molecules in balls of fat to both disguise them, thereby preventing attack by the immune system, and to allow the target cells to readily ingest the mRNA molecules. Moderna lost its sublicense to those disputed patents in 2016 and then (before the pandemic) sought to invalidate the patents through three USPTO inter partes review (IPR) proceedings that were decided earlier this year.

This post examines the procedural history and status of those proceedings.

On July 23, 2020, the Patent Trial and Appeal Board (“PTAB”) for the United States Patent and Trademark Office issued a final written decision upholding the claims of Arbutus Biopharma Corporation’s U.S. Patent No. 8,058,069 (“the ’069 patent”) from a challenge by Petitioner Moderna Therapeutics, Inc.[1]

The PTAB specifically determined that Moderna failed to show, by a preponderance of the evidence, that claims 1-22 of the ’069 patent were unpatentable under 35 U.S.C. § 103. The ’069 patent’s claims relate to “stable nucleic acid-lipid particles (SNALP) comprising a nucleic acid (such as one or more interfering RNA), methods of making the SNALP, and methods of delivering and/or administering the SNALP.”[2]

Moderna sought to invalidate the ’069 patent on two grounds, each of which the PTAB rejected. On the first ground, Moderna argued claims 1-22 were anticipated or obvious by International Application Publication No. 2005/007196 (“the ’196 PCT”) and United States Application Publication No. 2006/0134189 (“the ’189 Publication”). On the second ground, Moderna contended claims 1-22 were anticipated or obvious by Arbutus’s prior disclosures in light of two pieces of non-patent literature.[3][4]

This is the third final written decision in a series of IPRs brought by Moderna against Arbutus patents, and it is also the first final written decision with an entirely negative result for Moderna. Moderna’s first IPR ended in success, with the PTAB invalidating Arbutus’s US Patent No. 9,404,127 (“the ’127 patent”)[5]; but Moderna’s second IPR, concluded with mixed results, with the PTAB invalidating some claims of Arbutus’s US Patent No. 9,364,435 (“the ’435 patent”) and upholding others.[6]

Importantly, Arbutus’s ’127, ’435, and ’069 patents are similar to the extent they claim stable nucleic acid-lipid particles (SNALP) and methods of delivery. These patents appear to cover liquid nanoparticle (LNP) technology, which can be used to deliver messenger ribonucleic acid (mRNA) to cells. In the past, Moderna has indirectly licensed such LNP technology from Arbutus, but it has recently begun to develop its own proprietary LNP technology.

After the PTAB’s ruling on the ’069 patent, Moderna stated it “is not aware of any significant intellectual property impediments” toward products it intends to commercialize, including mRNA-1273. Indeed, whether Moderna is infringing Arbutus’s patents during its development of a COVID-19 vaccine is unknown, but it is worth noting that Arbutus has not brought any patent infringement actions against Moderna.

The IPRs for the ’127, ’435, and ’069 patents have each been appealed to the Court of Appeals for the Federal Circuit (CAFC), and Moderna’s appeal brief for the case involving the ’069 patent is due this month. In an event that could be viewed as related to its failed challenge to the ’069 patent, Moderna stated last month it will not enforce its COVID-19 related patents against “those making vaccines intended to combat the pandemic” while the pandemic continues.[7] However, it remains to be seen whether another company could – or would – enforce its COVID-19 related patents against Moderna during this pandemic or otherwise.

[1] Moderna Therapeutics, Inc. v. Arbutus Biopharma Corp., No. IPR2019-00554, 2020 WL 4237232 (P.T.A.B. July 23, 2020).


[3] Lin et al., Three-Dimensional Imaging of Lipid Gene-Carriers: Membrane Charge Density Controls Universal Transfection Behavior in Lamellar Cationic Liposome-DNA Complexes, 84 BIOPHYSICAL J. 3307–16 (2003) (“Lin”).

[4] Ahmad et al., New Multivalent Cationic Lipids Reveal Bell Curve for Transfection Efficiency Versus Membrane Charge Density: Lipid-DNA Complexes for Gene Delivery, 7 J. GENE MED. 739–48 (2005) (“Ahmad”). Ex. 1007.

[5] Moderna Therapeutics, Inc. v. Protiva Biotherapeutics, Inc., No. IPR2018-00680, 2018 WL 4362415 (P.T.A.B. Sept. 12, 2018). [Note: Protiva was a wholly-owned subsidiary of Arbutus.]

[6] Moderna Therapeutics, Inc. v. Protiva Biotherapeutics, Inc., IPR2018-00739 (P.T.A.B. Sept. 11, 2019).

[7] https://investors.modernatx.com/news-releases/news-release-details/statement-moderna-intellectual-property-matters-during-covid-19

A motion recently filed by US Inventor, Inc. in the United States District Court for the Northern District of California seeks a temporary restraining order and a preliminary injunction to prevent the United States Patent and Trademark Office (“USPTO” or “Patent Office”) from instituting any new reviews of any patent until it solves the debate over the “NHK-Fintiv rule” by promulgating a rule under the proper notice-and-comment procedure of the American Procedure Act (“APA”).  US Inventor, Inc. is a non-profit association of inventors devoted to protecting the intellectual property of individuals and small companies.

Declaring the current situation “an emergency,” US Inventor argued that the relief requested – a restraining order and preliminary injunction – is “the only way to preserve the status quo for inventors” and “protect the availability of a lawful remedy” for the trial at hand.  The motion was filed in the lawsuit Apple, Inc., et al. v. Iancu,[1] in which a number of tech companies have challenged the NHK-Fintiv rule and the USPTO’s authority.  US Inventor intervened, arguing instead that the rule should be promulgated through the proper channel.

The NHK-Fintiv rule stems from a line of cases where the USPTO’s Patent Trial and Appeal Board (“PTAB”) declared its discretionary authority to deny institution of American Invents Act (“AIA”) review trials based on parallel proceedings in federal district courts.  In the two precedential opinions from which the rule takes its name, the PTAB outlined a number of factors that would weigh against instituting review of a patent whose validity is already at issue in a pending district court trial.  Although the Patent Act gives the PTAB discretion to deny AIA review for any reason, it also requires that the Director prescribe regulations setting forth the standards to show sufficient grounds to institute review.  US Inventor points to the latter as its basis for arguing that the Patent Office may not develop standards like the NHK-Fintiv rule in an ad hoc adjudicative decision, and instead must promulgate regulations through the statutory process of notice-and-comment rulemaking.

US Inventor pointed to “traditional preliminary injunction factors,” such as public interest weighing in favor of granting its relief.  Specifically, US Inventor identified the harm of patentees being “deprived of a procedural protection to which they are entitled,” where the current rules lack the clarity and balance that only notice-and-comment rulemaking can provide; and that US Inventor’s members are irreparably harmed by having to formulate arguments and responses under deadlines without proper guidance as to the discretionary facts, where an adverse decision would mean a loss of their property.

The parties stipulated to and the court granted a deadline of October 12, 2020, for the USPTO to respond to US Inventor’s motion.

[1] No. 5:20-cv-06128 (N.D. Cal. Sept. 29, 2020).

On October 6, 2020, the United States Patent and Trademark office (USPTO) released a report titled “Public Views on Artificial Intelligence and Intellectual property Policy.”  The report follows the USPTO’s August 2019 request for comments on patenting AI inventions, and the USPTO’s October 2019 request for comments related to the impact of AI on other IP policy areas.

A few general themes emerged from the nearly 200 submissions, including “the fact that AI has no universally recognized definition,” “the current state of the art is limited to ‘narrow’ AI”, as opposed to artificial general intelligence akin to human intelligence, and “a general sense that existing U.S. intellectual property laws are calibrated correctly to address the evolution of AI.”  Report pp. ii-iii.

With respect to patent protection, the consensus remains that inventors must be human, but some differences arose as to what human activities should qualify as a contribution to the conception of an invention.  The Report notes that “activities such as designing the architecture of the AI system, choosing the specific data to provide to the AI system, developing the algorithm to permit the AI system to process that data, and other activities not expressly listed here may be adequate to qualify as a contribution to the conception of the invention.”  Report, p. 5.  But perhaps the USPTO will need to revisit the question of whether machines can be inventors when and if science agrees that machines can “think” on their own.

On data and new forms of IP protection, the Report acknowledges that data “is a foundational component of AI,” and “data and datasets, including their collection and compiling, have value.”  Report p. 15.  Commentators, however, were divided between the view that new IP rights were necessary and the belief that the current US IP framework was adequate to address AI inventions.  No concrete proposals were submitted on how any newly created IP right for AI and data should function, and many called upon the USPTO to further consult the public on the issue.

On the copyright front, the Report notes that existing “statutory and case law should adequately address the legality of machine ‘ingestion’ in AI scenarios,” and that mass digitization and text and data mining “may be considered copyright infringement or fair use, depending on the facts and circumstances at issue.”  Report p. 23.  Critically, however, “mass digitization for purposes of machine learning (ML) ‘ingestion’ processes-and large-scale ingestion of already-digitized works-has not yet been tested by the courts.”  Id. p. 25.  Additionally, commentators mostly found that existing laws are adequate to continue to protect AI-related databases and datasets—including copyright protection as a compilation, trade secret, contract law, and tort law—and there is no need for a sui generis database protection law, such as exists in Europe.

In view of these comments and the areas of greatest divergence, there are a few practical takeaways to keep in mind.  First, there are numerous ways a human can contribute to the conception of an AI invention—from curation of the input data to practical application of the output—and innovators should document and evaluate who was involved at every step of the AI development process as part of the inventorship inquiry for patent protection.  Second, datasets used for AI can have tremendous value, and there are multiple ways to preserve the value of datasets, such as with copyright, trade secret, and contractual/licensing protection.  As each form of protection has its strengths, it is important to choose the right avenues of protection for the right datasets and applications.  Finally, we will likely see further developments in the case law on the issue of copyright infringement through machine ingestion of data, and the applicability (or not) of the fair use defense.  The Oracle v. Google Supreme Court case on fair use may potentially touch these issues, as well as the numerous data scraping cases making their way through the courts.

Stay tuned!

The Federal Circuit reconfirmed its interpretation of the IPR joinder rules of 35 U.S.C. § 315(c) after the panel’s rehearing in Facebook, Inc. v. Windy City Innovations, LLC, No. 2018-1400, 2020 WL 5267975 (Fed. Cir. Sept. 4, 2020).  Appellant Facebook, Inc. had filed a combined request for panel rehearing and rehearing en banc.  The rehearing en banc was denied, but the panel granted the panel rehearing to the extent that it replaced its original precedential opinion with a revised opinion on September 4, 2020.  The conclusions of the Federal Circuit remained unchanged: § 315(c) does not permit either same-party joinder or joinder of new issues.

For more details on the Federal Circuit’s reasoning for reversing the Patent Trial and Appeal Board’s interpretation of the statute, see our previous article on the Federal Circuit original Facebook v. Windy City Innovations decision here.

Last week, Microsoft got tripped up at oral argument on the blocking and tackling of IPR practice:  making sure your prior art is prior art.

The specific error was eminently avoidable, though perhaps also eminently understandable. Under Federal Circuit law, a reference generally does not count as prior art unless it was “indexed.” (Think Dewey Decimal system, or the USPTO’s classification system). To clear this “indexing” hurdle, Microsoft found a document that helpfully titled itself an “index” and linked to the reference-in-question. A good start, no doubt, but it turns out the document had padded its resume:  it was more “list” than “index.” And, under Federal Circuit law, a “list” may not be good enough.

This List Wants You to Believe It Is an Index

The patent owner, Uniloc, sagely caught the error, citing Samsung Elecs. Co. v. Infobridge Pte. Ltd., 929 F.3d 1363 (Fed. Cir. 2019) for the relevant point of law.

When a reference is uploaded to a website or deposited in a library, the fact that the reference is indexed or cataloged in some way can indicate that it is publicly accessible. In Acceleration Bay, for example, the reference at issue was uploaded to a university website. 908 F.3d at 773. While this made the work technically accessible—someone could theoretically find it on the Internet—we explained that “public accessibility requires more than technical accessibility.” Id. (internal quotation marks omitted). And while the website indexed references “by author and year,” we agreed with the Board that this did not mean the reference at issue had been “meaningfully indexed such that an interested artisan exercising reasonable diligence would have found it.” Id. at 774; see also SRI, 511 F.3d at 1196 (“[T]he FTP server did not contain an index or catalogue or other tools for customary and meaningful research.”). On this record, we affirmed the Board’s finding that the reference was not publicly accessible even though it had been uploaded to a website.

Id. at 1369 (emphasis added). In other words, you need an index—not a list. This makes sense when you consider that public accessibility law is based on cases from the 1980’s dealing with PhD theses that were physically printed and shelved in library stacks. If not for the Dewey Decimal system, how could anything be found?

At the oral hearing, Microsoft added a new wrinkle to its argument, submitting that a skilled artisan would have plodded unguided through the whole of the 20-page list because the artisan would already have been familiar with a reference that was located on the same website as both the list and the reference-in-question.

The PTAB panel seemed unimpressed with Microsoft’s argument, as Administrative Patent Judge Jameson Lee pointedly noted:  “I mean, you’re just making it up right now. That story wasn’t in your petition.”

Moral of the story: when you’re filing an IPR petition that relies on non-patent literature, it pays to double- and triple-check that all of the technical requirements for prior art status are met. This includes having a cogent explanation for why a skilled artisan would have found the reference-in-question. These technicalities, when overlooked, are often case-dispositive and impossible to fix post-institution.

The case is IPR2019-01116.

Last week, four major technology companies – Apple, Cisco, Google, and Intel – brought suit against the United States Patent and Trademark Office (“USPTO”), challenging its authority to reject petitions for inter partes review (“IPR”) based on two precedential decisions by its Patent Trial and Appeal Board (“PTAB”).  The decisions, Apple Inc. v. Fintiv, Inc.,[1] and NHK Spring v. Intri-Plex Techs.,[2] allow the PTAB to deny institution of IPRs based on a number of factors related to the existence of a parallel United States district court proceeding on the same challenged patents.  The tech companies have sued in the District Court for the Northern District of California, arguing that the rule violates both the Leahy-Smith America Invents Act (“AIA”), which created the IPR procedure, and the Administrative Procedure Act (“APA”), which created the system of organization and procedures that all administrative agencies of the federal government must follow.

The three arguments of the complaint are that (1) the NHK-Fintiv rule is contrary to the policy and text of the AIA; (2) the rule is arbitrary and capricious as the factors are vague and have already led to unjustifiable and unpredictable disparities among similarly-situated IPR petitioners; and (3) the rule is otherwise procedurally invalid because it was not adopted through notice-and-comment rulemaking required by both the AIA and the APA.  The tech companies are seeking to have the rule set aside and have the USPTO enjoined from relying on the rule to deny institution of IPRs.

While the arguments certainly have merit, Federal Circuit and Supreme Court precedent supports the USPTO’s discretion both to deny petitions and to formulate policy.  The Supreme Court recently stated in Cuozzo Speed Tech., LLLC v. Lee that an “agency’s decision to deny a petition is a matter committed to the Patent Office’s discretion.”[3]  The Court has also long acknowledged that notice-and-comment is not the only method of lawmaking available to agencies.[4]  Thus, while the challenges may make sense from a policy standpoint, it may not be enough to prove the USPTO has acted unlawfully.

[1] No. IPR2020-00019, Paper 11 (Mar. 20, 2020).

[2] No. IPR2018-00752, Paper 8 (Sept. 12, 2018).

[3] 136 S. Ct. 2131, 2140 (2016).

[4] N.L.R.B. v. Bell Aerospace Co., Div. of Textron, Inc., 416 U.S. 267, 293 (1974) (“‘the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.’”) (quoting SEC v. Chenery Corp., 332 U.S. 194, 203 (1947)).

In Uniloc 2017 LLC v. Hulu, LLC, Netflix, Inc. (July 22, 2020), the Federal Circuit held that the Patent Trial and Appeal Board (“the PTAB”) may consider, in its review of substitute claims proposed in an inter partes review (“IPR”), the patentability of the claims under 35 U.S.C. § 101.

Hulu, LLC and Netflix, Inc. (together “Hulu”) filed a petition for an IPR, challenging claims 1-25 of U.S. Patent No. 8,566,960 (“the ’960 patent”) owned by Uniloc 2017 LLC (“Uniloc”). During the IPR proceeding, Uniloc filed a motion to amend the ’960 patent, asking the PTAB to enter the substitute claims 26-28 if the PTAB found claims 1, 22, and 25 of the ’960 patent unpatentable. Hulu opposed the motion by arguing, inter alia, that the substitute claims are patent ineligible under § 101. Uniloc replied to the opposition, arguing that Hulu was not permitted to raise § 101 in opposition to the substitute claims. Uniloc, however, did not make any substantive arguments that the substitute claims are patent-eligible under § 101. The PTAB issued its final written decision (i) finding that the challenged claims are unpatentable and (ii) denying Uniloc’s motion to amend solely on the ground that Hulu had shown by a preponderance evidence that the substitute claims are directed to non-statutory subject matter under § 101. Uniloc requested a rehearing of the PTAB’s denial of its motion to amend. The PTAB denied Uniloc’s request for rehearing, concluding that, in determining patent eligibility of substitute claims submitted during the IPR proceeding, the PTAB may consider patent eligibility under § 101. Uniloc appealed.

35 U.S.C. § 311(a) allows any person who is not the owner of a patent to file a petition to institute an IPR of the patent, and 35 U.S.C. § 311(b) allows the petitioner to request cancelling one or more claims as being unpatentable “only on a ground that could be raised under section 102 or 103.”

Uniloc argued that the PTAB is limited in its review of substitute claims proposed in an IPR to anticipation or obviousness, as disclosed in § 311(b). The Federal Circuit disagreed and held that the text, structure, and legislative history of the IPR Statutes confirm that the PTAB may review substitute claims proposed during an IPR under § 101.

First, the Federal Circuit pointed out that “[t]he IPR Statutes plainly and repeatedly require the PTAB to determine the ‘patentability’ of proposed substitute claims,” and that “a § 101 analysis constitutes a ‘patentability’ determination.” The Federal Circuit also held that “section 311 is confined to review of existing patent claims, not proposed ones” as it limits a request to cancel as unpatentable one or more claims of a patent to ‘a ground that could be raised under sections 102 and 103,’” and that substitute claims are not claims of a patent.

Second, the Federal Circuit held that the legislative history of the IPR Statues confirms that the PTAB is allowed to review proposed substitute claims for patentability outside of anticipation and obviousness. The Federal Circuit pointed out that the scope of reexamination proceedings is limited to substantial new question of patentability, and “[p]roposed substitute claims in an IPR proceeding have not undergone a patentability review by the USPTO.” The Federal Circuit concluded that “[p]rohibiting the PTAB from reviewing patent eligibility would indeed ‘strip … [the PTAB] of a critical legal tool[.]’”.

Third, the Federal Circuit agreed with the comment the USPTO made as intervenor — that “‘if a patent owner seeking amendments in an IPR were not bound by § 101 and § 112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification[,]’ … allowing patents with otherwise invalidated claims ‘to return from the dead as IPR amendments.’”

It is clear from this opinion that the PTAB’s review of patentability of substitute claims proposed during an IPR proceeding is not bound by § 102 and § 103. Thus, while the owner of a patent that is subject to an IPR may avoid, by submitting substitute claims, the possibility of having its patent invalidated under § 102 and/or § 103, it should bear in mind that the substitute claims will need to withstand scrutiny under § 101 (and probably § 112), not just § 102 and § 103.