In REG Synthetic Fuels (“REG”), the PTAB found anticipated all challenged claims 1-5 and 8 of U.S. Patent 8,231,804.  These claims covered even-carbon-number paraffins and methods of making them.  Claims 1, 3, 4, and 8 were found anticipated based on a U.S. patent to Craig, and claims 1-3, 5, and 8 were found anticipated based on a U.S. patent application to Dindi.  Slip op. at 2.  The Federal Circuit affirmed the PTAB’s determinations based on Craig but reversed those based on Dindi.  The reason for its reversal was that the PTAB had incorrectly excluded an exhibit relevant to conception prior to Dindi’s filing date.  Slip op. at 12-19.  It then remanded the case for the PTAB to make further findings regarding diligence and reduction to practice – findings the PTAB had not made in its original decision.  Slip op. at 19.

The court determined that three exhibits were sufficient to establish conception – two that were in evidence and one, Exhibit 2061, that had been incorrectly excluded based on hearsay.  Id.  Exhibit 2061 was a set of email exchanges between the inventor and Microtek discussing testing of a sample supplied by the inventor in which the inventor said he was having difficulty recovering a 90+%  and that “80% purity … is the best [they] got.”  Thus, the emails supplied the inventor’s knowledge that certain percentages should be summed up, and, if summed, would meet one of claim 2’s limitations, i.e., “at least 80 wt%.”

Neste argued that the emails were hearsay.  In response, REG argued that they were not because they were not being offered to prove the truth of the matter asserted but rather to show that the inventor recognized the usefulness of the claimed paraffins.  Id. at 17.  While the Board admitted the exhibit to show the inventor contacted Microtek, it refused to consider the content of the exhibit but rather treated it as hearsay.

On appeal, the Federal Circuit concluded:

We find that the Board erred to the extent that it excluded the content of Exhibit 2061 based on hearsay because REG offered Exhibit 2061 for the non-hearsay purpose to show that Mr. Abhari thought he had achieved 80 wt% purity C18 product.  The act of writing and sending the email is, by itself, probative evidence on whether Mr. Abhari recognized—at the time that he had written the email—that the sum of the weight percentages of even-carbon-number paraffins in his compositions was at least 80 wt% and communicated this to a third party.  In Knorr v. Pearson, 671 F.2d 1368, 1372–73 (C.C.P.A. 1982), the U.S. Court of Customs and Patent Appeals found that a statement was not hearsay if “the communication (as opposed to the truth) ha[d] legal significance.”  Knorr involved a telephone call, in which two co-inventors,

Buergin and Pearson, discussed an invention, and which was overheard by a third party, Rutkowski.  Id. at 1370.  The court held that Rutkowski’s testimony on what he heard Buergin say to Pearson was not hearsay because the communication of the idea had legal significance as the basis for the conception of the invention.  Id. at 1373–74.  By contrast, Rutkowski’s testimony on “Buergin’s statements to Rutkowski regarding what Pearson said” was hearsay.  Id. at 1373.  [Slip op. at 17.]

In this case, the email communication from Mr. Abhari to Microtek was “legally significant because it shows that Mr. Abhari communicated the conception of his invention to a third party, Microtek.”  Id. at 18.  On this basis, the court reversed the Board’s findings on conception.  Id. at 19.  It then remanded to the PTAB to make findings relating to diligence and reduction to practice.  Id.

This is one of two cases to be decided by the Federal Circuit in the past few weeks relating to antedating a reference.  See also Perfect Surgical Techniques, Inc. v. Olympus America, Inc., Olympus Medical Systems Corp., IPR2014-00233 (Fed. Cir. Nov. 15, 2016) in which the PTAB incorrectly applied a too stringent standard to prove reasonable diligence.  Slip op. at 7.  Given these two cases, patent owners should consider whether they have sufficient evidence to challenge allegations that a §102(a) or §102(e) reference is, in fact, prior art.
 

In Click-To-Call, two Federal Circuit judges called for en banc review of the Achates and Wi-Fi One decisions holding that 35 U.S.C. § 314(d)[i] precludes appellate review of a Board’s IPR determination underlying institution that the petitioner could overcome the one-year time bar under 35 U.S.C. § 315(b).[ii]

Concluding that it is bound by Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944, 2016 U.S. App. LEXIS 16942, at *26 (Fed. Cir. Sept. 16, 2016), the Click-To-Call panel begrudgingly reinstated its earlier judgment and dismissed for lack of jurisdiction Click-to-Call’s appeal of the Patent Trial and Appeal Board’s decision to institute inter partes review proceedings brought by Oracle Corporation (and others), which CTC had argued were time-barred under § 315(b).

The Federal Circuit originally dismissed CTC’s appeal based on Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015), which held that 35 U.S.C. § 314(d)[iii] precluded appellate review of a Board’s IPR determination underlying its institution decision that found the time bar of § 315(b).

CTC’s petition for writ of certiorari was granted, and the Federal Circuit’s decision was vacated and remanded by the Supreme Court for further consideration in light of Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016).

In supplemental briefing, CTC argued that Cuozzo implicitly overruled Achates. CTC argued that Cuozzo held that § 314(d) bars appeal challenges that are “closely related” to the Board’s substantive patentability determination under § 314(a)[iv] but did not bar appeals based on the Board’s interpretation of § 315(b) because § 315(b) is not closely related to the Board’s decision to institute under § 314(a) but rather an independent jurisdictional bar on the Board’s actions.

Oracle and the PTO argued that Cuozzo did not overrule but rather supported Achates, quoting Justice Alito’s separate opinion that “the Court says that such questions [including the petition’s timeliness] are unreviewable.” Cuozzo, 136 S. Ct. at 2155 (Alito, J., concurring in part and dissenting in part).

In a per curium decision the Federal Circuit held that it was bound by intervening precedent, Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944, 2016 U.S. App. LEXIS 16942, at *26 (Fed. Cir. Sept. 16, 2016), which reaffirmed Achates and concluded that it was not overruled by Cuozzo.

In her concurrence Judge O’Malley expressed disagreement with Achates and suggested that it be reconsidered en banc. She opined that § 315(b) is a jurisdictional statute reviewable under § 706(2)(C) of Administrative Procedures Act, 5 U.S.C, and pointed to a PTO regulation, 37 C.F.R. § 42.3(b), that identifies time-period requirements as jurisdictional. She did not think Congress provided the clear and convincing indications needed to overcome the presumption that § 315(b) determinations are reviewable.

Judge Taranto agreed with Judge O’Malley in his concurrence, adding that “the rule of decision favoring reviewability (where a clear contrary showing is not made) should apply in determining the scope of any statutory provision asserted to create an exception, not just in determining whether the provision is an exception at all.” He pointed to Cuozzo’s suggestion that the question of reviewability depends on the determination at issue and its relationship to § 314(d), and specific language in Cuozzo to the effect that § 314(d) does not bar review of agency actions to determine if they are “in excess of statutory jurisdiction” under 5 U.S.C. § 706(2)(C). He further distinguished the issue of timeliness under § 315(b) as completely unrelated to patentability, unlike § 312(a)(3)’s pleading rule at issue in Cuozzo, and other preliminary determinations held to be unreviewable.[v]

Judges O’Malley and Taranto make compelling points, and we should know shortly whether the Federal Circuit will reconsider its Achates and Wi-Fi One decisions en banc. Wi-Fi filed its petition for rehearing on October 17th and Broadcom filed its response on November 18th.

[i] Section 314(d) provides, “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”

[ii] Section 315(b) provides, in relevant part, “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

[iii] Section 314(d) provides, “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”

[iv] Section 314(a) provides, “The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”

[v] The third judge on the panel was Chief District Judge Stark, sitting by designation.

In Perfect Surgical Techniques, Inc. v. Olympus America, Inc., Olympus Medical Systems Corp., IPR2014-00233 (Fed. Cir. Nov. 15, 2016) (Judges Moore, Schall, and O’Malley), the Federal Circuit vacated and remanded the Board’s decision invalidating certain claims of U.S. Patent 6,030,384 (“’384 patent”).  The Board’s decision was based on prior art under pre-AIA §102(a).  This statute states that “[a] person shall be entitled to a patent unless (a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for a patent.”  Another pre-AIA statute, §102(g)(2) “allows a patent owner to antedate a §102(a) reference by proving earlier conception and reasonable diligence in reducing the invention to practice.”  Perfect Surgical, slip op. at 4.  In relevant part, that statute reads:

A person shall be entitled to a patent unless … (2) before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

The “time prior to conception” in this case was February 9, 1998 (one day before the reference’s publication) to May 1, 1998 (the date the invention was reduced to practice).  Dr. Nezhat, the inventor, hired James Heslin to draft and file his application.  Dr. Nezhat received a draft on January 28, 1998, and the application was filed on May 1, 1998.  Dr. Nezhat testified he was reasonably diligent during the three month period but also was working 80 hours per week performing four to six surgeries each week.  He submitted comments to a first draft on March 2, participated in two conferences with his lawyer, and submitted comments to a second draft on April 13.  A declaration from Mr. Heslin, letters, and billing records corroborated Dr. Nezhat’s testimony.  The Board “accepted Dr. Nezhat’s testimony and corroborating evidence but determined that [the patent owner] was not ‘sufficiently specific as to facts and dates’ of Dr. Nezhat’s diligence during” certain time periods and thus “concluded that PST failed to demonstrate Dr. Nezhat’s ‘continuous exercise of reasonable diligence for the entire critical period.’”  Slip op. at 6.

In Perfect Surgical, the court held that the Board’s requirement that Perfect Surgical Techniques, Inc. (“PST”) establish continuous exercise of reasonable diligence during the entire critical period was “too exacting and in conflict with [the court’s] precedent.”  Perfect Surgical, slip op. at 7.  According to the court:

A patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence. See, e.g., Tyco Healthcare Grp. v. Ethicon Endo-Surgery, Inc., 774 F.3d 968, 975 (Fed. Cir. 2014); Monsanto, 261 F.3d at 1370. Under this standard, an inventor is not required to work on reducing his invention to practice every day during the critical period. See Monsanto, 261 F.3d at 1369. And periods of inactivity within the critical period do not automatically vanquish a patent owner’s claim of reasonable diligence. For example, in Monsanto, we held that substantial evidence supported the jury’s presumed finding that an inventor was reasonably diligent where there was no corroborating evidence of any activity for a series of months. Id. at 1370. We explained that, notwithstanding the absence of daily notebook entries and the resulting gaps during the critical period, “the work involved in the experiments was continuous in nature” and therefore the reduction to practice was “reasonably continuous.” Id. In Brown v. Barbacid, we held that the patent owner’s evidence of diligence during a 31-day critical period was “sufficient to show substantially continuing activity” despite the lack of activity during six single-day gaps. 436 F.3d at 1380–83.

Our holdings in these cases are consistent with the purpose of the diligence inquiry. In determining whether an invention antedates another, the point of the diligence analysis is not to scour the patent owner’s corroborating evidence in search of intervals of time where the patent owner has failed to substantiate some sort of activity. It is to assure that, in light of the evidence as a whole, “the invention was not abandoned or unreasonably delayed.” Id. at 1379. That an inventor overseeing a study did not record its progress on a daily, weekly, or even monthly basis does not mean the inventor necessarily abandoned his invention or unreasonably delayed it. The same logic applies to the preparation of a patent application: the absence of evidence that an inventor and his attorney revised or discussed the application on a daily basis is alone insufficient to determine that the invention was abandoned or unreasonably delayed. One must weigh the collection of evidence over the entire critical period to make such a determination.  [Slip op. at 7-8.]

The Board distinguished In re Mulder, 716 F.2d 1542, 1542-46 (Fed. Cir. 1983), in which a 2-day period of inactivity was fatal to the patent owner.  Id. at 8.  According to the court, in Mulder there was a “complete lack of evidence” during that period.  Id.

The court vacated and remanded Perfect Surgical so the Board could “properly weigh PST’s evidence under a rule of reason” analysis under which “PST was not required to corroborate every day the application was worked on, every surgery Dr. Nezhat performed, or specify precisely what work was done.”  Id. at 9.  According to the court, “[s]uch corroboration is particularly unnecessary when, as here, the record indisputably shows that activities must have occurred within the relevant time period.”  Id. at 9-10.  On remand, the court instructs the Board to focus on the evidence as a whole rather than on “gaps of inactivity.”  Id. at 11-13.

The court also determined that the Board’s claim construction of “perforated” was not supported by substantial evidence in that the Board turned to extrinsic evidence –dictionary definitions – rather than relying on the specification, where “perforated” was distinguished from “passages.”  Thus, defining “perforated” to include “perforations or passages” was not supported by the intrinsic evidence.  Id. at 14-15.

Judge Schall concurred in part and dissented in part.  According to Judge Schall, the Board’s finding regarding reasonable diligence was supported by substantial evidence.

Cases such as this one are heavily fact-dependent and not often reversed by the Federal Circuit.  Further, because a number of Board APJs have interference experience, the stringent requirements when two inventors are competing for patent rights often spill over to cases such as this one in which a patent owner is attempting to antedate a reference.  Thus, it should be helpful to patent owners to be able to cite cases such as this one and focus on the record as a whole under a rule of reason analysis  when attempting to antedate a reference.

 

On Final Written Decision in Pure Fishing, Inc. v. Globeride, Inc., the PTAB determined the Petitioner had failed to establish by a preponderance of the evidence that claims 1 and 2 of U.S. Patent 5,921,489 were unpatentable.  The PTAB’s decision turned on the question of whether two cited references were “analogous to the claimed invention.”  Slip op. at 8.  Ultimately, the PTAB determined they were not.

The PTAB began its analysis by quoting In re Bigio, 381 F.3d 1320, 1325 (Fed. Cir. 2004) in which the court stated:

Two separate tests define the scope of 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.

Slip op. at 8.

The claimed invention in the ‘489 patent is “an improvement of a fishing spinning reel having an oscillate mechanism,” col. 1, lines 7-8, and “purports to solve the issue of uneven line winding by the specific arrangement” of an oscillate grove in an oscillate slider that allows the fishing reel “spool to move smoothly back and forth.”  Slip op. 4-5.

In its patentability challenge of claims 1 and 2, the Petitioner relied on a number of references, including Schad (directed to a slider crank driver mechanism) and Busse (directed to change speed switchgear devices).  All of its challenges relied in part on one of these two references.  Slip op. at 8.  The Patent Owner argued that Petitioner’s challenges failed because both Schad and Busse are non-analogous art.  Id.

With respect to whether these references are in the same field of endeavor, Patent Owner argued that the field is fishing reels, and Petitioner argued that it is “oscillate mechanisms, generally, rather than being limited to fishing reels.”  Id. at 9.  According to the PTAB, the “patent states clearly that the field of the invention is ‘an improvement of a fishing spinning reel having an oscillate mechanism.’”  Id. (citing col. 1, lines 6-8 (emphasis PTAB’s)).  The PTAB also looked to the embodiments and the claims and found they all are directed to a fishing spinning reel.  Id. at 10.  Based on these observations, the PTAB concluded that the Patent Owner was right, i.e., that “the ‘489 patent’s field of endeavor is spinning reels.”  Id.

The PTAB then broke down Bigio’s second inquiry into two sub-inquiries: (i) whether the references addressed the same problem as the ‘489 patent, and (ii) if not, whether either of the two references is “reasonably pertinent” to the problem addressed by the ‘489 patent.  Id. at 10-20.  With respect to the first sub-inquiry, the Petitioner argued that “’the actual problem was how to control the linear motion of the reciprocating element,’” while the Patent Owner contended that the problem was “’uneven line winding on the spool of a fishing spinning reel.’”  Id. at 10-11 (citations omitted).  Again, the PTAB agreed with the Patent Owner.  Id. at 11.

Having concluded that neither Schad nor Busse is directed to the same problem as the ‘489 patent, the PTAB then turned to its second sub-inquiry, i.e., whether either of the two references is “reasonably pertinent” to the problem addressed by the ‘489 patent.  Id. at 12-20.  Here, the PTAB relied extensively on Patent Owner’s expert, who went into some detail explaining why Schad and Busse are not reasonably pertinent to the problem addressed by the ‘489 patent.  Id. at 13-14, 18-19.  The PTAB found that this testimony was unrebutted by the Petitioner in its briefing and evidence and thus concluded that the Petitioner had failed to establish that one skilled in the art would have considered either reference reasonably pertinent to the problem of uneven line winding.  Id. at 14-16, 19-21.  Therefore, the Patent Owner prevailed with respect to both claims.

This case raises a point that all practitioners before the PTAB should heed:  Each party to an IPR or PGR must ensure the record before the PTAB addresses each issue raised in the other party’s papers, including expert declarations.  Expert declarations are considered evidence, and, if they contain sound reasoning to support a particular position, they must be fully addressed in the briefing by pointing to evidence to the contrary.

In Medtronic, Inc. v. Robert Bosch Healthcare Systems, Inc., the Federal Circuit considered the impact of Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) on the scope of appellate review of a PTAB decision to vacate an inter partes review institution decision and terminate the proceeding  and concluded there was none.

In this case, Medtronic filed three petitions for inter partes review of two patents owned by Bosch, listing itself as the sole real party in interest.  Bosch argued that the petitions should be denied for failure to name Cardiocom (a Medtronic subsidiary) as a real party in interest.  Over Bosch’s objection, the Board instituted the IPRs.

Later, based on additional discovery, Bosch moved to terminate the IPRs.  The Board agreed that Cardiocom should have been named as a real party in interest based on the evidence, including (1) Cardiocom was the defendant in the corresponding litigation, (2) Cardiocom had previously unsuccessfully filed its own IPR petitions, (3) Cardiocom’s executives communicated with Medtronic while Medtronic’s petitions were being prepared, and (4) Cardiocom paid a portion of the fees for preparing Medtronic’s petitions.  Slip op. at 3.  In view of its determination, the Board vacated the institution decisions and terminated the proceedings because of Medtronic’s failure to name all real parties in interest.

Medtronic appealed, and the Federal Circuit dismissed the appeal for lack of jurisdiction.  Id.  Medtronic then petitioned for rehearing.

In the meantime, the U.S. Supreme Court decided Cuozzo.  In its opinion, the Court agreed with the Board that its institution decisions are “final and nonappealable” under § 314(d), even after a final Board decision on the merits.  Id. at 2136. The Court also held that the statute barred review of “questions that are closely tied” or “closely related” to “the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”  Id. at 2141-42, quoted in slip op. at 4.  However, the Court left open the possibility that other decisions underlying an institution decision may be reviewable, including those decisions “implicat[ing] constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond” § 314(d).  136 S. Ct. at 2141, quoted in slip op. at 6.  The Federal Circuit acknowledged that § 314(d) “would not categorically bar review of a due process challenge based on insufficient notice that affects an entire proceeding” and “it would not ‘enable the agency to act outside of its statutory limits ….”  Slip op. at 6 (quoting 136 S. Ct. at 2141-42).

In supplemental briefing, Medtronic argued, inter alia, that the Board exceeded its statutory authority by terminating the IPRs after institution on a non-merits issue, which the Federal Circuit interpreted as merely arguing that the Board lacked authority to reconsider its institution decision.  Id. The Federal Circuit rejected this argument, stating that it would be “difficult to conceive of a case more ‘closely related’ to a decision to institute proceedings than a reconsideration of that very decision….  This is especially so when, as here, the Board’s reconsideration was predicated on a failure to meet the statutory requirements for filing a petition under § 312(a), a provision that ‘define[s] the metes and bounds of the inter partes review process.’”  Id. at 5 (internal citation omitted). The panel also rejected the argument on the basis that agencies have inherent authority to reconsider their decisions.  Id. at 6-7. The court thus denied Medtronic’s petition for panel rehearing.   Id. at 9.

Judges Lourie, Dyk, and Hughes unanimously decided this case, and, given its precedential designation, one may surmise that a majority of the members of the court support the decision.  However, with respect to other underlying issues supporting an institution decision, several  Federal Circuit panels have been split on the scope of review since the Supreme Court decided Cuozzo.  See Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944, 2016 WL 4933298 (Sept. 16, 2016) Reyna, J., dissenting); and Husky Injection Molding Sys. Ltd. v. Athena Automation Ltd., No. 2015-1726, 2016 WL 5335500 (Sept. 23, 2016)(Plager, J., dissenting). Thus, while this case provides the Board and practitioners with an additional data point on the issue of reviewability of Board determinations, the Court is clearly divided in its interpretation of § 314(d) and application of Cuozzo.  Thus, one can expect that the Federal Circuit will eventually take a § 314(d) case en banc to better define the dividing line between questions that can be appealed and those that cannot.

In Husky Injection Molding v. Athena Automation, the Federal Circuit has again refused to review a decision underlying the Board’s institution decision, in this case, whether the Petitioner was barred from filing an inter partes review petition based on assignor estoppel.  As in Achates, the court concludes that it lacks jurisdiction to conduct a review of the assignor estoppel issue relying on selective portions of Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) and its pre-Cuozzo jurisprudence.

The Federal Circuit begins its analysis by discussing the Supreme Court’s Cuozzo opinion:

The Court relied on two aspects in particular:  the language of § 314(d), and the nature of the legal dispute at issue.

With respect to the first, the Court noted that § 314(d) unquestionably provides that the determination whether to institute inter partes review “shall be final and nonappealable.”  …  Id. at 2139-40.

With respect to the second, the Court noted that “the legal dispute at issue [there was] an ordinary dispute about the application of certain relevant patent statutes concerning the Patent Office’s decision to institute inter partes review,” particularly the “related statutory section, § 312,” and that the express language of § 314(d) “must, at the least, forbid an appeal that attacks a ‘determination . . . whether to institute’ review by raising this kind of legal question.”  Id. at 2139.  The Court emphasized that review is foreclosed “where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”  Id. at 2141 (emphasis added).

Slip op. at 10-11.

The Federal Circuit acknowledges, however, that the Supreme Court “did … leave open the possibility that § 314(d) may nevertheless allow for review of appeals that ‘implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.”’  Id.”  Slip op. at 11.  It further acknowledged that the Court “did not ‘categorically preclude review’ of any final decision where the agency acted outside of its statutory authority, e.g., ‘canceling a patent claim for “indefiniteness under § 112” in inter partes review.’  Id. at 2141–42; see also 35 U.S.C. § 311(b) (‘A petitioner may request to cancel [a claim] only on a ground that could be raised under section 102 or 103.’).”  Slip op. at 11.

While recognizing these arguably broad exceptions allowing for review, the Federal Circuit then shifts to its pre-Cuozzo jurisprudence to conclude that review is foreclosed.  The Federal Circuit relies on its pre-Cuozzo test – a test previously used to justify why some pre-institution determinations are subject to review, such as whether a patent is a CBM patent, and others are not, such as determining, whether the real party-in-interest has been named and whether a petitioner is barred by the one year time bar.  That test, referred to as the Board’s “ultimate authority to invalidate” test is as follows:

[W]e may review a challenge to the institution decision if it relates to the Board’s ultimate authority to invalidate a particular patent.  That ultimate invalidation authority is purely tied to the patent challenged and the nature of the review requested; it is not a question of who petitions for review.  Achates, 803 F.3d 652; see Wi-Fi One, LLC v. Broadcom Corp., 2015-1944, slip op. at 8–9 (Fed. Cir. Sept. 16, 2016) (holding that Achates remains good law in light of the Supreme Court’s  decision  in Cuozzo II, specifically concluding that § 315 is a statute closely related to the decision whether to institute); Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306 (Fed. Cir. 2015), cert. denied, No. 15-1145, 2016 WL 1029054 (U.S. June 27, 2016).

Slip op. at 11-12.

The Federal Circuit then attempts to tie its pre-Cuozzo test to that of the Court by establishing a “two-part inquiry” for determining whether an issue is subject to review.  First, the Federal Circuit asks

whether the challenge at issue is “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review,” or if it instead or if it instead “implicate[s] constitutional questions,” “depend[s] on other less closely related statutes,” or “present[s] other questions of interpretation that reach, in terms of scope and impact,” “well beyond ‘this section.’”  Cuozzo II, 136 S. Ct. at 2141 (emphasis added). If the latter, our authority to review the decision to institute appears unfettered.  But if the former, § 314(d) forbids our review.

Slip op.at 14.  The Federal Circuit then identifies “[o]ne further exception” that requires a second inquiry:

[W]e must ask if, despite the challenge being grounded in a “statute closely related to that decision to institute,” id. at 2142, it is nevertheless directed to the Board’s ultimate invalidation authority with respect to a specific patent, id. at 2141; see also Versata, 793 F.3d at 1319–20; Achates, 803 F.3d at 657. If so, we may review the challenge.

Slip op. at 14.

In applying the above analysis to the assignor estoppel issue in Husky Injection Molding, the Federal Circuit determines that (1) it does not fall under any of the exceptions identified by the Supreme Court; (2) it does not derive from any statute but rather is an equitable doctrine; (3) § 311(a), which permits any person except the patent owner to file a petition , is the only statute implicated; and (4) “an interpretation of § 311 … to either include or foreclose assignor estoppel is very ‘closely related’ to any decision to initiate inter partes review.”

Slip op. at 16-17 (emphasis in original).

Finally, the court turned to its “ultimate authority to invalidate” test.  Id. at 17.  Since that authority “derives from the patent challenged and the type of review requested; it is not a question of who petitions for review” and thus “a bar preventing particular petitioners from challenging a patent does not impact the Board’s invalidation authority, for ‘[t]he Board may still invalidate a claim’” via another properly-filed petition.  Id. at 17.  Since “assignor estoppel implicates who may petition,” the Federal Circuit concluded it lacked jurisdiction to review the estoppel issue.  Id. at 18-19.

Judge Plager dissented with respect to the reviewability issue, expressing concern that the “majority’s view may contribute to the already-existing confusion regarding which matters this court can review on appeal from a final decision by the Board.”  Plager, slip op. at 1.  In his view, “the Court took an intermediate position that fundamentally altered the playing field.”  Judge Plager criticized the majority’s views in this case as “unnecessary commentary approving prior cases that may no longer be good law in light of Cuozzo,” and found “unhelpful” the majority’s “discussion of why the question of the application of assignor estoppel to this case does not relate to ‘the Board’s ultimate invalidation authority.’”  Id. at 8.  Judge Plager would have the Federal Circuit consider anew whether it is obligated to review issues it has previously declined to review, such as “filing deadlines and joinder and estoppel issues.”  Id. at 8 (citing Judge Reyna’s concurring opinion in Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944, 2016 WL 4933298, at *8-9 (Sept. 16, 2016)).

The Husky Injection Molding opinions reflect a very divided Federal Circuit.  Clearly, we have not heard “the last word” on reviewability.  It is reasonable to expect that the Federal Circuit will take the right case en banc, and perhaps that the Supreme Court will step in again, particularly when the Federal Circuit adopts a rigid framework such as its “ultimate authority to invalidate” test.

Under 35 U.S.C. § 325(d), the Patent Trial and Appeal Board (“Board”) may “take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.”[1] From seven Informative Decisions, in which the Board used its discretion under § 325(d) to deny institution of inter partes review, several trends have emerged that reveal how the Board has used the statute as a mechanism to reduce the number of inter partes reviews it must consider and to create a general shift in favor to patent owners.

Based on the seven Informative Decisions, the Board appears to apply the statutory language “previously…presented to the Office” fairly broadly. In rejecting institution of the seven inter partes reviews, the Board relied on evidence presented in a variety of related proceedings, including other inter partes reviews and ex parte reexaminations of the same patent, whether those decisions were denied, granted, ongoing, or submitted by unrelated third party petitioners.[2] In fact, in one case, the Board even demonstrated a reluctance to revisit arguments and prior art submitted during prosecution of the subject patent.[3] District court cases and proceedings pertaining to related patents were also noted, although not necessarily relied on to support a rejection under 35 U.S.C. § 325(d).[4] In casting such a wide net of what constitutes “previously…presented to the Office,” the Board makes clear its disfavor of duplicative proceedings that force the patent owner to repeatedly defend the same claims based on the same evidence. This holds true even if the later-filed petition for inter partes review would be the only opportunity for the petitioner to submit arguments with respect to the subject claims, thus requiring the petitioner to rely on a third party to prove unpatentability in a related proceeding.[5]

The Board also appears to strongly discourage second-round inter partes review petitions that attempt to remedy the deficiencies of an earlier filed petition. In two such cases, after identifying the failings of the first petition in the institution decision, the Board refused to accept the same arguments in a second petition that had simply been bolstered by new evidence to address the Board’s concerns.[6]  The Board explains that their disapproval of this trial-and-error fashion of submitting inter partes review petitions is a preventative measure to mitigate administrative abuse of the proceedings by petitioners and to “achieve a result that promotes the efficient and economical use of Board and party resources.”[7]

As the PTAB continues to deny review petitions using their discretion under 35 U.S.C. § 325(d), the number of petitions filed and instituted may be reduced. Petitioners should take caution to avoid duplicative arguments and prior art, and to put forth their strongest evidence in a first filing, as the chances of successful follow-up petitions appear to be lessening as the Board’s workload grows. While the statute provides clear outright benefits for patent owners, they can further increase their chances at getting a review petition denied by citing to repeated arguments from any related proceedings and from the patent prosecution in their Patent Owner’s Preliminary Response and/or their opposition to the petitioner’s motion for joinder.

[1] 35 U.S.C. § 325(d).

[2] IPR2013-00454, Paper 12, at 2 (September 25, 2013); IPR2014-00506, Paper 17, at 2 (July 7, 2014); IPR2014-00487, Paper 8, at 2 (September 11, 2014); IPR2013-00324, Paper 19, at 2 (November 21, 2013); IPR2014-00702, Paper 13, at 2 (July 24, 2014).

[3] IPR2014-00315, Paper 14, at 2 (July 8, 2014).

[4] IPR2014-00436, Paper 17, at 3 (June 19, 2014).

[5] IPR2014-00702, Paper 13, at 7 (“Although we recognize that, as a result of our decision, Unified will not have an opportunity to submit arguments or evidence with respect to claims 1-4, 29-33, 35, and 41 of the ‘791 patent, there are sufficient reasons to exercise our discretion to deny the Petition in this proceeding.”).  In this case, the claims had been held unpatentable in two cases and one was on appeal.

[6] IPR2014-00506, Paper 17, at 8; IPR2014-00487, Paper 8, at 6.

[7] IPR2014-00628, Paper 23, at 5 (March 20, 2015).

In Cox Communications, Inc. v. Sprint Communication Co. LP, No. 2016-1013 (Fed. Cir. Sept. 23, 2016), the Federal Circuit reversed the district court’s determination that certain claims were indefinite under 35 U.S.C. § 112 ¶ 2 due to the phrase “processing system.”  Id. at 3.  The majority did so in a rather unique way, i.e., by considering how the claims would be affected if the alleged indefinite phrase “processing system” were omitted from the claim and concluding that doing so would not change the scope of the claims.  Slip op. at 9-12.  According to the majority, because the “point of novelty resides with the steps of the[] method claims, not with the machine that performs them,” they could be “revised to remove the word ‘processing system,’” without “discernably chang[ing]” their meaning.  Id. at 9.  The majority continued:  “If ‘processing system’ does not discernably alter the scope of the claims, it is difficult to see how this term would prevent the claims … from serving their notice function under § 112, ¶ 2.”  Id. at 12.

Judge Newman concurred in the result, i.e., that the claims were not invalid due to indefiniteness, but she took issue with the way the majority reached that result:

I agree with the court’s holding that the claims are not invalid on the ground of indefiniteness.  However, the court creates an interesting, but flawed, new mode of analysis, whereby the adjudicator (1) first removes the challenged term from the claim, then (2) decides whether the claim has the same meaning without the challenged term, and (3) if the answer is “yes,” rules that the claim is not indefinite as a matter of law.  Maj. Op. at 10–12.  This new style of claim construction will confound the already confused determination of patent rights. I write to protest this further inroad on a reasoned and reliable law of patents.  [Slip op. at 2 (Newman, J., concurring opinion).]

Cox Communications is an appeal from a district court rather than from the PTAB.  While the PTAB generally follows Federal Circuit case law in deciding issues before it, the PTAB’s standard for indefiniteness contains some subtle differences than the standard used in district court.  As set forth in Ex parte Miyazaki, 89 U.S.P.Q.2d (BNA) 1207, 1211 (BPAI Nov. 19, 2008) (precedential), “if a claim is amenable to two or more plausible claim constructions, the USPTO is justified in requiring the applicant to more precisely define the metes and bounds of the claimed invention by holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as indefinite.”  That being said, it appears that the reasoning of the Cox Communication decision may apply with equal force to the indefiniteness standard used by the PTAB. [1]  As in Cox Communication, if the disputed term has no effect on the overall scope of the claims, presumably the claim is not amenable to two or more constructions based on that term and thus would pass muster with respect to Miyazaki.

Going forward, it will be interesting to see whether parties try to utilize the Cox Communications decision’s approach to argue against indefiniteness.  The same logic would seem to apply in PTAB proceedings and would provide one means for countering any assertion of indefiniteness.  It will also be interesting to see how the PTAB reconciles the decision with its own Miyazaki precedential decision regarding indefiniteness and whether Judge Newman’s concern come to pass.  That is, to the extent the Federal Circuit has confused the law on indefiniteness in Cox Communications, in attempting to apply the Federal Circuit’s analysis to post-grant review proceedings, will the PTAB’s law on indefiniteness also become confused?  We will have to stay tuned.

[1] Inter partes reviews, technically, are limited to prior art issues, i.e., ones to be decided under 35 U.S.C. § 102 or 103.  Nevertheless, the PTAB has addressed indefiniteness issues in inter partes reviews.  See, e.g., Activision Blizzard, Inc. v. Acceleration Bay, Inc., IPR2016-00724, Paper 11 at 9 (Sept. 7, 2016) (refusing to institute with respect to claim 9 because PTAB determined the claim was indefinite).  See Dahlgren & Linck, “Claim Survives IPR Challenge Due to Indefiniteness,” www.ptablaw.com (Sept. 12, 2016). The issue may also arise during the course of claim amendments.

An increasing number of cases demonstrate the challenges that the Federal Circuit and parties face when dealing with standing questions in appeals from administrative agencies.  These challenges only emphasize the growing need for a change in the Court’s rules of procedure.

Standing in cases from the U.S. Patent and Trademark Office (“PTO”) has become a more significant issue since the Court decided Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014).  In that case, Consumer Watchdog, a non-profit consumer rights organization, challenged a patent owned by the Wisconsin Alumni Research Foundation (“WARF”) in an inter partes reexamination.  WARF prevailed before the PTO and Consumer Watchdog appealed.  However, the Federal Circuit dismissed Consumer Watchdog’s appeal because it lacked standing.  The Federal Circuit clarified that to appeal a decision from an administrative agency to an Article III court, the appellant must have constitutional standing.  Citing Sierra Club v. E.P.A., 292 F.3d 895, 899 (D.C. Cir. 2002), the Federal Circuit emphasized that, “although Article III standing is not necessarily a requirement to appear before an administrative agency, once a party seeks review in a federal court, ‘the constitutional requirement that it have standing kicks in.’” Consumer Watchdog, 753 F.3d at 1261.  The Federal Circuit held that because Consumer Watchdog could not identify any concrete and particularized injury in fact, it lacked standing to appeal to an Article III court.  Id. at 1263.

One issue that has arisen after Consumer Watchdog is when the Federal Circuit or the parties would raise the issue of standing.  One of the more recent examples of a case in which this issue arose is in Personal Audio, LLC, v. Electronic Frontier Foundation, No. 16-1123 (Fed. Cir. 2016).  In that case, Personal Audio appealed the Board’s decision in an inter partes review that Personal Audio’s claims were unpatentable.  After the parties had fully briefed the appeal, and less than two weeks prior to oral argument, the Federal Circuit issued a sua sponte order requiring each party to submit a brief addressing whether the appellee, Electronic Frontier Foundation, had standing under Consumer Watchdog.  While the Court did not delve into the question of standing during oral argument, the parties undoubtedly expended significant resources briefing the issue under the expedited schedule near the end of the appeal.

Personal Audio is not unique in terms of when the question of standing was raised.  In Gandhi v. Bandl-Konrad, No. 14-1087 (Fed. Cir. 2014), the Federal Circuit took a similar approach when it raised the issue of standing for the first time at oral argument.  In that case, the appellant, Gandhi, appealed the Board’s interference decision that Bandl-Konrad’s claims were not shown to be unpatentable.  The real parties in interest were Ford (Gandhi) and Daimler (Bandl-Konrad).  During oral argument, Judge Hughes questioned whether the appellant had Article III standing under Consumer Watchdog.  Notably, neither party had briefed the issue nor had it been developed in the record before the PTO.  A similar situation also occurred in Rambus Inc. v. Micron Technology, No. 2013-1192 (Fed. Cir. 2013) where the issue of standing was first raised by the Federal Circuit during oral argument, and not briefed by either party.

While neither Gandhi nor Rambus resulted in an opinion addressing standing, as shown with the sampling of cases, the current approach for addressing standing in appeals at the Federal Circuit from administrative agencies lacks consistency and leaves the Federal Circuit ill-prepared to evaluate close cases.  In many instances standing is never addressed, or as shown above, the issue is raised towards the end of the appeal after substantive briefing on the merits has taken place.  The result is either hurried briefing by parties or last minute argument by attorneys without a developed record.  Neither situation is ideal.

A primary reason for the inconsistent approach for raising questions concerning standing is that the Federal Circuit is often given little information to assess whether standing problems exist earlier in the appeal.  There is a simple solution.  The D.C. Circuit has dealt with this issue for years.  Indeed, Consumer Watchdog relied heavily on the D.C. Circuit’s jurisprudence, including Sierra Club.  Aside from its body of case law on the subject, the D.C. Circuit has developed its own rules of appellate procedure that require appellants to address standing early in the appeal.  First, D.C. Circuit Rule 15(c)(2) requires that in cases involving review of administrative actions, the appellant include a brief description of its basis for standing in the docketing statement. Additionally, D.C. Circuit Rule 28(a)(7) requires that the appellant’s brief include a specific section setting forth the appellant’s basis for standing in cases involving the review of administrative actions.  Where needed, the rule also provides the opportunity for the appellant to provide evidence establishing standing that is not contained in the administrative record.  The Federal Circuit should consider adopting similar rules.

Adopting similar rules could be very beneficial for the Court and the parties.  First, it would give the Court additional information so that it can satisfy itself that the requirements of Article III are being followed.  Second, it would provide the opportunity to identify potential deficiencies in standing earlier in the appeal.  For example, the Court could have the clerk’s office screen docketing statements for cases with significant standing problems and refer those to a motions panel.  It would also put appellees on notice and facilitate challenges where standing is questionable.  Consistent with current practice, those challenges could be forwarded to the motions panel, or briefed for consideration by the merits panel.  In any event, even if the issue was deferred, the panel would benefit from having the parties discuss the issue of standing prior to argument.  Third, because standing is not required to appear before the PTO, these rules would provide a mechanism for parties to introduce evidence outside of the administrative record when needed to establish standing.  While questions of standing likely will continue to arise, the Court and the parties will be better equipped and prepared to deal with them if such rules are adopted.

The recent decision in Wi-Fi One v. Broadcom, has presented an interesting opportunity for the Federal Circuit to reconsider its jurisprudence on the reviewability of the PTO’s institution decision post-Cuozzo and in particular the application of the time bar set forth in 35 U.S.C. § 315(b).  The language of 35 U.S.C. § 315(b) states:

An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.  The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).  [emphasis added]

Subsection (c) states:

If the Director institutes an inter partes review, the Director in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314. [emphasis added]

However, in 37 CFR § 42.122(b), the PTO has interpreted the language of §§ 315(b) and (c) in a way that allows it to ignore the 1 year time bar by joining the out-of-time petition with another petition that was timely filed:  The 1 year bar of §315(b) ”shall not apply when the petition is accompanied by a request for joinder.”  [emphasis added]

Thus, rather than focusing on the language of the statutes which merely permits “a request for joinder” to be filed outside the 1 year period and requires that the petition be “properly filed,” the PTO routinely sets aside the 1 year bar through the procedural mechanism of joinder.  There is significant doubt that Congress intended this result when it enacted §315(b).  The bar serves at least two important purposes:  First it avoids the institution of an inter partes review when a district court case has been ongoing for more than 1 year fulfilling the legislation’s purpose of providing an alternative to litigation rather than a second bite at the apple; and, second, it avoids further harassment of the patentee.  The PTO’s interpretation, however, frustrates both purposes of the time bar.

To date, the Federal Circuit has refused to review this practice based on 35 U.S.C. §314(d).   Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) (in IPRs2013-00080 and -00081, dismissing a §315(b) time bar challenge to institution for lack of jurisdiction because of  314(d)).  See also, e.g., Synopsys, Inc. v. Mentor Graphics Corp. v. Lee, Director, 814 F.3d 1309 (Fed. Cir.) (in IPR2012-00042, reaffirming the Achates holding that decisions under §315(b) are not appealable as they are part of institution determination); MCM Portfolio v. Hewlett Packard, 812 F.3d 1284 (Fed. Cir.) (in IPR2013-00207, citing Achates, and refusing to review §315(b) bar because of §314(d)).

When the Supreme Court decided Cuozzo v. Lee, the Court opened the door for the Federal Circuit to revisit this and other issues decided as part of the institution decision.  See 136 S. Ct. 2131, 2141-42 (2016) (deciding only that the institution itself is unreviewable under §314(d) and not “enabl[ing] the agency the agency to act outside its statutory limits”).  However, given its first opportunity to do so, the majority declined to do so when the 1 year time bar issue turned on whether unnamed defendants in an ongoing litigation — defendants who would have been time barred under §315(b)–  were privies with the petitioner Broadcom.  See Wi-Fi One, LLC v. Broadcom Corp., No. 2015-1944, slip op. at 5-9 (Fed. Cir. Sept. 16, 2016).

Judge Reyna concurred in the result, finding that Wi-Fi had not established that Broadcom was in privity with the time-barred defendants nor a real party in interest in the subject litigation.  However, he disagreed that the court did not have jurisdiction to address the time bar issue.  Noting that “Achates renders § 315(b) toothless,” Judge Reyna’s position is that: “A final decision concerning the time bar set forth in 35 U.S.C. §315(b) should be subject to review.”  Slip op. at 1-2 (dissent).  In his analysis, the Judge turned to the Supreme Court opinion in Cuozzo:  “Cuozzo explicitly notes that its holding does not ‘enable the agency to act outside its statutory limits’ and that such ‘shenanigans’ are properly reviewable.  136 S. Ct. at 1241-42.  That admonition compels us to review allegations that the Board has ignored, or erred in the application of, the statutory time bar.”  Id. at 3.  In Judge Reyna’s view the Federal Circuit should reconsider Achates en banc.  It is only time until a patent owner requests such review.  In view of Cuozzo v. Lee, perhaps the Federal Circuit will take Judge Reyna’s suggestion and address the significant loophole created by the PTO’s statutory interpretation.