Category Archives: CBM

NO ARTHREX DO-OVER FOR PETITIONERS DENIED AIA TRIALS

By Tom Engellenner
Petitioners in administrative patent challenges under the America Invents Act (AIA) that are denied a trial are not entitled to an Arthrex do-over according to a recent Federal Circuit panel holding in United Fire Protection v. Engineered Corrosion Solutions, Appeal No. 2020-1272 (Fed. Cir. May 19, 2020).

Late last year we reported on the Federal Circuit’s Arthrex decision that send shock waves through the IP community by holding that the way administrative patent judges (APJs) were appointed to the Patent Trial and Appeal Board (PTAB) pursuant to the AIA was unconstitutional.  Arthrex v. Smith & Nephew, No. 2018-2140 (Fed. Cir., Oct. 31, 2019).

The Arthrex decision devised a cure for this problem going forward by severing a portion of the enabling AIA legislation that prevents the administrative judges from being fired except for cause. The Federal Circuit’s Arthrex  decision essentially made all PTAB judges subject to dismissal by the secretary of Commerce without cause.  The Federal Circuit panel then remanded the Arthrex case back to the PTAB for a rehearing before a different panel of judges that had been cleansed by severing their job security.

The Arthrex decision create a class of litigants who, like Arthrex, had already received a final written decision on a patent challenge but were still in their pre-appeal period. Those parties — if they chose to appeal and raise the “appointments” issue — would also allowed to get their decisions vacated and remanded.

But the Arthrex decision also cut-off another class of litigants whose cases had not yet reached a PTAB final written decision.  Because the problem was “fixed” by taking away the job security of the PTAB judges, the judges would be deemed properly appointed after the Arthrex ruling and their decisions going forward would no longer be unconstitutional.

Following the Arthrex decision, the Federal Circuit expanded the class of litigants entitled to a remand and rehearing of their cases to include patent owners who lost appeals at the PTAB in inter partes reexamination, and ex parte reexamination proceeding during the pre-Arthrex window of time.  (See, Virnetx Inc. v. Cisco Systems, Inc., Appeal No. 2019-1671 (Fed. Cir., May 13, 2020 – inter partes reexamination) and In re JHO Intellectual Property Holdings LLC, Appeal No. 2019-2330 (Fed. Cir. June 18, 2020 – ex parte appeals)).

It remains to be seen whether the Anthrex decision will also apply to patent applicants who lost appeals of examiner rejections at the PTAB during the pre-Arthrex time window.  This issue is being argued in In re: Boloro Global Ltd., Appeal No.1209-2349. Continue reading →

2019 PTAB Year In Review Part IV: THE PRECEDENTIAL OPINION PANEL (POP)

The Precedential Opinion Panel (POP), formed in September 2018, began rendering opinions in 2019. The POP is intended to provide two main functions: rehear matters in pending trials and appeals of exceptional importance; and assist the Director in determining whether a previously issued decision should be designated as precedential or informative. Its decisions are binding authority on the PTAB. In 2019, the POP issued 3 decisions, designated 8 decisions as precedential, and designated another 13 decisions informative. The three POP decisions are summarized below.

In Proppant Express Investments LLC v. Oren Technologies LLC, IPR2018-00914 (March 2019; Paper 38, precedential), the POP addressed discretionary joinder under §315(c). The POP held that (a) a petitioner may be joined to a proceeding in which it is already a named party, and (b) new issues may be added to an existing proceeding, irrespective of whether the petitioner is already a named party. The POP also advised that the one-year time bar under 35 USC §315(b) is one of several factors to consider when exercising its discretion.

In GoPro Inc. v. 360Heroes Inc., IPR2018-01754 (August 2019; Paper 38, precedential), the POP addressed the one-year time bar under § 315(b). It concluded that § 315(b)’s language, “served with a complaint alleging infringement” is plain and unambiguous. Thus, the service of a pleading alleging patent infringement triggers the one-year time period for filing an IPR petition under 35 U.S.C. § 315(b), regardless of whether the serving party lacked standing to sue or the pleading was otherwise deficient.

Notably, six days after the POP issued the GoPro decision, it also designated as precedential the decision in Cisco Systems, Inc. v. Chrimar Systems, Inc. IPR2018-01511 (PTAB Jan. 2019; Paper 11, designated precedential August 2019).. In that case, the PTAB held that that § 315(a)(1) bars institution of an inter partes review of a patent in which petitioner voluntarily dismisses its earlier civil action challenging the validity of that patent prior to filing the petition.  Continue reading →

TRICK OR TREAT: PTAB JUDGE APPOINTMENTS ARE UNCONSTITUTIONAL

By Tom Engellenner
A Halloween decision by the U.S. Court of Appeals for the Federal Circuit ruled has concluded that the way administrative patent judges (APJs) are appointed to the Patent Trial and Appeal Board (PTAB) is unconstitutional and vacated the decision before the court with a remand that the case be heard again by another PTAB panel. The case is Arthrex v. Smith & Nephew No. 2018-2140 (Fed. Cir., Oct. 31, 2019).

The decision cures this problem going forward by severing a portion of the enabling legislation that prevents the administrative judges from being fired except for cause. The Fed. Circuit decision essentially makes all PTAB judges subject to dismissal by the secretary of Commerce without cause.

The Arthrex decision, however, does appear to create a class of litigants who have already received a final written decision on a patent challenge and are still in their pre-appeal period. Those parties — if they choose to appeal and raise this “appointments” issue — may also be able to get their decisions vacated and remanded.

According to the Fed. Cir. decision by Judges Moore, Chen and Reyna, PTAB judges do not receive enough oversight and supervision from the Director of the U.S. Patent and Trademark Office (USPTO) to be considered “inferior” officers under the U.S. Constitution and, hence, exempt from the Senate confirmation process. (“Principal” officers must be appointed by the president and confirmed by the Senate, while “inferior” officers can be appointed by heads of departments.)

The Fed. Cir. Panel chose the “narrowest remedy” by stripping the PTAB administrative judges of their exemption from dismissal without cause, rather than applying its ruling to the entirety of cases rendered so far by the PTAB:

Thus, we conclude that the appropriate remedy to the constitutional violation is partial invalidation of the statutory limitations on the removal of APJs. Continue reading →

PTAB PROPOSES RULES ON BURDEN OF PROOF FOR AMENDMENTS DURING AIA TRIALS

By Tom Engellenner
In a proposed rule published in the Federal Register on October 22, 2019, the U.S. Patent and Trademark Office (USPTO) has finally moved to codify a change in the way its Patent Trial and Appeal Board (PTAB) conducts administrative patent challenge proceedings (inter partes reviews, covered business method patent reviews, and post-grant reviews) established by the 2011 America Invents Act (AIA).

Under the proposed rule, the petitioner who initiates a patent challenge will not only have the burden of persuading the PTAB that a patent owner’s claims as issued are invalid but will also have the same burden with regard to new claims that the patent owner may present by amendment during the proceeding.

The proposed new rule is hardly a change in practice since the PTAB has essentially been following this practice for the past two years after the Court of Appeals for the Federal Circuit rejected its old rule placing the burden of proof for amendments on the patent owner.

During the first five years of administrative trials under the AIA, the tactic of amending claims to overcome prior art was largely an illusory exercise in part at least because of the original USPTO rule. However, an en banc Federal Circuit decision in Aqua Products v. Matel, 872 F. 3d 1290 (Fed. Circ. 2017) threw out the original USPTO rule.

Continue reading →

FEDERAL CIRCUIT FINDS A TECHNOLOGICAL INVENTION IN SIPCO’S TELECOM PATENT AND REVERSES PTAB DECISION THAT THE PATENT IS SUBJECT TO CBM REVIEW

By Reza Mollaaghababa
Under the administrative trial rules of the America Invents Act (AIA) a patent is eligible for covered business method (CBM) review if it only claims “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” 37 C.F.R. 42.301(a). Notwithstanding, such a patent is exempt from CBM review if it includes a “technological invention.” Id.

In determining whether a patent includes a technological invention for the purposes of CBM review, U.S. Patent Office rules require the Patent Trial and Appeal Board (PTAB) consider “whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art, and solves a technical problem using a technical solution.” 37 C.F.R. 42.301(b).

In SIPCO LLC v. Emerson Electric Co. (IPR 2017-0001), the PTAB concluded that SIPCO’s U.S. Patent No. 8,908,842 was not excluded from CBM review under the statutory “technological exception.” The CAFC disagreed and vacated the PTAB’s decision. Continue reading →