Category Archives: PGR

CONSEQUENCES OF AN UNSUCCESSFUL ADMINISTRATIVE PATENT CHALLENGE – JUST GOT A LOT MORE TROUBLESOME

By Tom Engellenner
In a precedential opinion handed down last month by the Court of Appeals for the Federal Circuit, the court overruled its own prior decisions and greatly expanded the scope of estoppel applied against petitioners who are unsuccessful in challenging patents in an inter partes review proceeding (IPR) before the Patent Trial and Appeal Board (PTAB) of the US Patent and Trademark Office.  In California Institute of Technology v. Broadcom Limited, No. 20-2222 (Fed. Cir. Feb. 4, 2022), the court found that “estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not in the IPR but which reasonably could have been included in the petition.”

At issue in the Caltech case was section 35 U.S.C. § 315(e)(2) of the America Invents Act (AIA) of 2011, which authorized new types of administrative hearings to review the validity of issued patents.  Since 2012, thousands of trials, primarily inter partes review or IPR trials, has been held by PTAB panels of administrative judges.  While many of these trials have resulted in partial or complete victories for the petitioners that challenged patent claims, patent owners have also been successful in defending their patents some of the time.  Section 315(e)(2) of the AIA provides:

The petitioner in an inter partes review of a claim in a patent . . . may not assert either in a civil action . . . or in a proceeding before the International Trade Commission . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

Early on in the course of AIA trials, it was not clear what Congress meant by “any ground that the petitioner raised or reasonably could have raised” in an IPR.  The scope of estoppel applied against a defendant following an unsuccessful IPR challenge in parallel patent infringement cases before Federal district courts was hotly contested.  Some courts adopted a narrow approach to the scope of section 315(e)(2) estoppel, basically only precluding the re-litigation of arguments raised in any earlier IPR.  Other courts gave a broader interpretation to the “reasonably could have raised” wording of section 315 and precluded anything prior art arguments that defendant knew (or should have known) about and chose not to raise by way of an IPR proceeding.

All these views seemed to be put to rest in a 2016 Federal Circuit decision in Shaw Industries Group v. Automated Creel Systems, 817 F.3d 1293.  In the Shaw decision, the Federal Circuit noted that the rules adopted by the USPTO to govern AIA trials gave PTAB panels the authority to not only deny or institute a trial, but also to “partially” institute a trial.  The court then concluded if the PTAB can pick the arguments to be litigated in an IPR proceeding, then any argument not chosen by the PTAB for trial could not have been “reasonably” raised.  Following the Shaw decision, federal district courts seemed to fall into line with a narrow view of section 315(e)(2) estoppel.

But then came a Supreme Court decision in 2018 that essentially threw out the USPTO “partial institution” rules for PTAB trials.  In SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Supreme Court held that any time an IPR trial is conducted, the PTAB must render judgment on all patent claims contested by the petitioner.  Federal District courts again began to diverge in their interpretation of section 315(e)(2) estoppel in patent infringement trials.

A court decision later in 2018 in the District of Massachusetts was perhaps the bellwether for reconsideration of the Shaw case and its narrow interpretation of estoppel.  In SiOnyx LLC v. Hamamatsu Photonics K.K., 330 F. Supp. 3d 574, 601 (D. Mass. 2018) District Court Judge Saylor found a pre-SAS narrow view decision in his own district “cannot be correct” after the Supreme Court’s SAS decision and applied a broad estoppel instead.   Because partial institutions are improper after the SAS decision, Judge Saylor reasoned, “for the words ‘reasonably could have raised’ to have any meaning at all,” they must include prior art arguments that were not raised in the petition.

Indeed, last month’s decision by the Federal Circuit in the Caltech case has come to the same conclusion.  The judges of the Federal Circuit panel that decided the Caltech case further took the extraordinary step of explicitly overruling the Shaw case.  Typically, a panel decision on the same fact pattern is considered binding on other panels in the same circuit but the Caltech court relied upon an exception to the general rule when a court of last resort (i.e., the U.S. Supreme Court) takes a position that “undercuts the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.”  In such circumstances overruling of a panel precedent is permissible.  Thus, the panel in the Caltech case held:

“Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not in the IPR but which reasonably could have been included in the petition. In a regime in which the Board must institute on all grounds asserted and the petition defines the IPR litigation, this interpretation is the only plausible reading of “reasonably could have been raised” and “in the IPR” that gives any meaning to those words.”

Thus, the Caltech case, (unless reversed by the Federal Circuit en banc or the Supreme Court – both unlikely scenarios) has ushered in a new era of broad estoppel to be applied against unsuccessful IPR petitioners.  It appears that defendants in subsequent patent infringement cases will not be able to present any prior art-based invalidity argument that they knew about – or should have been aware of based on a reasonable search for prior art – following an unsuccessful IPR challenge to the patent(s)-in-suit.

One strategy for escaping this broad estoppel, at least for well-heeled defendants, may be to concurrently present multiple IPR petitions if they choose to go the AIA administrative invalidity trial route.  Flooding the PTAB deck, so to speak, with many different petitions is unlikely to result in multiple proceedings because the PTAB rarely grant two separate trials on the same patent claims (and, in fact, PTAB rules require petitioners to rank parallel petitions in order of preference).  However, if only one trial is instituted, the grounds presented in the other denied petitions may remain available as defenses in parallel patent infringement litigation. 

The Caltech case may have an even bigger impact on another type of AIA trial, namely “post grant review” (PGR) proceedings.  This type of proceeding is available for newly issued patents during the first nine months follow the patent’s issuance.  Unlike IPR proceedings, where challenges to a patent’s validity are limited to patents and printed publications as prior art, petitioners for a PGR trial can raise virtually any ground in the patent statute as a basis for invalidating a patent, e.g., other types of prior art such as prior use or sale of the claimed invention, indefiniteness, or lack of written description – as well as prior patents and publications.  Section 325(e)(2), the section of the AIA that provides for petitioner estoppel following an unsuccessful challenge in a PGR proceeding, contains identical language to section 315(e)(2) that governs IPR proceedings.  Thus, an unsuccessful PGR determination excludes defenses on “any ground that the petitioner raised or reasonably could have raised.”  Since the scope of invalidity arguments that can be made in a PGR petition is broader, based on the Caltech decision reasoning, the unsuccessful petitioner runs of risk on being stripped of all invalidity defense in subsequent patent infringement litigation.

Post script: On February 22, 2022, The Federal Circuit panel that handed down the Caltech decision issued a clarification to its opinion.  In its original opinion, the panel stated that estoppel applies “to all claims and grounds not stated in the IPR but which reasonably could have been included in the petition” (emphasis added). The errata modified the decision by deleting the term “claims.”  The original holding failed to acknowledge that section 315(e) limits estoppel to the challenged claims that were the subject of the IPR final written decision (i.e., not other claims that could have been challenged but were not).

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 →

FEDERAL CIRCUIT SHEDS (SOME) LIGHT ON WHAT CONSITUTES A NEW ARGUMENT AT PTAB ORAL HEARING

By Siew Chong
A recent Federal Circuit decision in The Chamberlain Group, Inc v. One World Technologies, Inc. (Fed. Cir. December 17, 2019), is notable in that it clarifies what a patent owner may permissibly raise for the first time at an oral hearing. Despite acknowledging that Chamberlain argued a claim limitation for the first time at oral argument before the Patent Trial and Appeal Board (PTAB), the Federal Circuit panel still found that the argument acceptable because the new citation merely clarified Chamberlain’s previously articulated position.

Nonetheless, the Federal Circuit panel affirmed a Patent Trial and Appeal Board’s final written decision that found claims 8-15 of U.S. Patent No. 7,196,611 (the ’611 patent) – directed to garage door and gate operator systems – unpatentable as anticipated by U.S. Patent No. 4,638,422 (Schindler). The challenged claims were directed to methods of “teaching” barrier movement systems, e.g., garage door systems, to set various limits for operating the systems. One World Technologies, Inc. successfully petitioned for the inter partes review of claims 8-15 in the ’611 patent for being anticipated by Schindler, and claims 23 and 25 for being obvious over the combination of Schindler and “Liftmaster,” an owner’s manual for a door operator system. One World Technologies asserted that Schindler disclosed a method that sets the upper and lower limits for door positions, and thus anticipates the challenged claims. Chamberlain disagreed, and stated in its patent owner’s response that contrary to Schindler, which taught programming a “single” activity at a time, the ’611 patent was directed to a system that required identifying and guiding “multiple activities.”

At the oral hearing, Chamberlain argued for the first time that the claim limitation for the final step of the learning mode, “responsive to the first and second identifying step,” required identifying multiple activities before transmitting any guidance responsive to the identifying step. That limitation, according to Chamberlain, was not anticipated by Schindler, which disclosed transmitting a guidance signal after identifying a single activity. In its final written decision, the Board found that Chamberlain waived this argument because it was raised for the first time at the oral hearing. The Board, however, went on to address the merits of the argument and ultimately found it unpersuasive.

In its appeal, Chamberlain asserted that the Board’s finding of waiver was erroneous because Chamberlain’s argument was responsive to new arguments made in One World’s petitioner reply, and the argument was merely a clarification of its position, which had been consistent throughout the IPR. The Federal Circuit panel agreed with Chamberlain, explaining Federal Circuit case law allows parties to “elaborate” their arguments on previously raised issues.   The panel found that Chamberlain did not raise new issues or evidence, but instead tracked its previous argument and “merely pointed to different portions of the claim language” to clarify its previously stated position in response to One World’s reply. 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 →