Overview
In this series of monthly updates, we summarize decisions issued last month where the Federal Circuit reversed or vacated PTAB or trial court rulings, which can provide guidance on how to succeed on appeal.
Quick takeaways:
- Once a motion to transfer is filed, disposing of that motion takes top priority.
- The Board’s finding of invalidity based on theory not set forth in the petition violated APA.
- Adding a functional limitation without reciting a new way for computers to conduct the function does not render the claims patent eligible.
- When the claim differentiates between two functions, a required element of one function cannot be satisfied by the existence of that element in the other function.
- The lack of motivation finding is error when the analysis focused on limitation not claimed.
- Issue preclusion applies to inter partes reexamination and the Board's earlier finding of two prior art being incompatible precluded a different finding in a later proceeding for another patent.
In Re SK Hynix Inc., Case No. 21-113 (Fed. Cir. Feb. 1., 2021)
Netlist filed a patent infringement against SK Hynix in the Western District of Texas, and SK moved to the transfer the case. Without ruling on the motion to transfer, the District Court ordered the parties to engage in extensive discovery and to proceed with all deadlines. SK Hynix petitioned for a writ of mandamus directing the district court to transfer the case or to stay the proceedings and rule on the motion.
Mandamus may be used to correct an erroneous denial of transfer or an arbitrary refusal to act on such request. Although district courts have discretion as to how to handle their dockets, once a party files a transfer motion, disposing of that motion takes top priority. The Federal Circuit agreed with SK Hynix that the district court's handling of the motion amounted to "egregious delay and blatant disregard for precedent."
However, since the district court has since scheduled a hearing on the motion and is presumably proceeding toward a resolution of the transfer issue, the Federal Circuit decided that a writ of mandamus to compel the court is not necessary. The Federal Circuit instead granted the petition to the extent that the district court must stay all proceedings concerning the substantive issues until it issues a ruling on the transfer motion.
M & K Holdings, Inc. v. Samsung Electronics Co., Ltd., Case No. 20-1160 (Fed. Cir. Feb. 1., 2021)
In an IPR proceeding, the Board found all challenged claims to be unpatentable. M&K appealed, arguing that the Board erred by relying on references that do not qualify as prior art printed publications, and that the Board erred by finding claim 3 anticipated. The Federal Circuit affirmed the Board's decision with respect to the printed-publication issue, but vacated the decision with respect to claim 3.
Regarding claim 3, Samsung's petition challenged it only on a theory of obviousness, and did not include anticipation as an alternative theory. Indeed, Samsung had expressly stated in its petition that the particular prior art at issue here did not disclose a limitation of claim 3. The Board, however, found claim 3 anticipated by that prior art.
The Federal Circuit agreed with M&K that the Board deviated impermissibly from the invalidity theory set forth in Samsung's petition. Although M&K was aware of the prior art used to invalidate claim 3 given the obviousness combination asserted, M&K was not put on notice that the Board might invalidate claim 3 based on anticipation. If M&K had been given notice of the anticipation theory, it could have challenged the Board's interpretation of claim 3. The Federal Circuit had found similar deprivations of notice regarding non-prior-art issues to be a violation of the APA.
The Federal Circuit therefore vacated the Board's holding that claim 3 is unpatentable, and remanded for the Board to further analyze the patentability of claim 3.
cxLoyalty Inc. v. Maritz Holdings Inc., Case No. 20-1307 (Fed. Cir. Feb. 8, 2021)
The Board instituted CBM review and concluded that original claims 1–15 are patent ineligible under 35 U.S.C. § 101 but that proposed substitute claims are patent eligible. Both parties appealed. cxLoyalty appealed the Board's ruling as to the substitute claims, and Maritz cross-appealed both the Board's determination that the '087 patent is eligible for CBM review and the Board’s ruling as to the original claims.
The Federal Circuit first decided that it does not have authority to review Maritz's challenge to the threshold determination that a patent qualifies for CBM review, which the Supreme Court has made clear is a decision non-appealable under 35 U.S.C. § 324(e).
Turning to the Board's 101 decision, the Federal Circuit affirmed the Board's patent ineligible determination as to the original claims, but reversed the Board’s patent eligible determination as to the proposed substitute claims. Representative substituted claim 16 added a functional limitation, but it does not provide any guidance as to how this purported function is achieved. Further, Maritz does not contend that the claimed invention improves the use of computers as a tool by reciting a new way for computers to conduct the function. The Federal Circuit therefore concluded that representative substitute claim 16 does not claim a patent-eligible technological solution to a technological problem. The Federal Circuit also found Maritz’s reliance on precedent misplaced.
The Federal Circuit also found representative substitute claim 22 patent ineligible, because the additional limitation constitutes part of the abstract idea, which is implemented using wholly conventional techniques.
Caterpillar Paving Products v. Wirtgen America, Inc., Case No. 20-1261 (Fed. Cir. Feb. 10, 2021)
The Board found all challenged claims and proposed substitute claims invalid as obvious. Finding an incorrect claim construction applied, the Federal Circuit vacated and remanded.
As an initial matter, the Federal Circuit decided that although the parties framed their arguments as questions of substantial evidence or improper procedure, the dispute is about claim construction of whether mere "use" by a system sufficient to establish that the "recall command includes the respective first or second unique identifier" limitation. It is not.
The claim differentiates between the recall command and the functions of the controller. Because the identifier must be included in a command entered by the operator, it is not enough that the unique identifier is included in an instruction given by the controller in response to the command entered by the operator. It is also not enough that the controller, or the system as a whole, "uses" the identifier. The plain language of the claims requires more than mere use by the system to meet the limitation.
The Federal Circuit therefore remanded for the Board to consider whether the prior art discloses or renders obvious a "recall command" that "includes the respective first or second unique identifier," beyond mere use of the unique identifier by the controller in response to the recall command.
Canfield Scientific, Inc. v. Melanoscan, LLC, Case No. 19-1927 (Fed. Cir. Feb. 18, 2021)
In finding all challenged claims patentable, the Board held that a person of ordinary skill in the art of photo-imaging would not have been motivated to combine the prior art, because a prior art’s wall would have blocked the view of other cameras.
The Federal Circuit disagreed. The Board's reasoning of view being blocked did not consider placing the subjects at the center of the system as disclosed in certain prior art references. Claims 1 and 51 are not limited as to the location of the subject being imaged. The claims place the subject within the enclosure, as in the prior art, and place multiple cameras and lights within the enclosure, as in the prior art. Therefore, the subject matter described in claims 1 and 51 would have been obvious to a person of ordinary skill in the field of the invention, and reversed the Board's ruling of patentability as to these claims.
With regard to dependent claims, because the Board did not separately analyze them upon holding the independent claims to be patentable, the Federal Circuit vacated the Board's decision those claims and remanded to determine the patentability of these claims.
Synqor, Inc. v. Vicor Corp., Case No. 19-1704 (Fed. Cir. Feb. 22, 2021)
During an inter partes reexamination proceeding, the PTAB found the original claims and the later presented claims of the '190 patent obvious. On appeal, the Federal Circuit vacated the decision as to both sets of claims.
The '190 patent, along with the '702 and the '290 patents, were asserted in a district court case in 2011. Vicor petitioned for reexamination of all three patents. The Board found the claims of the '702 and '290 patents patentable, due to incompatibilities in frequency between the prior art, which was affirmed by the Federal Circuit. However, as to the '190 patent, the Board instead found that the same prior art references were not incompatible, and the challenged claims unpatentable.
SynQor appealed the '190 patent decision and argued that common law issue preclusion arising from the '702 and '290 patent reexaminations should have collaterally estopped the Board from finding that an artisan would be motivated to combine the prior art. The Federal Circuit previously held that issue preclusion applies to inter partes reviews. Here, the Federal Circuit majority held that collateral estoppel (or issue preclusion) also applies to inter partes reexamination, stating that "Given the statutory estoppel scheme for inter partes reexaminations, the informal procedural safe-guards, the nature of the tribunal, and the overall magnitude and complexity of the proceedings, we are unpersuaded that inter partes reexamination procedures are so 'fundamentally poor, cursory, or unfair,' that the resolution of a factual dispute in a first inter partes reexamination should not collaterally estop the contrary resolution of that dispute in a second reexamination."
The Federal Circuit majority next evaluated whether the facts support issue preclusion. They do. First, the issues are identical between the '190 patent reexamination and the '290 and '702 patent reexaminations, with the relevant issue being whether the two prior art are incompatible. The issue was litigated and decided in both the '290 and '702 patent reexaminations. The decision of incompatibilities was essential to the judgments holding the '290 and '702 patents not obvious. Thus, because the Board was precluded from finding that an artisan would combine the prior art, The Federal Circuit majority vacate the Board's decision on the original claims, and remanded for further proceedings.
Regarding the later presented claims, the expiration of the '190 patent renders any appeal of the Board's decision regarding those claims moot, and thus the Federal Circuit also vacated the decision as to those claims.