MBHB-Webinar-PTAB-Williams-Lovsin-051616-FINAL

The PTAB Front and Center at the Federal Circuit and the Supreme Court:

The First Year of Appellate Review(Live MBHB Webinar)

Andrew W. Williams, Ph.D.James L. Lovsin

May 18, 2016

PTAB Front and Center

Appeal Statistics Claim Construction Reviewability of Institution Constitutional and Structural Challenges Best Practices for Appeal

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Appeal to the Federal Circuit

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“A party dissatisfied with the final written decision of thePatent Trial and Appeal Board under section 318(a) mayappeal the decision pursuant to sections 141 through144. Any party to the inter partes review shall have theright to be a party to the appeal.”

35 U.S.C. § 319

Since February 4, 2015, 93 cases have been decided by the Federal Circuit

Appeal Statistics

27 precedential opinions 15 Affirmed 12 Affirmed-in-part / reversed-in-part, vacated

and remanded, or dismissed 11 non-precedential opinions 7 Affirmed 4 Affirmed-in-part / reversed-in-part, vacated

and remanded, reversed, or dismissed 55 cases affirmed pursuant to Rule 36

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Appeal Statistics

1st Quarter 2015 1 precedential opinion (Affirmed) 7 cases affirmed pursuant to Rule 36

2nd Quarter 2015 1 precedential opinion Affirmed-in-part / reversed-in-part, vacated-in-part

and remanded 1 non-precedential opinion (Affirmed) 8 cases affirmed pursuant to Rule 36

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Appeal Statistics

3rd Quarter 2015 3 precedential opinions 2 Affirmed, 1 Dismissed

2 non-precedential opinions (Both affirmed) 7 cases affirmed pursuant to Rule 36

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Appeal Statistics

4th Quarter 2015 9 precedential opinion 6 Affirmed 3 Affirmed-in-part / reversed-in-part, or vacated and

remanded 1 non-precedential opinion (Dismissed) 7 cases affirmed pursuant to Rule 36

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Appeal Statistics

1st Quarter 2016 10 precedential opinions 4 Affirmed 6 Affirmed-in-part / vacated-in-part and remanded,

affirmed-in-part / reversed-in-part, or vacated and remanded

5 non-precedential opinions 3 Affirmed 2 Vacated and remanded or dismissed as moot

15 cases affirmed pursuant to Rule 36

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Appeal Statistics

2nd Quarter 2016 (through May 17, 2016) 3 precedential opinion 2 Affirmed 1 Affirmed-in-part / reversed-in-part

2 non-precedential opinion 1 Affirmed (with one combined appeal dismissed) 1 Reversed

11 cases affirmed pursuant to Rule 36

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Claim Construction Standard

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Broadest reasonable construction in light

of specificationPhillips Standardvs.

In re Cuozzo Speed Techs., LLC

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The first Supreme Court case of the first appeal of the first Final Written Decision for the first IPR petition filed

U.S. Patent No. 6,778,074


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Garmin USA had been sued in district court and filed petition IPR2012-00001


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10. A speed limit indicator comprising:a global positioning system receiver;a display controller connected to said global

positioning system receiver, wherein said display controller adjusts a colored display in response to signals from said global positioning system receiver to continuously update the delineation of which speed readings are in violation of the speed limit at a vehicle's present location; and

a speedometer integrally attached to said colored display.


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“Integrally Attached”

Cuozzo’s Proposed Construction “Joined or combined to work as a complete unit”

The Board’s Construction “Discrete parts physically joined together as a unit without each

part losing its own separate identity.”

In re Cuozzo Speed Techs., LLC (Fed. Cir. 2015)

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The Federal Circuit concluded “that Congress implicitly approved the broadest reasonable interpretation standard in enacting the AIA.” “It can therefore be inferred that Congress impliedly approved the

existing rule of adopting the broadest reasonable construction.”

Failing that, the Court determined that “[e]ven if approval of the broadest reasonable interpretation standard were not incorporated into the IPR provisions of the statute, the standard was properly adopted by PTO regulations.”

In re Cuozzo Speed Techs., LLC (Fed. Cir. 2015)

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Judge Newman in dissent: BRI standard frustrates the goal of inter partes review to be a

surrogate for district court litigation Reference to other office proceedings cannot justify standard

“Amendment in post-grant validity proceedings is not of right, and thus far appears to be almost entirely illusory”

Originally issued opinion noted that the House “Innovation Act” contained a section amending the standard: “each claim of a patent shall be construed as such claim would be in a civil

action to invalidate a patent under section 282(b), including constructing each claim of the patent in accordance with the ordinary and customary meaning of such as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent . . . .”

This comment not found in current version of the opinion


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Petition for Rehearing en banc denied

11 judges considered the petition, and it likely failed by one vote

Judge Dyk, joined by Judges Lourie, Chen, and Hughes, filed a concurrence

Chief Judge Prost, and Judges Newman, Moore, O’Malley, and Reyna filed a joint dissent

Judge Newman filed a separate dissent

In re Cuozzo Speed Techs., LLC (Sup. Ct. 2016)

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On March 4, 2016, the Supreme Court granted certiorarion two questions:1. Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2. Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board's decision whether to institute an IPR proceeding is judicially unreviewable.

Oral Argument on April 25, 2016


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Chief Justice Roberts:

“So why – why should we be so wedded to the way they do business in the PTO with respect to the broadest possible construction when the – the point is not to replicate PTO procedures. It’s supposed to take the place of district court procedures.”

“[I]t’s a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results.”


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Justice Breyer:

“[Y]ou could look at this new law as you [Cuozzo] were looking at it, as trying to build a little court proceeding. If I thought it was just doing that, I would say you were right. But there is another way to look at it. And the other way to look at it . . . is that there are these things, for better words, let’s call them patent trolls, and that the –the Patent Office has been issuing billions of patents that shouldn’t have been issued – I overstate – but only some. . . . And so what we’re trying to do with this process is to tell the office, you’ve been doing too much too fast. Go back and let people who are hurt by this come in and get rid of those patents that shouldn’t have issued. . . . If it’s that second purpose, then I would think, well, maybe this is right, what they [the PTAB] are doing.”


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Justice Breyer:

“I apply for a patent because I have this thing that instead of putting red cellophane on the speedometer, I put purple cellophane on the speedometer. It signals the presence of a hot dog stand. All right. [Laughter] I – I then try to patent it. And they look at this patent and, no, absolutely not.”

BRI v. Phillips

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Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1298 (Fed. Cir. 2015) (citations omitted).

That is not to say, however, that the Board may construeclaims during IPR so broadly that its constructions areunreasonable under general claim constructionprinciples. . . . Even under the broadest reasonableinterpretation, the Board’s construction “cannot bedivorced from the specification and the recordevidence,” and “must be consistent with the one thatthose skilled in the art would reach . . . .”

BRI v. Phillips

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Straight Path IP Group, Inc. v. Sipnet EU S.R.O., 806 F.3d 1356, 1362 (Fed. Cir. 2015)

The plain meaning of the claim language is therefore notoverridden by the specification. And the plain meaning ispositively confirmed by the prosecution history, whichwe have indicated is to be consulted even indetermining a claim’s broadest reasonableinterpretation.

BRI v. Phillips

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Trivascular, Inc. v. Samuels, 812 F.3d 1056, 1062 (Fed. Cir. 2016) (citations omitted).

While the broadest reasonable interpretation standard isbroad, it does not give the Board an unfettered licenseto interpret the words in a claim without regard for thefull claim language and the written description. . . .Instead, it is the “use of the words in the context of thewritten description and customarily by those of skill inthe relevant art that accurately reflects both the‘ordinary’ and ‘customary’ meaning of the terms in theclaims.”

BRI v. Phillips

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PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, 2015-136, 2016 WL 692368 at *5 (Fed. Cir. Feb. 22, 2016).

However, claim construction in IPRs is not governed byPhillips. Under Cuozzo, claims are given their broadestreasonable interpretation consistent with thespecification, not necessarily the correct constructionunder the framework laid out in Phillips.

Thus, while the Board’s construction is not the correctconstruction under Phillips, it is the broadest reasonableinterpretation of “continuity member,” and because thisis an IPR, under our binding precedent, we must upholdthe Board’s construction [of the claim terms].”

FOR ATTENDANCE TRACKING PURPOSES PLEASE ENTER THE

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Motion to Amend Claims

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“The Director shall prescribe regulations – setting forthstandards and procedures for allowing the patent ownerto move to amend the patent . . . to cancel a challengedclaim or propose a reasonable number of substituteclaims.”

35 U.S.C. § 316(a)(9)

“During an inter partes review instituted under thischapter, the patent owner may file 1 motion to amendthe patent in 1 or more of the following ways: (A) Cancelany challenged patent claim. (B) For each challengedclaim, propose a reasonable number of substituteclaims.

35 U.S.C. § 316(d)(1)


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Guidance from the Office:

Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 26 (June 11, 2013) Approved by Federal Circuit in Microsoft Corp. v. Proxyconn, Inc.,

789 F.3d 1292 (Fed. Cir. 2015)

MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (July 15, 2015) Approved by Federal Circuit in Nike, Inc. v. Adidas AG, 812 F.3d

1326 (Fed. Cir. 2016) Designated Precedential


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Patent Trial and Appeal Board Motion to Amend Study Dated April 30, 2016

As of the date of the study, the Board reported instituting and completing 1539 trials

In those cases, the Board decided the merits of a motion to amend in 118 trials (8%)

Of those, the motion was granted (or granted-in-part) in only 6 cases (5% of the 118 trials)



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Reviewability of Institution

AIA proceedings and statutory scheme Federal Circuit Case law Reviewability at Supreme Court Special Case: Partial Institution

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Two Stages of AIA Proceedings

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Institution Trial

Institution Decision Final Written Decision

Appeals Limited By Statute

Appeals from PTAB’s Final Written Decision to Federal Circuit. 35 U.S.C. § 141(c)

“Broadly worded bar” for Institution. 35 U.S.C. § 314(d) – “No Appeal. The

determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”

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Federal Circuit: Section 314(d) means what it says No review of decisions not to institute. St. Jude, 749 F.3d 1373 (Fed. Cir. 2014)

No (interlocutory) review of decisions toinstitute. P & G, 749 F.3d 1376 (Fed. Cir. 2014)

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No Review of Institution Issues on Merits Appeal

Court cannot review whether PTAB can institute an IPR based on a ground that was not presented in the petition. Cuozzo, 778 F.3d 1271 (Fed. Cir. 2015)

Court cannot review PTAB’s determination that petition is not time-barred per§315(b). Achates, 803 F.3d 652 (Fed. Cir. 2015)

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Federal Circuit’s Answer:Mandamus / Ultra Vires Action Writ of Mandamus has three requirements: (1) no other adequate means to attain relief (2) right of relief is clear and indisputable (3) writ is appropriate under the circumstances

Ultra Vires agency action: PTAB cannot exceed scope of its delegated

authority or violate a clear statutory mandate

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Counterpoint?Versata’s Approach to CBMs Counterpart to§314(d) limits appeal of

PGR and CBM institution.

Court can review whether patent is a “covered business method patent” because that goes to the PTAB’s authority to invalidate claims in CBM.

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Cuozzo’s Reviewability at the Supreme Court

Cuozzo’s view of §314(d) Bars review of decisions not to institute. Bars mandamus of decisions to institute

before final written decision.

PTO’s view of §314(d) Bars review of decisions to institute Mandamus is available at time alleged error

occurred

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Few Questions on Reviewability

Cuozzo’s Argument Justice Ginsburg: “work” the statute is doing.

PTO’s Argument Justice Sotomayor: why not at least “some

review.” Justice Ginsburg concerned with prospect of

series of judicially unreviewable PTAB rulings.

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Prediction: Loosen Reviewability

Verasata’s Approach: on appeal of final written decision, court can review institution issue that goes to PTAB’s authority to invalidate. Achates’ issue (yes); Cuozzo’s issue (no)

Practical effect: Court would likely apply deference to PTAB’s fact findings related to institution issues.

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Special Case: Partial Institution

PTAB has discretion to institute IPR on: (1) a subset of claims challenged in petition (2) a subset of grounds raised in petition

PTAB has practice of denying institution on grounds it deems “redundant” of instituted grounds.

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Partial InstitutionNot Reviewable

Series of cases February through April 2016 finding redundancy not reviewable. Hybrid of decision to institute / not to institute.

Supreme Court’s Cuozzo decision unlikely to affect partial institution. Does not go to PTAB’s authority to invalidate.

Partial institution creates safe harbor.•43



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Constitutional Challenge Rejected MCM Portfolio, 812 F.3d 1284 (Fed. Cir. 2016) IPRs do not run afoul of Article III of the

Constitution. IPRs do not violate the 7th Amendment right to

a trial by jury. Patents are public rights, and therefore PTO,

like the courts, can declare issued patents invalid.

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Another Constitutional/Structural Challenge Rejected Ethicon, 796 F.3d 1312 (Fed. Cir. 2016) Court upheld PTO’s practice of having same

PTAB panel decide to institute and conduct the IPR. Court ruled that PTO Director may delegate

institute decision to PTAB. Nothing in the Constitution or the text, structure, or

legislative history of the AIA precludes such delegation.

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FOR ATTENDANCE TRACKING PURPOSES PLEASE ENTER THE

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Claim Construction!

There have been 13 appeals that resulted in at least a reversal-in-part or that were at least vacated-in-part and remanded Of these, 6 were because of the Board’s

claim construction

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Claim Construction! Microsoft Corp. v. Proxyconn, Inc.

Because the Board’s determination that claims 1, 3, 10, 22, and 23 were unpatentable was based on an unreasonably broad construction of the terms “sender/computer” and “receiver/computer,” we vacate the Board’s findings of unpatentability of claims 1, 3, 10, 22, and 23 and remand for proceedings consistent with this opinion.

Straight Path IP Group, Inc. v. Sipnet EU S.R.O. The plain meaning of the claim language is therefore not

overridden by the specification. And the plain meaning is positively confirmed by the prosecution history, which we have indicated is to be consulted even in determining a claim’s broadest reasonable interpretation.

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Claim Construction! PPC Broadband, Inc. v. Corning Optical

Communications RF, LLC (II) The Board’s approach in this case fails to account for how the

claims themselves and the specification inform the ordinarily skilled artisan as to precisely which ordinary definition the patentee was using.

Dell v. Acceleron The Board’s construction runs counter to the claim construction

principle that meaning should be given to all of a claim’s terms.

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Claim Construction! Pride Mobility v. Permobil

The Board’s sole basis for its claim construction does not reasonably support a departure from what the claim language and specification so clearly mean.

Cutsforth, Inc. v. MotivePower, Inc. The Board’s interpretation of “a projection extending from the

mounting block” far exceeds the scope of its plain meaning and is not justified by the specification.

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Procedural Arguments

PTAB not making all required findings. Nike, 812 F.3d 1326 (Fed. Cir. 2016) Obviousness vacated and remanded. PTAB erred by not making findings on secondary

considerations evidence relating to long-felt need.

PTAB can only be affirmed on the factual findings that it made. SEC v. Chenery, 318 U.S. 80 (1943) No alternative factual grounds for affirmance.

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Procedural Arguments

PTAB improperly relying on arguments or evidence. Dell, No. 2015-1513 (Fed. Cir. Mar. 2016) Anticipation vacated and remanded. PTAB erred by relying on a factual assertion made

by petitioner for the first time at oral argument.

PTAB not explaining its decision. Cutsforth, No. 2015-1316 (Fed. Cir. Jan. 2016) Obviousness vacated and remanded.

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Things to Consider with Procedural Arguments

Procedural arguments typically only lead to vacatur and remand.

Avoid focusing appeal on correctness of PTAB’s factual findings. Reviewed for “substantial evidence”

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www.patentdocs.org

Andrew W. Williams, [email protected]

(312) 913-3301

James L. [email protected]

(312) 913-2112

Connect with MBHB!

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THANK YOU!

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MBHB-Webinar-PTAB-Williams-Lovsin-051616-FINAL

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