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Fresh From the Bench: Precedential Patent Cases From the Federal Circuit

August 31, 2017


Today the Circuit agreed to hear en banc Nantkwest v. Matal,in which the panel had reversed a district court decision that had rejected the PTO’s position that applicants who appeal a district court must pay the PTO’s legal bills regardless of who wins. See our report on that case here. In Return Mail v. U.S. Postal Service, a split panel determines that the USPS is a “person” under the AIA provision that a “person” may file a petition for CBM review if the person has been sued ‎for infringement. The panel also rules that the filing of an action in the Claims Court for compensation from the federal ‎government is within the definition of “sued for infringement.”‎ In Vicor v. SynQor, the Circuit affirms and reverses various obviousness determinations as to two closely related inter partes reexaminations involving similar inventions, sharing common patentability issues because the respective reexaminations contain inconsistent findings on identical issues without any explanation for the differences. In Ultratec v. CaptionCall, the panel vacates and remands an IPR decision, ruling that the Board abused its discretion in refusing to admit potentially conflicting trial testimony of an expert witness for CaptionCall without explaining the bases for its decision.

Any precedential cases decided tomorrow will be included in next week’s report. Thanks to Yuke Wang for his help with this week’s report.


Return Mail, Inc. v. U.S. Postal Service, Fed. Cir. Case 2016-1502 (August 28, 2017)

The majority of a divided panel affirms the invalidity under § 101 of a Return Mail patent directed to the processing of mail items that are undeliverable due to an inaccurate address and, in doing so, broadens yet again the circumstances in which a Covered Business Method review can be utilized to challenge the validity of CBM patents. The AIA provides that a “person” may file a petition for CBM review if the person has been sued for or charged with infringement of a patent. The majority rules that the USPS is a “person” under the Act, and the filing of an action in the Claims Court for compensation from the federal government is within the definition  of “sued for infringement.”

The panel first considers whether it can hear an appeal of the “standing” issue. The AIA authorizes appeals from the Board’s final written decision in a CBM review proceeding, but the statute also includes a “no appeal” provision in § 324(e), stating that the determination by the Director whether to institute review is “final and nonappealable.” The Postal Service argued that this appeal is precluded by the Cuozzodecision, barring judicial review of determinations by the Board regarding a “reasonable likelihood” of success of an IPR petition, as well as challenges grounded “in a statute closely related to that decision to institute IPR.”  The entire panel rejects that argument, noting that the statutory language and the legislative history of the AIA supports the conclusion that questions related to a party’s standing touch upon the PTO’s ultimate authority to act, which should be subject to appellate review.

A CBM review may be filed by a person only after being “sued for infringement” or otherwise charged with infringement. The entire panel rules that the filing of an action against the government in the Claims Court qualifies as being “sued for infringement.” Return Mail argued that because § 1498(a) is grounded in eminent domain, it cannot be a suit “for infringement,” but the panel disagrees. Looking to the meaning of “sued for infringement,” the panel rules that there is no basis for Return Mail’s argument that “sued for infringement” is limited to actions under 35 U.S.C. § 271, as Congress could have limited the statutory language to “sued for infringement under 35 U.S.C. § 271 or otherwise could have excluded section 1498 suits from the definition, but it did not do so.

The majority and Judge Newman disagree on whether the USPS can be considered a “person” under § 18(a)(1)(B). In its opening appeal brief, Return Mail failed to argue that the USPS was not a “person” so the majority notes that the issue normally would be considered waived. Even assuming the issue is not waivable, the majority is not persuaded that the word “person” upends the applicability of § 18(a)(1)(B) to the government. The dissent relies on a presumption that “in common usage the term ‘persons’ does not include the sovereign, and statutes employing it will ordinarily not be construed to do so.” But the majority rules that when determining the scope of the term “person,” there is no hard and fast rule of exclusion, and much depends on the context. Nor does the AIA use the term “person” in other provisions to exclude the government. Since the legislative history does not directly address the issue, and in the absence of briefing, the majority rules that it will not engage in speculation that Congress intended to exclude the government from filing petitions.

In a fairly routine analysis, the panel applies the two steps of Alice, finding that the method claims are directed to an abstract idea and that there is nothing in the claims that transforms the abstract idea into “something more.”

Comment: In addition to distinguishing Cuozzo as to the appealability issue, the panel ‎distinguishes the Circuit’s 2015 Achates decision. The continued viability of that decision is ‎presently being considered by the en banc Circuit in Wi-Fi One v. Broadcom. Both Cuozzo and ‎Achates interpreted the scope of 35 U.S.C. § 314(d), an analogous no-appeal provision for ‎IPRs. Because the pertinent language of § 314(d) is identical to that of § 324(e), the ‎USPS argued that the Board’s determination that it had standing is not reviewable by the ‎Circuit. Nevertheless, the panel concludes that Cuozzo and Achates are distinguishable. Here, in contrast, whether a party is ‎statutorily allowed to petition for CBM review does not amount to “little more than a challenge ‎to the PTO’s conclusion” about the petition’s likelihood of success on the merits. The Board’s ‎determination of whether a party is qualified under § 18(a)(1)(B) to petition for CBM review is a ‎condition precedent independent from a threshold analysis regarding the likelihood of success of ‎the information contained in the petition. For this reason, the panel rules that the standing issue is ‎appealable.‎

Read the full opinion

Vicor Corp. v. SynQor, Fed. Cir. Case 2016-2283 (August 30, 2017)

The Circuit is troubled with the Board’s handling of two closely related inter partes reexaminations involving similar inventions, sharing common patentability issues, with the reexaminations being heard by the same Board panel, because the respective reexaminations contain inconsistent findings on identical issues. Accordingly the panel affirms in part and reverses in part the Board’s decisions in both reexaminations.

SynQor owns several patents directed to the architecture of direct current-to-direct current (DC-DC) power converters, including the ’290 and ’021 patents. These and related patents had been the subject of prior litigation judgments and reexaminations involving validity, including appeals to the Circuit. In the present appeals, Vicor appeals the Board’s decision in the ’290 patent’s reexamination holding that certain claims are patentable. SynQor appeals the Board’s decision in the ’021 patent’s reexamination holding that certain claims in that patent are unpatentable as anticipated or obvious.

According to the panel, the Board’s decision on these rejections was erroneous and must be vacated for two reasons. First, the Board improperly analyzed Vicor’s obviousness arguments under only one of the four Grahamfactors when it looked exclusively at the objective evidence, without considering the remaining factors and the relative strength of the factors. Second, the Board reached inconsistent conclusions as to the evidentiary weight to be given to the secondary considerations evidence presented in the respective reexaminations of the ’290 and ’021 patents, without any explanation to justify such inconsistency. The Board’s legal error is underscored by its opinion in the related reexamination of the ’021 patent where it applied all four Graham factors and stated that the “Circuit has determined that only after considering the four Graham criteria can the decision maker make the legal determination of whether the invention is nonobvious.” The Supreme Court instructed that, in performing an obviousness inquiry, “the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined.” Graham v. Deere. The Circuit has interpreted this mandate to require that “evidence relating to all four factors—including objective evidence of secondary considerations—must be considered before determining whether the claimed invention would have been obvious to one of skill in the art at the time of invention.”

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Ultratec, Inc. v. CaptionCall, LLC, Fed. Cir. Case 2016-1706, -1707, -1710 and -1712 (August 28, 2017)

The Circuit vacates and remands an IPR decision invalidating the claims of Ultratec patents, ruling that the Board abused its discretion in refusing to admit potentially conflicting trial testimony of an expert witness for CaptionCall without explaining the bases for its decision.      

Ultratec sued CaptionCall for infringement of patents directed to systems for assisting deaf or hard-of-hearing users to make phone calls. CaptionCall petitioned for IPRs but before the Board issued its final written decisions, the case went to trial, where a jury found the patents valid and infringed and awarded damages of $44 million. The Board subsequently issued its decision invalidating all of the challenged claims based on anticipation or obviousness, and Ultratec appealed. The district court immediately stayed all post-trial briefing, casting doubt on Ultratec’s ability to collect the awarded damages.

CaptionCall retained the same invalidity expert, Mr. Occhiogrosso, in the district court litigation and the IPRs, and he testified about some of the same references in the two proceedings. Within a week of the jury trial, Ultratec sought to introduce Mr. Occhiogrosso’s trial testimony into the IPRs, alleging that his trial testimony conflicted with written declarations he made in the IPRs. The Board denied Ultratec’s request in a conference call and indicated that a written order would follow, but the order never was issued. Of consequence to the panel was that the Board did not review the testimony when deciding whether it could be admitted. Following the hearing, the Board issued final written decisions, relying heavily on the Board’s belief that Mr. Occhiogrosso was a credible witness. 

The PTO’s regulations require that a request to submit new information must show: (1) why the supplemental information reasonably could not have been obtained earlier; and (2) that consideration of the supplemental information would be in the interests of justice.  The Circuit determines that Ultratec satisfied both requirements. The inconsistent testimony of the expert witness did not exist sooner and could not have been proffered to the Board sooner.  The recent sworn testimony was by the same expert addressing the same patents, references, and limitations at issue in the IPR. Under such circumstances, no reasonable fact finder would refuse to consider evidence of inconsistent sworn testimony.      

The Board offered no written order for the denial of admitting the trial testimony, and failed to offer any reasoned basis why it would not be in the interest of justice to consider sworn inconsistent testimony on the identical issue.  CaptionCall and the PTO argued that Ultratec bore the responsibility to memorialize the conference call if it desired a written record for the denial.  The Circuit finds no burden on the patentee to memorialize agency action or reasoning.  It is the agency that has the obligation to fulfill its APA duty to provide a “satisfactory explanation for its action.” The panel therefore rules that the Board abused its discretion when it refused to admit and consider the trial testimony by the expert witness and when it refused to explain its decision.  The Board also notes, as it has in many recent decisions, that without an adequate explanation for the bases of a ruling, the Circuit cannot conduct a meaningful review.

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