PATENT CASE OF THE WEEK 

SIPCO, LLC v. Emerson Electric Co., Appeal No. 2018-1635 (Fed. Cir. Sept. 25, 2019)

In this appeal of the Patent Trial and Appeal Board’s (PTAB) final written decision regarding covered business method (CBM) review of SIPCO’s U.S. Patent No. 8,908,842 (“the ’842 patent”), the Federal Circuit addresses issues relating to claim construction and eligibility for CBM review.

The ’842 patent concerns the use of a “low-power” remote transceiver configured to wirelessly transmit a signal with instruction data for delivery to a network of devices. Two dependent claims of the ’842 patent allow for the remote device to be associated with a vending machine or an ATM.

The Court first discussed claim construction of the term “low-power transceiver.” During the CBM review, SIPCO proposed a construction specifying that the transceiver “transmits and receives signals having a limited transmission range,” and supported its construction with a document showing that the FCC discusses “low-power” transceivers in a way that limits their range to a few meters. Emerson did not provide a proposed construction. The PTAB determined that the phrase should “encompass” a device that transmits and receives signals having a limited transmission range, but declined to limit its construction, finding instead that SIPCO’s proposed construction conflated “power” with “transmission range.” On review, the Federal Circuit found that the PTAB failed to give appropriate meaning to “low power.” Explaining that all claim terms are presumed to have meaning in a claim, the Court looked to the patent’s specification and found that it explicitly ties the “low-power transceiver” to a limited transmission distance, and that a skilled artisan would thus understand that the transceiver operates at a power level corresponding to “limited transmission range.” Although the specification uses the word “extremely” before “low-power,” the Court explained that because the specification repeatedly ties the low-power transmitter to having a limited transmission range, the specification thus supports a relationship between limited transmission range and low transmit power. This is further reinforced by the specification’s use of the word “extremely” to specify the amount of distance (“several feet”) by which the transmission is limited and by its example of a cellular transmitter being capable of transmitting a further distance than a “low-power transmitter.” Thus, the Court reversed the PTAB’s construction and instead construed the term to mean “a device that transmits and receives signals at a power level corresponding to a limited transmission range.”

The Court next reviewed whether the patent is in fact a CBM patent under AIA section 18(d)(1), which requires such a patent to claim a method or apparatus for use in a financial product or service. The Court held that the PTAB’s determination that dependent claims 3 and 4 recite such an apparatus was not arbitrary and capricious, and thus affirmed. Specifically, the Court explained that the statute does not limit CBM patents only to products or services in the financial industry; rather, it covers a wide range of finance-related activities. The ’842 patent does not merely claim a device that is “incidental to” or “complementary to” a financial activity such that it would not qualify for CBM review. Rather, the Court held that the ’842 patent, which claims a remote device being associated with an ATM or vending machine, expressly contemplates that the information communicated through the claimed system is financial information that identifies the user’s bank account and identity. Thus, communicating financial information is central to the operation of the claimed device.

The Court last reviewed the PTAB’s reasoning as to whether the ’842 patent qualifies as a “technological invention,” such that it would be excluded from CBM review. The PTAB used 37 CFR 42.301 to determine that the ’842 patent was not a technological invention and thus eligible for CBM review. That rule states that a patent is a technological invention when (1) the subject matter as a whole recites a technological feature that is novel and unobvious over the prior art and (2) it solves a technical problem using a technical solution. If both parts are satisfied, a patent is not eligible for CBM review. The PTAB analyzed the second part only and found that the ’842 patent solved only a financial problem and thus was eligible for CBM review. The Court found the PTAB’s decision arbitrary and capricious because its decision was based on a mischaracterization of the features of the claims of the patent. Specifically, the Court found that the claims and specification make clear that the invention describes a technical problem—how to extend the reach of an existing communication system while protecting against unwanted interference—solved by a technical solution—the creation of a two-step communication system that uses a low-power transceiver. The Court reversed the PTAB’s decision that the second part of the rule is not satisfied because the ’842 patent’s claims combine certain communication elements in a particular way to address a specific technical problem with a specific technical solution. Therefore, because one of the two required parts of the rule were satisfied, the Court remanded for analysis of the first part.

The Court declined to accept Emerson’s argument that remand is unnecessary because the PTAB already analyzed whether the ’842 patent was obvious under section 103. The Court explained that it has previously questioned whether the first part of the rule—which references the word “obvious”—is co-extensive with section 103, and therefore also ordered that on remand, the PTAB should explain what part one of the rule means and then apply it as explained. Because on remand the PTAB will have to revisit whether the ’842 patent qualifies for CBM review, the Court vacated all of the PTAB’s unpatentability determinations.

The opinion can be found here.

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Campbell Soup Company v. Gamon Plus, Inc., Appeal Nos. 2018-2029, -2030 (Fed. Cir. Sept. 26, 2019)

In an appeal from an inter parties review, the Court addressed whether the PTAB erred in finding two design patents not invalid for obviousness. On appeal, the court addressed the standard to find a piece of prior art sufficient to qualify as a primary reference for such an analysis. The Court vacated the PTAB’s findings and partially remanded the claims, because “the ever-so-slight differences in [the] design [of one of the patents], in light of the overall similarities,” created “basically the same visual impression as the claimed designs,” and thus allowed that reference to qualify as a primary reference for a design patent obviousness analysis.

The opinion can be found here.