PTAB Cannot Shortcut the Two-Step Obviousness Analysis

FITBIT, INC. v. VALENCELL, INC.

Before Newman, Dyk, and Reyna.  Appeal from Patent Trial and Appeal Board.

Summary: Notwithstanding its rejection of the Petitioner’s proposed claim construction, the PTAB may not end an obviousness inquiry without evaluating patentability in view of the asserted obviousness grounds. 

Apple Inc. petitioned for IPR of a patent owned by Valencell.  The Board instituted review of claims 1, 2, and 6–13 but denied review of claims 3–5.  Fitbit subsequently petitioned for IPR for claims 1, 2, and 6–13 and moved for joinder with Apple’s IPR, which the Board granted.  After the PTAB trial but before the Final Written Decision, the Board re-instituted the Apple/Fitbit IPR to add claims 3–5 pursuant to the Supreme Court’s holding in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).  The Board proceeded to conclude that claims 1, 2, and 6–13 were unpatentable and claims 3–5 were not unpatentable.  The Board determined that claim 3 was not unpatentable based on the rejection of Fitbit’s proposed claim construction.  The Board also determined that claims 4 and 5 were not unpatentable because the meaning of the claims was “subject to reasonable debate” due to a claim term lacking antecedent basis.

The Federal Circuit held that Fitbit’s rights as a joined party included the right to appeal, that the Board’s claim construction was not in error, and that the Board erred in making patentability determinations for claims 3–5 by not considering the asserted grounds of obviousness.  Valencell argued on appeal that Fitbit did not have standing to appeal the Board’s decision as to claims 3–5 because Fitbit’s petition omitted them.  The Federal Circuit rejected Valencell’s argument, reasoning that such circumstances do not override Fitbit’s statutory right of appeal under 35 U.S.C. § 315 as a joined party.  The Federal Circuit next affirmed the claim construction the Board adopted.  However, the Federal Circuit found that the Board erred in its determination as to claim 3 by stopping its analysis after completing only the claim construction step. Because the Board failed to review the patentability of claim 3, as construed, on the asserted grounds of obviousness, the Federal Circuit vacated the Board’s decision with respect to claim 3 and remanded for a determination of patentability.  Lastly, the Federal Circuit addressed the Board’s decision that claims 4 and 5 were not unpatentable.  The Federal Circuit rejected the Board’s determination that there was reasonable debate as to the meaning of the claims due to the lack of antecedent basis, explaining that the correct antecedent basis of the claim term was clarified by referencing the prosecution history. The Federal Circuit highlighted that the Parties did not dispute the correct antecedent basis, but the Board declined to adopt this shared view.  The Federal Circuit concluded that the Board’s treatment of this error as the basis of patentability is not a reasonable resolution and fails to comport with the Agency’s assignment under the AIA to resolve the merits of patentability.  Accordingly, the Federal Circuit also vacated the Board’s decision that claims 4 and 5 are not unpatentable and remanded for determination on the merits of patentability of corrected claims 4 and 5 on the asserted grounds of obviousness.

Editor: Paul Stewart