Federal Circuit Review - October 2018
IPR Petitioner’s Initial Identification of the Real Parties in Interest Is to Be Accepted Unless and Until Disputed by a Patent Owner
In Worlds Inc. v. Bungie, Inc., Appeal Nos. 2017-1481, -1546, -1583, the Federal Circuit held that the PTAB may initially accept an IPR petitioner’s identification of real-parties-in-interest, but if a patent owner produces some evidence disputing the identification, the burden is on the petitioner to demonstrate that the correct real-parties-in-interest were identified.
During district court litigation, Plaintiff Worlds informed Defendant Activision that it intended to add an additional accused product: a video game published by Activision but developed by non-party Bungie. Bungie responded to this accusation by filing IPR petitions against all five patents at issue in the district court case. In its petitions, Bungie represented that it was the sole real-party-in-interest.
Worlds moved for discovery regarding the real-party-in-interest, citing an agreement that allowed Activision to approve legal reviews conducted by Bungie, included indemnification provisions, and allowed Activision to financially support Bungie’s video game development. The Board denied the motion for discovery and, in both the institution and final written decisions, determined that Worlds had not demonstrated that Activision was an unnamed real-party-in-interest.
Worlds appealed, arguing that Activision should have been named as a real-party-in-interest, and the IPR petitions were time-barred because World had served its complaint on Activitision more than a year before these petitions were filed. Worlds also argued that the board should not have placed the ultimate burden of persuasion on Worlds.
The Federal Circuit agreed with Worlds. First, it reiterated that the petitioner bears the ultimate burden of persuasion to show that a petition is not time-barred based on a complaint served on a real-party-in-interest. Next, the Federal Circuit examined and rejected the PTAB’s practice of treating the petitioner’s identification of real-parties-in-interest as a rebuttable presumption, shifting the burden topatent owner to prove otherwise. The Federal Circuit held that the PTAB may accept the petitioner’s identification of the real-parties-in-interest unless and until the patent owner decides to dispute its accuracy. To do so, the patent owner must provide some evidence to show that a particular third party should be named a real-party-in-interest. Using this burden-shifting framework, the Federal Circuit held that Worlds had provided sufficient evidence to dispute Bungie’s initial identification. However, it was unclear whether the Board placed the burden of persuasion on Worlds or Bungie, so the Federal Circuit vacated and remanded the IPRs.
Obviousness of Method Claims May Require Stronger Motivation to Combine than Related Apparatus Claims
In ParkerVision, Inc. v. Qualcomm Inc., Appeal Nos. 2017-2012, -2013, -2014, -2074, the Federal Circuit held that while obviousness of apparatus claims “capable of” a particular function may be shown by identifying an apparatus in the prior art with that capability, obviousness of related method claims requires a motivation to actually use the apparatus for the claimed function.
Qualcomm filed petitions for inter partes review challenging the patentability of both apparatus and method claims of ParkerVision’s ’940 Patent. The ’940 Patent describes a system and method wherein low-frequency electromagnetic signals are up-converted to higher-frequency signals by various means. The Board held certain apparatus claims of the ’940 Patent unpatentable as obvious over the prior art. However, Qualcomm failed to prove by a preponderance of evidence that certain method claims are unpatentable.
ParkerVision appealed and Qualcomm cross-appealed. The dispute between the parties concerned “plurality of harmonics” limitations present in both apparatus and method claims.
The Federal Circuit affirmed the Board’s decision. As to the apparatus claims, the Federal Circuit reasoned that “a prior art reference may anticipate or render obvious an apparatus claim—depending on the claim language—if the reference discloses an apparatus that is reasonably capable of operating so as to meet the claim limitations, even if it does not meet the claim limitations in all modes of operation.” The Federal Circuit noted a distinction between claims reciting capability and those reciting configuration, holding that here the claims fall squarely on the “capable of” side of the line. Thus, because it was undisputed that the prior art apparatus is capable of producing a “plurality of harmonics,” the Federal Circuit held that substantial evidence supported the Board’s determination that the apparatus claims were unpatentable. As to the method claims, the Federal Circuit explained that more was required. Because Qualcomm failed to present evidence and argument that a person of ordinary skill in the art would have been motivated to operate the prior art apparatus in a manner that satisfied the “plurality of harmonics” limitation, Qualcomm failed to meet its burden of proof as to the challenged method claims.
Presumption of Obviousness and Burden-Shifting Framework Applies in the IPR Context
In E.I. DuPont De Nemours & Co. v. Synvina C.V., Appeal No. 2017-1977, the Federal Circuit reaffirmed that when ranges identified in a claimed composition overlap with ranges disclosed in the prior art, obviousness is presumed, and the burden shifts to the patentee to rebut the presumption. The Federal Circuit also held that this burden-shifting framework is applicable for both district court cases and inter partes review proceedings.
DuPont petitioned for inter partes review of a patent owned by Synvina. The patent is directed to a method of oxidizing 5-hydroxymethylfurfural (“HMF”) or an HMF derivative to form 2,5-furan dicarboxylic acid (“FDCA”), a building block for bio-based chemicals. The Board instituted review on obviousness grounds.
The Board found the claims were not obvious even though the prior art references disclosed oxidizing HMF to FDCA under conditions overlapping with those disclosed in the patent at issue. None of the references expressly taught the particular combination of claimed reaction conditions. The Board rejected DuPont’s argument that the burden-shifting framework should be applied in the context of overlapping prior art ranges. The Board interpreted the recent Federal Circuit decisions in In re Magnum Oil Tools International, Ltd., 829 F.3d 1364, 1375 (Fed. Cir. 2016) and Dynamic Drinkware, LLC v. National Graphics, Inc. 800F.3d 1375, 1378 (Fed. Cir. 2015) as prohibiting any burden-shifting framework from applying in an IPR. However, these decisions did not discuss the case law concerning overlapping ranges and the procedural framework relating to them. DuPont appealed the Board’s decision.
The Federal Circuit reversed and found the claims obvious. The Board should have applied the burden-shifting framework to analyze obviousness, because this framework applies to IPR proceedings and district court cases, as well as PTO examination. The Federal Circuit found that the presumption of obviousness applied in this case because the claimed composition ranges fell within the ranges disclosed in the prior art. The patentee failed to rebut this presumption by showing unexpected results, that the prior art taught away, that the parameter was not recognized as “result-effective,” or that the disclosure of the broad ranges did not invite routine optimization.
Section 315(b) Time Bar Applies to IPR Petitions Even When Complaint Alleging Patent Infringement Is Involuntarily Dismissed
In Bennett Regulator Guards, Inc. v. Atlanta Gas Light Company, Appeal Nos. 2017-1555, 2017-1626, the Federal Circuit held that 35 U.S.C. § 315(b), which prohibits the Board from instituting an IPR based on a petition filed more than one year after the date on which the petitioner is served with a complaint, is fully applicable to complaints that are involuntarily dismissed by the court.
In 2012, Bennett served Atlanta Gas with a complaint alleging infringement of a patent. Atlanta Gas successfully moved to dismiss the complaint. Nearly three years later, in 2015, Atlanta Gas filed an IPR to challenge the validity of the Bennett patent. Bennett objected, arguing that § 315(b) prohibits institution if a petition is filed more than one year after the petitioner is served with a complaint. The Board concluded that the district court’s dismissal of the complaint without prejudice nullified service, and proceeded to institute review of all claims. The Board later held that all claims of the patent were unpatentable. The Board also granted sanctions against Atlanta Gas for failing to disclose the change of corporate parentage.
The Federal Circuit vacated the Board’s final written decision and remanded with instructions to dismiss the IPR. The Federal Circuit first noted that serving a complaint alleging infringement unambiguously implicates the § 315(b) time bar. The time bar is unchanged by the subsequent success or failure of the complaint. The Federal Circuit further explained that the statute does not create an exception for involuntarily dismissed complaints, and therefore the Board exceeded its authority when it instituted an IPR more than one year after service of the complaint. With regard to the appeal of sanctions, the Federal Circuit determined the sanctions were non-final, and declined to exercise pendent jurisdiction.
