IP News

At the end of its analysis, the PTAB addressed Ariosa's attempt, through a second declaration of its expert accompanying its reply, to bolster its reliance placed in the petitions on a brochure as evidence of the state of the art. Id. at 10. The PTAB characterized that testimony as attempting to replace the teachings of the prior art upon which the proceedings had been instituted, but also as failing to explain why the exhibit could not have been presented originally with the petitions as part of an asserted ground of unpatentability. Id. Therefore, the PTAB accorded no weight to that aspect of the expert's testimony. Id.'In the footnote to that passage, the PTAB quoted the USPTO regulation declaring that '[a] reply may only respond to arguments raised in the corresponding ' patent owner response,' 37 C.F.R. '42.23(b), and the related explanation that '[r]eply evidence ' must be responsive and not merely new evidence that could have been presented earlier to support the movant's motion,' Rules of Practice for Trials before the Patent Trial and Appeal Board, 77 Fed. Reg. 48,612, 48,620 (Aug. 14, 2014). Ariosa appealed from that decision to the Federal Circuit, challenging the PTAB's treatment of the prior art exhibit.

In its opinion, the Federal Circuit panel first noted that it reviews de novo the PTAB's ultimate determinations of obviousness, and reviews for substantial evidence the underlying factual findings, which include findings as to the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, the presence or absence of a motivation to combine or modify with a reasonable expectation of success, and objective indicia of non-obviousness. Slip Op. at 11.

The panel indicated it could not confidently discern whether the Board, in its consideration of the exhibit, relied on a legally proper ground or an improper one. On its face, the panel concluded, the PTAB's language supports Ariosa's interpretation that it had declined to consider the exhibit simply because it had not been identified in the petition as one of the prior art references defining a combination for obviousness. Id. If that is what the PTAB meant, it erred, according to the panel. Id.''Art can legitimately serve to document the knowledge that skilled artisans would bring to bear in reading the prior art identified as producing obviousness. Ariosa's petitions and opening declarations invoked [the exhibit] in that way.' Id. at 11-12.'However, if the PTAB meant to say that the development of Ariosa's argument invoking the exhibit was inadequate, then the PTAB would be justified in giving no weight to the exhibit. Id. at 13.

The panel stated that it would “not here draw [its] own conclusion about whether [the exhibit], if considered for what the Petitions (and supporting declarations) adequately presented about it, could have filled the explanatory gap that was the heart of the Board's reason for finding Ariosa's case unproved,” id. at 14, adding that “[t]he Board is in a better position to do so,” id. at 15. Thus, the Federal Circuit vacated the decision and remanded. The panel clarified that, in remanding, it did not direct the PTAB to take new evidence or to accept new briefing. Id. at 15. Consistent with its governing statutes, regulations, and practice, the PTAB may control its own proceedings in order to comply with the congressional directive that IPR proceedings be completed within one year of institution. Id.

Federal Circuit: Inter Partes Review System Is Constitutional

On Dec., 2, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Dyk, and Hughes issued a unanimous opinion, authored by Judge Dyk, in MCM Portfolio LLC v. Hewlett-Packard Co., Case No. 2015-1091. The panel held that the inter partes review (IPR) system does not violate either Article III or the Seventh Amendment of the U.S. Constitution.

HP had petitioned for IPR of certain claims of U.S. Patent No. 7,162,549 (“the '549 patent”). MCM, in its preliminary response to HP's petition, argued that the petition was time-barred, under 35 U.S.C. '315(b), because HP was a privy of Pandigital, whom MCM had sued for infringement of the '549 patent more than one year before HP filed its IPR petition. The PTAB, however, instituted the IPR proceeding, holding that the fact that Pandigital and HP were successive owners of the same allegedly infringing property was not sufficient to confer privity for the purposes of ' 315(b). Ultimately, the PTAB issued its final written decision rejecting MCM's argument that the IPR proceedings violated Article III and the Seventh Amendment of the Constitution, and on the merits, concluding that the challenged claims were unpatentable. MCM appealed.

In its opinion, the Federal Circuit quickly disposed of MCM's argument that the IPR should not have been instituted in the first place because it was time-barred under 35 U.S.C. '315(b). The panel explained: “[t]he law is clear that there is 'no appeal' from the decision to institute inter partes review.” Slip Op. at 7 (citing 35 U.S.C. '314(d); In re Cuozzo Speed Techs., 793 F.3d 1268, 1273-74 (Fed. Cir. 2015); Achates Reference Publishing, Inc. v. Apple Inc., 903 F.3d 652, 658 (Fed. Cir. 2015)).

Next, the Federal Circuit considered MCM's argument that the IPR system is unconstitutional on the ground that any action revoking a patent must be tried in an Article III court with a right to a trial by jury under the Seventh Amendment. The panel explained that Congress has the power to delegate disputes over public rights to non-Article III courts and, in fact, has done so in several cases since at least the mid-1800s. Slip Op. at 10 (citing Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272, 284 (1855) (public rights exception applied to disputes between the government and private parties), Block v. Hirsh, 256 U.S. 135, 158 (1921)'(administrative agency authorized to determine fair rents for holdover tenants), Ex parte Bakelite Corp., 279 U.S. 438, 460-61 (1929)'(dispute between competitors for unfair importation practices under federal law could be heard outside of an Article III court), Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 571 (1985)'(upholding binding arbitration scheme of the Federal Insecticide, Fungicide, and Rodenticide Act)). More recently, the Supreme Court expounded on the public rights doctrine in Stern v. Marshall, 131 S. Ct. 2594 (2011), in which it explained that the public rights doctrine applies to disputes between private parties in “cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency's authority.” Slip Op. at 11 (quoting Stern, at 2613). The Federal Circuit explained that the patent right “derives from an extensive federal regulatory scheme,” Stern, at 2613, and is created by federal law. Slip Op. at 12. Further, “[t]here is notably no suggestion that Congress lacked the authority to delegate to the PTO the power to issue patents in the first instance,” and “[i]t would be odd indeed if Congress could not authorize the PTO to reconsider its own decisions.” Id.

The Federal Circuit noted its conclusion that the IPR system does not violate Article III or the Seventh Amendment also finds support in its own precedent. On each occasion that the Federal Circuit has considered the constitutionality of ex parte reexamination system under Article III and the Seventh Amendment, it has upheld the constitutionality the system. Slip Op. 13-14 (citing Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985); Joy Techs. v. Manbeck, 959 F.2d 226 (Fed. Cir. 1992)).

Federal Circuit Affirms'PTAB Decision Finding'Negative Claim'Limitation Satisfies'35 U.S.C. '112

On Nov. 13, 2015, a Federal Circuit panel of Judges O'Malley, Reyna, and Chen issued a unanimous opinion, authored by Judge O'Malley, in Inphi Corp. v. Netlist, Inc., Case No. 2015-1179. The panel affirmed the USPTO Patent Trial and Appeals Board's (PTAB) decision in an inter partes reexamination proceeding that a particular proposed claim amendment introducing a negative claim limitation satisfies the written description requirement of 35 U.S.C. '112.

Inphi had requested inter partes reexamination of U.S. Patent No. 7,532,537 ('the '537 patent'). The patent examiner rejected certain claims as obvious in view of the prior art. In response, patent owner Netlist made narrowing claim amendments. Thereafter, the examiner withdrew his rejection of the claims and issued a final decision. Inphi appealed to the PTAB, arguing that the amendment, which introduced a negative claim limitation, failed to satisfy the written description requirement of 35 U.S.C. '112, '1. Inphi's appeal focused on the claim requirement of 'DDR chip selects that are not CAS [column address strobe], RAS [row address strobe], or bank address signals.' The PTAB, however, affirmed the examiner's final decision. Inphi requested a rehearing, which the PTAB denied. Inphi appealed to the Federal Circuit.

In its opinion, the Federal Circuit first noted that it reviews factual findings by the PTAB for substantial evidence, which is a deferential standard of review. Slip Op. at 8. The Federal Circuit observed that the PTAB had identified three portions of the '537 patent's specification upon which it had relied in finding written description support for the negative claim limitation: 1) incorporation by reference of a Joint Electron Device Engineering Counsel standard, which specifies that RAS, CAS, and bank address signals are distinct from each other; 2) Table 2, which excludes RAS and CAS signals; and 3) various other passages from the '537 patent's specification. Id. at 6.

Regarding the written description requirement of 35 U.S.C. '112, '1 vis-'-vis negative claim limitations, the Federal Circuit cited precedent informing that '[n]egative claim limitations are adequately supported when the specification describes a reason to exclude the relevant limitation.' Id. at 9 (citing Santarus, Inc. v. Par Pharm., Inc., 694 F.3d 1344, 1351 (Fed. Cir. 2012)). Netlist argued that the 'reason to exclude' requirement is satisfied when alternative features are properly described, and that the three portions of the '537 patent's specification cited by the PTAB satisfied the requirement. Slip Op. at 12. Inphi, on the other hand, argued that 'reason to exclude' requires something more than describing alternative features of the patented invention, but did not go as far as to argue that it requires listing the advantages and disadvantages of the alternatives. Id. at 11-12.

In Santarus, written description support for a negative limitation had been found where the specification described both the advantages of the claimed element and the disadvantages of the disclaimed element. Id. at 10-11. The Santarus court held that the patent's express recitation of (dis)advantages was sufficient to provide a reason to exclude the claim limitation at issue. As the Federal Circuit explained in this opinion, however, the Santarus court did not hold that such recitations were required to satisfy the written description requirements of 35 U.S.C. '112, '1 for negative claim limitations. The panel further explained that it does not see any reason to now articulate a new and heightened standard for negative claim limitations.

Thus, the Federal Circuit held that the 'reason to exclude' requirement of Santarus can be met by properly describing alternative features of the patented invention, and that it is not necessary to describe the advantages or disadvantages of the features. Finding substantial evidence of written description support in the '537 patent's specification for the proposed negative claim limitation, the Federal Circuit affirmed the PTAB's decision.

Jeffrey S. Ginsberg is the Assistant Editor of this newsletter and a partner with Patterson Belknap Webb & Tyler LLP. Abhishek Bapna is an associate at the firm.

Federal Circuit Vacates PTAB Decision On Obviousness

On Nov., 16, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Wallach, and Judge Taranto issued a unanimous opinion, authored by Judge Taranto, in Ariosa Diagnostics v. Verinata Health, Inc., Case Nos. 2015-1215, 2015-1226. The panel vacated the PTAB's decision in an inter partes review (IPR) proceeding and remanded, due to the PTAB's failure to properly consider an exhibit submitted by the petitioner.

Ariosa filed two petitions for IPR of U.S. Patent No. 8,318,430 against patent owner Verinata. Ariosa's petitions were based on arguments that the claims were unpatentable as obvious in view of three prior art references. The PTAB instituted both proceedings, but after receiving the patent owner's response, the petitioner's reply, and counsel's oral arguments, the PTAB upheld the claims. The PTAB's central point was that Ariosa's petitions were lacking because “virtually no effort [wa]s made to explain how or where the references differ from the challenged claims, how one of ordinary skill in the art would go about combining their disparate elements, or what modifications one of ordinary skill in the art would necessarily have made in order to combine the disparate elements.” Slip Op. at 8-9.

At the end of its analysis, the PTAB addressed Ariosa's attempt, through a second declaration of its expert accompanying its reply, to bolster its reliance placed in the petitions on a brochure as evidence of the state of the art. Id. at 10. The PTAB characterized that testimony as attempting to replace the teachings of the prior art upon which the proceedings had been instituted, but also as failing to explain why the exhibit could not have been presented originally with the petitions as part of an asserted ground of unpatentability. Id. Therefore, the PTAB accorded no weight to that aspect of the expert's testimony. Id.'In the footnote to that passage, the PTAB quoted the USPTO regulation declaring that '[a] reply may only respond to arguments raised in the corresponding ' patent owner response,' 37 C.F.R. '42.23(b), and the related explanation that '[r]eply evidence ' must be responsive and not merely new evidence that could have been presented earlier to support the movant's motion,' Rules of Practice for Trials before the Patent Trial and Appeal Board, 77 Fed. Reg. 48,612, 48,620 (Aug. 14, 2014). Ariosa appealed from that decision to the Federal Circuit, challenging the PTAB's treatment of the prior art exhibit.

In its opinion, the Federal Circuit panel first noted that it reviews de novo the PTAB's ultimate determinations of obviousness, and reviews for substantial evidence the underlying factual findings, which include findings as to the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, the presence or absence of a motivation to combine or modify with a reasonable expectation of success, and objective indicia of non-obviousness. Slip Op. at 11.

The panel indicated it could not confidently discern whether the Board, in its consideration of the exhibit, relied on a legally proper ground or an improper one. On its face, the panel concluded, the PTAB's language supports Ariosa's interpretation that it had declined to consider the exhibit simply because it had not been identified in the petition as one of the prior art references defining a combination for obviousness. Id. If that is what the PTAB meant, it erred, according to the panel. Id.''Art can legitimately serve to document the knowledge that skilled artisans would bring to bear in reading the prior art identified as producing obviousness. Ariosa's petitions and opening declarations invoked [the exhibit] in that way.' Id. at 11-12.'However, if the PTAB meant to say that the development of Ariosa's argument invoking the exhibit was inadequate, then the PTAB would be justified in giving no weight to the exhibit. Id. at 13.

The panel stated that it would “not here draw [its] own conclusion about whether [the exhibit], if considered for what the Petitions (and supporting declarations) adequately presented about it, could have filled the explanatory gap that was the heart of the Board's reason for finding Ariosa's case unproved,” id. at 14, adding that “[t]he Board is in a better position to do so,” id. at 15. Thus, the Federal Circuit vacated the decision and remanded. The panel clarified that, in remanding, it did not direct the PTAB to take new evidence or to accept new briefing. Id. at 15. Consistent with its governing statutes, regulations, and practice, the PTAB may control its own proceedings in order to comply with the congressional directive that IPR proceedings be completed within one year of institution. Id.

Federal Circuit: Inter Partes Review System Is Constitutional

On Dec., 2, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Dyk, and Hughes issued a unanimous opinion, authored by Judge Dyk, in MCM Portfolio LLC v. Hewlett-Packard Co., Case No. 2015-1091. The panel held that the inter partes review (IPR) system does not violate either Article III or the Seventh Amendment of the U.S. Constitution.

HP had petitioned for IPR of certain claims of U.S. Patent No. 7,162,549 (“the '549 patent”). MCM, in its preliminary response to HP's petition, argued that the petition was time-barred, under 35 U.S.C. '315(b), because HP was a privy of Pandigital, whom MCM had sued for infringement of the '549 patent more than one year before HP filed its IPR petition. The PTAB, however, instituted the IPR proceeding, holding that the fact that Pandigital and HP were successive owners of the same allegedly infringing property was not sufficient to confer privity for the purposes of ' 315(b). Ultimately, the PTAB issued its final written decision rejecting MCM's argument that the IPR proceedings violated Article III and the Seventh Amendment of the Constitution, and on the merits, concluding that the challenged claims were unpatentable. MCM appealed.

In its opinion, the Federal Circuit quickly disposed of MCM's argument that the IPR should not have been instituted in the first place because it was time-barred under 35 U.S.C. '315(b). The panel explained: “[t]he law is clear that there is 'no appeal' from the decision to institute inter partes review.” Slip Op. at 7 (citing 35 U.S.C. '314(d); In re Cuozzo Speed Techs., 793 F.3d 1268, 1273-74 (Fed. Cir. 2015); Achates Reference Publishing, Inc. v. Apple Inc., 903 F.3d 652, 658 (Fed. Cir. 2015)).

Next, the Federal Circuit considered MCM's argument that the IPR system is unconstitutional on the ground that any action revoking a patent must be tried in an Article III court with a right to a trial by jury under the Seventh Amendment. The panel explained that Congress has the power to delegate disputes over public rights to non-Article III courts and, in fact, has done so in several cases since at least the mid-1800s. Slip Op. at 10 (citing Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272, 284 (1855) ( public rights exception applied to disputes between the government and private parties) , Block v. Hirsh, 256 U.S. 135, 158 (1921)' (administrative agency authorized to determine fair rents for holdover tenants) , Ex parte Bakelite Corp., 279 U.S. 438, 460-61 (1929)'(dispute between competitors for unfair importation practices under federal law could be heard outside of an Article III court), Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 571 (1985)' (upholding binding arbitration scheme of the Federal Insecticide, Fungicide, and Rodenticide Act)) . More recently, the Supreme Court expounded on the public rights doctrine in Stern v. Marshall, 131 S. Ct. 2594 (2011), in which it explained that the public rights doctrine applies to disputes between private parties in “cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objective within the agency's authority.” Slip Op. at 11 (quoting Stern, at 2613). The Federal Circuit explained that the patent right “derives from an extensive federal regulatory scheme,” Stern, at 2613, and is created by federal law. Slip Op. at 12. Further, “[t]here is notably no suggestion that Congress lacked the authority to delegate to the PTO the power to issue patents in the first instance,” and “[i]t would be odd indeed if Congress could not authorize the PTO to reconsider its own decisions.” Id.

The Federal Circuit noted its conclusion that the IPR system does not violate Article III or the Seventh Amendment also finds support in its own precedent. On each occasion that the Federal Circuit has considered the constitutionality of ex parte reexamination system under Article III and the Seventh Amendment, it has upheld the constitutionality the system. Slip Op. 13-14 (citing Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985); Joy Techs. v. Manbeck, 959 F.2d 226 (Fed. Cir. 1992)).

Federal Circuit Affirms'PTAB Decision Finding'Negative Claim'Limitation Satisfies'35 U.S.C. '112

On Nov. 13, 2015, a Federal Circuit panel of Judges O'Malley, Reyna, and Chen issued a unanimous opinion, authored by Judge O'Malley, in Inphi Corp. v. Netlist, Inc., Case No. 2015-1179. The panel affirmed the USPTO Patent Trial and Appeals Board's (PTAB) decision in an inter partes reexamination proceeding that a particular proposed claim amendment introducing a negative claim limitation satisfies the written description requirement of 35 U.S.C. '112.

Inphi had requested inter partes reexamination of U.S. Patent No. 7,532,537 ('the '537 patent'). The patent examiner rejected certain claims as obvious in view of the prior art. In response, patent owner Netlist made narrowing claim amendments. Thereafter, the examiner withdrew his rejection of the claims and issued a final decision. Inphi appealed to the PTAB, arguing that the amendment, which introduced a negative claim limitation, failed to satisfy the written description requirement of 35 U.S.C. '112, '1. Inphi's appeal focused on the claim requirement of 'DDR chip selects that are not CAS [column address strobe], RAS [row address strobe], or bank address signals.' The PTAB, however, affirmed the examiner's final decision. Inphi requested a rehearing, which the PTAB denied. Inphi appealed to the Federal Circuit.

In its opinion, the Federal Circuit first noted that it reviews factual findings by the PTAB for substantial evidence, which is a deferential standard of review. Slip Op. at 8. The Federal Circuit observed that the PTAB had identified three portions of the '537 patent's specification upon which it had relied in finding written description support for the negative claim limitation: 1) incorporation by reference of a Joint Electron Device Engineering Counsel standard, which specifies that RAS, CAS, and bank address signals are distinct from each other; 2) Table 2, which excludes RAS and CAS signals; and 3) various other passages from the '537 patent's specification. Id. at 6.

Regarding the written description requirement of 35 U.S.C. '112, '1 vis-'-vis negative claim limitations, the Federal Circuit cited precedent informing that '[n]egative claim limitations are adequately supported when the specification describes a reason to exclude the relevant limitation.' Id . at 9 (citing Santarus, Inc. v. Par Pharm., Inc. , 694 F.3d 1344, 1351 (Fed. Cir. 2012)). Netlist argued that the 'reason to exclude' requirement is satisfied when alternative features are properly described, and that the three portions of the '537 patent's specification cited by the PTAB satisfied the requirement. Slip Op. at 12. Inphi, on the other hand, argued that 'reason to exclude' requires something more than describing alternative features of the patented invention, but did not go as far as to argue that it requires listing the advantages and disadvantages of the alternatives. Id. at 11-12.

In Santarus, written description support for a negative limitation had been found where the specification described both the advantages of the claimed element and the disadvantages of the disclaimed element. Id. at 10-11. The Santarus court held that the patent's express recitation of (dis)advantages was sufficient to provide a reason to exclude the claim limitation at issue. As the Federal Circuit explained in this opinion, however, the Santarus court did not hold that such recitations were required to satisfy the written description requirements of 35 U.S.C. '112, '1 for negative claim limitations. The panel further explained that it does not see any reason to now articulate a new and heightened standard for negative claim limitations.

Thus, the Federal Circuit held that the 'reason to exclude' requirement of Santarus can be met by properly describing alternative features of the patented invention, and that it is not necessary to describe the advantages or disadvantages of the features. Finding substantial evidence of written description support in the '537 patent's specification for the proposed negative claim limitation, the Federal Circuit affirmed the PTAB's decision.

Jeffrey S. Ginsberg is the Assistant Editor of this newsletter and a partner with Patterson Belknap Webb & Tyler LLP. Abhishek Bapna is an associate at the firm.