IP News

Apple argued that the claims asserted by Wi-LAN were invalid as anticipated by several prior art references, which the parties agreed taught only the use of a real randomizer, rather than a complex randomizer. The jury found the asserted claims of Wi-LAN's patent both invalid and not infringed by Apple. Wi-LAN moved for JMOL on both issues, arguing that its asserted claims required complex randomization, which the parties agreed the prior art did not disclose. The district court upheld the finding of non-infringement, but reversed on invalidity, stating that the construction of computing means “does not specifically provide for a complex multiplier,” but nonetheless it was necessarily included. Slip Op. at 8. The district court stated it was necessary because “expert witnesses from both sides agreed that complex multipliers are part of the structure of the 'first computing means' as taught by the '802 patent.” Id. Wi-LAN appealed the denial of JMOL on non-infringement, and Apple cross-appealed the grant of JMOL on no invalidity.

The Federal Circuit panel cited Hewlett-Packard Co. v. Mustek Sys., Inc., 340 F.3d 1314, 1321 (Fed. Cir. 2003), stating that “it is too late at the JMOL stage to argue for or adopt a new and more detailed interpretation of the claim language and test the jury verdict by that new and more detailed interpretation.” Slip Op. at 16. However, “a trial court may 'adjust construction post-trial if the court merely elaborates on the meaning inherent in the previous construction.'” Id. at 17 (citing Mformation Techs., Inc. v. Research in Motion Ltd., 764 F3d 1392, 1397 (Fed. Cir. 2014)). Wi-LAN argued that the trial court's JMOL order was based on a permissible clarification of existing claim construction, as opposed to an impermissible reconstruction. Wi-LAN asserted the same reasoning as the district court, that expert testimony from both sides established the complex multiplier is an inherent part of the first computing means. The Federal Circuit disagreed with the district court and Wi-LAN, stating that “the parties clearly did not agree that the claims required complex randomization.” Id. The Federal Circuit noted that even if Apple's expert had agreed that complex randomization was required, the jury need not accept that opinion. Slip Op. at 18. Clarification is permissible only when it makes plain what should be obvious to the jury. Slip Op. at 17.

Thus, the addition of complex randomization to the construction of computing means was not an elaboration or clarification. Instead, it was a reconstruction that altered the scope of the original Markman construction and undermined Apple's case post-verdict.

Federal Circuit: USPTO Decision to Initiate CBM Review Not Reviewable By Federal Circuit, But Decision To Qualify a Patent As a CBM Patent Is

On Dec. 15, 2015, a Federal Circuit panel of Circuit Judges Lourie, Dyk, and Hughes issued a unanimous opinion, authored by Judge Dyk, in SightSound Technologies, LLC v. Apple, Inc., Case No. 2015-1159, -1160. The panel held that it lacked jurisdiction to review the PTO's decision to initiate covered business method (CBM) review, but that it did have jurisdiction to review whether the patents qualify as CBM patents. The panel affirmed the Patent Trial and Appeal Board's (the Board) finding that the patents in suit qualify as CBM patents, as well as the Board's final written decision.

Apple petitioned the Patent and Trademark Office (PTO) for CBM review of two patents owned by SightSound. Apple asserted that the claims were invalid as anticipated by disclosures made by CompuSonics in the 1980s related to a computer system. Apple's petition did not explicitly allege obviousness over CompuSonics. However, the Board, in exercising its discretion, instituted a CBM review on the ground of obviousness over CompuSonics. SightSound argued that it had not been given a fair opportunity to respond regarding the obviousness grounds, so the Board granted SightSound additional time for argument. The Board reaffirmed its initiation decision that it did not exceed its jurisdiction, stating that “while Apple's petitions did not assert obviousness explicitly, they nevertheless 'supported [such] a ground' based on their detailed explanation of the various CompuSonics references” and that “the reason to combine was manifested by the references themselves.” Slip Op. at 5. The Board held all claims of the challenged patents would have been obvious.

The Federal Circuit first addressed the question of jurisdiction, relying on 35 U.S.C. '324(e), which states that “the determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable.” Slip Op. at 6. The provision applies to both post-grant review (PGR) and CBM proceedings. Id . Although the decision to initiate CBM review is not appealable, under 35 U.S.C. '329 the final written decision from the proceeding is. Id. (citing In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015)).

SightSound argued that the final decision should be set aside because Apple did not explicitly raise the issue of obviousness in its petition. Id. The Federal Circuit disagreed, citing its decisions in Cuozzo and Achates. In Cuozzo, 35 U.S.C. '314(d) was considered, which applies to inter partes review, but contains the same language as '324(e), barring appeal of the Director's initiation determination. Slip Op. at 7. Cuozzo argued the initiation determination was improper because the PTO relied on prior art not cited by the petitioner in its petition. There, the Federal Circuit held that initiation decisions are not reviewable, even if there was a defect in the initiation due to improper pleading. Id. Likewise, in Achates Reference Publishing Inc. v. Apple Inc., 803 F3d 652 (Fed. Cir. 2015), the Federal Circuit found an IPR initiation determination barred from appeal, even though IPR was instituted based on petitions that were time barred under 35 U.S.C. '315(b). Id. The Federal Circuit applied the reasoning of Cuozzo and Achates, so '324 bars the challenge by SightSound. Slip Op. at 8.

Next, the court addressed Apple and the PTO's assertion that the court lacks jurisdiction to review the Board's qualification of the patents as CBM patents. This question was previously addressed by the Federal Circuit in Versata II, which held that “whether a patent falls within the scope of the Board's authority under AIA '18 as a CBM patent is a limitation on the Board's authority to issue a final decision and may be reviewed on appeal from the final written decision of the Board.” Slip Op. at 9 (citing Versata II, at 1319). Therefore, under Versata II, the Federal Circuit is not barred from considering SightSound's contention that the Board was not authorized to perform the CBM review because the patents were not CBM patents. Id.

Thus, a challenge to the determination by the PTO to initiate an IPR, PGR or CBM review is not appealable based on a defect in the pleadings. However, the determination of whether a patent qualifies as a CBM for purposes of initiating a CBM review is appealable.

Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Kenyon & Kenyon LLP. Daniel Shea is an associate at the firm.