IP News

The PTO, as intervenor, argued that the Federal Circuit lacks jurisdiction because the decision to institute an IPR is not appealable under 35 U.S.C. '314(d). The Federal Circuit rejected this position, reasoning that Ethicon did not challenge the institution of the IPR, but rather alleged defects in the final decision.

The majority first addressed Ethicon's constitutional argument that permitting the same panel to institute an IPR and later make a final determination raises 'serious due process concerns.' Slip Op. at 9. Citing U.S. Supreme Court and appellate court precedent, the majority found that combining the two functions in a single PTAB panel posed no due process concerns and is analogous to 'a district court determining whether there is 'a likelihood of success on the merits' and then later deciding the merits of the case.' Id. at 11. The majority was unpersuaded by Ethicon's contention that the PTAB panel's exposure, at the institution stage, to a limited record improperly biased its final decision because 'adjudicators are afforded a 'presumption of honesty and integrity' and even 'exposure to evidence presented in nonadversary investigative procedures is insufficient to impugn the fairness of [adjudicators] at a later adversary hearing.” Id. (citing Withrow v. Larkin, 421, U.S. 35, 47, 55 (1975)) (alteration in original).

The majority then rejected Ethicon's statutory argument because 'nothing in the [AIA] or legislative history of the statute indicat[es] a concern with separating the functions of initiation and final decision.' Id. at 13. The majority also found that the AIA's grant to the Director of 'broad rulemaking powers to 'govern the conduct of the proceedings in the Office,' and to 'establish[] and govern[] inter partes review under this chapter” provides an alternative basis for the Director's authority to delegate the institution of IPRs. Id. at 17 (quoting 35 U.S.C ”2(b)(2), 316(a)(4)) (alternations in original). According to the majority, the regulation authorizing the PTAB to institute IPRs 'on behalf of the Director' was a proper exercise of the Director's rulemaking power. Id. at 17 (quoting 37 C.F.R. '42(a)). Because the AIA is ambiguous as to whether the Director's personal participation is necessary to institute an IPR, the majority reasoned that it must defer to the agency's interpretation that personal participation is not required. Id. at 17'18 (citing Chevron, U.S.A, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842'43 (1984)).

Finally, the Federal Circuit panel rejected Ethicon's argument that the PTAB failed to consider the commercial success of Covidien's device and the existence of a long-felt but unresolved need in invalidating the claims at issue as obvious. Reviewing factual findings for substantial evidence, the majority affirmed the PTAB's conclusion that Ethicon failed to produce sufficient evidence supporting these secondary considerations of nonobviousness.

In her dissent, Judge Newman argued that the text, structure, and purpose of the AIA 'unambiguously places [IRP institution and final] determinations in different decision-makers, applying different criteria.' Dissent at 3. The Director performs a gatekeeper role of rejecting meritless petitions that plagued the pre-existing inter partes examination system and may delegate this task to an examiner or solicitor, but not the PTAB. If the Director institutes an IPR, the PTAB conducts an independent trial. Separating these two functions, according to Judge Newman, is necessary because IPRs were intended to be a fast, reliable, and cost-effective alternative to litigating the validity of patents in district court. She warned that disregarding this separation threatens the viability of the new system and echoed criticism that allowing the same PTAB panel to institute an IPR and issue the final decision causes 'actual or perceived bias against the patent holder' due to panels being 'put in the position of defending their prior decisions to institute the trial.' Id. at 7 (quoting AIPLA, Comments on PTAB Trial Proceedings, at 20 (Oct. 16, 2014)).

Federal Circuit: Ambiguous Testimony Failed To Show Infringement

On Jan. 29, 2016, a Federal Circuit panel consisting of Judge Lourie, Judge Reyna, and Judge Chen issued a unanimous opinion, authored by Judge Lourie, in Akzo Nobel Coating, Inc. v. Dow Chemical Company, Case Nos. 2015-1331 and 2015-1389. The panel affirmed the district court's holdings that Dow Chemical did not infringe claims in Akzo's patent for a high-temperature chemical dispersal process, and that the patent's claims are not indefinite.

Dutch-based Akzo owns U.S. Patent No. 6,767,956 (the '956 patent), which contains claims directed to an 'extrusion process that generates low viscosity aqueous polymers dispersions.' Slip Op. at 2. Claim 1 recites that 'the pressure in the extruder is maintained above atmospheric so that the aqueous medium does not boil characterized by maintaining the pressure above atmospheric for the extruder at the outlet with a pressurized collection vessel'and 'the aqueous dispersion [is cooled] to below 100' C to have an aqueous dispersion with a viscosity below 10 Pa.s.' Id. at 2'3 (emphases in original). Claims 2'6 further specify '[a] process according to claim 1 which is carried out at a temperature of from about 5 to 150' C. above the melting point of the polymer.' Id. at 3 (emphases in original).

Akzo filed an action against Dow in the District of Delaware, alleging Dow's polymer dispersion process infringed claims 1'8 of the '956 patent. The Federal Circuit characterized Dow's process as a process whereby 'the dispersion exits the extruder, passes through a valve located at the extruder's outlet, and then travels through a series of pipes and heat exchangers. The dispersion then continues on through a filter and collects in a 'Product Tote,' an unpressurized compartment, eventually used to transport the end-product.' Id. at 3'4 (internal citation omitted).

The district court granted Dow's request to file an early summary judgment motion and combined summary judgment and Markman hearings. After the combined hearings, the district court construed 'pressurized collection vessel' as a 'tubing, piping, or other container where a desired material accumulates, which is maintained above atmospheric pressure.' Id. at 4 (emphasis added). The court found no literal infringement, because Dow's dispersion does not 'accumulate' in its heat-exchange equipment, and no infringement under the doctrine of equivalents. The district court also rejected Dow's contention that the specifications (1) to have a dispersion with 'viscosity below 10 Pa.s' and (2) to carry out the process 'at a temperature of from 5 to 150' C above the melting point of the polymer' renders claims of the patent indefinite. Id. at 4'5. Akzo appealed the district court's claim construction and non-infringement holdings, and Dow cross-appealed the indefiniteness holding.

The panel first addressed Akzo's challenge to the district court's construction of 'pressurized collection vessel.' Akzo argued that 'collection' should instead be given its ordinary meaning of 'gather or receive,' rather than 'accumulation.' The Federal Circuit reasoned that Akzo's proposed construction of ”collection' to mean 'receive' would render 'collection' entirely superfluous and allow any pressurized vessel to constitute a 'pressurized collection vessel.” Id. at 8. The panel affirmed the district court's construction of 'accumulation' because it 'gives the term 'collection' proper meaning in context,' and '[a] claim construction that gives meaning to all the terms of the claim is preferred over one that does not do so.' Id. at 8'9 (quoting Merck & Co. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1372 (Fed. Cir. 2005).

Next, the panel rejected Akzo's contentions that it raised genuine issues of fact as to whether Dow literally, or under the doctrine of equivalents, infringed claims of the '956 patent, as construed by the district court. Akzo's literal infringement argument that Dow's process involves 'accumulation' rested primarily on expert testimony that Dow's 'dispersion collects and is resident for a period of time' to create backpressure on the extruder. Id. at 11. The Federal Circuit found this testimony did not establish a genuine issue of fact because it did not specify on which construction of 'collects' it relied, and 'resident for a period of time' is not equivalent to accumulate. Id. Accordingly, the testimony failed to 'refute Dow's contention that its dispersion flows continuously and does not accumulate.'

Akzo's doctrine of equivalents argument fared no better. The panel scrutinized Akzo's expert testimony that Dow's process operates in substantially the same way as the claimed process, that is, 'by collecting the dispersed material in a contained volume.' Id. at 14. The Federal Circuit found this testimony 'fails to articulate which construction of 'collecting' [it] invokes, much less articulate how the differences between the two processes are insubstantial.' Id. According to the panel, '[s]uch ambiguity and generality cannot create a genuine issue of material fact' as to infringement under the doctrine of equivalents. Id.

Finally, the Federal Circuit turned to Dow's two cross-appeal indefiniteness arguments. First, Dow argued the specification of 'viscosity below 10 Pa.s' rendered claims 1-8 indefinite because it fails to recite a temperature at which the viscosity measurement would be taken. The Federal Circuit affirmed, on clear error review, the district court's decision to credit Akzo's expert testimony that 'standard practice in analytical chemistry dictates that if a temperature is not specified for a given measurement, room temperature is implied.' In contrast, Dow's extrinsic evidence describing a process to measure viscosity of a ”hot melt adhesive' above 175' C,' according to the panel, was 'inapposite to the claimed product that has been cooled to below 100' C.' Id. at 16. The panel noted that intrinsic evidence further supported this conclusion because 'room temperature is the only temperature mentioned at all in the '956 patent in connection with a viscosity measurement.' Id. at 17.

Dow's second indefiniteness argument maintained that the specification in claims 2'6 to 'carr[y] out [the process described in claim 1] at a temperature of from 5 to 150' C above the melting point of the polymer' rendered those claims indefinite by failing to state the steps in the claimed process to occur at those temperatures. Id. at 15. The panel rejected this position because the process described in claim 1 contains elevated temperature phases where 'the polymer is melted in the initial melt zone of the extruder at a temperature above the melting point of the polymer, preferably from 5 to 150' C.' Accordingly, the panel affirmed the district court's determination that a person of ordinary skill in the art would understand that the specifications in claims 2-6 refer to the elevated temperature phases, and therefore, the claims are not indefinite.

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Jeffrey S. Ginsberg'is the Assistant Editor of this newsletter and a partner with Patterson Belknap Webb & Tyler LLP.'Sheng T. Li is an associate at the firm.