IP News

PTAB Did Not Deny Procedural Due Process By Adopting a Claim Construction not Offered by the Parties During IPR

On May 8, 2017, Federal Circuit Judges Reyna, Wallach, and Chen issued a unanimous decision, authored by Judge Reyna, in Intellectual Ventures II LLC v. Ericsson Inc., Case Nos. 2016-1739, 2016-1740, and 2016-1741. The panel affirmed a decision by the United States Patent and Trademark Office, Patent Trial and Appeal Board (the Board) invalidating Intellectual Ventures II LLC's (IV) patents in Nos. IPR2014-00915, IPR2014-00919, and IPR2014-01031.

In 2014, the Board granted two IPR petitions by Ericsson Inc. and Telefonaktiebolaget LM Ericsson and one IPR petition by Google, Inc. The petitions challenged claims which disclosed a method for efficiently synchronizing cellphone base stations on a selected frequency. IV argued before the Board that the term “an indication of an operating bandwidth” referred to a particular operating bandwidth. Ericsson argued that IV's construction was unduly narrow, and Google argued that the plain and ordinary meaning should control. The Board adopted a claim construction that no party had argued for, which required “that the first signal portion contains sufficient information” such that “the receiver is able to configure itself to receive the data portion of the signal” at “approximately the same frequency range or bandwidth at which it will be transmitted by the transmitter.”

In its Final Written Decision, the Board found that the challenged claims were obvious over the prior art. On appeal, IV argued that it was denied procedural due process because the earliest it learned of the Board's construction was during oral arguments for the last of the three IPRs, and because the Board's adopted construction was not offered by any of the parties. The Federal Circuit affirmed the Board's decision invalidating IV's patents and held that the Board is free to adopt a construction unconstrained by the parties' proposals.

The Federal Circuit disagreed that IV was denied procedural due process because IV had both notice and an opportunity to be heard. IV had adequate notice of the Board's adopted construction even though it first learned of it during oral arguments, because the construction of the claim term was central to the case and was extensively litigated. IV had an opportunity to be heard because the Board asked IV and Google to respond to its proposed construction during oral arguments. Furthermore, IV did not utilize opportunities to be heard, such as requesting leave to file a sur-reply after reviewing oral arguments, or seeking a rehearing after the Final Written Decision.

The Federal Circuit distinguished two recent cases which IV cited to support its argument that it was denied due process. IV cited In re Magnum Oil International, Ltd., 829 F.3d 1364, 1381 (Fed. Cir. 2016), where the Federal Circuit reversed the Board's decision because it “adopt[ed] arguments on behalf of petitioners that could have been, but were not, raised by petitioners during an IPR.” The Federal Circuit explained that IV was extensively questioned about claim construction after it submitted briefs on the issue, unlike in Magnum, where the Board supplied completely new arguments. IV also cited SAS Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016), where the Federal Circuit vacated a construction because, “an agency may not change theories in midstream without giving respondents reasonable notice of the change.”

The Federal Circuit reiterated that after adopting a construction, the Board cannot change theories without giving the parties an opportunity to respond. It explained, however, that IV had an opportunity to respond to the Board's construction during oral arguments, unlike in SAS where the Board construed a claim term in its Institution Decision which it unexpectedly changed in its Final Written Decision.

Finally, IV asserted a substantive challenge to the term, “an indication of an operating bandwidth,” and asserted that the board erred by not adopting its proposed claim construction, “an identification of a particular bandwidth.” It argued that identifying an operating bandwidth with particularity was necessary to make sense of an example by the Board, and to make sense of a dependent claim in the patent requiring “[a] selected bandpass range.” The Federal Circuit disagreed with IV because its position on appeal was inconsistent with its concession during oral argument that “there's no special requirement for the form of an indication.”

USPTO Did Not Exceed Authority in Granting Inter Partes Reexamination after Requester Sought to Have It Denied

On May 10, 2017, a Federal Circuit panel of Judges Dyk, Mayer, and Reyna, issued a unanimous decision, authored by Judge Reyna, in In Re: AT&T Intellectual Prop. II., Case No. 2016-1830. The panel affirmed the U.S. Patent and Trademark Office Patent Trial and Appeals Board's (the Board) decision to institute an inter partes reexamination proceeding and also affirmed its finding of anticipation.

AT&T Intellectual Property II LP (AT&T) owned U.S. Patent No. 7,454,071 ('071 patent), which was directed toward a method for compressing and transmitting digital video data by subdividing a video image into blocks. The '071 patent disclosed that each block of the image contains a discrete number of pixels, and mathematical transformations were performed on the blocks to generate coefficient data. While prior methods relied on scanning the coefficients in a particular order, the '071 patent taught a “one-shot” approach where all of the coefficients were transmitted in the same step.

LG Electronics, Inc. (LG) filed a request for inter partes reexamination of the '071 patent. As LG did not believe there was a reasonable likelihood of prevailing, it petitioned to have its request for reexamination denied before the PTO had decided whether to initiate the reexamination. The PTO issued an Office Action granting LG's initial request for reexamination, and denied LG's petition. The PTO found that there was no “extraordinary situation” such that it should suspend the PTO's standard rule prohibiting a requester from filing documents between the time of requesting reexamination and the PTO's initial office action on the merits. LG withdrew from the proceedings while discussions between AT&T and the examiner were ongoing.

The Office Action agreed that LG did not have a reasonable likelihood of prevailing on its arguments, but found new grounds for rejection based on U.S. Patent No. 5,295,203 (Krause). The examiner initially stated that Krause anticipated the '071 patent because its disclosure of scanning a region of coefficients could be extrapolated to cover an entire block of coefficients. AT&T argued that the method disclosed in the '071 patent scanned an entire pixel block at once, while Krause only disclosed “regional” scanning. The examiner later argued that Krause anticipated the '071 patent under an alternative theory; Krause's written description disclosed coding an entire block, and the division of a block into regions was only a preferred embodiment. The Board affirmed the examiner's reasoning.

On appeal, AT&T argued that it was improper to institute reexamination after LG petitioned for a denial of it request for reexamination. The PTO intervened and argued that the Federal Circuit lacked jurisdiction to hear AT&T's challenge to the institution. The Federal Circuit disagreed with the PTO's argument about jurisdiction because 35 U.S.C. §312(c) only restricts the review of a determination concerning whether “there is a reasonable likelihood that the requester would prevail.” Authority to review the Board's decision existed because AT&T's challenge to the institution was not based on LG's likelihood of prevailing, but was based on the fact that LG had petitioned for a denial of its request for reexamination.

The Federal Circuit, however, rejected AT&T's argument that the Board lacked the statutory authority to institute a reexamination because there was no request or requester. The fact that LG desired a denial of its request to institute was unavailing; the court pointed to the fact that the record literally showed that LG was a requester, and had made a request to institute a reexamination.

AT&T also challenged the merits of the Board's finding that the '071 patent was anticipated by Krause. The Federal Circuit found that substantial evidence supported the Board's decision under a claim differentiation argument. Independent claim 1 described a “group of coefficients,” while dependent claim 2 required the additional limitation of dividing the block into regions. The Federal Circuit found that a reasonable mind could conclude that Krause discloses coding an entire block of coefficients based on this claim differentiation. Furthermore, the court found that the written description's acknowledgement that coding an entire block at once is “difficult” was a demonstration of the advantage of the preferred embodiment rather than a limitation on scope.

Finally, AT&T argued that the examiner improperly shifted its basis for finding anticipation by Krause. The Federal Circuit found that the record did not support AT&T's objection because AT&T received notice of the second basis for finding anticipation before any amendments to the claims were made, and did not respond to the examiner's second basis for anticipation when it amended its claims.

*****
Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Andrews Kurth Kenyon. He can be reached at [email protected]. Michael Block is an associate with the firm. He can be reached at [email protected].

PTAB Did Not Deny Procedural Due Process By Adopting a Claim Construction not Offered by the Parties During IPR

On May 8, 2017, Federal Circuit Judges Reyna, Wallach, and Chen issued a unanimous decision, authored by Judge Reyna, in Intellectual Ventures II LLC v. Ericsson Inc., Case Nos. 2016-1739, 2016-1740, and 2016-1741. The panel affirmed a decision by the United States Patent and Trademark Office, Patent Trial and Appeal Board (the Board) invalidating Intellectual Ventures II LLC's (IV) patents in Nos. IPR2014-00915, IPR2014-00919, and IPR2014-01031.

In 2014, the Board granted two IPR petitions by Ericsson Inc. and Telefonaktiebolaget LM Ericsson and one IPR petition by Google, Inc. The petitions challenged claims which disclosed a method for efficiently synchronizing cellphone base stations on a selected frequency. IV argued before the Board that the term “an indication of an operating bandwidth” referred to a particular operating bandwidth. Ericsson argued that IV's construction was unduly narrow, and Google argued that the plain and ordinary meaning should control. The Board adopted a claim construction that no party had argued for, which required “that the first signal portion contains sufficient information” such that “the receiver is able to configure itself to receive the data portion of the signal” at “approximately the same frequency range or bandwidth at which it will be transmitted by the transmitter.”

In its Final Written Decision, the Board found that the challenged claims were obvious over the prior art. On appeal, IV argued that it was denied procedural due process because the earliest it learned of the Board's construction was during oral arguments for the last of the three IPRs, and because the Board's adopted construction was not offered by any of the parties. The Federal Circuit affirmed the Board's decision invalidating IV's patents and held that the Board is free to adopt a construction unconstrained by the parties' proposals.

The Federal Circuit disagreed that IV was denied procedural due process because IV had both notice and an opportunity to be heard. IV had adequate notice of the Board's adopted construction even though it first learned of it during oral arguments, because the construction of the claim term was central to the case and was extensively litigated. IV had an opportunity to be heard because the Board asked IV and Google to respond to its proposed construction during oral arguments. Furthermore, IV did not utilize opportunities to be heard, such as requesting leave to file a sur-reply after reviewing oral arguments, or seeking a rehearing after the Final Written Decision.

The Federal Circuit distinguished two recent cases which IV cited to support its argument that it was denied due process. IV cited In re Magnum Oil International, Ltd., 829 F.3d 1364, 1381 (Fed. Cir. 2016), where the Federal Circuit reversed the Board's decision because it “adopt[ed] arguments on behalf of petitioners that could have been, but were not, raised by petitioners during an IPR.” The Federal Circuit explained that IV was extensively questioned about claim construction after it submitted briefs on the issue, unlike in Magnum, where the Board supplied completely new arguments. IV also cited SAS Institute, Inc. v. ComplementSoft, LLC , 825 F.3d 1341, 1351 (Fed. Cir. 2016), where the Federal Circuit vacated a construction because, “an agency may not change theories in midstream without giving respondents reasonable notice of the change.”

The Federal Circuit reiterated that after adopting a construction, the Board cannot change theories without giving the parties an opportunity to respond. It explained, however, that IV had an opportunity to respond to the Board's construction during oral arguments, unlike in SAS where the Board construed a claim term in its Institution Decision which it unexpectedly changed in its Final Written Decision.

Finally, IV asserted a substantive challenge to the term, “an indication of an operating bandwidth,” and asserted that the board erred by not adopting its proposed claim construction, “an identification of a particular bandwidth.” It argued that identifying an operating bandwidth with particularity was necessary to make sense of an example by the Board, and to make sense of a dependent claim in the patent requiring “[a] selected bandpass range.” The Federal Circuit disagreed with IV because its position on appeal was inconsistent with its concession during oral argument that “there's no special requirement for the form of an indication.”

USPTO Did Not Exceed Authority in Granting Inter Partes Reexamination after Requester Sought to Have It Denied

On May 10, 2017, a Federal Circuit panel of Judges Dyk, Mayer, and Reyna, issued a unanimous decision, authored by Judge Reyna, in In Re: AT&T Intellectual Prop. II., Case No. 2016-1830. The panel affirmed the U.S. Patent and Trademark Office Patent Trial and Appeals Board's (the Board) decision to institute an inter partes reexamination proceeding and also affirmed its finding of anticipation.

AT&T Intellectual Property II LP (AT&T) owned U.S. Patent No. 7,454,071 ('071 patent), which was directed toward a method for compressing and transmitting digital video data by subdividing a video image into blocks. The '071 patent disclosed that each block of the image contains a discrete number of pixels, and mathematical transformations were performed on the blocks to generate coefficient data. While prior methods relied on scanning the coefficients in a particular order, the '071 patent taught a “one-shot” approach where all of the coefficients were transmitted in the same step.

LG Electronics, Inc. (LG) filed a request for inter partes reexamination of the '071 patent. As LG did not believe there was a reasonable likelihood of prevailing, it petitioned to have its request for reexamination denied before the PTO had decided whether to initiate the reexamination. The PTO issued an Office Action granting LG's initial request for reexamination, and denied LG's petition. The PTO found that there was no “extraordinary situation” such that it should suspend the PTO's standard rule prohibiting a requester from filing documents between the time of requesting reexamination and the PTO's initial office action on the merits. LG withdrew from the proceedings while discussions between AT&T and the examiner were ongoing.

The Office Action agreed that LG did not have a reasonable likelihood of prevailing on its arguments, but found new grounds for rejection based on U.S. Patent No. 5,295,203 (Krause). The examiner initially stated that Krause anticipated the '071 patent because its disclosure of scanning a region of coefficients could be extrapolated to cover an entire block of coefficients. AT&T argued that the method disclosed in the '071 patent scanned an entire pixel block at once, while Krause only disclosed “regional” scanning. The examiner later argued that Krause anticipated the '071 patent under an alternative theory; Krause's written description disclosed coding an entire block, and the division of a block into regions was only a preferred embodiment. The Board affirmed the examiner's reasoning.

On appeal, AT&T argued that it was improper to institute reexamination after LG petitioned for a denial of it request for reexamination. The PTO intervened and argued that the Federal Circuit lacked jurisdiction to hear AT&T's challenge to the institution. The Federal Circuit disagreed with the PTO's argument about jurisdiction because 35 U.S.C. §312(c) only restricts the review of a determination concerning whether “there is a reasonable likelihood that the requester would prevail.” Authority to review the Board's decision existed because AT&T's challenge to the institution was not based on LG's likelihood of prevailing, but was based on the fact that LG had petitioned for a denial of its request for reexamination.

The Federal Circuit, however, rejected AT&T's argument that the Board lacked the statutory authority to institute a reexamination because there was no request or requester. The fact that LG desired a denial of its request to institute was unavailing; the court pointed to the fact that the record literally showed that LG was a requester, and had made a request to institute a reexamination.

AT&T also challenged the merits of the Board's finding that the '071 patent was anticipated by Krause. The Federal Circuit found that substantial evidence supported the Board's decision under a claim differentiation argument. Independent claim 1 described a “group of coefficients,” while dependent claim 2 required the additional limitation of dividing the block into regions. The Federal Circuit found that a reasonable mind could conclude that Krause discloses coding an entire block of coefficients based on this claim differentiation. Furthermore, the court found that the written description's acknowledgement that coding an entire block at once is “difficult” was a demonstration of the advantage of the preferred embodiment rather than a limitation on scope.

Finally, AT&T argued that the examiner improperly shifted its basis for finding anticipation by Krause. The Federal Circuit found that the record did not support AT&T's objection because AT&T received notice of the second basis for finding anticipation before any amendments to the claims were made, and did not respond to the examiner's second basis for anticipation when it amended its claims.

*****
Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Andrews Kurth Kenyon. He can be reached at [email protected]. Michael Block is an associate with the firm. He can be reached at [email protected].