IP News

Judges Newman and Reyna argued that en banc review was warranted because it would be improper to sustain the “adverse inference of specific intent to deceive,” without a hearing and without evidence. They expressed concern that this ruling was a departure from Supreme Court and Federal Circuit precedent. In Driller Co. v. General Excavator Co., 290 U.S. 240 (1933), the Supreme Court illustrated that litigation misconduct does not affect the viability of a property right in itself. In Aptix Corp. v. Quickturn Design Systems, Inc., 269 F.3d 1369, 1375 (Fed. Cir. 2001), the Federal Circuit explained that neither “the Supreme Court nor this court has ever declared a patent unenforceable due to litigation misbehavior” and that “the property right itself remains independent of the conduct of a litigant.” Highlighting the amici curiae attention to this issue, Judges Newman and Reyna argued that the Federal Circuit's holding creates a new and “irreconcilable split” in patent law which will harm patent attorneys, patentees, and the public.
Federal Circuit Affirms Board's Decisions in IPRs Finding a Video Conferencing Patent Not Anticipated or Obvious

On Dec. 28, 2017, a Federal Circuit panel of Judges Newman, O'Malley, and Reyna issued a split decision, with the majority opinion authored by Judge O'Malley and the dissent authored by Judge Newman, in Microsoft Corporation v. Biscotti, Inc., Case Nos. 2016-2080, 2016-2082, 2016-2083. The panel affirmed decisions finding no anticipation or obviousness by the Patent Trial and Appeal Board (Board) in Nos. IPR2014-01457, IPR2014-01458, IPR2014-01459.

In November 2013, Biscotti, Inc. (Biscotti) sued Microsoft Corporation (Microsoft) in the U.S. District Court for the Eastern District of Texas for infringement of U.S. Patent No. 8,144,182, directed to improvements in real-time video conferencing over a network. In September 2014, Microsoft filed three separate IPR petitions against the '182 patent based on anticipation and obviousness by U.S. Patent No. 7,907,164 (Kenoyer). The Board instituted review on all three petitions but ultimately found that in each, Microsoft had failed to prove anticipation or obviousness by a preponderance of the evidence.

On appeal, Microsoft argued that the Board incorrectly applied an “unduly narrow anticipation standard”, by requiring Kenoyer to identically match each of the limitations of independent claims 6 and 69 of the '182 patent. The majority found that contrary to Microsoft's argument, the Board did not require perfection, but instead considered whether a person of ordinary skill in the art would “at once envisage” the teachings in these claims, based on disconnected teachings in Kenoyer.

The primary dispute on appeal for claim 6 was whether Kenoyer disclosed a storage medium with four types of program instructions. Microsoft argued that a sentence disclosing a storage medium and program instructions found near the end of Kenoyer's specification applied broadly to all embodiments, because it appeared along with other general paragraphs that applied to the entire disclosure. Biscotti argued that Kenoyer's disclosure was imprecise about linking a storage medium with program instructions, and that instead of referring to all previous figures and embodiments of the patent, the sentence was best read as only referring to Figure 22, which was described in the lines immediately preceding the sentence.

The Board found that Microsoft did not demonstrate anticipation by a preponderance of the evidence, because Biscotti's evidence and arguments were at least as persuasive as Microsoft's. While the majority also recognized that both arguments had merit, it explained that anticipation is a question of fact reviewed for substantial evidence, and found that the Board's finding that Kenoyer did not anticipate claim 6 was supported by substantial evidence.

The primary dispute on appeal for claim 69 was whether Kenoyer taught a limitation involving an audiovisual input interface and audiovisual stream. Microsoft argued that Kenoyer disclosed this limitation in a teaching about an external codec, with audio and video inputs coupled to and receiving audiovisual signals from a television set-top box. Microsoft explained that a person of ordinary skill in the art would “reasonably understand” and “at once envisage” the functionality of the external codec and the arrangement of the set-top box coupled to an external codec, as being read together. Biscotti argued that the codecs relied on by Microsoft that are disclosed by Kenoyer were incompatible embodiments which are not ordinarily used with set-top boxes. Furthermore, Biscotti argued that Microsoft waived new arguments against claim 69 that were not presented to the Board in its petitions for IPR.

The Board found that Biscotti had introduced evidence which “cast substantial doubt” regarding whether a person of ordinary skill in the art would have considered the interface connections described in Kenoyer as appropriate for connecting with a set-top box. Additionally, Microsoft provided no explanation in its petition as to how an interface taught in Kenoyer would be compatible with a codec described in Kenoyer. Furthermore, the majority found that Microsoft waived new arguments against claim 69 because it did not present these arguments in its petitions, and never sought permission to present them to the Board during the course of the IPRs. Accordingly, the majority found that the Board's finding that Kenoyer did not anticipate claim 69 was also supported by substantial evidence.

Judge Newman's dissent argued that the claims were anticipated because Kenoyer described the same audiovideo conferencing system in the same terms as the '182 patent. She disagreed with the majority's criticism of the lack of disclosure in Kenoyer, because the disclosure of the claims at issue in the '182 patent was comparably broad; she argued that both Kenoyer and the '182 patent showed the same components, having the same function, combined in the same way for the same purpose.

Federal Circuit Affirms No Intent to Deceive for Inequitable Conduct Claim Where Inventors Should Have Documented Findings to the USPTO

On Jan. 4, 2018, a Federal Circuit panel of Judges Wallach, Chen, and Hughes issued a unanimous decision in Everlight Electronics Co., Ltd v. Nichia Corporation, Case Nos. 2016-1677, 2016-1611. The panel affirmed a decision denying judgment as a matter of law for validity and denying an inequitable conduct claim in the U.S. District Court for the Eastern District of Michigan in No. 4:12-cv-1178.

Everlight Electronics Co. (Everlight) brought a declaratory judgment suit against Nichia Corporation (Nichia) seeking a determination of non-infringement, invalidity, or unenforceability of U.S. Patent Nos. 5,998,925 and 7,531,960, directed to the production of white light-emitting diodes. The jury found that several claims of both patents were obvious and a bench trial determined that Everlight failed to establish its inequitable conduct claim.

Reviewing the denial of judgment as a matter de novo, the Federal Circuit held that the district court correctly determined that the jury verdict was supported by substantial evidence. It explained that a reasonable jury could have concluded that the asserted claims would have been obvious, because Everlight offered evidence that every element of the claimed invention existed in the prior art, and that a person of ordinary skill would have desired combining a blue-to-yellow phosphor with a blue LED to produce white light as contemplated by the patents.

Reviewing the denial of Everlight's inequitable conduct claim for clear error, the Federal Circuit held that there was no reversible error by the district court. Everlight argued before the district court that statements made in the specification of the '960 patent during prosecution involving the achievement of peak wavelengths “near 600nm” were intentionally false. The district court held that the record lacked support for demonstrating but-for materiality and intent to deceive the USPTO, and at most demonstrated that the inventors should have been more careful in documenting their findings. The Federal Circuit explained that a mere showing that documents should have been submitted by the inventors regarding achievements described in the specification, is not enough to demonstrate intent to deceive the USPTO.

*****
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].