Issue 45: PTAB Trial Tracker

Federal Circuit Affirms Board’s Finding a POSA Would Have Been Motivated to Optimize Disclosed Ranges in Prior Art

In Pfizer Inc., v. Sanofi Pasteur Inc., SK Chems Co. Ltd., v. Vidal, 2019-1871 (March 5, 2024), the Federal Circuit affirmed the Board’s conclusions that claims 1–45 of U.S. Patent No. 9,492,559 were unpatentable due to obviousness.

The prior art asserted by Petitioners disclosed molecular weight ranges that overlapped with the claimed range. The Court rejected Pfizer’s argument that because the prior art did not disclose the specific molecular weight range recited, there could be no presumption of obviousness. Id. at 7. The Court found sufficient support to conclude that a person of skill in the art would have been motivated, “with a reasonable expectation, to bridge any gaps in the prior art to arrive at a claimed invention.” Id. at 8–9. “Where that gap includes a parameter not necessarily disclosed in the prior art, it is not improper to consider whether or not it would have been recognized as result-effective. If so, then the optimization of that parameter is ‘normally obvious.’” Id. at 8.

Takeaway: Even when the prior art does not disclose a specific claimed range, if a person of ordinary skill in the art would have been motivated to bridge the gap in the prior art to arrive at the claimed invention, then the claimed invention is obvious.

Decisions Provide Guidance on Printed Publication Issues

In two recent cases, the Board found that petitioners failed to establish that the prior art relied on was “publicly available” and thus declined to find the challenged claims unpatentable.

In Medivis, Inc. v. Novarad Corp., IPR2023-00042, Paper 37 (April 23, 2024), Petitioner Medivis argued in its Request on Rehearing of the Final Written Decision that the Board incorrectly found that the prior art was not publicly accessible because in accordance with Hulu, LLC v. Sound View Innovations, LLC, IPR2018-01039, Medivis had shown “a copyright date, a publication date, and an established publisher of a series of similar type of references.” Id. at 4. The Board stated that Petitioner’s reliance on Hulu was unpersuasive because it concerned whether prior art was publicly accessible assessed using the reasonable likelihood standard for institution. The Board held that the evidence that Medivis relied on was sufficient to institute the proceeding, and not for the final determination from the Board. Medivis also argued that the reference was publicly accessible because it served as the documentation for the publicly sold software. The Board found there was no evidence that the documentation was distributed with the software.

In OBM, Inc. & Cholla Energy LLC v. Lancium LLC, IPR2023-01407, Paper 9 (PTAB Mar. 13, 2024), the Board denied institution because Petitioner OBM failed to present evidence that the prior art relied on was publicly accessible. Petitioner relied on “a certified copy of a revised tariff document associated with a public record of the Virginia State Corporation Commission, filed January 14, 2015.” The Board found that OBM fell short of even the Hulu standard for institution, i.e., though there was some evidence of availability, that the evidence did not show that it was accessible. While Petitioner obtained a certification that the document was true and authentic, that did not establish that the document was available and accessible online at the relevant time. The Board further found that even if the reference was online at the relevant time, that there was no evidence of how an interested member of the public would have found it.

Takeaway: When relying on non-patent literature, Petitioners should be careful to clearly establish what constitutes a printed publication under Hulu at institution, but be aware that those criteria may not be enough to find unpatentability at the Final Written Decision. Petitioners should not rely on assumptions regarding availability and accessibility without supporting evidence.

A Final Judgment is Not Final Until Damages are Decided

In Packet Intelligence LLC v. NetScout Systems, Inc., 2022-2064 (Fed. Cir. May 2, 2024), the parties’ case reached the Federal Circuit a second time. In their first appeal, defendant NetScout Systems, Inc. (“NetScout”) challenged the judgment of the Eastern District Court of Texas that they infringed Packet Intelligence LLC’s (“Packet”) patents. The Federal Circuit affirmed the district court’s judgment of infringement and validity, but reversed the district court’s pre-suit damages award and vacated the court’s enhancement of that award. Packet, 22-2064 at 2-3. Before the remand could be finalized, the Patent Trial and Appeal Board (the “Board”) found all claims asserted in the case unpatentable as obvious. Id. at 3. Packet appealed the Board’s final written decisions. Id. In this second appeal, Packet’s appeals of the final written decisions and NetScout’s challenges to the amended judgment on remand were at issue. Id.

NetScout argued that if the Court affirmed the Board’s final written decisions that the claims in the case were unpatentable that it would preclude Packet from obtaining the monetary damages awarded in the amended final judgment, citing several cases where the Court vacated a district court’s judgment and affirmed the Board’s determination of unpatentability. Id. at 4-5. Packet contended that their case was “sufficiently final such that it is immune to the Board’s subsequent determination of unpatentability.” Id. at 5. The Court rejected Packet’s argument, pointing to the Court’s decision in Fresenius USA, Inc. v. Baxter Int’l Inc., 721 F.3d 1330 (Fed. Cir. 2013).

In Fresenius, 721 F.3d at 1340, the court held that “for a judgment to be sufficiently final to prevent the application of an intervening unpatentability finding, the litigation must be entirely concluded so that the cause of action against the infringer was merged into a final judgement [and is] one that ends the litigation on the merits and leaves nothing for the court to do but execute the judgement.” Id. at 8 (internal quotation marks omitted). The Court noted that the remand of the initial judgment did not end the litigation because the district court had to modify its original judgment and the remand litigation lasted more than 16 months. Accordingly, the Court applied affirmance of the Board’s determination that the infringed claims were unpatentable and vacated the district court’s amended final judgment, remanding with instructions to dismiss the case as moot. Id. at 17.

Takeaway: For a judgment to be final and immune from the effects of a later ruling on appeal, the case must be entirely concluded with no pending litigation on the merits.

Petition That Failed to Provide Proposed Construction for Term Disputed in District Court Found Insufficient for Institution

On March 7, 2024, the PTAB denied institution in 10x Genomics, Inc. v. President and Fellows of Harvard College, IPR2023-01299, Paper 15 (PTAB Mar. 7, 2024) on two separate grounds: (1) the Petitioner, 10x Genomics, did not properly assert a Section 112(f) construction in the alternative in its Petition under 37 C.F.R. § 42.104(b)(3); and (2) the circumstances of a parallel district court proceeding called for a discretionary denial under 35 U.S.C. § 314(a) under Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential).

10x Genomics filed a petition (“Petition”) requesting an inter partes review of the claims in the patent at issue, 11,098,303 B2 (“the ’303 patent”), which relates to systems and methods for imaging or determining nucleic acids within cells. The ’303 patent describes a method to determine nucleic acids by exposing a sample to a plurality of nucleic acid probes. Claim 1 of the ’303 patent recites “an error detection or correction system.” In a parallel proceeding, 10x Genomics argued that the phrase was governed by 35 U.S.C. § 112(f) and asserted a corresponding construction. The district court held that “an error detection or correction system” was governed by Section 112(f), and adopted 10x Genomics’ construction with a slight modification. Before the PTAB, 10x Genomics took the opposite position and asserted “solely for the purpose of this IPR,” no construction was necessary. 10x Genomics did not explain why Section 112(f) did not apply to construction of the term “an error detection or correction system.”

Under 37 C.F.R. § 42.104(b)(3), a petition must identify in the specification the structure associated with each function in Section 112(f) means-plus-function claims. The Consolidated Trial Practice Guide instructs that under 104(b)(3) “[w]here claim language may be construed according to 35 U.S.C. § 112(f), a petitioner must provide a construction” and “[a] petitioner who chooses not to address construction under Section 112(f) risks failing to satisfy the requirement of 37 C.F.R. § 42.104(b)(3).”

Consequently, the PTAB denied institution and held that 10x Genomics “failed to satisfy its burden to set forth ‘[how] the challenged claim is to be construed’” under 37 C.F.R. § 42.104(b)(3). The PTAB clarified that 10x Genomics “should have provided reasons why the limitation [was] not governed by Section 112(f) or [should have provided] an express construction of the claim phrase.” Also, because 10x Genomics had instead taken the position that “’no construction [was] necessary’—while knowing the construction [was] actually disputed under § 112(f)—[the Petition was] not sufficient for the purposes of institution.”

Takeaway: Parties should be aware of the risks in taking differing positions on claim construction before different venues, especially in the event of a disputed construction in a parallel proceeding.

USPTO’s Proposed Rule Concerning Director Review Process

On April 15, the USPTO announced a Notice of Proposed Rulemaking (NPR) to formalize the Director Review process implemented after the Supreme Court’s holding in United States v. Arthrex, Inc., 594 U.S. 1, 24 (2021). The proposed rules largely track the interim guidance with some changes.

The proposed rule is silent on the type of issues that must be present to request review. “Under the interim process, . . . requests for Director Review of Board decisions on whether to institute an AIA trial, or decisions granting rehearing of such a decision, are limited to decisions presenting: (a) an abuse of discretion, or (b) important issues of law or policy.” Rules Governing Director Review of Patent Trial and Appeal Board Decisions, 89 Fed. Reg. 26807, 26810 (April 16, 2024) (to be codified at 37 C.F.R. Part 42). “Under the interim process, requests for Director Review of PTAB final written decisions, or decisions granting rehearing of such decisions, are available for decisions presenting: (a) an abuse of discretion, (b) important issues of law or policy, (c) erroneous findings of material fact, or (d) erroneous conclusions of law.” 89 Fed. Reg. 26807, 26810. However, these requirements are not included in the proposed rule.

The proposed rule does not change the standard for sua sponte Director Review, largely leaving it up to the discretion of the Director. The NPR explains that “[u]nder the interim process . . . sua sponte Director Review is typically reserved for issues of exceptional importance.” 89 Fed. Reg. 26807, 26811. Consistent with the interim process, “the Director may initiate review sua sponte at any point within 21 days after the expiration of the period following a request for rehearing.” 89 Fed. Reg. 26807, 26811.

The proposed rule includes requires the following procedure for requesting Director Review:

1. Timing. The request must be filed within the time period set forth in § 42.71(d) unless an extension is granted by the Director upon a showing of good cause. No response to a Director Review request is permitted absent Director authorization.
2. Format and Length. A request for Director Review must comply with the format requirements of § 42.6(a). Absent Director authorization, the request must comply with the length limitations for motions to the Board provided in § 42.24(a)(1)(v).
3. Content. Absent Director authorization, a request for Director Review may not introduce new evidence.

89 Fed. Reg. 26807, 26813.

The proposed rule also affects the procedure of the proceeding. “[B]y default a request for Director Review or the initiation of sua sponte Director Review resets the time for appeal but does not stay or delay the time for the parties to take action in the underlying proceeding before the PTAB, unless the Director orders otherwise.” 89 Fed. Reg. 26807, 26811. The time for appeal will be reset “until after all issues on Director Review in the proceeding are resolved.” 89 Fed. Reg. 26807, 26813.

According to the NPR, “[a]s of April 1, 2024, the USPTO had received 328 compliant requests for Director Review under the interim process. Of those requests, the Director Review process was completed for 316 requests. Of the 316 completed requests, 18 requests were granted, 2 requests were delegated to the DRP, 5 requests were withdrawn, and the remaining 291 requests were denied. Additionally, sua sponte Director Review was initiated in 35 cases.” 89 Fed. Reg. 26807, 26811. Director Review was expanded to allow for review of institution decisions on July 24, 2023. From July 24, 2023, to April 1, 2024, the majority of the review requests have been to review institution decisions (82 requests for review of decisions compared to 27 requests for review of final written decisions). 89 Fed. Reg. 26807, 26811.

Takeaway: The proposed rule is largely in line with the interim Director Review process with few changes. Because the proposed rule is silent on the types of issues that may be presented for Director Review, this may increase requests for Director Review. However, it is unclear if this will impact whether Director Review is granted.

 

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.