Despite PTAB “Sweet Talk” Federal Circuit Reverses Invalidity Of Deicing Patent

By Tom Engellenner
The Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) invalidity decision last week that had found a patent for a molasses-based, road deicing agent obvious over earlier patents on sugar-related inventions.  The Federal Circuit panel of Judges Pauline Newman, Raymond C. Clevenger and Kathleen M. O’Malley concluded that the U.S. Patent and Trademark Office (USPTO) finding of invalidity during reexamination proceedings was faulty because the USPTO had failed to set forth a prima facie case explaining why a person of ordinary skill in the art would have been motivated to combine references from disparate technological fields.  In Re Natural Alternatives, LLC (Fed. Cir. No. 2015-1911, August 31, 2016).

Univar, Inc., a licensee of U.S. Patent No. 6,080,330 owned by Natural Alternatives, LLC., filed three reexamination requests in 2011, seeking review of the licensed patent. The reexamination proceedings were consolidated, and the examiner found the claims drawn to a deicing composition comprising 25-99% desugared sugar beet molasses obvious in light of an earlier Polish patent combined with certain secondary prior art references.  Natural Alternatives appealed the reexamination decision to the PTAB but the board affirmed the examiner’s position, and the patent owner then appealed to the Court of  Appeals for the Federal Circuit.

In a decision handed down on August 31, 2016, the Federal Circuit disagreed with the PTAB’s reasoning.  First, the panel found the PTAB’s reliance on a 1990 Polish Patent No. PL 164018 to Zdzislaw (“Zdzislaw”) was misplaced because it did not teach the use of “desugared” molasses.  The process described in the Polish patent retained approximately 50% of the sugar in the molasses, while the patent at issue described processes for removal of most of the sugar.  Second, the Federal Circuit panel found one of the secondary references to be so far afield of the invention that a skilled artisan would not have motivated to combine it with Zdzislaw.  Finally, the panel found the examiner and the PTAB had improperly ignored the patent owner’s evidence of commercial success.

In particular, the decision criticized the PTAB’s reliance on U.S. Patent No. 5,639,319 to Daly (“Daly”); alone or together with a journal article titled “Winter is Hell,” published July 1997 in Public Works (“Public Works”).  The Daly patent was directed to the use of desugared sugar beet molasses (DSBM) as tire ballast, which served the unrelated purpose of stabilizing and balancing tires.  The Federal Circuit panel agreed with the patent owner that a person having ordinary skill in the art would not have found Daly to be reasonably pertinent to the problem of deicing road surfaces. Continue reading

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When Can Common Sense be Relied Upon to Find an Invention Obvious?

By Alicia Palladino
All patent practitioners recognize that a single prior art reference can be used to reject claims in an obviousness rejection. However, the issue is whether the Patent Office must provide additional evidence, above and beyond the sole prior art reference, when using common sense to conclude the invention is obvious. Recently, the Federal Circuit held that the Board misapplied the law on the permissible use of common sense in an obviousness analysis. Arendi S.A.R.L. v. Apple Inc., No. 2015-2073, 2016BL258032, 5 (Fed. Cir. Aug. 10, 2016).

The Arendi case began as an IPR petition filed December 2, 2013 by Apple Inc., Google, Inc., and Motorola Mobility LLC claiming U.S. Patent No. 7,917,843 (the ‘843 Patent), owned by Arendi S.A.R.L., was invalid as obvious. The IPR was instituted and the Board issued an opinion on June 9, 2015 finding the claims unpatentable as obvious. On appeal, the Federal Circuit reverses the Board.

As described by the patent owner, the “’843 Patent is directed, among other things, to computer-implemented processes for automating a user’s interaction between a first application, such as a word processing application or spreadsheet application, on the one hand, and a second application, such as contact management application having a database, on the other.” IPR2014-00208, Paper 6 page 1. The sole prior art reference used to invalidate the ‘843 Patent as obvious was U.S. Patent No. 5,859,636 (“Pandit”). Pandit taught recognizing different classes of text in a document and providing suggestions based on it.

The Federal Circuit acknowledged that there is a place for common sense, common wisdom, and common knowledge in the obviousness analysis. However, Judge O’Malley provides three caveats when applying common sense in these instances.

First, common sense is acceptable to use to provide a motivation to combine, not to supply a missing claim limitation. O’Malley noted the suggestion test described in Dystar. The suggestion test does not require that an explicit teaching to combine be found in a particular prior art reference, the motivation to combine “may be found in the knowledge of one of ordinary skill in the art, or, in some cases, from the nature of the problem to be solved. When not from the prior art references, the ‘evidence’ of motive will likely consist of an explanation of the well-known principle or problem-solving strategy to be applied.”. Dystar Textilfarben GmbH v. Patrick Co., 464 F.3d 1356, 1366 (Fed. Cir. 2006).  The Dystar decision further explained that an “implicit motivation to combine exists not only when a suggestion may be gleaned from the prior art as a whole, but when the ‘improvement’ is technology-independent and the combination of references results in a product or process that is more desirable, for example because it is stronger, cheaper, cleaner, faster, lighter, smaller, more durable, or more efficient…In such situations, the proper question is whether the ordinary artisan possesses knowledge and skills rendering him capable of combining the prior art references.” Id. at 1368. Continue reading

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Status Quo At The PTAB For Now: Supreme Court makes no changes to IPR Practice

By Maia Harris and Frank Liu
Last week, the Supreme Court declined to make any changes to IPR procedure in its opinion in Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. ___ (2016). Relying primarily on statutory language and concepts of agency rulemaking authority, the Court found no reason to alter the Federal Circuit’s interpretation of the “no appeal” provision of the patent act covering IPRs, or the patent office rule that the agency shall construe a claim according to its “broadest reasonable construction” during IPR. In doing so, the Court did not foreclose the possibility of other challenges to actions by the PTAB, whether constitutional or based on the manner in which the PTAB exercised its authority. For now, however, it is largely business as usual at the PTAB.

Background
The case arose out of an IPR instituted on certain claims of a patent owned by Cuozzo (“Cuozzo Patent”). The original petitioner sought IPR on all 20 claims of the Cuozzo Patent. One of the grounds for review set forth the petition was that dependent claim 17 was obvious under §103. The PTAB instituted review of claim 17 on the §103 ground articulated in the petition, but also decided to include claims 10 and 14 in its review on the same obviousness ground as claim 17. As noted by the PTAB, claim 17 depended from claims 14 and 10, and a challenge to claim 17 implicitly raised the same challenge to claims 14 and 10. Thus, the PTAB decided to institute IPR on claims 10, 14, and 17, despite the fact that petitioner only specifically challenged claim 17 on the obviousness ground that ultimately was the basis of instituting the IPR.

During the course of IPR, the PTAB issued a final decision, in which it construed the claim terms at issue with the “broadest reasonable” construction. Cuozzo also sought to amend the claims, which the PTAB rejected, finding that the proposed amendments failed to satisfy 35 U.S.C. §112 and would have impermissibly broadened the scope of the claim language.

Cuozzo appealed the PTAB’s decision to institute review of claims 10 and 14 on the grounds that petitioner failed to identify those claims with particularity as required by 35 U.S.C. §312(a)(3). Cuozzo also appealed the PTAB’s use of the “broadest reasonable interpretation” standard to construe claims in IPR, arguing that the Congressional intent of establishing IPR as a surrogate for litigation suggests that the claim construction standard employed during IPR should be consistent with the standard used in district court cases.

The Federal Circuit affirmed the decision to institute review of claims 10 and 14 of the Cuozzo Patent, noting that the “no appeal” provision of 35 U.S.C. §314(d) explicitly states that the decision whether to institute an IPR “shall be final and nonappealable.” The Federal Circuit reasoned that §314(d) precludes not only interlocutory appeal of the PTO’s decision to institute an IPR, but also appeal of the PTO’s decision to institute an IPR after a final decision from the Patent Trial and Appeal Board. In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015).

The Federal Circuit also held that the PTO reasonably required the PTAB in an IPR to construe claims according to their “broadest reasonable construction.” While noting that there is no express requirement in the patent statute about what specific claim construction standard should be used, the Federal Circuit reviewed the judicially approved history of use of this standard in other PTO proceedings involving unexpired patents, and concluded that the PTO’s approach was a valid exercise of agency rulemaking authority.

The Supreme Court granted cert on both issues.

“No Appeal” Means “No Appeal” – Absent Shenanigans, That Is
Justice Breyer, writing for the majority, affirmed the Federal Circuit’s determination and held that §314(d)’s “no appeal” provision precluded appellate review of a decision to institute an IPR. The majority held that the plain language of §314(d) clearly set forth Congress’ intent to preclude such judicial review of a decision to institute. Any other interpretation of §314(d), the majority reasoned, “would undercut one important congressional objective, namely, giving the Patent Office significant power to revisit and revise earlier patent grants.” Cuozzo, 579 U.S. at ___ (slip op., at 8).

In making its holding, the majority “emphasize[d] that our interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” Id. (slip op., at 11). Applying this interpretation, the majority held that Cuozzo’s challenge of the PTAB’s determination was closely tied to its determination that the information presented in the petition warranted review under §314(a).

The majority, however, did not interpret §314(d)’s “no appeal” provision to completely foreclose all judicial review of decisions to institute an IPR. In particular, the majority noted that judicial review of PTO decisions to institute an IPR would be warranted where the PTO’s decisions “implicate constitutional questions, [] depend on other less closely related statutes, or [] present other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Id. (slip op., at 11). Such questions could be reviewed under the Administrative Procedure Act (APA), which allows courts to “set aside agency action that is contrary to constitutional right, in excess of statutory jurisdiction, or arbitrary and capricious.” Id. (slip op., at 12).

Justice Alito, along with Justice Sotomayor, dissented from the majority’s holding, arguing that the “strong presumption favoring judicial review of administrative action” precluded the majority’s broad reading of §314(d)’s “no appeal” provision. Id. (slip op., at 3, Alito, J., dissenting). Noting that Congress could have employed “far more unambiguous and comprehensive” language precluding judicial review in §314(d), Justice Alito concluded that §314(d) should be read to only preclude interlocutory appeal of the PTO’s determination to institute an IPR. Id. (slip op., at 5, Alito, J., dissenting). While this interpretation would allow for judicial review of the PTO’s determination to institute an IPR after a final determination, Justice Alito confirmed that “normal limits on judicial review still apply” – noting that “errors that do not cause a patent owner prejudice” or errors that are “superseded by later developments” may not warrant relief and thus do not warrant disposal of the PTO’s determination. Id. (slip op., at 9-10, Alito, J., dissenting).

The majority rejected the arguments in Justice Alito’s dissent, finding the plain language of §314(d) to be consistent with preserving “the agency’s primacy over its core statutory function in accord with Congress’ intent.” Id. (slip op., at 10). The majority noted that the APA still provided an avenue to seek judicial review of the PTO’s determination.

Despite the differences in interpretation between the majority and dissent, both opinions recognize that judicial review is appropriate where the PTO engages in “shenanigans” – such as exceeding its statutory authority by canceling a patent claim for indefiniteness under §112 in inter partes review. Id. (slip op., at 11 and slip op., Alito., J., dissenting at 12-13). Under the majority opinion, however, it is questionable whether anything short of “shenanigans” by the PTAB in a decision to institute could be subject to judicial review, nor is it entirely clear what might be considered appealable shenanigans.

“Broadest Reasonable” Is Reasonable
While noting that the patent statute does not unambiguously direct the PTO to use one claim construction standard or another, the majority also noted that the statute does expressly authorize the PTO to issue rules governing IPR. Id. (slip op., at 13). The “broadest reasonable construction” regulation is one such rule. Id. Continue reading

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PTAB Can Rely Upon Prior Art Not Cited in an IPR Institution Decision to Establish the State of Art

By Frank Liu
The Federal Circuit affirmed the PTAB’s final determination in Genzyme Therapeutic Products Limited Partnership v. Biomarin Pharmaceutical Inc., Nos. 2015-1720, 2015-1721 (Fed. Cir. June 14, 2016), holding that the PTAB did not violate the Administrative Procedure Act (APA) by relying upon prior art references not identified in the grounds on which the PTAB instituted review.  In particular, the Federal Circuit held that the PTAB properly relied upon those references to establish the state of the art at the time of invention of the claimed invention.

Background
The patents at issue are Genzyme’s U.S. Patent Nos. 7,351,410 (“the ’410 patent”) and 7,655,226 (“the ’226 patent”), which are directed towards the treatment of Pompe disease. Pompe disease is a genetic condition that results in a deficiency or absence of a certain enzyme, acid alpha glucosidase (“GAA”), that is used to break down glycogen.  The inability to break down glycogen in the body causes the glycogen to accumulate in a patient’s heart and skeletal muscles, causing progressive deterioration and ultimate failure of those muscles.  Pompe’s disease can be treated by injecting GAA with mannose-6-phosphate (“M-6-P”) into patients, causing GAA to be taken up in heart and skeletal muscles with M-6-P receptors.

Biomarin filed two IPR petitions challenging the validity of Genzyme’s ’410 and ’226 patents. The PTAB instituted review of the ’410 and ’226 patents on grounds that the claims were invalid as obvious in view of the prior art. In its patent owner responses, Genzyme argued that the claims of the ’410 and ’226 patents were not obvious because each of the prior art references were directed towards in vitro experiments, and that there was no evidence that a person of ordinary skill would have a reasonable expectation of success applying those experiments in a human.  In its reply, Biomarin challenged Genzyme’s non-obviousness argument and identified two references in response – van der Ploeg ’91 and Kikuchi – showing successful in vivo tests administering GAA.  The van der Ploeg ’91 and Kikuchi references were not identified in the instituted grounds for review.

The PTAB found the challenged claims of the ’410 and ’226 invalid as obvious. In particular, the PTAB found that a person of ordinary skill could have arrived at the claimed inventions through “routine optimization” of the prior art.  In reaching this conclusion, the PTAB relied upon the Kikuchi and van der Ploeg ’91 references to establish the state of the art regarding in vivo studies.

Genzyme challenged the PTAB’s final determination, inter alia, on the grounds that the PTAB “relied on ‘facts and legal arguments’ that were not set forth in the institution decisions.” Id. (slip op., at 7).  In particular, Genzyme took issue with the fact that the PTAB’s final determination relied on the Kikuchi and van der Ploeg ’91 references to establish obviousness without providing notice of those specific references in its institution decision.  In Genzyme’s view, the PTAB improperly “change[d] theories in midstream,” thereby depriving Genzyme of notice and an opportunity to be heard as required by the APA. Id. (slip op., at 7-8).

On appeal, the Federal Circuit rejected Genzyme’s argument, holding that Genzyme had actual notice of the Kikuchi and van der Ploeg ’91 references and had an opportunity to be heard with regards to those references. Continue reading

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Federal Circuit Erases a Rare Patent Owner Victory and Tells PTAB: No Changing Horses (Claim Constructions) Midstream

By Tom Engellenner
In a recent decision on an inter partes review (IPR) appeal, the Federal Circuit erased a rare victory for a patent owner and remanded the case back to the Patent Trial and Appeal Board (PTAB) for rehearing on the sole claim that survived the initial trial.  In SAS Institute, Inc. v. ComplementSoft, LLC, Nos. 2015-1346 & 2015-1347 (Fed. Cir. June 10, 2016), SAS Institute, as petitioner, had challenged claims 1-16 of Patent 7,110,936 owned by ComplementSoft.  The ’936 patent discloses “a language independent software development tool having a graphical user interface.”  The PTAB instituted an IPR trial on claims 1 and 3-10 of the patent and ultimately found all of the instituted claims, except for claim 4, invalid in light of the prior art.  (IPR2013-00226).

At issue in the appeal was whether claim 4 was properly found not invalid. Claim 4 was an independent claim and included (among other things) an element, “graphic representations of data flows,” that the PTAB had construed in its initial determination to be “a diagram that depicts a map of the progression (or path) through the source code.”

However, in its final written decision, the PTAB chose a new definition for this term, namely “a graphical representation comprised of icons depicting data processing steps and arrows to depict the movement of data through source code.” Based on this new construction, the PTAB concluded that this feature was not taught or suggested by the cited art.

On appeal, the Federal Circuit panel of Judges Newman, Chen and Stoll found error in the PTAB’s adoption of a new construction for a term it had construed differently in its institution decision. The Federal Circuit panel (citing Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015)) held that the Administrative Procedure Act (APA) prevents federal agencies, including the PTAB, from “chang[ing] theories in midstream without giving the respondent reasonable notice of the change and the opportunity to present argument under the new theory.”

Writing for the Fed. Circuit panel, Judge Stoll wrote, “[i]t is difficult to imagine either party anticipating that already-interpreted terms were actually moving targets, and it is thus unreasonable to expect that they would have briefed or argued, in the alternative, hypothetical constructions not asserted by their opponent.”

The decision may be a pyrrhic victory for SAS Institute since Judge Stoll’s opinion also noted: “[W]e we agree with the Board’s ultimate construction of the “graphical representations of data flows” claim term. The Board’s procedure for arriving at this construction, however, gives us pause.”

Interestingly, the Federal Circuit panel had no problem with PTAB construing claim language on the fly – so long as the Board had not previously construed the claim element differently in its initial determination. “What concerns us is not that the Board adopted a construction in its final written decision, as the Board is free to do, but that the Board ‘change[d] theories in midstream,’” cited the Belden case again.

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