PATENT CASE OF THE WEEK
Ericsson Inc. v. Intellectual Ventures I LLC, Appeal No. 2017-1521 (Fed. Cir. Aug. 27, 2018)
In an appeal from an inter partes review, the Court reviewed the Patent Trial and Appeal Board’s authority to strike arguments improperly raised for the first time in a reply. 37 C.F.R. § 42.23(b) (“… A reply may only respond to arguments raised in the corresponding opposition, patent owner preliminary response, or patent owner response.”).
In the decision below, the Board held that certain claims of U.S. Patent No. 5,602,831 (the “’831 Patent”) were not unpatentable under 35 U.S.C. § 103. The ’831 Patent “is directed to increasing the reliability of a wireless communications system.” Specifically, the ’831 Patent teaches the interleaving of packets with other packets within a packet block (i.e., S-blocks with S-blocks).
Initially, the parties and the Board applied the broadest reasonable interpretation claim construction standard. However, after institution, the Board applied the standard in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) and “revisit[ed] whether the combination of [prior art] teaches ‘encoding packets into packet blocks,’ . . . and ‘an encoder for combining and varying the number of packets transmitted in each of the packet blocks.’”
In Reply, Ericsson argued that the interleaving of packets described in the ’831 Patent was rendered obvious in light of a particular prior art reference. In particular, Ericsson argued in its Reply that “[t]he difference between interleaving R-blocks together and interleaving S-blocks together is insubstantial at best,” and that the prior art “suggests that an added benefit would be obtained from interleaving larger data portions.”
Ericsson’s Reply relating to interleaving of packets was not considered by the Board since they considered it a new theory of obviousness not previously raised in the Petition or Patent Owner Response. As a result, the Board found that the prior art did not render the claims obvious because it taught only one type of interleaving (i.e., interleaving of R-blocks with R-blocks) and not the interleaving of packets with other packets (i.e., S-blocks with S-blocks).
However, the Court disagreed with the Board’s approach, finding that “[t]he Board’s error was parsing Ericsson’s arguments on reply with too fine of a filter.” The Court also held that Ericsson should have been given an opportunity to reply since there had been a change in claim construction.
Finally, the Court explained that its decision should not be understood as restricting the Board’s authority to limit the scope of replies. It referred to its previous decision in Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359 (Fed. Cir. 2015) and noted that, in this case, Ericsson did not rely upon new evidence and instead expanded on the same arguments made in the Petition. It also noted Ericsson’s Reply arguments were not an “entirely new rationale” worthy of being excluded as in Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359. 1370 (Fed. Cir. 2016).
As a result, the Court vacated the Board’s decision and remanded for the Board to consider all of Ericsson’s Reply.
Opinion can be found here.
