Federal Circuit Upholds Broad Scope of CBM Review and Explains that an Internet Reference Must be Indexed by a Search Engine to Qualify as a Prior Art Publication

In Blue Calypso, LLC v. Groupon, Inc., Appeal Nos. 2015-1391, -1393, -1394, the Federal Circuit upheld the PTAB’s decision to institute covered business method (“CBM”) review.  The Federal Circuit also upheld the PTAB’s finding that Groupon had failed to establish that a report, published on a webpage by a college graduate student (“Ratsimor”), was sufficiently publicly available to qualify as prior art.

When the PTAB instituted review of the patents, it noted that each patent included a “subsidy” or “incentive” claim term.  Both terms were construed to refer to a system of providing financial assistance that was essential to practicing the steps of the claimed method.  Based on this interpretation, the PTAB found that each patent claim constituted a “business method” within the meaning of the statute.  On appeal, Blue Calypso argued that the claims did not cover business methods and were ineligible for CBM review because they fit within the “technological inventions” exclusion under the AIA.  In affirming the PTAB’s institution of CBM review, the Federal Circuit upheld the PTAB’s broad business methods definition and found that the “technological inventions” exclusion was inapplicable because the claims merely recited general and conventional computer hardware.

Groupon also cross-appealed the PTAB’s finding that the Ratsimor reference was not publicly available prior art.  The Ratsimor reference was a report co-authored by a graduate student along with Groupon’s technical expert.  The report was made available on the student’s website and Groupon’s expert testified that it was available before the critical date of the applicable patent.  In upholding the PTAB’s finding that Groupon had not established that the report was publicly available, the Federal Circuit noted that Groupon had not provided evidence that an ordinarily skilled artisan would have known about, or been able to find, the graduate student’s website.  The Federal Circuit emphasized that there was no evidence that the website had been indexed by a search engine, or that the Ratsimor reference had ever been accessed or downloaded.

Federal Circuit Confirms the Existence of a Patent-Agent Privilege

In In re Queen’s University at Kingston, Appeal No. 2015-145, the Federal Circuit held that the patent-agent privilege narrowly protects communications between clients and non-attorney patent agents.

Queen’s University sued Samsung for patent infringement.  During discovery, Queen’s University produced a privilege log asserting that certain communications with its patent agents were privileged under the patent-agent privilege.  Samsung moved to compel production of these documents.  The district court determined that there is no privilege for communications between a client and its non-attorney patent agents, and ordered the patentee to produce the requested documents.  Queen’s University filed a petition for writ of mandamus with the Federal Circuit, which was granted.

The Federal Circuit held that a patent-agent privilege exists due to the unique roles of patent agents, congressional recognition of patent agents’ authority to act, and the Supreme Court’s characterization of their activities as the practice of law.  This privilege, however, is narrow and the burden is on the party invoking the privilege to prove that the communications at issue “are reasonably necessary and incident to the preparation and prosecution of patent applications or other proceeding” before the Patent Office. 

Rules for Playing a Card Game Are Patent-Ineligible under Section 101

In In re Smith, Appeal No. 2015-1664, the Federal Circuit upheld the rejection of claims pertaining to rules for playing a wagering game as patent-ineligible subject matter under 35 U.S.C. § 101.

The patent application was entitled “Blackjack Variation” and claimed a “method of conducting a wagering game.”  The Examiner rejected the claims under section 101, finding that an attempt to claim new rules for playing a card game qualified as an abstract idea.  The PTAB affirmed and Smith appealed.    

Applying the two-step framework of Alice, the Federal Circuit affirmed.  First, the court found that the claims were drawn to the abstract idea of “fundamental economic practices” because a wagering game is simply a method of exchanging financial obligations based on the probabilities of the cards.  Second, the Federal Circuit found that the claims lacked an “inventive concept” sufficient to transform the claims because shuffling and dealing physical playing cards are purely conventional activities.  The Federal Circuit did note, however, that it is possible that claims directed to conducting a game using a new or original deck of cards could potentially survive step two of Alice.

U.S. IP Infringement Claims Cannot Be Dismissed for Forum Non Conveniens

In Halo Creative & Design Ltd. v. Comptoir Des Indes Inc., Appeal No. 2015-1375, the Federal Circuit held that the district court erred by dismissing the case under forum non conveniens in favor of a Canadian court.

Halo’s suit alleged copyright, trademark, and design-patent infringement as well as state consumer fraud and deceptive business practices.  The district court granted defendants’ motion to dismiss for forum non conveniens and determined that the Federal Court of Canada would be a superior forum.  The district court determined that the Federal Court of Canada was adequate because: (1) Canada was a signatory to the Berne convention (an international agreement governing copyright), and (2) it was possible that Canadian courts could apply U.S. copyright law. 

The Federal Circuit reversed because there was insufficient evidence that Canada was an adequate forum. The Federal Circuit noted that intellectual property rights are territorial, and Canada would not be able to provide redress for violations of U.S. trademarks and patents, which the district court failed to analyze.  Regarding Halo’s copyright infringement claims, Canada’s participation in the Berne convention only requires that authors in other countries receive the same protection as Canada provides its own authors; it has no requirement that Canada provide a remedy for U.S. infringement.

Federal Circuit Confirms that in IPR Proceedings, Every Claim Term Must be Given Meaning

In Dell Inc. v. Acceleron, LLC, Appeal Nos. 2015-1513, -1514, the Federal Circuit vacated the PTAB’s cancellation of two claims of Acceleron’s patent. One claim was remanded for reconsideration based on an incorrect claim construction. A second claim was remanded because the Board failed to allow Acceleron a fair opportunity to respond to new arguments raised by Dell during oral argument.

Claim 20 required a microcontroller module that remotely polls a CPU module. Acceleron argued before the Board that it should construe this claim term to require that the microcontroller module actually be configured to remotely poll.  The PTAB disagreed and construed the claims to not require the module to be configured to remotely poll. On appeal, the Federal Circuit held that the PTAB’s construction ran counter to the claim-construction principle that every claim term should be given meaning. Because the PTAB did not correctly construe the claim to require remote polling, the Federal Circuit vacated the PTAB’s cancellation of claim 20 and remanded for reconsideration under the correct construction.

Regarding claim 3, the Federal Circuit held that the PTAB erroneously relied on an argument presented by Dell for the first time during oral argument.  Acceleron, therefore, did not have notice and a fair opportunity to respond to Dell’s new argument.  The Federal Circuit vacated the PTAB’s cancellation of claim 3 and remanded for further proceedings.

Federal Circuit Provides Guidance on Scope of Estoppel Provision for IPRs

In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., Appeal Nos. 2015-1116, -1119, the Federal Circuit denied Shaw’s petition for a writ of mandamus to require the PTO to institute another IPR based on grounds that the PTAB had previously refused to institute as redundant.

ACS sued Shaw for patent infringement and Shaw petitioned for IPR of all of the patent’s claims, citing fifteen different invalidity grounds. The PTAB instituted the IPR on most of the claims, but decided not to institute on the grounds based on the Payne reference due to redundancy.  The PTAB upheld the patentability of some of the claims.  Shaw appealed.

On appeal, Shaw petitioned for a writ of mandamus to require the PTO to institute an IPR based on the Payne reference.  Shaw’s arguments were predicated on its concern that the estoppel provision in 35 U.S.C. § 315(e) prevented Shaw from raising an invalidity defense in the district court action, or in a future IPR, using the Payne reference.  The Federal Circuit, however, explained that § 315 would not estop Shaw from later raising its arguments because estoppel only applies to arguments on grounds the petitioner raised or reasonably could have raised during the IPR. Since no IPR was instituted on that ground, the Federal Circuit held that Shaw did not raise the ground during the IPR.