Federal Circuit Review - Issue 288

Troutman Pepper

286-1. Federal Circuit Overturns PTAB’s Nonobviousness Ruling Finding the Subject Matter Claimed was Obvious in Light of the Combined Teachings of the Prior Art

The United States Court of Appeals for the Federal Circuit recently reversed in part and vacated in part Canfield Scientific’s appeal of an inter partes review decision by the Patent Trial and Appeal Board in which the Board held all challenged claims of a patent owned by Melanoscan patentable. The Federal Circuit agreed with Canfield and concluded that the Board erred in finding all claims patentable. In doing so, the Federal Circuit reversed the Board’s decision that the independent claims were not obvious and further vacated and remanded the determination of patentability of the dependent claims. See Canfield Sci., Inc. v. Melanoscan, LLC, No. 2019-1927, 2021 U.S. App. LEXIS 4727 (Fed. Cir. Feb. 18, 2021) (Before Newman, Dyk, and Reyna, Circuit Judges) (Opinion for the Court, Newman, Circuit Judge).

Melanoscan, LLC (“Melanoscan”) is the owner of U.S. Patent No. 7,359,748 (“the ’748 patent”) which “relates to the detection, diagnosis and treatment of skin cancer as well as other diseases and cosmetic conditions of the visible human.” The ‘748 patent claims a device that is an enclosure fitted with cameras and lights arranged in a manner that “allows for the imaging of total or subtotal non-occluded body surfaces.” Canfield Scientific, Inc. (“Canfield”) challenged the validity of the ’748 patent in an IPR proceeding on obviousness grounds. After the Board found all claims were patentable, Canfield appealed the decision and argued that: (1) the Board erroneously refused to consider arguments and evidence the Canfield presented, and (2) the Board misapplied the law of obviousness.

The ’748 patent has two independent claims, 1 and 51. Claim 1 states:

A device for the identification of maladies that effect [sic] human tissue comprising:

an enclosure configured to receive a person or portion thereof for imaging the person or portion thereof, wherein the enclosure defines a specified imaging position for placing the person or portion thereof within the enclosure for imaging, and the specified imaging position defines a centerline;

a plurality of imaging devices, wherein a plurality of the imaging devices are vertically spaced relative to each other, a plurality of the imaging devices are laterally spaced relative to each other, a plurality of the imaging devices are located on opposite sides of the centerline of the specified imaging position relative to each other, and each imaging device is located a predetermined distance relative to the specified imaging position;

and a plurality of light sources spaced relative to each other and peripheral to the plurality of imaging devices that illuminate the person or portion thereof located at the specified imaging position and generate refraction and reflectance light therefrom;

wherein each of said imaging devices generates an image of the illuminated person or portion thereof located at the specified imaging position, and defines respective coordinates and said respective predetermined distance relative to the specified imaging position, and defines a respective focal length and resolution information, allowing precise measurement of imaged features of the person or portion thereof located at the specified imaging position.

Claim 51 is a related means plus function claim that does not add any additional limitations beyond those found in claim 1. In the IPR proceeding, the Board held that claims 1 and 51 were patentable and did not review any of the dependent claims for separate patentability. Canfield appealed the Board’s decision arguing that these claims were obvious in light of the prior art provide in their IPR petition.

The issue of obviousness is a question of law that is reviewed de novo on appeal. In its review, the Federal Circuit first explained that an “obviousness determination comprise four primary factors: the scope and content of the prior art; the differences between the prior art and the claimed invention; the level of ordinary skill in the field of the invention; and objective considerations such as commercial success, long-felt need, and the failure of others.” Graham v. John Deere Co., 383 U.S. 1, 17 (1966). The Federal Circuit also noted that “in determining obviousness, the adjudicator also considers aspects such as the motivation to select and combine specified teachings of the prior art.” KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 400–01 (2007).

In its analysis, the Federal Circuit looked at the five prior art references put forth by Canfield in their IPR petition. These references were Voigt, Hurley, Crampton, Daanen, and Dye. Voigt is a scientific paper related to melanoma screening that discloses an enclosure containing cameras and lights, for analyzing and measuring images on the skin of a patient. The parties and Board had agreed that the only limitation of claim 1 not disclosed in Voigt is “the plurality of cameras spaced vertically, laterally, and on opposite sides of the centerline.” Importantly, and as Melanoscan argued, Voigt places the subject along a wall and therefore the subject cannot be imaged from all sides, as required by the ’748 patent. Hurley and Crampton relate to multi-camera systems and disclose the placement of the subject at the center of a multi-camera system such that the subject can be imaged from all sides. Daanen and Dye further disclose whole body scanners and 3D graphics, respectively, and were put forth by Canfield as disclosing additional limitations found in dependent claims of the ’748 patent.

The Board, in upholding patentability, concluded that Canfield “failed to show how combining Voigt with the other prior art references would make the claimed subject matter obvious.” The Board specifically reasoned that a person of ordinary skill in the art of imaging would not have been motivated to combine the unmodified Voigt’s system with either Hurley’s or Crampton’s arrangement of imaging devices surrounding a subject on all sides because of Voigt’s placement of the subject against a wall.

The Federal Circuit disagreed. The Federal Circuit first pointed to the fact that Claims 1 and 51 are not limited as to the location of the subject being imaged within the enclosure. While Voigt discloses a subject placed against a wall of the enclosure, Hurley and Crampton alternatively show the subject placed at the center of the enclosure. The prior art as a whole thus discloses various placements of the subject being imaged, including both against the wall and centrally placed within an enclosure, as well as cameras “laterally and vertically spaced to each other about a centerline.” As noted in KSR, ”[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” 550 U.S. at 416. Here, the Federal Circuit found that combining elements found in the prior art made the claimed subject matter obvious. Specifically, the subject matter of claims 1 and 51 would had have been obvious because ”[c]laims 1 and 51 place the subject within the enclosure, as in the prior art, and place multiple cameras and lights within the enclosure, as in the prior art.”

The Federal Circuit therefore found that subject matter described in claims 1 and 51 would have been obvious to a person of ordinary skill in the field of the invention. In so holding, the Court reversed the Board’s decision as to the patentability of the claims 1 and 51. Additionally, because the Board did not separately analyze the dependent claims, the Federal Circuit vacated the Board’s decision of patentability of the dependent claims and remanded for further proceedings.

Claims may be rendered obvious when the combination of elements found in the prior art does no more than yield predictable results.

288-2. Federal Circuit Upholds District Court’s Finding of Summary Judgment Based on Equitable Intervening Rights

The United States Court of Appeals for the Federal Circuit recently affirmed a decision by the United States District Court for the Eastern District of Arkansas granting-in-part an alleged patent infringer’s motion for summary judgment based on equitable intervening rights. See John Bean Technologies Corp. v. Morris & Associates, Inc., No. 2020-1090, 2020-1148, 2021 U.S. App. LEXIS 4882 (Fed. Cir. Feb. 19, 2021) (Before Lourie, Reyna, and Wallach, Circuit Judges) (Opinion for the Court, Reyna, Circuit Judge).

This case began in June 2002 when John Bean Technologies Corporation (“John Bean”) was issued U.S. Patent No. 6,397,622 (“the ’622 patent”) covering an auger-type poultry chiller for processing poultry for human consumption. Shortly after issuance of the ‘622 patent, Morris & Associates, Inc. (“Morris”) wrote a demand letter to John Bean contending the ’622 patent appeared invalid and citing prior art in support of its position. John Bean never responded to Morris’s demand letter, but instead—approximately eleven years later—filed a request for ex parte reexamination of the ’622 patent before the United States Patent and Trademark Office (PTO). The PTO issued John Bean a reexamination certificate in May 2014.

Just six weeks after receiving the reexamination certificate, John Bean filed a complaint in the United States District Court for the Eastern District of Arkansas alleging Morris infringed the ’622 patent upon issuance of the reexamination certificate. John Bean then amended the complaint to include willful infringement. Morris moved for summary judgment, which the district court granted with respect to the affirmative defenses of laches and equitable estoppel. Upon John Bean’s appeal, this Court reversed the grant of summary judgment and remanded to the district court. Morris once again filed for summary judgment based on equitable intervening rights and prosecution laches. While the district court did not reach the issue of prosecution laches, it granted-in-part Morris’s motion based on equitable intervening rights.

The central issue addressed by the Federal Circuit was whether the district court abused its discretion in granting-in-part Morris’s motion for summary judgment. The Court explained that its review of the “district court’s grant of summary judgment [is] based on the law of the regional circuit, here the Eight Circuit,” and thus the Court would review the issue “de novo, construing evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in its favor.” Schoelch v. Mitchell, 625 F.3d 1041, 1045 (8th Cir. 2010). The Court further explained that reviewing the district court’s decision falls under an abuse of discretion standard, which permits “decisions that are flexible, intuitive, and tailored to the particular case.”

The Court first highlighted that under 35 U.S.C. § 252, the affirmative defense of equitable intervening rights may protect a defendant accused of infringing either a reissued or reexamined patent. The Court explained that ”[g]ranting equitable intervening rights is a matter of judicial discretion” and that ”[o]nce granted, [these rights] give the alleged infringer the continued right to manufacture, sell, or use the accused product after the reexamination certificate is issued ‘when the defendant made, purchased, or used identical products, or made substantial preparation to make, use, or sell identical products before the reissue date.’” BIC Leisure Prods., Inc. v. Windsurfing Inter., Inc., 1 F.3d 1214, 1221 (Fed. Cir. 1993). The rationale behind equitable intervening rights “is that the public has the right to use what is not specifically claimed in the original patent.” Seattle Box Co. v. Indus. Crating & Packing, Inc., 756 F.2d 1574, 1579 (Fed. Cir. 1985).

In affirming the district court, the Court first looked to the district court’s weighing of six factors in granting Morris’s motion, including:

(1) whether substantial preparation was made by the infringer before the reissue;

(2) whether the infringer continued manufacturing before reissue on advice of its patent counsel;

(3) whether there were existing orders or contracts;

(4) whether non-infringing goods can be manufactured from the inventory used to manufacture the infringing product and the cost of conversion;

(5) whether there is a long period of sales and operations before the patent reissued from which no damages can be assessed; and

(6) whether the infringer made profits sufficient to recoup its investment.

John Bean Techs. Corp. v. Morris & Assocs., Inc., No. 4:14-CV-00368, 2019 WL 7176779, at *2 (E.D. Ark. Sept. 23, 2019). Particularly, the Court looked to the district court’s finding that Morris had made “substantial preparation” prior to the issuance of the reexamination certificate based on Morris’s “years of research, developments, investments, improvement, promotion, and good-will associated with the accused product” and Morris’s conversion of “nearly [two-thirds] of its business to selling the accused product.” Id. at *2. The Court also looked to the district court’s consideration of the “relative degrees of good or bad faith exercised by the parties” and its finding “that John Bean appeared to have acted in bad faith when it did not dispute Morris’s belief that the ’622 patent was invalid and thus allowed Morris to build its business based on the accused product before requesting reexamination.” Id. at *3.

While John Bean argued Morris’s “monetary recoupment of investments made prior to the grant of reissue as sufficient to protect investments and defeat the grant of the equitable remedy,” the Court offered that “recoupment is not the sole objective to § 252′s protection of ‘investments made or business commenced.’” 35 U.S.C. § 252. Instead, the Court explained, recoupment is only a single factor to consider in weighing the equities.

Finally, while John Bean further argued that genuine issues of material fact remained with respect to Morris’s willful infringement, the Court explained that the district court did not have to reach the issue of willful infringement because ”[i]f there is no infringement, there cannot be willful infringement.” 35 U.S.C. § 284.

In so holding, the Court affirmed the district court’s granting-in-part of Morris’s motion for summary judgment based on equitable intervening rights.

First, patent holders must remember that equitable intervening rights apply to both reissued and reexamined patents. Further, patent holders should keep in mind the courts’ broad discretion in weighing and balancing many factors in determining an alleged infringer’s equitable intervening rights.

288-3. Federal Circuit Finds Collateral Estoppel Applies Between Multiple Related Inter Partes Reexaminations

The Federal Circuit recently vacated and remanded a Patent Trial and Appeal Board (“Board”) decision based on collateral estoppel. The Court found that factual determinations in a first inter partes reexamination precluded the Board from making contrary decisions in a second, related inter partes reexamination. See SynQor, Inc. v. Vicor Corp., No. 2019-1704, 2021 U.S. App. LEXIS 5060 (Fed. Cir. Feb. 22, 2021) (Before Dyk, Clevenger, and Hughes, Circuit Judges) (Opinion for the Court, Hughes, Circuit Judge) (Dissenting opinion, Dyk, Circuit Judge).

SynQor, Inc. (SynQor) is the owner of a large family of patents related to DC-DC power converters. The family includes U.S. Patent Nos. 7,564,702 and 8,023,290 (“the ’702 patent” and “the ‘290 patent,” respectively), and U.S. Patent No. 7,072,190 (“the ‘190 patent”). SynQor asserted all three of these patents against Vicor Corp. (“Vicor”). Vicor petitioned for inter partes reexamination of each, arguing unpatentability in view of Steigerwald, a U.S. patent, and Cobos, a 1994 article. In the reexaminations of the ‘702 patent and the ’290 patent, claims were found nonobvious. On appeal to the Board, the Board agreed that “there are incompatibilities in frequency between [Cobos and Steigerwald],” finding SynQor’s evidence of incompatibility more credible than Vicor’s evidence to the contrary.

But for the patent at issue in this appeal, the ’190 patent, the Board found the opposite—that they were “not persuaded” that the two references could not be combined. The Board found the claims of the ’190 patent to be unpatentable, and SynQor appealed to the Federal Circuit.

The Court first addressed scenarios when issue preclusion, or collateral estoppel, applies to administrative proceedings. For one, since issue preclusion is so well-grounded in common law, it “will apply ‘except when a statutory purpose to the contrary is evident.’” Further, an administrative decision will have preclusive effect when the “agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate.”

The Court first noted that it has already decided that collateral estoppel applies to inter partes reviews. As for inter partes reexamination, the Court first turned to legislative intent regarding collateral estoppel in the context of inter partes reexamination. The Court considered pre-AIA Sections 315(c) and 317(b) related to reexamination, and concluded that the grounds/claims provisions therein codified and are fully consistent with common-law principles of collateral estoppel.

The Court then addressed “whether inter partes reexaminations categorically fail to meet the ordinary elements of issue preclusion.” Referring to the Restatement (Second) of Judgments, the following factors were addressed by the Court (bracketed additions in Opinion):

[1] Adequate notice to persons who are to be bound by the adjudication . . . ;

[2] The right on behalf of a party to present evidence and legal argument in support of the party’s contentions and fair opportunity to rebut evidence and argument by opposing parties;

[3] A formulation of issues of law and fact in terms of the application of rules with respect to specified parties concerning a specific transaction, situation, or status, or a specific series thereof;

[4] A rule of finality, specifying a point in the proceeding when presentations are terminated and a final decision is rendered; [and finally, a catch-all,]

[5] Such other procedural elements as may be necessary to constitute the proceeding a sufficient means of conclusively determining the matter in question, having regard for the magnitude and complexity of the matter in question, the urgency with which the matter must be resolved, and the opportunity of the parties to obtain evidence and formulate legal contentions.

Only factors 2 and 5 were at issue here. Vicor argued that inter partes reexamination was “examinational” or “inquisitorial” in nature, not judicial, and the Examiner frames the issues unlike in adversarial proceedings. The Court noted that in inter partes reexamination, unlike ex parte, the requester has full participation in the proceedings, including opportunities to respond to each response filed by the patentee. The parties can also proffer expert testimony in these responses. To the Court, this was evidence of “adequate adversarial participation.”

The Court noted that the procedures in a second inter partes reexamination are inherently the same as in a first, weighing in favor of collateral estoppel. Vicor had the same opportunity to present evidence in the first reexaminations as it did in the reexamination for the ’190 patent. Vicor argued that the inter partes reexamination does not allow for cross examination or subpoenaing witnesses, to which the Court responded by observing that a full opportunity to litigate is provided even without cross examination. For example, the parties can trade expert testimony and, although it is not a confrontational cross examination, it does “serve[] a similar purpose.” Further, the fact finders here are trained administrative judges that can properly rely on and weigh the evidence submitted.

The Court then turned to the facts of the case, and used the factors from In re Freeman, 30 F.3d 1459, 1465 (Fed. Cir. 1994) to determine if issue preclusion should apply. The issues here are identical—whether the two references were incompatible. The issue was litigated and decided upon—the Board found in reexamination in the ’702 patent that the two references had incompatible frequencies. The Board’s holding was “essential” to the judgment of non-obviousness in the prior inter partes reexaminations. Finally, and as described above, Vicor had a full and fair opportunity to litigate the prior issue.

In so holding, the Court vacated the Board’s decision regarding the ’190 patent and remanded to the Board to apply collateral estoppel.

Judge Dyk authored a dissenting opinion, finding inter partes reexamination to be “examinational (or inquisitorial) rather than adjudicatory” in nature and, therefore, collateral estoppel should not apply. For one, the Examiner controls the issues in the proceeding, not the requester. Judge Dyk also finds persuasive the inability to cross-examine in inter partes reexamination.

Patent Trial and Appeal Board holdings in a first appealed inter partes reexamination can have a collateral estoppel effect on subsequent, related inter partes reexaminations. Although the AIA abolished inter partes reexamination in view inter partes review, the case provides some guidance on how older reexaminations may affect future proceedings.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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