Federal Circuit Review - June 2019

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One-year Clock for Filing IPR Petition Applies to Litigants and Parties that Become Privies of the Litigant Prior to Institution.

In Power Integrations, Inc v. Semiconductor Components, Appeal No. 2018-1607, the Federal Circuit decided that an IPR is time-barred under 35 U.S.C. § 315(b) if, at the time of institution, the petitioner is in privity with a party who was served with a complaint for patent infringement over a year before the petition was filed.

In 2009, Power Integrations sued Fairchild for patent infringement. After expiration of Fairchild’s one-year IPR window under § 315(b), Semiconductor Components—who was not a party to the litigation—petitioned for IPR. At the time Semiconductor Components petitioned, they had entered into a merger agreement with Fairchild. The merger closed after the IPR petition was filed, but before the PTAB issued its institution decision. In instituting the IPR, the PTAB focused its § 315(b) analysis on when the petition was filed, and asked whether Semiconductor Components and Fairchild were in privity on that date. Because the merger had not closed at the time of filing, the PTAB determined that the petition was not time-barred.

The Federal Circuit reversed. Section 315(b) states that an IPR “may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” The Federal Circuit noted that the “is filed” language does not dictate when to determine if the privity relationship exists. Instead, the words “is filed” merely mark the end of the one-year window for filing an IPR petition. Section 315(b) provides a condition, which if true, dictates that an IPR “may not be instituted.” Accordingly, the PTAB may not institute if, at the time of institution, the petitioner is subject to the time-bar.


State Sovereign Immunity Does Not Bar an IPR

In Regents of the University Of Minnesota v. LSI Corporation, Appeal No. 2018-1559, state sovereign immunity does not apply to IPR proceedings asserted against patents owned by or assigned to states, regardless of whether the state has asserted the patent claims in a district court litigation.

The Regents of the University of Minnesota (“UMN”), an arm of the state of Minnesota, sued LSI Corp. and customers of Ericsson Inc. in district court for infringement of a number of patents. In turn, LSI and Ericsson separately petitioned for IPR against UMN’s patents. UMN filed a motion to dismiss the petitions based on state sovereign immunity. An expanded panel at the PTAB concluded that although state sovereign immunity applies to IPR proceedings, UMN waived its immunity by filing the district court suit. A concurring opinion concluded that state sovereign immunity was not implicated because IPR proceedings are in rem proceedings.

The Federal Circuit agreed that the IPR against UMN’s patents could continue, but held that state sovereign immunity does not apply to IPR proceedings. The Federal Circuit noted that because IPR proceedings are more similar to agency enforcement actions than civil litigation, they are an adjudication of a public right and are not barred by tribal sovereign immunity. The court reasoned that, because state and tribal sovereign immunity do not materially differ with regard to IPR proceedings, state sovereign immunity also does not apply to IPR proceedings. The Federal Circuit did not address the issue of whether, if state sovereign immunity were to apply to IPR proceedings, UMN waived its immunity by asserting patent claims in district court.

Separate from the opinion, Judges Dyk, Wallach, and Hughes also provided additional views on the matter, arguing that “state sovereign immunity also does not apply to IPR proceedings because they are in substance the type of in rem proceedings to which state sovereign immunity does not apply.”


Years-Old R&D Investments Satisfy the Domestic Industry Requirement

In Hyosung TNS Inc. v. ITC, Appeal No. 2017-2563, past investments can satisfy the ITC’s domestic industry requirement if (1) the investments pertain to products covered by an asserted patent and (2) the complainant continues to make other investments relating to such products at the time the complaint is filed.

Diebold filed a complaint with the ITC arguing that Hyosung violated 19 U.S.C. § 1337(a)(1)(B) by importing products that infringed Diebold’s patents. The ITC agreed with Diebold and entered a limited exclusion order and a cease-and-desist order. Hyosung appealed the ITC’s decision.

On appeal, Hyosung argued that Diebold failed to satisfy the domestic industry requirement under § 1337(a)(1)(B) for the products covered by one of the asserted patents. In particular, Hyosung asserted that Diebold’s main investments for these products, which occurred between 2005 and 2010, failed to meet the economic prong of the domestic industry requirement, as those investments occurred at least 5 years before Diebold brought the ITC action in 2015.

The Federal Circuit disagreed with Hyosung and held that past investments may be considered to support a domestic industry claim if (1) the investments pertain to products covered by the asserted patent and (2) the complainant continues to make investments relating to such products at the time the complaint is filed. Diebold’s investments between 2005 and 2010 were directly related to products covered by the asserted patent. Additionally, Diebold continued to have service and assembly expenses for those products until the date of its ITC complaint. As a result, substantial evidence supported the ITC’s domestic industry finding.


A Single Prior Art Reference Can Render a Patent Obvious

In Game and Technology Co., Ltd. v. Activision Blizzard Inc., Appeal No. 2018-1981, the Federal Circuit determined that a single prior art reference can render a patent obvious if it would have been obvious to modify that reference to arrive at the claimed invention.

Game and Technology Co., Ltd. (“GAT”) owned a patent directed to a method of customizing internet game characters in online games. Activision sought inter partes review of the patent and argued that it was obvious in view of two prior art references: a video game manual and a patent publication. The PTAB determined that the challenged claims were obvious over the video game manual alone or combined with the patent publication. GAT appealed, challenging the determination of obviousness and the claim construction of the terms “gamvatar” and “layers.”

GAT argued on appeal that a single reference cannot support a finding of obviousness. The Federal Circuit rejected this as a matter of law because a patent can be obvious in light of a single prior art reference if it would have been obvious to modify that reference. The Federal Circuit also affirmed the PTAB’s construction of the terms “gamvatar” and “layers.” The Federal Circuit noted that the specification is always highly relevant to the claim construction analysis, and that the specification supported the PTAB’s construction.


The Doctrine of Equivalents May Apply Despite Restriction Requirements and Narrow Claiming

In UCB, Inc. v. Watson Laboratories Inc., Appeal No. 2018-1397, 2018-1453, the Federal Circuit found that application of the doctrine of equivalents may not be barred by: (1) prosecution history estoppel where an election in response to a restriction requirement does not constitute a surrender of an asserted equivalent, or (2) intentional narrow claiming where there is insufficient evidence that the asserted equivalent was foreseeable.

UCB filed suit against Defendants Watson and Actavis asserting a patent relating to a transdermal form of a drug for treating Parkinson’s disease. The district court found that Defendants infringed all of the asserted claims of the patent under the doctrine of equivalents. While Defendants’ products used a different adhesive than the claimed adhesives, the district court determined that, under the doctrine of equivalents, the differences between Defendants’ adhesives and the claimed adhesives were insubstantial. The district court also rejected Defendants’ arguments that UCB was barred from asserting the doctrine of equivalents. Defendants appealed.

On appeal, the Federal Circuit first agreed with the district court that UCB was not barred from asserting the doctrine of equivalents. Regarding prosecution history estoppel, the Federal Circuit disagreed with Defendants’ reading of the prosecution history, noting that the restriction requirement did not relate to Defendants’ adhesive and that UCB never added a limitation excluding Defendants’ adhesive by amendment. Accordingly, the Federal Circuit concluded that UCB’s election in response to the Examiner’s restriction was not a narrowing amendment, and did not indicate a surrender of Defendants’ adhesive as an equivalent. Next, the Federal Circuit rejected Defendants’ argument that UCB chose to draft narrow claims and therefore should not be permitted to expand the scope of those claims through the doctrine of equivalents. While recognizing that foreseeability of an asserted equivalent at the time of claim drafting is a factor to consider in determining whether the doctrine of equivalents should apply, the Federal Circuit determined that there was not enough indication from the patent specification, claims, or the record evidence of the inventor’s knowledge to conclude that UCB surrendered Defendants’ adhesive as an equivalent for infringement purposes. The Federal Circuit also rejected Defendants’ claim vitiation and ensnarement arguments. Finding no clear error in the district court’s application of the doctrine of equivalents, the Federal Circuit affirmed.

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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