Latest Federal Court Cases - January 2021

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General Electric Co. v. Raytheon Techs. Corp., Appeal No. 2019-1319 (Fed. Cir. Dec. 23, 2020)

In one of two precedential opinions this week, the Federal Circuit established new precedent concerning what it takes for a petitioner to have standing to bring an appeal from an IPR. On the merits, the Court elaborated on the “obvious to try” doctrine in engaging in an obviousness analysis.

The case was brought by General Electric, challenging claims of a patent for airplane jet engines owned by Raytheon Technologies Corporation. The technology at issue generally concerns a specific design for a two-stage gas turbine engine.

This was not the first case between these parties—and not the first case concerning this technology. In 2016, GE petitioned for inter partes review of U.S. Patent No. 8,511,605. The PTAB ultimately found the claims not obvious in view of the prior art. GE appealed. In that case, the Federal Circuit found that GE failed to establish that it had standing to appeal its loss at the PTAB. Whereas any party can petition for an IPR, that does not confer Article III standing on any party to appeal its loss at the PTAB. In that case, the Federal Circuit established that GE failed to establish the “injury” prong of a standing analysis. Specifically, GE failed to establish that it was at threat of an infringement action because of its IPR loss. Declarations of its attorneys only suggested generally that Raytheon had “a history of threatening the aviation industry with their patent portfolio” and that it would injure GE generally by increasing its R&D costs and harming its competitive ability to supply engines to aircraft manufacturers. GE also provided a declaration stating that it had been in discussions with aircraft manufacturers regarding various engine architectures, but did not allege that any actually embodied the claims at issue. The closest it got was a statement that one such architecture for a possible project for Boeing included some features of the disputed patent claim. But the allegations were “shaky,” “vague,” and “conclusory.” Moreover, the allegations were weakened even further when GE’s bid for the Boeing project ended up offering a different design.

Against this background, the Federal Circuit held that GE failed to establish that it would have been injured by the inability to bring an appeal of its IPR loss. The panel decision was written by Judge Reyna and joined by Judge Taranto. Judge Hughes wrote a concurring decision, disagreeing with the precedent that necessitated the decision, but agreeing it was properly applied. We wrote that case up as our Case of the Week in July 2019. A copy of that can be found here.

In December 2016, GE filed a petition for IPR against a second Raytheon patent in the same family, which also claims two-stage gas turbine engine technology. GE asserted two prior art references. One reference taught all elements of the asserted claims except for the use of a two-stage design. A second article advocates for two-stage designs over single-stage designs. The PTAB found the claims nonobvious, and GE appealed.

The three-judge panel involved two of the same judges as the prior panel: Judges Reyna and Hughes, joined by Judge Lourie. Judge Hughes wrote the opinion for the Court.

This time, the Court found that GE had standing. The panel, relying on GE declarations, found that “GE has made concrete plans for future activity” that could be accused of infringement. GE had “offered this preferred geared turbofan design to Airbus in response to a request for information Airbus dispatched for its next-generation narrow body aircraft.” And GE Aviation’s Chief IP Counsel submitted a declaration stating, “GE fully expects that [Raytheon] would accuse this engine of infringing” the patent at issue. The Court inferred this to mean that “GE believes its preferred design raises a substantial risk of infringement.” With that more specific testimony, the Court found that GE suffered injury, giving it standing to appeal its loss in the IPR.

On the merits, the Court found that the PTAB erred in its “motivation to combine” analysis. GE had appealed three separate aspects of the PTAB’s decision. The Court held that the PTAB lacked substantial evidence for each of the three presented questions.

First, the Court found that the first prior art reference did not disparage two-stage designs, as the PTAB had found. Contrary to the PTAB’s assessment of that article, the Court found that a single-stage high-pressure turbine is not “critical or enabling” technology. Rather, a one-stage turbine is “a general preference.” The Court analyzed the article at length, ultimately finding that it “does not criticize, [dis]credit, or discourage the use of a two-stage high pressure turbine.” For that reason, the Court held that the article does not teach away from two-stage designs.

For similar reasons, the Court concluded that the Board lacked substantial evidence concerning its “motivation to combine” analysis. The Court held that “[a]n artisan seeking to improve upon or otherwise modify [that] advanced engine would have tried to implement a two-stage high-pressure turbine because of the known advantages provided by a two-stage design.”

Finally, the Court found the Board had erred in its obviousness analysis “as a whole,” finding that the Board had misapprehended precedent concerning the requirement that obviousness of a claim be established “as a whole.”

The Court’s opinion on the “motivation to combine” issues spans 16 pages and is a worthwhile read for the earnest practitioner contending with “motivation to combine” issues. The Court ultimately vacated the Board’s decision and remanded, presumably to enter a Final Written Decision of obviousness of the five claims at issue.

Curiously, the opinion was published on December 23, and then appears to have been withdrawn. The opinion was published again on December 28, which is why we write it up as our Case of the Week this week.

A copy of the opinion can be found here.

By: Nika Aldrich

ALSO THIS WEEK

Simio, LLC v. FlexSim Software Products, Inc., Appeal No. 2020-1171 (Fed. Cir. Dec. 29, 2020)

In this case, the Federal Circuit affirmed the Rule 12(b)(6) dismissal of a patent case for patent-ineligibility under 35 U.S.C. § 101. The patent at issue was generally directed to a system for developing object-based simulations on a computer through the use of graphical processes instead of text-based programming, including a limitation directed to an executable process to add a behavior to an instance of an object without changing the object definition, i.e., without affecting objects of the same type.

Based in part on the focus of the patent’s specification, the Federal Circuit agreed with the district court that the claims as a whole were directed to “the decades-old computer programming practice of substituting text-based coding with graphical processing,” which was an ineligible abstract idea under step one of the Supreme Court’s Alice inquiry. Considering the “executable process” limitation under Alice step two, the Federal Circuit found that this was a well-known practice distinguished only by the use of graphics instead of programming. Because the limitation described only the claimed invention’s use of the ineligible concept to which it was directed, the Court held that it could not supply an inventive concept to render the invention significantly more than that abstract idea. 

The Federal Circuit also affirmed the district court’s denial of patentee Simio’s motion for leave to amend its complaint after the dismissal ruling, agreeing with the district court that amendment would be futile. Specifically, Simio’s proposed amended allegations highlighted the improved speed and efficiency of the “executable process” limitation. The Court held that simply claiming the speed, efficiency, or improvement in user experience inherent with applying an abstract idea was insufficient to transform it into patent-eligible subject matter, and that allegations that the limitation improved the functioning of the computer itself were conclusory. Finally, although the issue was not reached by the district court, the Federal Circuit also affirmed on the independent ground that Simio had not shown good cause to amend its complaint after the district court’s deadline for doing so, which was agreed by the parties and entered after FlexSim had filed its motion to dismiss and before Simio had filed its opposition.

A copy of the opinion can be found here.

By: Jason Wrubleski

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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