Patent Case Summaries August 26, 2020

Patent Case Summaries | Week Ending August 21, 2020

A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

Security People, Inc. v. Iancu, No. 2019-2118 (Fed. Cir. (N.D. Cal.) Aug. 20, 2020). Opinion by Hughes, joined by Lourie and Wallach.

Security People filed suit in district court challenging the constitutionality of the cancellation of its patent in an IPR proceeding. The district court dismissed the suit for lack of subject matter jurisdiction. The district court ruled that under 35 U.S.C. § 141(c), an IPR final written decision may be reviewed “only” in the Federal Circuit. Therefore, Security People should have asserted its constitutional challenge on direct review of the IPR final written decision. Security People appealed.

The Federal Circuit affirmed, ruling that Security People’s arguments “misapply fundamental concepts of administrative law.” The Federal Circuit explained that it “can meaningfully address constitutional questions on appeal,” and “the presence of disputed factual questions does not change that calculus.” Also, Security People’s constitutional challenge did not need to await an affirmance of the Board’s final written decision and the issuance of a certificate canceling the patent. “The PTO’s decision-making process in an IPR is complete after issuance of the final written decision (or, if parties move for reconsideration, after the Board issues its decision on reconsideration).” Additionally, both the text of § 141(c) and the “structure of the statutory scheme” reveal “congressional intent to preclude district court review of IPR decisions.”

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Sowinski v. California Air Resources Board, No. 2019-1558 (Fed. Cir. (N.D. Cal.) Aug. 21, 2020). Opinion by Newman, joined by Lourie and Schall.

In a first lawsuit, Sowinski sued the California Air Resources Board (CARB) alleging that California’s Cap-and-Trade Program auctions infringed his patent. CARB filed several motions to dismiss. Sowinski did not file a response, and so the district court dismissed the complaint with prejudice citing a local rule that the failure to respond may be deemed consent to the granting of the motion. Sowinski appealed, and the Federal Circuit affirmed.

Sowinski then filed a second lawsuit against CARB, asserting the same counts as in the first lawsuit. The district court dismissed the complaint on the ground of res judicata. Sowinski filed this appeal.

On appeal, Sowinski argued that the merits of patent infringement were not adjudicated in the first lawsuit because the action was dismissed based on his non-compliance with the district court’s local rule. He also argued that preclusion cannot apply because he is seeking damages only for the period after the conclusion of the first litigation.

The Federal Circuit ruled that the district court properly applied res judicata. Sowinski’s “failure to respond to the motions to dismiss was treated as a judgment on the merits,” and the second lawsuit did not allege any different facts. Also, “although Dr. Sowinksi stresses the inequity that he did not obtain resolution of the question of infringement, CARB points out that he had the opportunity to do so.” The Federal Circuit thus affirmed, ruling that the district court acted within its discretion and in accordance with law.

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