Extracted from Law360
Continuation practice is as popular as ever at the U.S. Patent and Trademark Office. This is due, at least in part, to the potential for patent challenges before the Patent Trial and Appeal Board.
This is often seen as an advantage to the patent owner, permitting flexibility with a future, perhaps narrower claim scope that can be used to combat the negative consequences of a successful post-grant review or inter partes review, and it often presents an easier avenue for modifying claim scope than amendments at the PTAB.
The amendment procedures of the PTAB are notoriously unsuccessful. Recently, the PTAB reviewed the success of motion to amend proceedings and found that from Oct. 1, 2012 through March 31, 2020:
The Board granted or granted-in-part and denied-in-part an MTA [motion to amend] in 46 of the 335 trials (14%) and denied an MTA [motion to amend] in 289 of the 335 trials (86%).[1]
Rather than attempt to amend at the PTAB and risk the high likelihood that such a motion will be denied, the patent owner that has a live application at the USPTO can simply file a continuation application, with the goal of obtaining allowance of new claims that include limitations different in scope from the claims subject to the IPR.
This provides the applicant the opportunity to submit multiple different amendments and submissions to the USPTO, as is often the case in prosecution before the USPTO, in order to get new, narrower claims, such that regardless of the outcome of the IPR, the patent owner can argue that the new patent is still viable.
As a result, it is often the case that PGR and IPR proceedings are initiated against patents with family members that are still pending at the USPTO, which leads to the inevitable question: How will district courts assessing new patents weigh a decision by the PTAB rejecting the claims of a related patent?
IPRs and Issue Preclusion
In recent years, the impact of IPR decisions on district court proceedings has been a topic of increasing importance, with many different issues arising at the intersection of the PTAB and the federal judiciary. As a fundamental matter, courts have struggled to decide whether IPR final decisions preclude district court proceedings at all.
For example, in MaxLinear Inc. v. CF CRESPE LLC,[2] the U.S. Court of Appeals for the Federal Circuit held that issue preclusion applied when the same claims of the same patent were found to be invalid in a related IPR. In Papst Licensing GmbH & Co. KG v. Samsung Electronics Co.,[3] ruling on a motion for judgment as a matter of law, the U.S. District Court for the Eastern District of Texas held that issue preclusion due to an IPR did not apply because of the differing standards of proof between the PTAB and district court.
So the fundamental question of whether issue preclusion may apply at all must still be resolved. But assuming that in some instances it may apply, as found by the court in MaxLinear, a related question also remains: How will U.S. district courts address the claims of later-issued patents that are related to claims found to be invalid by the PTAB?
Perhaps even more importantly, what steps can a patent challenger take to increase the odds that the claims of a continuation application will be rejected by a U.S. district court in light of a previously successful IPR or PGR? Conversely, what can a patent owner do to limit a patent challenger's ability to attack its continuation claims?
A recent decision of the U.S. District Court for the Northern District of California provides answers to these questions in at least one factual context, serving as practical guidance to patent owners and patent challengers wrestling with similar scenarios.
Chrimar Systems v. Ruckus Wireless
The complaint in Chrimar Systems Inc. v. Ruckus Wireless Inc.[4] was originally filed on July 1, 2015, in the Eastern District of Texas and then transferred to the Northern District of California, which stayed the litigation on Sept. 26, 2016, pending the outcome of an IPR filed by the defendant. On April 26, 2018, the PTAB found that claims 73 and 145 of the asserted patent were invalid based on prior art references.[5]
Subsequently, the Federal Circuit upheld the PTAB's decision. Before the invalidation, an ex parte reexamination was filed by a third party, and claims 73 and 145 were amended. On Dec. 16, 2019, the district court lifted the stay and the plaintiff asserted infringement of the asserted patent's amended claim 145.
Accordingly, the defendant, Ruckus, filed a motion for summary judgment, asserting that the PTAB's final invalidity decision, affirmed by the Federal Circuit, rendered amended claim 145 invalid and precluded relitigation of amended claim 145.
For ease of comparison, the original and amended claims are reproduced below.
Original Claim 145
The BaseT Ethernet system according to any one of claims 82-91, 94-100, 101-103, 104-107, 108-121, 127-132, 134-139, or 140-144 wherein the piece of BaseT Ethernet terminal equipment is a powered-off piece of BaseT Ethernet equipment.
Amended Claim 145
The BaseT Ethernet system according to any one of claims 73, 82-91, 94-100, 104-107, 108-121, 127-132, 134-139, or 140-144 wherein the piece of BaseT Ethernet terminal equipment is a powered-off piece of BaseT Ethernet equipment.
Amended claim 145 depended from a different string of claims, one of which was amended claim 73, which was amended to add the additional limitation that "the piece of central network equipment is a BaseT Ethernet hub."
Drawing on U.S. Court of Appeals for the Ninth Circuit precedent, the district court evaluated whether issue preclusion applies based on the following factors: (1) final judgment on the merits, (2) privity and (3) identicality of issues.
The court first determined that parties in the instant suit and the IPR satisfied the privity requirement. Because the Federal Circuit had affirmed the PTAB's decision, the district court found that final judgment on the merits was satisfied as well.
The court noted that, as a procedural matter, the Northern District of California in Roche Palo Alto LLC v. Apotex Inc.[6] held that the relevant issue was the patent validity itself and then turned to substantive Federal Circuit precedent to determine whether there was an identicality of issues in the present case.[7]
The defendants argued that the IPR and the instant suit involved identical issues, and therefore preclusion should apply. Chrimar, on the other hand, asserted that the IPR did not reach the controversy in the instant suit because amended claim 145 was not at issue in the IPR proceeding.
The court did not find the plaintiff's argument persuasive, noting that the Federal Circuit:
does not limit [issue preclusion/] collateral estoppel to patent claims that are identical. Rather, it is the identity of the issues that were litigated that determines whether collateral estoppel should apply. If the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity, collateral estoppel applies.[8]
The court noted that unadjudicated amended claim 145 and the adjudicated claim 145 had two differences:
1. Amended claim 145 does not depend from claims 101-103.
2. Amended claim 145 does depend from amended claim 73.
The court first found that "[t]he fact that amended claim 145 is no longer depended upon claims 101-103 does not materially alter the subject matter of amended claim 145."[9]
In so holding, the court pointed to the requirements of Title 35 of the U.S. Code, Section 103, that a patent claim is invalid for obviousness:
if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.
As an initial matter, the court found that the subject matter as a whole of amended claim 145 and original claim 145 was not materially different — both relate to BaseT Ethernet systems.
The court further found that the limitation added to amended claim 145 did not alter the question of invalidity because the PTAB found that the prior art at issue, Hunter, taught the limitation that was added to the amended claim. Therefore, because the subject matter as a whole was not materially different between the two claims, and the plaintiff failed to demonstrate how the invalidity analysis was altered by the amended claim, the court held that issue preclusion applied.
Analysis — Patent Owners and Patent Challengers
While Chrimar Systems is not dispositive of all claims that arise from a family of patents having claims that were previously found to be not patentable by the PTAB, the Northern District of California's opinion signals that district courts can consider prior PTAB decisions for related patents.
At least for the Northern District of California, the fundamental question is whether there are any actual differences between the scope of the claims, and summary judgment is a possibility if the Federal Circuit has affirmed the PTAB's decision and the new claims at hand only include additional limitations that were also addressed by the PTAB.
Considerations for the Patent Challenger
It is important for the patent challenger, typically the defendant in a district court proceeding, to draw as many parallels as possible between the previously invalidated claim and the newly amended claim that has emerged from the patent office.
Even if the claim is different from those that were previously adjudicated by the PTAB, if the patent challenger can demonstrate that all the limitations have been addressed, then there is an available argument that this newly allowed claim can also be invalidated, and perhaps even more importantly, can be dealt with at the summary judgment stage. Patent challengers should continue to monitor district court jurisprudence this area for any expansion of the scope of preclusion.
Given the holding in Chrimar Systems, there may be additional opportunities to attack newly allowed claims that are different from those previously addressed by the PTAB. For example, depending on the particular facts, a patent challenger could seek to invalidate a claim that is amended to include limitations from the admitted prior art or limitations that are not directed to the fundamental elements of the invention.
Considerations for the Patent Owner
Merely arguing that the PTAB has not, as a technical matter, considered a newly amended claim may be insufficient to survive summary judgment, especially when there are no substantive differences between the amended and considered claims.
Accordingly, if a patent owner has the ability to amend a claim either through a pending application or during the course of an ex parte reexamination, Chrimar teaches that the patent owner should look to incorporate limitations that have not been addressed by the IPR in order to overcome the materially identical hurdle.
This will permit the patent owner to oppose a motion for summary judgment by arguing how the additional limitations of an amended claim would change the invalidity analysis and previous finding of invalidity.
Ultimately, Chrimar underscores the benefits of a robust continuation portfolio and arguably counsels in favor of a diverse claim set that adds different elements from the specification that are meaningfully distinct from prior applications.
Footnotes:
[1] Patent Trial and Appeal Board Motion to Amend Study: Installment 6: Update through March 31, 2020, at 3, last visited Aug. 5, 2020, https://www.uspto.gov/sites/default/files/documents/20200709-PTAB-PTAB%20MTA%20Study%20Installment%206%20%20%2820200629%29-IQ_813950-Final.pdf.
[2] MaxLinear Inc. v. CF CRESPE LLC , 880 F.3d 1373, 1376-77 (Fed. Cir. 2018).
[3] Papst Licensing GmbH & Co., KG v. Samsung Electronics. Co. , 403 F. Supp. 3d 572, 602 (E.D. Tex. 2019).
[4] Chrimar Systems Inc., et al. v. Ruckuss Wireless, Inc. , No. 16-CV-00186-SI, Dkt. Nos. 144, 146, Order Granting Defendants' Motions for Summary Judgment (N.D. Cal. July 31, 2020).
[5] Hunter et al., PCT Publication No. WO96/23377; Bulan et al., U.S. Patent No. 5,089,927.
[6] Roche Palo Alto LLC v. Apotex, Inc. , 526. F. Supp. 2d 985, 994 (N.D. Cal. 2007), aff'd, 531 F.3d 1372 (Fed. Cir. 2008).
[7] Chrimar Systems, No. 16-CV-00186-SI at 7.
[8] Ohio Willow Wood Co. v. Alps S., LLC , 735 F.3d 1333, 1342 (citing Bourns, Inc. v. United States , 537 F.2d 486, 491) 1976); Westwood Chem., Inc. v. U.S., 525 F.2d 1367, 1372 (1975)).
[9] Chrimar Systems, No. 16-CV-00186-SI at 8.