Patent Case Summaries March 21, 2023

Patent Case Summaries | Week Ending March 17, 2023

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.

Apple Inc., et al. v. Vidal, No. 2022-1249 (Fed. Cir. (N.D. Cal.) Mar. 13, 2023). Opinion by Taranto, joined by Lourie and Stoll.

Apple and four other companies brought suit against the Director of the Patent and Trademark Office under the Administrative Procedure Act (APA). The plaintiffs challenged instructions the Director had issued to the Patent Trial and Appeal Board regarding how to exercise discretion in whether to institute an IPR. The instructions at issue included the Board’s precedential decisions in NHK and Fintiv, both of which addressed “the role, in the decision whether to institute an IPR, of the pendency of district-court infringement litigation involving the same patents.”

The district court dismissed the action on the ground that the IPR provisions of the patent statute made the Director’s instructions unreviewable. The court concluded that the plaintiffs had standing but their challenges involved Director actions that are not reviewable.

The plaintiffs appealed, asserting three arguments. First, the plaintiffs urged that the Director’s instructions violate the IPR statute. Second, they argued that the instructions are arbitrary and capricious because the instructions “are not reasonable and reasonably explained.” Third, they argued that the Director was required to, but did not, “promulgate the institution instructions through notice-and-comment rulemaking procedures.”

Addressing the first two arguments together, the Federal Circuit affirmed their dismissal. The court explained that both arguments “have institution as their direct, immediate, express subject.” And the Federal Circuit concluded “that the IPR statute’s preclusion of review, as now settled by the Supreme Court based on statutory text, legislative history, and structure, must encompass preclusion of review of the content-focused challenges to the instructions at issue here.”

Addressing the plaintiffs’ third argument, the Federal Circuit reversed the dismissal, ruling that the argument may be pressed under the APA and “at least Apple has standing to press it.” Because this argument concerned the rulemaking process, the APA did not preclude review. The issue is reviewable because “whether notice-and-comment rulemaking procedures had to be employed for an agency action presents a matter ‘quite apart from the matter of substantive reviewability’ of the action for being contrary to statute or arbitrary and capricious.” Thus, the Federal Circuit remanded for consideration of the plaintiff’s third argument on the merits.

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AlterWAN, Inc. v., Inc., et al., No. 2022-1349 (Fed. Cir. (D. Del.) Mar. 13, 2023). Opinion by Dyk, joined by Lourie and Stoll.

AlterWAN sued Amazon for infringement of two patents concerning improvements to implementing wide area networks over the Internet. After the district court construed two claim terms—“non-blocking bandwidth” and “cooperating service provider”—the parties entered into a stipulation of non-infringement. AlterWAN then appealed, challenging the district court’s constructions.

The Federal Circuit ruled that the parties’ stipulation “is ambiguous and therefore defective” because it did not provide “sufficient detail to allow us to resolve the claim construction issues presented on appeal.” Thus, the Federal Circuit vacated the judgment and remanded “for further proceedings to clarify the parties’ non-infringement positions, and to determine whether a stipulation of non-infringement is even possible in the circumstances of this case.”

The ambiguity in the stipulation included not identifying which claims were implicated by the district court’s judgment. And “more importantly,” it was unclear whether the judgment requires affirmance of both claim terms, and it was “also unclear whether affirmance requires the approval of all aspects of the construction” of one of the terms. The Federal Circuit continued: “At oral argument, it became apparent that the parties have significant disagreements as to the effect of the stipulation—disagreements that render it impossible for this court to review the judgment.”

In connection with the remand, the Federal Circuit thought it “useful and appropriate to clarify the meaning of the claim term non-blocking bandwidth in one respect.” The district court’s construction effectively required a system to provide bandwidth even when the Internet is inoperable. The Federal Circuit stated that this “is not a reasonable construction in light of the specification since it requires the impossible.” Thus, the court ruled that the term “does not require bandwidth when the Internet is down,” but did not otherwise opine on the term’s meaning.

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Intel Corp. v. PACT XPP Schweiz AG, No. 2022-1037 (Fed. Cir. (PTAB) Mar. 13, 2023). Opinion by Prost, joined by Newman and Hughes.

Intel petitioned for IPR of independent claim 4 and dependent claim 5 of a PACT patent directed to multiprocessor systems and how processors in those systems access data. During the IPR, PACT statutorily disclaimed claim 4. As for claim 5, the Patent Trial and Appeal Board issued a final written decision finding that Intel failed to show that the claim was unpatentable as obvious in light of two prior art references, “Kabemoto” and “Bauman.” Intel appealed.

On appeal, Intel argued that substantial evidence did not support the Board’s findings that the prior art failed to disclose a “segment-to-segment” claim limitation and that there was no motivation to combine the references. The Federal Circuit agreed with Intel on both issues.

First, the Federal Circuit observed that the Board had misinterpreted PACT’s arguments. PACT had not disputed that the combination of Kabemoto and Bauman taught each limitation of claim 4, including the segment-to-segment limitation. The court also determined that, in any event, “Bauman’s Figure 6 teaches—if not plainly illustrates—the segment-to-segment limitation of the claimed interconnect system.”

Second, the Federal Circuit ruled that the Board’s rejection of Intel’s “known-technique” rationale for a motivation to combine lacked substantial evidence. The court explained that “Kabemoto and Bauman address the same problem,” and “Bauman’s cache was a known way to address that problem,” which “is precisely the reason that there’s a motivation to combine under KSR and our precedent.” Here, “Intel never had to show that replacing Kabemoto’s secondary cache with Bauman’s secondary cache was an ‘improvement’ in a categorical sense.” “Intel just had to show that Bauman’s secondary cache was a ‘suitable option’ to replace Kabemoto’s secondary cache.” Intel did so, and the Board’s contrary finding was not supported by substantial evidence.

The Federal Circuit thus overturned the Board’s final written decision and remanded for the Board to address remaining issues pertinent to claim 5.

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