Authentication of Prior Art in an IPR Does Not Require Testimony
In Valve Corporation v. Ironburg Inventions Ltd.,Appeal No. 20-1315, the Federal Circuit held that for purposes of authenticating a prior art reference in IPR proceedings, the Board had an obligation to compare the reference to nearly identical copies in the prosecution histories of the challenged patents.
Valve Corporation petitioned for inter partes review of two of Ironburg Inventions’ patents. The Patent Trial and Appeal Board instituted review but held certain claims in both patents not unpatentable. The Board did not consider Valve’s arguments for the obviousness of these claims because it held that a copy of an article Valve relied upon as a prior art reference had not been authenticated. Valve had asked the Board to authenticate the reference by comparing it to different copies of the article in the prosecution histories of the challenged patents, but the Board had declined.
On appeal, the Federal Circuit reversed the Board’s determination that the article had not been properly authenticated. The Federal Circuit held that there was no requirement to provide testimony that the article asserted in the IPRs was identical to the copies in the prosecution histories. It explained that Federal Rule of Evidence 901(b)(3) permits the trier of fact—here, the Board—to compare an exhibit to an authenticated specimen. After noting that such comparison is done routinely and would not have been burdensome for the Board, the Federal Circuit held that the Board had an obligation to make that comparison. The Federal Circuit then found that the copy of the article asserted in the IPRs was substantively the same as the copies in the prosecution histories of the challenged patents and therefore authenticated.
The Federal Circuit vacated the Board’s finding of unpatentability of the relevant claims and remanded the case for the Board to consider Valve’s obviousness arguments relying on the article.
“All the Expenses” Does Not Mean All: PTO Denied Its Expert Witness Fees
In Hyatt v. Hirshfeld, Appeal No. 20-2321, the Federal Circuit held that the phrase “all the expenses of the proceedings” in 35 U.S.C. § 145 does not invoke expert-witness fees with the clarity required to overcome the American Rule’s presumption against fee-shifting.
Gilbert Hyatt sued the PTO in district court pursuant to 35 U.S.C. § 145, seeking issuance of several patents. At the end of the proceedings, the PTO sought expert-witness fees under § 145’s “[a]ll of the expenses of the proceedings” provision. The district court denied the PTO’s request and the PTO appealed. The Federal Circuit affirmed the district court’s denial of expert fees, explaining that the American Rule’s presumption requires litigants to pay their own fees unless a statute or contract provides otherwise. To overcome this presumption a statute must provide a sufficiently “specific and explicit” indication of its intent to overcome the presumption against fee-shifting. The Federal Circuit held that § 145’s “all the expenses” language did not specifically and explicitly invoke expert-witness fees, and therefore did not meet the high standard needed to overcome the American Rule’s presumption. The Federal Circuit was unpersuaded by the PTO’s arguments that district courts routinely awarded expert witness fees under § 145, and that other statutes using the term “expenses” were interpreted to include expert witness fees. The Federal Circuit also rejected the PTO’s argument that denying expert-witness fees could increase the cost of patent applications, explaining that the patent system’s general approach of assigning applicants their own costs did not overcome the American Rule’s presumption. Instead, the Federal Circuit held the Supreme Court’s logic in Peter v. NantKwest, which specifically addressed fee-shifting under § 145, also applied to expert-witness fees. Thus, the PTO was not entitled to reimbursement of its expert witness fees.
Lack of Specificity in the Specification Creates Patent Eligibility Issues
In Universal Secure Registry LLC v. Apple Inc., Appeal No. 20-2044, the Federal Circuit held that a patentee’s reference to existing known methods and techniques in a specification, without providing technical details or unexpected results, may present patentable subject matter vulnerabilities during litigation.
Universal Secure Registry LLC (“USR”) filed suit against Apple and Visa alleging infringement of all claims of 4 USR patents. In response, Apple and Visa alleged that the claims should be dismissed based on Section 101. USR’s 4 patents were directed to securing electronic payment transactions. The district court found that all of them claimed patent-ineligible subject matter. USR appealed to the Federal Circuit. In making the Alice 2-step inquiry for each patent, the Federal Circuit concluded that each one failed both steps.
In its analysis, the Federal Circuit cited a line of cases involving authentication technology and noted, regarding user authentication, that “patent eligibility often turns on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself.” The court stated that generic combinations of known techniques with expected additive increases in functionality were generally insufficient to overcome Alice-based arguments.
According to the court, USR’s first patent had claims “directed to a method for enabling a transaction between a user and a merchant,” and thus failed Alice step 1. As for step 2, the court found that the specification acknowledged that the key step of generating time-varying codes for authentication is “conventional and long-standing” – with the patent citing use of commercially available authentication cards from security vendors that utilize a similar authentication scheme.
USR’s second patent had similar deficiencies. The court found that the invention was directed to the abstract idea of collecting and examining data to authenticate the user’s identity, and that the claims were a collection of “conventional actions in a generic way.” The court determined that there was no inventive concept sufficient to satisfy Alice step 2, since the patent merely suggested the combination of known security techniques that did not achieve more than the expected sum of the security provided by each technique. The specification similarly cited known security techniques such as commercially available authentication cards and bar codes found on checks.
Likewise, USR’s third and fourth patents were found to be directed to the abstract idea of “multi-factor authentication of a user’s identity using two devices to enable a transaction.” For both patents, the court reasoned that the claims “lacked specificity” in providing a technical solution to existing authentication or security applications. For one of the patents, the court reasoned that “no description of a specific technical solution by which the biometric information is generated, or by which the authentication information is transmitted,” was sufficient to render the claims abstract under Alice. While for the other patent, the claims were likewise abstract for failing to disclose specific technical improvements, and that “the claimed invention merely combines conventional authentication techniques… to achieve an expected cumulative higher degree of authentication integrity.”