Redundant Ground in an IPR Was Not Outside the Instituted Grounds
In CRFD Research, Inc. v. Matal, Appeal No. 2016-2198, the Federal Circuit held that the Board erred in performing its obviousness analysis when determining whether a single prior art reference rendered the claims at issue obvious.
CRFD Research, Inc., the patent owner in several inter partes reviews, owned a patent directed to a method of transferring a software-based session from a first device to a second device by conducting a session on the first device, specifying the second device, discontinuing the session on the first device, transmitting a session history to the second device, and resuming the session on the second device. In a consolidated appeal, the Federal Circuit first addressed whether the Board erred in determining that a prior art reference anticipated the claims which required “specifying a second device.” The Federal Circuit noted that the phrase as used in the claims was a broad limitation and did not restrict the “specification” portion of the claims to a specific user or device, as admitted by the patent owner. Taking action on a second device to resume a session, as taught in the prior art disclosure, was sufficient to cause transmitting of the information to a second device, which would first require “specifying” the second device. Therefore, the prior art anticipated the claims.
The Federal Circuit also reviewed the Board’s finding that the patent claims would not have been obvious on the grounds on which the Board instituted review. In its petition for inter partes review, the petitioner asserted obviousness on several grounds, including one based on a single reference and another based on that reference in combination with a second reference. The petitioner acknowledged that the primary reference did not teach a particular limitation recited in the challenged claims. But the petitioner argued that the claims would have been obvious over the primary reference alone, and alternatively that they would have been obvious over the combination of the primary reference with a second reference that expressly taught the disputed limitation. The Board instituted the inter partes review on the combination ground and dismissed the single-reference ground as redundant. The Board ultimately found that the second reference did not teach the missing limitation and therefore held that the claims were patentable. The Board expressly barred the petitioner from presenting the single-reference obviousness argument because the argument was outside the instituted grounds. The Federal Circuit condemned the Board’s approach, writing: “To bar [the petitioner] from pressing an argument it raised in a ground the Board found ‘redundant’ and that it expressly incorporated into other proposed grounds of unpatentability on which the Board instituted would not only unfairly prejudice [the petitioner], but would also raise questions about the propriety of the Board’s redundancy decision.” The Federal Circuit ultimately concluded the claims would have been obvious—ostensibly over the primary reference alone—and reversed the Board’s decision with respect to this issue.
Patentees Bear the Burden of Proving Compliance with § 287(a)
In Arctic Cat Inc. v. Bombardier Recreational Products Inc., Appeal No. 2017-1475, the Federal Circuit held that, in challenging compliance with the marking requirement of § 287(a), an accused infringer need only meet a “low bar” burden of production, at which point the burden to show that the identified products do not practice the patented invention shifts to the patentee.
Arctic Cat sued Bombardier for infringement of patents which disclosed a thrust steering system for a personal watercraft propelled by a jet stream. At trial, the jury found Bombardier infringed the patents asserted by Arctic Cat. Bombardier appealed a denied motion for judgment as a matter of law, arguing that Arctic Cat failed to comply with the marking requirement of § 287(a) because its sole licensee Honda had not marked allegedly patented products. In Arctic Cat’s license agreement with Honda, Arctic Cat explicitly stated that Honda “shall have no obligation or requirement to mark” the licensed products. Thus, if the licensed products were covered by the patent, Arctic Cat’s damages would be limited due to its failure to mark the patented products as required by § 287(a). The district court held that the defendant had both the burden of production and the burden of proof with respect to showing compliance with the marking statute.
The Federal Circuit disagreed, explaining that the burden of proving compliance with the marking statute remains on the patentee at all times. An alleged infringer who challenges compliance with § 287(a) bears an initial “low bar” burden of production to articulate which products it believes to be unmarked products. Once this burden is met, the patentee must prove that the identified products do not practice the patented invention. Because Arctic Cat had not been provided with a meaningful opportunity to show why Honda’s products were not covered by the patents, the Federal Circuit vacated and remanded the issue to the district court.
Party Liable for Attorney’s Fees for Failing to Reassess Its Case in View of New Controlling Law
In Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., Appeal No. 2016-2442, the Federal Circuit held that even if a patentee’s initial complaint was reasonable, the patentee can be liable for attorney’s fees under 35 U.S.C. § 285 if it does not reassess the merits of its case in view of new controlling law.
Inventor Holdings (IH) sued Bed Bath & Beyond (BBB) for patent infringement. In December 2013, BBB moved to dismiss the case, alleging invalidity of the asserted claims under § 101. The district court denied BBB’s motions. In June 2014, the Supreme Court decided Alice, which altered the landscape of § 101 law. In February 2015, BBB again moved to dismiss the suit, alleging the asserted claims were invalid under § 101 in view of the new Alice decision. The district court granted BBB’s motion to dismiss, the Federal Circuit affirmed that decision without opinion, and thereafter, the district court found the case was “exceptional” under § 285, awarding attorney’s fees incurred after Alice. IH appealed.
The Federal Circuit affirmed the district court’s award of attorney’s fees, holding that the contested claims were not “anywhere near the margins of patent-eligibility” under Alice. IH asserted its actions were reasonable because Alice was not a change in the law and IH had relied on the district court’s denial of the pre-Alice § 101 motions. The Federal Circuit rejected those arguments because “it was IH’s responsibility to reassess its case in view of new controlling law.” The Federal Circuit thus concluded that “the district court acted within the scope of its discretion in finding this case to be exceptional based on the weakness of IH’s § 101 arguments and the need to deter similarly weak arguments in the future.” The Federal Circuit also affirmed the award of attorney’s fees spent on appeal because the district court had authority to award fees for “the entire case, including the § 101 appeal.”