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Federal Circuit Review | February 2016

| Irfan Lateef

Federal Circuit Upholds Grant of Summary Judgment Under Section 101 for Claims Directed to Anonymous Loan Shopping

InMortgage Grader, Inc. v. First Choice Loan Services Inc., Appeal No. 2015-1415, the Federal Circuit affirmed a district court’s summary judgment ruling that claims directed to anonymous loan shopping were invalid under 35 U.S.C. § 101.

At the district court level, plaintiff Mortgage Grader moved to strike defendants’ § 101 defense as untimely because the defense was not asserted in their initial invalidity contentions as required by the court’s standing patent rules. The district court denied the motion to strike, finding that the defense was properly asserted after the Supreme Court’s decision in Alice, which was a substantial change in law. The Federal Circuit upheld this decision under the abuse of discretion standard.

The Federal Circuit also held that the district court did not err in granting summary judgment to defendants under § 101. The Federal Circuit stated that the district court correctly applied the two-step framework set out in Mayo and Alice. First, the Federal Circuit determined that the asserted claims were directed to the abstract idea of “anonymous loan shopping” and that the series of steps covered by the claims “could all be performed by humans without a computer.” Second, the Court determined that the claims lacked an “inventive concept” because the claims only recite a method of using this abstract idea using generic computer components.


Same PTAB Panel Can Begin and End IPR Reviews

In Ethicon Endo-Surgery, Inc. v. Covidien LP, Appeal No. 2014-1771, the Federal Circuit upheld the USPTO’s practice of having the same PTAB panel institute and issue the final decision in an IPR.

Covidien petitioned for IPR of an Ethicon patent. A PTAB panel granted the petition, and later that same PTAB panel found all claims of the Ethicon patent obvious in view of the prior art. Ethicon appealed, arguing that under the AIA, separate panels must institute an IPR and issue the IPR’s final decision. Ethicon also argued that because the PTAB is initially exposed to a limited record it may prejudge the case before seeing the full record. This allegedly raises “serious due process concerns.”

The Federal Circuit held that where no other issues of procedural fairness are alleged, the USPTO’s assignment of a single panel to both institute and issue a final decision in an IPR does not violate due process. The Federal Circuit also determined that nothing in the structure or legislative history of the AIA reflects a congressional intent for separate PTAB panels to institute and issue the final decision for an IPR. On the merits, the Federal Circuit affirmed the PTAB’s finding that all claims of Ethicon’s challenged patent were obvious in view of the prior art.

Judge Newman dissented, concluding that the AIA requires that the PTO Director make the institution decision and the PTAB issue the final decision.


Federal Circuit Upholds a District Court’s Claim Construction and Grant of Summary Judgment of Non-Infringement and No Invalidity for Indefiniteness

In Akzo Nobel Coatings, Inc. v. Dow Chemical Co., Appeal Nos. 2013-1331, -1389, Akzo sued Dow Chemical for infringing a patent related to extruding material at high pressure. After a combined claim construction and early summary judgment hearing, the district court granted Dow’s motion for summary judgment of non-infringement both literally and under the doctrine of equivalents. Akzo appealed the district court’s claim construction and summary judgment rulings. Dow Chemical cross-appealed the district court’s conclusion that the asserted claims are not invalid for indefiniteness.

The claims at issue require a “pressurized collection vessel.” Akzo argued that the district court’s construction of this term improperly required material to accumulate in the vessel. The Federal Circuit disagreed, noting that accumulation is required to give meaning to the claim term “collection” and to remain consistent with the examples provided in the specification.

Regarding infringement, Akzo’s expert declaration and other proffered evidence did not explain how material accumulated in the vessel of the accused products, as the court’s construction required. Thus, the Federal Circuit found Akzo had failed to raise a genuine issue of material fact as to whether the accused product contained a “pressurized collection vessel” or performed the same function as the asserted claims in substantially the same way. Accordingly, the Federal Circuit affirmed the district court’s summary judgment rulings of no direct infringement and no infringement under the doctrine of equivalents.

Regarding Dow’s cross-appeal, the Federal Circuit further affirmed the district court’s holding that the claims were not indefinite, finding that the district court did not clearly err in relying on an expert declaration that one of skill in the art would interpret a limitation requiring “viscosity below 10 Pa.s” to be measured at room temperature in the absence of a specified temperature.


Federal Circuit Dismisses an Appeal of an Inter Partes Reexamination for Lack of Standing Where the Appellant Failed to Establish that it was the Successor-in-Interest to the Original Petitioner

In Agilent Technologies, Inc. v. Waters Technologies Corp., Appeal No. 2015-1280, the Federal Circuit dismissed Agilent’s appeal of an inter partes reexamination for lack of standing.

Waters sued Aurora SFC Systems, Inc. for patent infringement. Aurora filed an inter partes reexamination request citing new prior art. Shortly thereafter, Agilent acquired “substantially all” of Aurora’s assets, but did not disclose this to the PTO. Approximately a month after the asset purchase the examiner issued its Action Closing Prosecution and rejected all claims over the new prior art. Waters filed its response, and Aurora submitted third-party comments. The examiner then issued a Right of Appeal Notice rejecting all remaining claims of the patent. Waters filed a notice of appeal to the Board and Aurora filed a cross-appeal. After filing the cross-appeal, Aurora filed a request to change the real party in interest from Aurora to Agilent, but Aurora did not withdraw its counsel from the reexamination proceeding. The Board reversed all of the examiner’s claim rejections. The Board listed Aurora as the third-party requester in the caption of the decision.

Agilent appealed the Board’s decision. Waters moved to dismiss the appeal, arguing that Agilent was not a third-party requestor under 35 U.S.C. § 315(b) and therefore lacked standing to appeal. Agilent argued that it qualified as a third-party requester because it was Aurora’s privy and successor-in-interest.

The Federal Circuit held that privies do not have standing to appeal reexamination decisions because privies are not explicitly mentioned in 35 U.S.C. § 141 or 35 U.S.C. § 315(b), whereas other sections of the patent laws specifically reference privies. The court then declined to address whether a successor-in-interest qualifies as a third-party requestor because Agilent did not prove that it was in fact Aurora’s successor-in-interest. The Federal Circuit reasoned that Aurora had continued to participate in the reexamination after its assets were acquired by Agilent and that Aurora was still a party to the related litigation. The Federal Circuit also pointed out that, in the litigation, Aurora had opposed Waters’ motion to amend its complaint to add Agilent as a party. Because Aurora was still a party to the litigation, the Federal Circuit held that Agilent had not properly “stepped into the shoes of Aurora” to be deemed a successor-in-interest.