SIPCO, LLC v. Emerson Electric Co., Appeal No. 2018-1635 (Fed. Cir. Nov. 17, 2020)

Our Case of the Week is one of two cases we revisit following further precedential decisions issued by the Federal Circuit this week (see our write-up of Network-1 Techs. below for the other). In this case, the Federal Circuit reconsidered its prior ruling on remand from the Supreme Court following its decision in Thryv, Inc. v. Click-to-Call Technologies, LP, 140 S. Ct. 1367 (2020). The Federal Circuit panel held that, following Thryv, it had no jurisdiction to decide whether a patent was a covered business method (CBM) patent subject to CBM review.

The appeal stems from a CBM review conducted by the PTAB. SIPCO asserted that its patent at issue was not a CBM patent, and was therefore not subject to CBM review. The PTAB disagreed, and instituted CBM review. In its final written decision, the PTAB held that claims 1 and 17 of the patent would have been obvious. On appeal, SIPCO asserted that its patent was not a CBM patent and therefore should not have been reviewed. In its prior decision, a panel of the Federal Circuit remanded to the PTAB for further consideration of whether the patent was a CBM patent. Our write-up of that appeal can be found here.

Emerson sought en banc review of the panel’s disposition of this issue, which was denied. According to Emerson, the PTAB’s determination that the patent was a CBM patent subject to review was not appealable, since it went to the issue of institution of the CBM review. Decisions whether to institute are subject to a “No Appeal” statute, similar to a counterpart statute governing IPRs. En banc review was denied. Emerson then petitioned for writ of certiorari to the Supreme Court. Following its decision in Thryv, the Supreme Court remanded to the Federal Circuit for further consideration in light of its decision in Thryv.

In cases where the petitioner was served with a patent infringement complaint more than one year prior to the petition date, 35 U.S.C. § 315(b) prohibits institution of inter partes review, and 35 U.S.C. § 314(d) holds that decisions whether to institute review are not subject to appeal. The Federal Circuit had previously held that, while institution decisions were not appealable, it could nonetheless review the PTAB’s application of Section 315(b) during the institution decision on appeal of a final written decision, at the end of the case. In Thryv, the Supreme Court reversed that precedent, holding that judicial review is not available “where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”

Thus, PTAB application of Section 315(b) is not reviewable on appeal. Our review of the Thryv case can be found here.

CBM reviews are subject to a similar “No Appeal” provision in 35 U.S.C. § 324(e). On remand, the Federal Circuit held that Thryv governed appellate reviewability of whether a patent is a CBM patent, subject to CBM review. The Court concluded: “Under Thryv, § 324(e) prohibits judicial review of SIPCO’s challenge because it is nothing more than a contention that the agency should have refused to institute CBM review.”

Having declined to reach the question of whether the patent was subject to CBM review, the Federal Circuit proceeded to the merits, revisiting three claim constructions central to the PTAB’s ultimate determination of obviousness. Upon finding no error in the PTAB’s decision, the Federal Circuit affirmed the claims at issue were obvious.

The opinion can be found here.

ALSO THIS WEEK 

Network-1 Technologies, Inc. v. Hewlett-Packard Company, Appeal Nos. 2018-2338, -2339, -2395, -2396 (Fed. Cir. Nov. 20, 2020)

A panel of the Court issued a modified opinion in this case, making a minor change in one paragraph to acknowledge an argument made by Network-1 that had not been acknowledged in the original panel opinion—though the Court declined to consider the issue. Our write-up of the original panel decision can be found here.

The opinion can be found here.

Vectura Ltd. v. GlaxoSmithKline LLC, Appeal No. 2020-1054 (Fed. Cir. Nov. 19, 2020)

In this case, the Federal Circuit affirmed a jury’s infringement and damages verdict concerning appellant GlaxoSmithKline’s use of a pharmaceutical patent directed to composite particles used in dry-powder inhalers to promote improved dispersion of active ingredient in the lungs. On infringement, the Court affirmed the district court’s claim construction of the patent’s “composite active particles” term as not limited to particles formed by the milling process disclosed in the patent, as references in the specification to that process being required were outweighed by references indicating it was only a preferred method, and during prosecution, the applicant’s distinction of particles formed by a different process was more reasonably read to distinguish the prior art particles based on their structure rather than on how they were formed. The Court also found the jury’s finding as to another limitation was supported by substantial evidence of experimental testing.

On damages, the Court found that the jury’s reasonable royalty award was supported by Vectura’s expert’s testimony utilizing the rate and base from an expired licensing agreement between the parties that covered the accused products and included a non-assert clause for the application that became the patent in suit. The Court also found that excessive remarks by Ventura’s counsel concerning GSK’s total sales of the accused products, while improper, were not so prejudicial as to warrant a new trial where some reference to those sales was required for the jury to determine a royalty base.

The opinion can be found here.

Whitewater West Industries, Ltd. v. Alleshouse, Appeal Nos. 2019-1852, -2323 (Fed. Cir. Nov. 19, 2020)

In this appeal from the District Court for the Southern District of California, the Court reversed the district court’s holding that Alleshouse’s employment agreement with Whitewater required Alleshouse to assign the patents at issue to Whitewater, and that, because of the assignment, Yeh was improperly named as an inventor on the patents. At issue was whether Alleshouse’s employment agreement with Whitewater, which purported to assign Alleshouse’s post-employment inventions to the Whitewater, regardless of whether Whitewater’s confidential information was used to conceive the invention, was valid and enforceable. The Court held that the terms of the employment agreement violated California law so the relevant provisions were invalid and unenforceable. Since Whitewater had no rights in the patents at issue, the Court held that Whitewater had no standing to challenge Yeh’s inventorship of the same. Accordingly, the Court reversed the district court’s holdings.

The opinion can be found here.