Vidal Says PTAB Got it Wrong on Denial of Volvo IPR Due to District Court Invalidation
“The Board’s reliance on Uniloc 2017 LLC v. Hulu, LLC is inappropriate because Uniloc concerned a proposed substitute claim, not an already-issued claim found invalid by a district court, Vidal said.”
United States Patent and Trademark Office (USPTO) Director Kathi Vidal issued a sua sponte Director Review decision on Tuesday explaining that the Patent Trial and Appeal Board’s (PTAB’s) reading of the inter partes review (IPR) statute was incorrect, and directing the Board to revisit a petition brought by Volvo Penta of the Americas, LLC and to analyze the Fintiv factors in view of a parallel district court proceeding.
The PTAB denied institution of several IPRs seeking to invalidate patents owned by Brunswick Corporation, due to a parallel district court decision that found the relevant claims of each patent ineligible under Section 101. As an example of one of the patents at issue, U.S. Patent No. 7727036-B1 is titled “System and Method for Controlling Movement of a Marine Vessel”.
The Board held that the statute says “only claims that are in effect may be annulled” and further found the Fintiv factor analysis was inapplicable under the circumstances of the petition. However, the PTAB still denied institution under its discretion to curb “inefficiency and gamesmanship.”
Vidal said the Board’s analysis relies on the determination that claim 1 of each patent is “finally adjudicated to be invalid,” despite a pending appeal to the U.S. Court of Appeals for the Federal Circuit. The Board’s reasoning was predicated on principles of collateral estoppel, said Vidal, but the collateral estoppel doctrine “does not speak to the appropriate interpretation of § 311(b),” she wrote. Furthermore, the Board’s reliance on Uniloc 2017 LLC v. Hulu, LLC is inappropriate because Uniloc concerned a proposed substitute claim, not an already-issued claim found invalid by a district court. Since the claims are subject to further review by the Federal Circuit, they are not “finally adjudicated,” said Vidal.
Vidal also disagreed with the PTAB’s determination that application of the Fintiv factors does not apply, as that analysis is limited to situations in which there is ongoing, parallel district court litigation and where no final judgment has been issued. Since the case is on appeal to the Federal Circuit, the litigation is ongoing and the Board must analyze the factors, said Vidal. She therefore ordered that the Board evaluate the application of Fintiv factors 1-5 and, if they favor exercising discretion to deny institution, Vidal reminded the Board that they must then apply the “Compelling Merits” standard articulated in her June 2022 memo, which explained in part that the PTAB “will not deny institution of an IPR or PGR under Fintiv (i) when a petition presents compelling evidence of unpatentability.”
If the PTAB institutes and upholds the district court’s invalidity ruling on claim 1 upon remand, it should then consider whether to continue or terminate the parallel IPR proceedings on the remaining claims based on precedent and guidance at the time, the decision concluded.
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Eileen McDermott
Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at […see more]
