Federal Circuit Vacates PTAB Decision for Failure to Consider Ericsson Reply Brief

On Monday, August 27th, the Court of Appeals for the Federal Circuit issued a precedential opinion in Ericsson Inc. v. Intellectual Ventures I which vacated a previous decision by the Patent Trial and Appeal Board (PTAB) to uphold patent claims owned by Intellectual Ventures in light of an obviousness challenge from Ericsson. The Federal Circuit panel of Circuit Judges Jimmie Reyna, Richard Taranto and Raymond Chen determined that the PTAB had erred in upholding the challenged claims without considering arguments made by Ericsson in a reply brief, remanding the case to the PTAB for further proceedings.

At issue in this case is U.S. Patent No. 5602831, titled Optimizing Packet Size to Eliminate Effects of Reception Nulls. Issued in February 1997, it covers a method for transmitting a message packet to a receiver by identifying changes in signal drop-out characteristics which are associated with the receiver, encoding packets into packet blocks, transmitting each packet block to the receiver, and varying the number of packets encoded into the packet block according to the changes in signal drop-out characteristics. The resulting invention increases the reliability of wireless communication systems by minimizing the effects of burst errors, or nulls, by reducing the proportion of individual packets which are corrupted by nulls caused by multipath message transmission.

Intellectual Ventures asserted the ‘831 patent in a series of lawsuits filed in the District of Delaware in 2013. Although Ericsson was not a defendant named in any of those actions, the Swedish telecom firm petitioned the PTAB for two inter partes review (IPR) proceedings to challenge claims of the patent. The first petition was denied institution while the second resulted in a final written decision entered by the PTAB last December which found that Ericsson did not prove that challenged claims were not invalid as obvious in light of asserted prior art.

In instituting the IPR proceeding on the ‘831 patent, the PTAB relied on three pieces of prior art, two of which are relevant to this appeal. Those include:

  • U.S. Patent No. 4939731, entitled Data Transmission System With Automatic Repeat Request (“Reed”). Issued in July 1990, it covers a method in a high-frequency radio communication system which corrects errors in received data packets.
  • U.S. Patent No. 5425051, entitled Radio Frequency Communication Network Having Adaptive Parameters (“Mahany”). Issued in June 1995, it claims a radio frequency data communication system having spread spectrum capability for collecting and transmitting data to many portable transceiver units.

Upon institution, the PTAB construed certain terms of the ‘831 patent, including “interleaving portions of each of the packets together” and “common portions of each message packet are interleaved together,” under the broadest reasonable interpretation (BRI) standard. After the IPR was instituted, Intellectual Ventures filed a response in which it argued that claims of the ‘831 patent must be construed under the Phillips standard because the patent expired prior to the IPR proceeding. Ericsson didn’t dispute the proposed Phillips standard constructions from Intellectual Ventures and those constructions were accepted by the PTAB. Ericsson filed a reply brief where it argued that, even with the new claim constructions, that interleaving was known in the prior art, that Reed taught interleaving packets together and the combination of Reed and Mahany taught the “interleaving packets together” limitation.

In upholding the claims in the final written decision, the PTAB panel relied on the conclusion that Reed only taught one particular type of interleaving and not the interleaving of packets with other packets within a packet block. In reaching this decision, the PTAB rejected portions of Ericsson’s reply regarding what Ericsson argued was the insubstantial difference in the type of packet interleaving taught by Reed and the type covered by the ‘831 patent. The PTAB held that Ericsson did not have the ability in a reply brief to identify new prior art elements satisfying the claim elements.

In its decision, the Federal Circuit noted that the PTAB is entitled to strike arguments improperly raised in a reply brief under 37 CFR § 42.23(b). However, the appellate court disagreed that Ericsson raised a new theory in its reply brief and thus the Board erred in not considering those portions of the reply brief. “The Board’s error was parsing Ericsson’s arguments on reply with too fine of a filter,” the Federal Circuit found. Ericsson’s petition for IPR described how a person with ordinary skill in the art would be familiar with the concept of interleaving. The CAFC further found that the PTAB’s error was exacerbated by the fact that the new claim constructions proposed by Intellectual Ventures after institution gave rise to the significance of interleaving in the proceeding. In light of this, the Federal Circuit found that Ericsson deserved an opportunity to respond to the new construction.

“Our decision should not be viewed as changing or challenging the Board’s practice of limiting the scope of replies pursuant to its regulations,” the Federal Circuit added. Citing to the 2015 decision in Ariosa Diagnostics v. Verinata Health, the Federal Circuit reiterated that the PTAB has the ability to reject arguments raised in reply briefs which rely on previously unidentified portions of a prior art reference which wasn’t cited in the original petition. By contrast, Ericsson’s reply expanded upon an argument raised in the petition and didn’t raise a new rationale worthy of being excluded. On remand, the Federal Circuit ordered the PTAB to consider these arguments raised by Ericsson in its reply.


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