Federal Circuit Considers CBM Review Under Thryv on Remand from SCOTUS

On Tuesday, the U.S. Court of Appeals for the Federal Circuit (CAFC) in SIPCO, LLC v. Emerson Electric Co. affirmed a determination of the U.S. Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) that the claims at issue were obvious in view of the prior art in an appeal that was returned to the CAFC on remand from the U.S. Supreme Court. In particular, the CAFC concluded that, according to the recent Supreme Court decision in Thryv, Inc. v. Click-to-Call Technologies, LP, “§ 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 [covered business method] CBM review.” The CAFC also affirmed the PTAB’s determination that the claims at issue were obvious in view of the prior art.

To SCOTUS and Back

On September 25, 2019, the CAFC issued a decision reversing-in-part, vacating and remanding a decision of the PTAB that had found certain claims of U.S. Patent No. 8,908,842 (the ’842 patent) patent ineligible under 35 U.S.C. § 101 and unpatentable for obviousness in SIPCO LLC v. Emerson Electric.  In determining that the ’842 patent qualified for CBM review, the PTAB found that the patent was not excluded from review under the statutory “technological invention” exception.

The CAFC reversed the PTAB’s finding that the ’842 patent did not satisfy the second part of the regulation defining “technological invention.” In addition, the CAFC reversed the PTAB’s claim construction of certain terms and then found that the PTAB’s “misreading and mischaracterization” of the features of the claims caused it to incorrectly conclude that the claims did not provide a technical solution to a technical problem.

On January 30, 2020, Emerson filed a petition for a writ of certiorari in the Supreme Court, asking the Court to consider “[w]hether 35 U.S.C. [§] 324(e) permits review on appeal of the Director’s threshold determination, as part of the decision to institute CBM review, that the challenged patent qualifies as a CBM patent.” In June 2020, the Supreme Court granted the petition, vacated the CAFC’s opinion, and remanded “for further consideration in light of Thryv, Inc. v. Click-to-Call Technologies, LP.”

Federal Circuit Reasoning on Remand

On remand, the CAFC noted that the “Supreme Court’s decision in Thryv… makes clear that the threshold determination that SIPCO’s ’842 patent qualifies for CBM review is a decision that is non- appealable under 35 U.S.C. § 324(e)…[and the CAFC was] precluded from reviewing SIPCO’s challenge to that threshold determination.” The CAFC explained that, in Thryv, the Supreme Court held 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.” The CAFC further noted that covered business method patent review is subject to a “No Appeal” provision in 35 U.S.C. § 324(e), which recites that “[t]he determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable” and the determination that a patent qualifies for CBM review is expressly and exclusively tied to the decision to institute the proceeding. Thus, the CAFC concluded that, according to 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.”

Obviousness Analysis

In connection with its obviousness review, the CAFC considered SIPCO’s challenges to the Board’s obviousness ruling, which focused on the claim limitations relating to “low power transceiver,” “instruction data,” and “establishing a communication link.”  With respect to the term “low power transceiver,” the SIPCO argued that the PTAB should have construed the term to require “a device that transmits and receives signals having a limited transmission range.” The CAFC found that the PTAB’s determination that the claimed “low power transceiver” would have been obvious over the prior art regardless of whether “low power” restricts the transceiver to having limited transmission range was supported by substantial evidence even under SIPCO’s proposed construction.

With respect to the “instruction data” limitations SIPCO argued that the PTAB erred in construing the term as “items of information that allow[] a computer system to identify a function or an instruction to be performed,” rather than as “code identifying a function to be performed or identifying a status that triggers a function to be performed.” The CAFC noted that the claims recited “instruction data,” not instruction code and concluded that even if the CAFC accepted SIPCO’s claim construction, the PTAB’s was “supported by substantial evidence in finding that [the prior art’s] distress call and response packet contain ‘code identifying a function to be performed.’”

Turning to the construction of “establishing a communication link,” SIPCO argued that the PTAB should have construed it to mean “to set up a communication link that did not previously exist.” The CAFC agreed with the PTAB that the prior art taught a communications link through a new base station did not previously exist; therefore, “even under SIPCO’s construction, substantial evidence supports the [PTAB]’s finding that [the prior art] discloses ‘establishing a communication link’ as claimed.”

Thus, the CAFC affirmed the PTAB’s determination that the claims at issue were obvious in view of the prior art.