CAFC Weighs in Again on IPR Joinder Estoppel, Affirms PTAB Holding that Uniloc Patent Claims are Obvious

The U.S. Court of Appeals for the Federal Circuit (CAFC) ruled yesterday in Uniloc v. Facebook, Inc., WhatsApp, Inc. that the “no appeal” provision of 35 U.S.C. § 314 does not preclude the court from reviewing a Patent Trial and Appeal Board (PTAB) finding that a petitioner is not estopped from maintaining an IPR proceeding under the IPR estoppel provision of 35 U.S.C. § 315(e)(1). However, the court noted that its decision was based on the particular facts of this case, where “the alleged estoppel-triggering event occurred after institution.”

Proceedings and Joinder

Uniloc owns U.S. Patent No. 8,995,433, certain claims of which the PTAB found unpatentable as obvious, following challenges by several different parties, including Facebook, Apple and LG Electronics, Inc, in 2017. Facebook was joined to Apple’s IPR and the PTAB also instituted Facebook’s separate petitions for IPR, which were ultimately consolidated on final written decision. LG filed petitions identical to Facebook’s IPRs and asked to be joined to them, which request was granted.

The PTAB issued a final written decision upholding as patentable all challenged claims of the ‘433 patent in the Apple IPR in May 2018. Six days later, the PTAB issued a decision in Facebook’s IPR, dismissing it in part from the proceeding because, as a joined party to the Apple IPR, Facebook was estopped under § 315(e)(1) as to the claims challenged in the Apple IPR  (claims 1–6 and 8 of the ’433 patent). However, as to claim 7, the PTAB said that Facebook was not estopped from maintaining the IPR “because § 315(e)(1)’s estoppel provisions apply only to grounds that the petitioner raised or reasonably could have raised ‘with respect to that claim.’”

The PTAB allowed the Facebook IPR to proceed with LG as the challenger to all claims, limiting Facebook’s participation to issues concerning solely claim 7.

In its Final Written Decision on the Facebook/LG IPR, the Board found all of the challenged claims (1-12; 14-17; 25 and 26) unpatentable as obvious.

Uniloc sought rehearing, arguing that the proceeding should have been terminated once Facebook was deemed estopped because “[j]oined parties are privy to a petitioner.” Uniloc also argued that it was denied proper notice in violation of due process with respect to this IPR, because “[t]he Board sua sponte provided a definition of the term ‘attaches’ that was not advanced by” the parties or supported by the record.” The PTAB denied the rehearing requests and Uniloc appealed to the CAFC.

Arguments on Appeal

On appeal, Uniloc put forth two main arguments with respect to estoppel:

(1) the Board erred in finding that LG is not estopped from challenging claims 1–8 in view of its purported relationship with Facebook as an RPI [real party in interest] or privy;

(2) the Board erred in finding that Facebook is not estopped from challenging claim 7.

Citing Thryv, Inc. v. Click-To-Call, SAS Institute Inc. v. Iancu and Cuozzo Speed Techs., LLC v. Lee, the CAFC first addressed whether it could review the challenge, since those Supreme Court cases raised questions “as to whether we have the authority to review certain matters addressed in an IPR that are not directly related to the ultimate patentability decisions the Board renders in a final written decision.” The court explained that it considered the question before it with respect to reviewability to be:

Whether 35 U.S.C. § 314(d) statutorily precludes judicial review, following a final written decision in an inter partes review proceeding, of a challenge to the Board’s conclusion that under § 315(e)(1) a petitioner is not estopped from maintaining the proceeding before it.

35 U.S.C. § 314(d) is the “no appeal” provision for IPR. It reads:

(d)No Appeal.—

The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

Section 315(e)(1), the estoppel provision relating to IPR, reads:

(e)Estoppel.—

(1)Proceedings before the office.—

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

Relying heavily on its decision in Credit Acceptance Corp. v. Westlake Services, the court held the following:

Considering the strong presumption of reviewability of agency action, we see no indication that § 314(d) precludes judicial review of the Board’s application of § 315(e)(1)’s estoppel provision in this case, in which the alleged estoppel-triggering event occurred after institution. Such a holding is a natural consequence of our reasoning in Credit Acceptance. We concluded there that we could review the patent owner’s challenge to the Board’s decision that the petitioner was not estopped from maintaining a patentability challenge under a nearly identical statutory estoppel provision, albeit as applied to the CBM scheme.

However, the court also cited cases in which it found that reviewability was precluded, such as Medtronic, Inc. v. Robert Bosch Healthcare Sys., Inc. and ESIP Series 2, LLC v. Puzhen Life USA, LLC, and distinguished them from Uniloc’s case and Credit Acceptance, explaining that it was the unique facts of the latter two cases that warranted reviewability:

When the Board instituted review in the ’1427 IPR, no estoppel could apply because no final written decision had been reached in the Apple IPR. Though the Board’s institution decision ordered supple-mental briefing regarding the potential, future applicability of § 315(e)(1)’s estoppel provision, due to its awareness of the advanced state of the Apple IPR, the Apple IPR final written decision did not issue until months after institution in this proceeding. The Board’s “no estoppel” decision thus was later than and separate from its earlier institution decision, and, consistent with the facts and reasoning of Credit Acceptance, is a decision we may review.

Real-Party-in-Interest and Obviousness

Turning to the merits, the CAFC affirmed the Board’s finding that LG was not an RPI or privy of Facebook, asserting that the record lacked any evidence that either party exercised control over the other’s decision to file the IPR or their arguments, or that LG was acting as an “agent” for Facebook. The court also found no evidence that there was a preexisting relationship between Facebook and LG.

As to the PTAB’s decision not to estop Facebook from participating in the Apple IPR on claim 7, Uniloc had argued that claim 7 depends from claim 1, which the Board had found Facebook estopped from challenging. This decision essentially allowed Facebook to continue to attack claim 1. Uniloc further argued that “’[t]he Board’s partial dismissal [of Facebook for estoppel on claims 1–6 and 8] essentially resulted in an impermissible partial institution’ in violation of SAS Institute.” But the CAFC ultimately held that “[b]ecause claim 7 was not at issue in the Apple IPR, the plain language of the statute supports the conclusion that Facebook is not estopped from challenging this claim in this proceeding, regardless of its dependency on claim 1.”

On the obviousness challenge, the court likewise affirmed the PTAB, holding that Facebook’s expert testimony and the Board’s factual analysis were supported by substantial evidence.