“The CAFC found that case law did not establish that the Board has an ‘affirmative duty to sua ponte raise patentability challenges to a proposed substitute claim,’ [though it] found ‘problematic the POP’s reasoning behind its decision to confine the Board’s discretion to sua sponte raise patentability issues to only rare circumstances.’”
On March 24, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a Patent Trial and Appeal Board (PTAB) Precedential Opinion Panel (POP) decision allowing patent owner DynaEnergetics Europe GmH to amend its claims, and also affirmed the PTAB’s decision that the original claims of the patent were unpatentable.
Hunting Titan, Inc. petitioned for inter partes review of claims 1–15 of the U.S. Patent No. 9,581,422, asserting grounds of unpatentability based on anticipation and obviousness, including allegations that the claims were anticipated by U.S. Patent No. 9,689,223 (Schacherer). The Board instituted trial on all grounds and found all of the original claims unpatentable.
DynaEnergetics opposed the petition. It also filed a contingent motion to amend the ’422 patent to add new claims, in the event the Board were to find the original claims unpatentable. Hunting Titan opposed the motion to amend but only advanced objections based on obviousness. Although Hunting Titan did not assert that Schacherer anticipated the proposed substitute claims, the Board determined that the original and proposed substitute claims were unpatentable as anticipated by Schacherer.
Subsequently, DynaEnergetics requested rehearing and POP review of the Board’s denial of the motion to amend. There, the POP vacated the Board’s decision denying DynaEnergetics’s motion to amend. It also found that Hunting Titan had not proven by a preponderance of the evidence that the proposed substitute claims are unpatentable and granted the motion to amend the ’422 patent.
The ’422 patent is directed to a perforating gun and detonator assembly. Its key feature is a “wireless” and “selective” detonator assembly for detonating an explosive projectile charge within the perforating gun “without the need to attach wires to the detonator.”
Hunting Titan appealed the POP’s decision vacating the Board’s denial of DynaEnergetics’s motion to amend. DynaEnergetics cross-appealed the Board’s decision invalidating its original claims. The CAFC affirmed both decisions.
The Original Claims Are Unpatentable
In its Patent Owner Response, DynaEnergetics argued Schacherer lacks several limitations of the claimed detonator assembly. For example, DynaEnergetics asserted Schacherer does not teach or disclose the claimed “wireless detonator assembly” because it incorporates an electrically wired detonator into a tandem sub or connector. However, the Board found Schacherer discloses a “detonator assembly” taught in the original claims and thus, the original claims are unpatentable as anticipated by Schacherer.
On cross-appeal, DynaEnergetics challenged the Board’s decision holding the original claims of the ’422 patent unpatentable as anticipated by Schacherer.
The CAFC agreed with the Board that DynaEnergetics narrowly construed “detonator assembly,” and failed to acknowledge that the claimed limitations “pertain solely to how the detonator assembly as a whole forms an electrical connection with the perforating gun assembly as a whole, irrespective of how any subcomponents within each assembly are connected.”
The CAFC concluded that substantial evidence supported the Board’s determination that Schacherer anticipates the original claims.
CAFC Affirms, Despite POP Problems
Hunting Titan opposed the motion to amend. It identified prior art references, including Schacherer, and asserted that these references disclose every claim limitation of the proposed substitute claims. Based on these assertions, Hunting Titan maintained that the proposed substitute claims are obvious and therefore unpatentable. It, however, did not allege that the proposed substitute claims were anticipated by the prior art of record.
The Bound found that none of the proposed substitute claims were novel or non-obvious over the prior art of record. Interestingly, the Board held that Hunting Titan showed that DynaEnergetics’s proposed amendments did not overcome the anticipatory nature of Schacherer’s disclosure and thus, it denied DynaEnergetics’s motion to amend.
On appeal, Hunting Titan challenged the POP’s decision to vacate the Board’s denial of the motion to amend. However, the CAFC disagreed with Hunting Titan’s argument that “the Board had an obligation to sua sponte identify patentability issues for a proposed substitute claim based on the prior art of record, and that the POP committed legal error by vacating the Board’s decision to do so in this case.” The CAFC found that case law did not establish that the Board has an “affirmative duty to sua ponte raise patentability challenges to a proposed substitute claim.”
However, the CAFC found “problematic the POP’s reasoning behind its decision to confine the Board’s discretion to sua sponte raise patentability issues to only rare circumstances.” Specifically, the CAFC said the POP’s reasoning overlooked the basic purpose of inter partes review (IPR) proceedings: “to reexamine an earlier agency decision and ensure ‘that patent monopolies are kept within their legitimate scope.’” But the CAFC held that the POP’s conclusion was not inconsistent with case law. The POP identified circumstances in which the Board should advance “a ground of unpatentability that a petitioner did not advance, or insufficiently developed, against substitute claims in a motion to amend,” such as “where certain evidence of unpatentability has not been raised by the petitioner, but is readily identifiable and persuasive such that the Board should take it up in the interest of supporting the integrity of the patent system.”
The POP highlighted an exemplary example in which the readily identifiable evidence exception could apply: “where the record readily and persuasively establishes that substitute claims are unpatentable for the same reasons that corresponding original claims are unpatentable.”
On this basis, the POP believed the circumstances of the case did not qualify as “one of the rare circumstances necessitating the Board to advance a ground of unpatentability that [Hunting Titan] did not advance or sufficiently develop.” Thus, the POP held the Board should not have raised the Schacherer anticipation ground and the POP, therefore, confined its own consideration to the grounds of unpatentability advanced by Hunting Titan in its opposition to the motion to amend. The POP ultimately held that Hunting Titan had not set forth an adequate case of obviousness and granted the motion to amend.
However, the CAFC was perplexed that the POP held that certain evidence of anticipation—evidence that Hunting Titan contended on appeal should have been considered—was not readily identifiable and persuasive. The CAFC pointed out that when the Board found the original claims unpatentable as anticipated by a prior art reference, “it would seem to follow that the Board should begin by first asking if the corresponding proposed substitute claim overcomes the ground on which it found the original claim unpatentable.”
However, on appeal, Hunting Titan did not challenge the POP’s decision as an abuse of discretion. Thus, it failed to argue that the POP misapplied the readily identifiable evidence exception. The CAFC concluded that because it failed to raise this argument, it was forfeited.
The CAFC affirmed the POP’s decision granting the motion to amend. The court emphasized, however, that the affirmance is “based only on this narrow ground. We are not determining the patentability of the proposed substitute claims, nor are we deciding whether the POP abused its discretion.”
Judge Prost’s Concurrence
Judge Prost wrote separately to explain that, regardless of the definition of the “readily identifiable and persuasive” standard, it should have allowed the Board to evaluate “whether the prior art reference that anticipated the original claims also anticipated the new claims.” Judge Prost noted that “such an evaluation can hardly be deemed overly zealous or creative on the Board’s part.”
Judge Prost also believed the circumstances of the case fits into one of the potential unpatentability bases to raise sua sponte. Prost said that the POP denied three administrative patent judges “the ability to use that acquired expertise in making their own patentability determinations before letting new claims out the door.”
Judge Prost noted the USPTO has since enacted a regulation that seemingly applies the “readily identifiable and persuasive” constraint to all motions to amend—opposed or not. In light of this, she was troubled by the prospect of applying the “readily identifiable and persuasive” constraint to unopposed motions to amend. Counsel at the oral arguments reasoned that this would “encourage the parties to remain in and oppose the motion [to amend],” but Judge Prost did not necessarily agree. She warned that “[b]ecause the regulation makes no caveat for unopposed motions, the Board may have its hands tied. . . even when no one is around to oppose a new patent monopoly grant.”