SoftView Petitions Full Federal Circuit to Rehear Decision on Patentee Estoppel at USPTO

On August 30, SoftView LLC filed a petition for en banc rehearing with the U.S. Court of Appeals for the Federal Circuit (CAFC), arguing that the court’s recent decision incorrectly applied the doctrine of collateral estoppel/issue preclusion to a series of amended claims.

In the original ruling, which was covered in a separate article, the CAFC held that the Patent Trial and Appeal Board (PTAB) properly applied the estoppel provision of 37 CFR § 42.73(d)(3)(i) in invalidating SoftView’s amended claims submitted in inter partes reexaminations based on a prior inter partes review (IPR) decision. However, the CAFC limited its application to new or amended claims and remanded the case for reconsideration of claims issued prior to the reexaminations.

Interestingly, the PTAB noted in the appeal of the reexaminations that there was “insufficient articulated reasoning to support the Examiner’s final conclusion that the claims would have been obvious to one of ordinary skill in the art at the time of Appellant’s invention.” But this finding was effectively moot, as the Board said SoftView was precluded from addressing the issue under 37 C.F.R § 42.73(d)(3)(i), which prohibits a patent owner from acting inconsistent with an adverse judgment from, among other things, an IPR proceeding, said the CAFC.

Although the CAFC acknowledged that “section 42.73(d)(3) renders unpatentable a category of claims that would not necessarily be unpatentable on obviousness grounds over the prior art,” it ultimately rejected SoftView’s argument that the USPTO does not have statutory authority to issue regulations on substantive issues of patent law and held that “section 42.73(d)(3) of the PTO’s regulations was lawfully promulgated pursuant to the agency’s rulemaking authority under section 316(a)(4) of the Patent Act.”

SoftView’s Petition

In the en banc petition filed Friday, SoftView argues that “such a result is contrary to the patent laws and congressional intent.” While the petition acknowledges the importance of the collateral estoppel doctrine as a safeguard to ensure claims that are not patentably distinct from other claims found unpatentable are estopped from issuance, it argued that the court’s application was incorrect and effectively undermined the process of amending a claim to fall within the requirements for patentability.

The effect, SoftView argued, could be staggering – any claim, even amended, that was at any point found to be unpatentable in a prior proceeding could be precluded from being litigated by the rule.

The Argument for Rehearing

In its argument, SoftView first disputes the lists of amended and issued claims in the panel decision, noting that they are simply incorrect and must be fixed. Next, SoftView argues that the Board and the panel’s application of CFR § 42.73(d)(3)(i) flies in the face of general patent law and congressional intent. In particular, SoftView argues the Board did not apply the claim construction used in the IPR final written decisions to determine whether the amended claims were not patentably distinct. That claim construction, which SoftView argues was erroneous even under the broadest reasonable interpretation (BRI) standard, was necessary to find the claims unpatentable. Since the incorrect claim constructions were used in the IPRs, the PTAB rendered otherwise patentable claims unpatentable. The petition explains:

“The Board’s and Panel’s application of the rule precludes issuance of claims that are not only patentable under the patent laws, including section 103, but using a substantially narrower claim construction under which no claims in the IPRs were found unpatentable…. None of the claims found unpatentable using the overly broad erroneous construction in the IPRs is unpatentable using the correct construction, and any argument to the contrary is irrelevant because the correct construction was not applied in the IPRs.”

Next, SoftView asserts that the CAFC incorrectly applied the doctrine of collateral estoppel. It argues that Google LLC v. Hammond Dev. Int’l, Inc. requires a party invoking estoppel to demonstrate a four-part test:

(1) The issue is identical to one decided in the first action; (2) the issue was actually litigated in the first action; (3) the resolution of the issue was essential to a final judgment in the first action; and (4) the opposing party had a full and fair opportunity to litigate the issue in the first action

SoftView argues that the PTAB refused to consider the elements of common law collateral estoppel, and acknowledged “it’s not present”.  While SoftView points to its extensive briefing on why that the elements of collateral estoppel are not met, it notes that “neither the Board, Director, nor Appellees presented evidence the elements are met,” says the petition.

The petition also points to an additional cause for concern in its eyes. The PTAB, in its decision, applied KSR Int’l Co. v. Teleflex Inc’s instruction to its “patentably distinct” analysis of the cancelled claims instead of the prior art references, according to the CAFC. The PTAB then analyzed whether the combination of the canceled claim limitations amounted to “anything more than the obvious sum of their parts,” ultimately finding they did not. The petition notes the problem with this analysis:

“Each of the amended claims recites claim limitations that were not in the prior art, including the preserving/preservation limitation; the Board never argued they were. This Court’s precedent precludes giving prior-art effect to the subject matter of cancelled claims when comparing obviousness of unadjudicated claims.”

Finally, the petition argues the USPTO is in violation of the Administrative Procedure Act (APA) due to the inconsistencies in its decisions. “The Board found the amended claims determined by the Examiner to be patentably distinct (over the cancelled claims) in this proceeding and the ’994 proceeding (Appx4507-4512) to not be patentably distinct based on a new claim construction that is inapposite to the ’353 FWD claim construction affirmed on appeal by this Court.”