Federal Circuit Vacates PTAB Obviousness Determination and Holds Real Party in Interest Challenge Unreviewable

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision Wednesday in Federal Express Corporation v. Qualcomm Incorporated, vacating a determination by the United States Patent and Trademark Office’s (USPTO) Patent Trial and Appeal Board (PTAB) that certain claims of a Federal Express Corporation patent were unpatentable as obvious. The CAFC also held that it could not review the PTAB’s refusal to determine whether all real parties in interest were identified in the petition for inter partes review (IPR). The court concluded that “allegations of acting in excess of statutory jurisdiction are ‘closely tied to the application and interpretation of statutes related to’ the [agency’s] decision to initiate’ IPR, without more, do not overcome § 314(d)’s bar.”

Federal Express Corporation owns U.S. Patent No. 8,766,797, which describes systems and methods for providing access to information about shipments from sensors. The technology involves sensors to collect location and environmental data and communicate with a tracking center for packages, shipping containers, or vehicles. According to the patent, these systems improve upon prior methods by enabling greater customization and control over shipment notifications. The independent claims describe receiving sensor information at a tracking center, analyzing access rules for a party to determine authorization, and restricting access based on these rules. On appeal, the dependent claims further describe a method of restricting access by reporting the received sensor information to the party after a predetermined time delay.

In February 2021, Federal Express filed a complaint in the United States District Court for the District of Delaware against Roambee Corporation by asserting infringement of six patents, including the ‘797 patent. Federal Express served Roambee with the complaint, which started the one-year window during which Roambee could petition the PTAB for IPR. On the deadline for Roambee to file an IPR petition, Qualcomm Incorporated filed IPR petitions challenging four of the six patents asserted in the district court litigation. Qualcomm was not a party to the district court litigation and did not list Roambee as a real party in interest in its petition.

Federal Express Corporation opposed the institution of the IPR, arguing that the failure by Qualcomm to list Roambee as a real party in interest precluded the PTAB from considering the petition, and disagreed and instituted the review. Federal Express Corporation later moved to terminate the proceedings, but the PTAB denied the motion. The PTAB stated that it should not determine whether an unnamed party is a real party in interest if the determination is not necessary to resolve the proceeding. Since Qualcomm filed its petitions within the deadline for Roambee to file, the PTAB held that no time bar would apply absent bad faith or gamesmanship. The PTAB then issued a final written decision finding all challenged claims unpatentable as obvious over the asserted prior art.

On appeal, Federal Express argued that the PTAB violated the statute by refusing to determine whether the petition by Qualcomm identified all real parties in interest. Federal Express contended that the PTAB exceeded its statutory authority by issuing a final written decision without conducting this analysis. Qualcomm and the Director of the USPTO argued that the challenges to the handling of the real party in interest issues were barred from judicial review because the determination of whether to institute an IPR is final and nonappealable.

The Federal Circuit agreed that the challenges by Federal Express regarding the real party in interest requirement were unreviewable. The court explained that the requirement to identify all real parties in interest is a prerequisite and is integral to the institution of an IPR. It also noted that prior Supreme Court precedent established that matters closely tied to the application and interpretation of statutes governing the institution decision are unreviewable. The CAFC rejected Federal Express’s argument that the appeal was reviewable because it challenged the PTAB’s authority to refuse to make the determination. The court reasoned that the challenge ultimately targeted the decision to institute the review at all, which is barred from appellate review.

Turning to the merits of the obviousness determination, the parties agreed that the only issue on appeal was whether the PTAB erred by finding claims 6, 17, and 28 of the ‘797 patent unpatentable based on a combination of two prior art references. The PTAB based its obviousness determination on its belief that Federal Express had not contested the challenge by Qualcomm on these grounds. However, both parties agreed that Federal Express had indeed contested the challenge.

The Federal Circuit agreed that the obviousness finding should be vacated because the PTAB failed to consider Federal Express’s arguments. The court noted that agencies are required to “present a full and reasoned explanation of [their] decision[s]” to allow for “meaningful review.” Although Federal Express argued for reversal, the CAFC determined that reversal was improper because unresolved factual disputes remained. The court noted that the PTAB had not considered arguments against unpatentability and not determined whether the prior art met the relevant claim limitations. Consequently, the CAFC vacated the obviousness finding and remanded the case for the PTAB to consider the arguments regarding the patentability of the claims.

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Author: Devon