Federal Circuit Affirms PTAB’s Unpatentability Finding for Palo Alto Networks

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Thursday affirmed a Patent Trial and Appeal Board (PTAB) ruling that held certain claims of a patent for network intrusion monitoring and detection unpatentable as obvious. The opinion was authored by Judge Chen.

U.S. Patent No. 7,895,641 is owned by BT Americas (BTA). Palo Alto Networks, Inc. petitioned for inter partes review (IPR) of the ‘641 patent, and the PTAB ultimately determined claims 1–7 and 15–17 would have been obvious in view of prior art references U.S. Patent No. 5,884,033 (“Duvall”) and Yang-hua Chu, Trust Management for the World Wide Web, M.I.T. (June 13, 1997) (“Chu”).

BTA appealed, arguing that “1) neither Duvall nor Chu teaches [Claim 1 of the ‘641 patent’s limitation] ‘dynamically modifying an analysis capability of the probe during operation’ and (2) the Duvall-Chu system must be significantly altered to perform the claimed dynamic modification.”

BTA disputed the Board’s reliance on Palo Alto’s expert testimony, arguing that the “testimony relates to merely dynamically modifying the database, not the claimed ‘analysis capability of the probe.’” But the CAFC found that the Board held “as soon as the filter database is updated, the probe’s analysis capability, through use of that updated database, is likewise altered during operation” and that substantial evidence supported that finding.

With respect to BTA’s second argument, the CAFC rejected the theory that the Duvall-Chu system would have to be “significantly altered” to perform the claimed dynamic modification because, while BTA said Duvall’s system relies on “a cached copy of the database,” not the original, it “does not require using a cached copy of the database.”  Palo Alto’s expert testified that “any modification to Duvall’s database [to support the claimed dynamic modification] would have been implicit or routine given that dynamic modification was a common database feature at the time of the invention” and the CAFC said the PTAB’s reliance on that testimony was reasonable.

The court further rejected BT Americas’ challenge to the motivation to combine the references and upheld the Board’s finding that a skilled artisan would have combined Duvall’s system with Chu’s teaching of human intervention to improve the handling of unresolved data.

For claim 6, BT Americas argued the Board failed to identify analysis performed at a secure operations center. The Federal Circuit said the argument misconstrued Palo Alto Networks’ petition and the Board’s analysis. One “analyst system” operated at a remote secure site and participated in Duvall’s multistage analysis; a separate system at the probe received the resulting data and could modify the filter database. The Board therefore had identified the claimed secure-center analysis, said the CAFC.

Finally, the CAFC said that BTA’s argument that the Board lacked jurisdiction because the patent had expired before the IPR petition was rejected in Apple Inc. v. Gesture Technology Partners, 127 F.4th 364, 368–69 (Fed. Cir. 2025) as being incompatible with the Supreme Court’s reasoning in Oil States Energy Servs. v. Greene’s Energy Grp., 584 U.S. 325, 334–35 (2018).

In Gesture, the CAFC explained:

“[In Oil States], the Court’s conclusion that an IPR falls under the public rights doctrine was based on the fact that the procedure involves a ‘second look’ at the earlier determination of granting a public right in the first place…. The review of an earlier grant of a patent thus inherently involves the adjudication of a public right, and it is irrelevant whether the patent has expired, since the patent itself continues to confer a limited set of rights to the patentee.”

Essentially, since a patentee still retains “some” rights after expiration of a patent, such as collection of damages for past infringement, this in turn creates a live case or controversy, which can be adjudicated via IPR/ the PTAB.

Thus, the CAFC determined here that “[w]e are not permitted to deviate from our precedential holding in Gesture Technology and anyway see no persuasive reason to do so.”

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Author: billperry