Trials@uspto.gov
`571.272.7822
`
`Paper No. 12
`Filed: September 28, 2017
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`FACEBOOK, INC. and INSTAGRAM, LLC,
`Petitioner,
`v.
`SKKY, LLC,
`Patent Owner.
`
`Case CBM2016-00091
`Patent 9,037,502 B2
`
`
`
`
`
`
`
`
`
`Before DAVID P. RUSCHKE, Chief Administrative Patent Judge,
`SCOTT R. BOALICK, Deputy Chief Administrative Patent Judge,
`JUSTIN T. ARBES, GLENN J. PERRY, and KEVIN W.
`CHERRY, Administrative Patent Judges.
`
`PERRY, Administrative Patent Judge.
`
`
`
`DECISION ON PETITIONER’S REQUEST FOR REHEARING
`
`37 C.F.R. § 42.71
`
`
`
`
`

`

`CBM2016-00091
`Patent 9,037,502 B2
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`I. INTRODUCTION
`Petitioner requests rehearing (Paper 8, “Req. Reh’g”), under 37 C.F.R.
`§ 42.71(c), of our Decision (Paper 7, “Dec. on Inst.”) denying its Petition
`(Paper 1, “Pet.”). Petitioner’s Request includes a request that its arguments
`be heard by an expanded panel. Req. Reh’g 1.
`On April 19, 2017, Petitioner requested a conference with the Board
`seeking authorization to file supplemental briefing pertaining to Rembrandt
`Wireless Techs., LP v. Samsung Elecs. Co., 853 F.3d 1370 (Fed. Cir. 2017),
`decided by the U.S. Court of Appeals for the Federal Circuit after Petitioner
`filed its Request for Rehearing. We held a telephone conference on April
`24, 2017, which was attended by counsel for both Petitioner and Patent
`Owner. We authorized supplemental briefing regarding Rembrandt, and
`have received and considered briefs from both Petitioner and Patent Owner.
`See Papers 9 (“Pet. Br.”), 10 (“PO Br.”).
`II. ANALYSIS
`A. Petitioner’s Request for an Expanded Panel
`Our governing statutes and regulations do not provide for parties to
`request, or panels to authorize, an expanded panel. See generally 35 U.S.C.
`§ 6; 37 C.F.R. §§ 41.1–42.412. Our standard operating procedures,
`however, provide the Chief Judge with discretion to expand a panel to
`include more than three judges. PTAB SOP 1, 1–3 (§§ II, III) (Rev. 14); see
`id. at 1 (introductory language explaining that the Director has delegated to
`the Chief Judge the authority to designate panels under 35 U.S.C. § 6); see
`also In re Alappat, 33 F.3d 1526, 1532 (Fed. Cir. 1994) (providing that
`Congress “expressly granted the [Director] the authority to designate
`expanded Board panels made up of more than three Board members.”). The
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`CBM2016-00091
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`Chief Judge may consider panel expansions upon a “suggestion” from a
`judge, panel, or party. Id. at 3–4; see also Apple Inc. v. Rensselaer
`Polytechnic Inst., Case IPR2014-00319, slip op. at 2 n.1 (PTAB Dec. 12,
`2014) (Paper 20) (expanded panel) (per curiam).
`The standard operating procedure exemplifies some of the reasons for
`which the Chief Judge may expand a panel. PTAB SOP 1, 3 (§ III.A). For
`example, an expanded panel may be appropriate when “[t]he proceeding or
`AIA Review involves an issue of exceptional importance” or when
`“[c]onsideration by an expanded panel is necessary to secure and maintain
`uniformity of the Board’s decisions.” Id. (§ III.A.1, 2).
`In this case, the Chief Judge has considered whether expansion is
`warranted, and has decided to exercise his discretion to expand the panel due
`to the nature of the issue Petitioner presents. The effect of a pre-institution
`statutory disclaimer on covered business method (“CBM”) patent review has
`been at issue in multiple cases before the Board. The Chief Judge has
`determined that an expanded panel is warranted to provide guidance
`regarding the effect of such disclaimers on CBM patent review eligibility.
`B. Petitioner’s Request for Rehearing
`On June 15, 2016, Petitioner filed a Petition for CBM patent review of
`claims 1−11 of U.S. Patent No. 9,037,502 B2 (Ex. 1001, “the ’502 patent”).
`Three months later, Patent Owner filed, on the day before its Preliminary
`Response, a statutory disclaimer of claims 6 and 8−11 pursuant to 37 C.F.R.
`§ 1.321(a), and argued that the disclaimer rendered those claims “irrelevant”
`to the CBM patent review eligibility determination. See Paper 6, 4–5
`(“Prelim. Resp.”); Ex. 2001. Petitioner subsequently asked the Board for
`leave to file a reply limited to addressing the impact of the disclaimer, which
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`was denied. See Dec. on Inst. 2. On November 23, 2016, the panel denied
`institution on the sole ground that the ’502 patent is not eligible for CBM
`patent review. Id. at 14. The panel “treat[ed] the disclaimed claims as if
`they never existed” and, thus, Petitioner’s arguments that the ’502 patent is
`eligible for CBM patent review based on claims 6 and 8−11 were not
`considered. Id. at 9−10.
`1. Standard of Review
`In determining whether to institute a CBM patent review, “the Board
`may deny some or all grounds for unpatentability for some or all of the
`challenged claims.” 37 C.F.R. § 42.208(b). When rehearing a decision on
`petition, the Board will review the decision for an abuse of discretion.
`37 C.F.R. § 42.71(c). “An abuse of discretion occurs if a decision is based
`on an erroneous interpretation of law, if a factual finding is not supported by
`substantial evidence, or if the decision represents an unreasonable judgment
`in weighing relevant factors.” Arnold P’ship v. Dudas, 362 F.3d 1338, 1340
`(Fed. Cir. 2004). The party requesting rehearing bears the burden of
`showing an abuse of discretion, and “[t]he request must specifically identify
`all matters the party believes the Board misapprehended or overlooked.”
`37 C.F.R. § 42.71(d).
`2. A “Time-of-Filing” Rule Does Not Apply When Assessing
`Pre-Institution Statutory Disclaimers
`Petitioner argues that the panel committed a “fundamental legal error”
`which, “if not corrected, threatens to undermine the efficacy of the CBM
`patent review procedure.” Req. Reh’g 1. The alleged error is “the Board’s
`decision to allow the Patent Owner to unilaterally strip the Board of its
`authority to institute a CBM patent review by filing a statutory disclaimer
`after the filing of the CBM petition.” Id. Petitioner urges that the Board
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`should adopt a “time-of-filing” rule in assessing the impact of post-filing
`statutory disclaimers on CBM patent review eligibility. Id. at 3. Petitioner
`explains that a “time-of-filing” rule is used for determining federal court
`jurisdiction and argues that it should be extended to CBM patent review
`because it is consistent with Congressional intent in creating the CBM patent
`review program. Id. at 4. Adoption of a “time-of-filing” rule would prevent
`a “postfiling salvage operation” attempting to divest this Board of its CBM
`patent review jurisdiction, according to Petitioner. Id. at 2−3. We decline to
`adopt a “time-of-filing” rule, as suggested.
`Although Petitioner is correct that federal courts apply the rule that
`“the jurisdiction of the court depends upon the state of things at the time of
`the action brought,” Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S.
`567, 570 (2004) (citation omitted), we are not a federal court, but an
`administrative agency whose authority to act has been granted by Congress,
`Kilip v. Office of Pers. Mgmt., 991 F.2d 1564, 1569 (Fed. Cir. 1993) (“An
`agency is but a creature of statute. Any and all authority pursuant to which
`an agency may act ultimately must be grounded in an express grant from
`Congress.”); see also id. (“Though an agency may promulgate rules or
`regulations pursuant to authority granted by Congress, no such rule or
`regulation can confer on the agency any greater authority than that conferred
`under the governing statute.”).
`The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat.
`284 (2011) (“AIA”), created a transitional program for the Board to conduct
`post-grant reviews of a limited set of patents designated as “covered
`business method patents.” AIA § 18(a). The AIA provides that “[t]he
`Director may institute a transitional proceeding only for a patent that is a
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`covered business method patent.” Id. § 18(a)(1)(E) (emphasis added). The
`AIA defines a “covered business method patent” as “a patent that claims a
`method or corresponding apparatus for performing data processing or other
`operations used in the practice, administration, or management of a financial
`product or service.” Id. § 18(d)(1) (emphasis added). Thus, the statute
`permits institution only for a patent that is a covered business method patent,
`and requires a patent that claims a particular type of method or apparatus.
`See Secure Axcess, LLC v. PNC Bank Nat’l Ass’n, 848 F.3d 1370, 1381
`(Fed. Cir. 2017) (“Necessarily, the statutory definition of a CBM patent
`requires that the patent have a claim that contains, however phrased, a
`financial activity element.” (emphasis added)); Unwired Planet, LLC v.
`Google Inc., 841 F.3d 1376, 1382 (Fed. Cir. 2016) (CBM patents “are
`limited to those with claims that are directed to methods and apparatuses of
`particular types and with particular uses ‘in the practice, administration, or
`management of a financial product or service’” (emphasis added)); Blue
`Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340 (Fed. Cir. 2016) (citing
`previous Board decisions that “properly focuse[d] on the claim language at
`issue” (emphasis added)).
`The decision whether to institute a CBM patent review is based on
`whether a patent “is” a covered business method patent, which in turn is
`based on what the patent “claims” at the time of the institution decision, not
`as the claims may have existed at some previous time. See AIA
`§§ 18(a)(1)(E) (using the present tense “is”), 18(d)(1) (using the present
`tense “claims”); 35 U.S.C. § 324(a); 37 C.F.R. § 42.207(e) (when a patent
`owner files a statutory disclaimer, “[n]o post-grant review will be instituted
`based on disclaimed claims”). For example, where a reexamination
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`certificate amending the claims of a patent issues subsequent to the filing of
`a petition but prior to a decision on institution, the Board’s decision whether
`to institute is based on the claims of the patent as amended in the
`reexamination certificate. See Eizo Corp. v. Barco N.V., Case
`IPR2014-00358, slip op. at 5 (PTAB July 23, 2014) (Paper 11); GEA
`Process Eng’g, Inc. v. Steuben Foods, Inc., Case IPR2014-00051, slip op. at
`2–3, 10–11 (PTAB Mar. 10, 2014) (Paper 14). Petitioner’s proposed
`“time-of-filing” rule is inconsistent with these principles.
`Petitioner’s Request for Rehearing raises the further issue of whether,
`when a patent owner files a statutory disclaimer after the filing of the
`petition but before institution, CBM patent review eligibility can be based on
`the disclaimed claims. Specifically, Petitioner relies upon limitations of
`disclaimed claims 6 and 8−11 as supporting its contention that the ’502
`patent qualifies for CBM patent review. See Pet. 4–8 (citing claim 6, for
`example, which recites “charging a fee, to the user”). Patent Owner,
`however, statutorily disclaimed claims 6 and 8−11, pursuant to 35 U.S.C.
`§ 253(a) and 37 C.F.R. § 1.321(a). See Prelim. Resp. 4; Ex. 2001. In the
`Decision on Institution, for purposes of establishing CBM patent review
`eligibility and in accordance with Federal Circuit case law, we treated the
`’502 patent as though these claims never existed. Dec. on Inst. 8–10.
`Petitioner’s “time-of-filing” rule would require that we ignore
`35 U.S.C. § 253(a) and its effect, as interpreted by the Federal Circuit.
`Statutory disclaimer of claims is authorized under 35 U.S.C. § 253(a), which
`provides in part:
`A patentee, whether of the whole or any sectional interest therein,
`may, on payment of the fee required by law, make disclaimer of
`any complete claim, stating therein the extent of his interest in
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`such patent. Such disclaimer shall be in writing, and recorded in
`the Patent and Trademark Office; and it shall thereafter be
`considered as part of the original patent to the extent of the
`interest possessed by the disclaimant and by those claiming
`under him.
`The Federal Circuit has held consistently that claims disclaimed under
`§ 253(a) should be treated as though they never existed. See Vectra Fitness,
`Inc. v. TWNK Corp., 162 F.3d 1379, 1383 (Fed. Cir. 1998) (“This court has
`interpreted the term ‘considered as part of the original patent’ in section 253
`to mean that the patent is treated as though the disclaimed claims never
`existed.”); Guinn v. Kopf, 96 F.3d 1419, 1422 (Fed. Cir. 1996) (“A statutory
`disclaimer under 35 U.S.C. § 253 has the effect of canceling the claims from
`the patent and the patent is viewed as though the disclaimed claims had
`never existed in the patent.”); see also Genetics Inst., LLC v. Novartis
`Vaccines & Diagnostics, Inc., 655 F.3d 1291, 1299 (Fed. Cir. 2011) (holding
`that the Board’s interference jurisdiction under 35 U.S.C. § 291 required
`“the existence of an interference, and a claim that ‘never existed’ [due to a
`statutory disclaimer] cannot form the basis for an interference”).
`Under Petitioner’s proposed rule, the disclaimed claims would be
`treated as if they never existed, except for purposes of the CBM patent
`review program. We see no basis for writing an exception into the statutory
`disclaimer statute by adopting a “time-of-filing” rule, as suggested.
`Petitioner’s proposed rule also could result in the Board conducting a CBM
`patent review of a patent that is no longer a “covered business method
`patent” as defined in the AIA. See AIA §§ 18(a), 18(d)(1). Petitioner’s
`arguments regarding claims 6 and 8−11, therefore, are not persuasive, and
`Petitioner has not shown an abuse of discretion in the Decision not to
`institute a CBM patent review.
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`3. Rembrandt Does not Require a “Time-of-Filing” Rule
`We are not persuaded that Rembrandt requires a “time-of-filing”
`determination of CBM patent review eligibility. According to Petitioner,
`Rembrandt clarified that disclaimers under 35 U.S.C. § 253(a) extinguish
`only a patent owner’s legal rights—not the rights of others—with regard to
`the disclaimed claims, pointing to the following language in the decision:
`[W]hile we have held that a disclaimer relinquishes the rights of
`the patent owner, we have never held that the patent owner’s
`disclaimer relinquishes the rights of the public. Indeed, our
`precedent and that of other courts have not readily extended the
`effects of disclaimer to situations where others besides the
`patentee have an interest that relates to the relinquished claims.
`Rembrandt, 853 F.3d at 1383–84; see Pet. Br. 1–2. Petitioner argues that the
`principle annunciated in Rembrandt “squarely applies to the rights Congress
`and the PTO granted to accused infringers under the Covered Business
`Method patent review program.” Pet. Br. 2. We disagree.
`Rembrandt did not involve the issue of CBM patent review
`jurisdiction. Rather, it involved the patent marking statute, which pertains to
`giving “notice to the public” that an article is patented. See 35 U.S.C.
`§ 287(a); Rembrandt, 853 F.3d at 1382–84. In Rembrandt, the plaintiff
`disclaimed claims to avoid a limitation on damages due to a failure to mark
`in accordance with the marking statute. Id. The Federal Circuit vacated and
`remanded the district court’s denial of the defendant’s motion to bar
`recovery of pre-notice damages based on the disclaimer, emphasizing the
`purpose of the marking statute—to protect the public from liability for
`unknown infringement. Id. Because the purpose of marking is to provide
`public notice, the court reasoned that it was “irreconcilable” for a disclaimer
`to extinguish the right of the public to utilize unmarked features of a product
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`until receiving notice. Id. Protecting the public’s rights was central to the
`decision, as reflected in the court’s narrow holding: “the marking statute’s
`focus is not only the rights of the patentee, but the rights of the public . . . .
`Considering these rights held by the public, we hold that disclaimer cannot
`serve to retroactively dissolve the § 287(a) marking requirement for a
`patentee to collect pre-notice damages.” Id. at 1384.
`We agree with Patent Owner that there is no basis to expand this
`holding to the Board’s limited jurisdiction related to CBM patent review,
`especially given that the court did not discuss post-grant review proceedings
`at all in its decision, or the potential impact of statutory disclaimers on such
`proceedings.1 See PO Br. 1–2. In contrast to the patent marking statute at
`issue in Rembrandt, which expressly pertains to rights of the “public,” as
`well as a defendant’s statutory right to patent infringement defenses and
`counterclaims (also cited by the Court in Rembrandt), there is no analogous
`right to institution of a CBM patent review for the public generally. See
`Rembrandt, 853 F.3d at 1383–84. Although certain individuals or entities
`who meet the statutory requirements may petition for CBM patent review,
`institution by the Board is discretionary. See AIA § 18(a)(1); 35 U.S.C.
`§ 324(a) (“The Director may not authorize a post-grant review to be
`instituted unless the Director determines that the information presented in
`the petition filed under section 321, if such information is not rebutted,
`would demonstrate that it is more likely than not that at least 1 of the claims
`
`
`1 We also note that, although discussed in a concurrence and dissent, the
`issue of the effect that a pre-institution statutory disclaimer has on a CBM
`patent review was not decided by the Federal Circuit in Secure Axcess, LLC
`v. PNC Bank Nat’l Ass’n, 859 F.3d 998, 1003 n.5 (Fed. Cir. 2017) (Taranto,
`J., concurring); id. at 1005 (Lourie, J., dissenting).
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`challenged in the petition is unpatentable.” (emphasis added)); 37 C.F.R.
`§§ 42.4(a) (“The Board institutes the trial on behalf of the Director.”),
`42.208(a) (“[T]he Board may authorize the review to proceed.”), 42.208(b)
`(“At any time prior to institution of post-grant review, the Board may deny
`some or all grounds for unpatentability for some or all of the challenged
`claims.”); Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016)
`(the AIA does not impose a “mandate to institute review”); Harmonic Inc. v.
`Avid Tech., Inc., 815 F.3d 1356, 1367 (Fed. Cir. 2016) (explaining that
`under § 314(a) (which is worded similarly to § 324(a)), “the PTO is
`permitted, but never compelled, to institute an [inter partes review]
`proceeding”); PO Br. 3–4. Thus, we are not persuaded that Rembrandt
`requires statutorily disclaimed claims to be considered when determining
`whether a patent is eligible for CBM patent review.
`4. Conclusion
`As explained above, CBM patent review eligibility is determined
`based on the claims of the challenged patent as they exist at the time of the
`decision whether to institute, and statutorily disclaimed claims must be
`treated as if they never existed. Petitioner has not carried its burden of
`demonstrating that we abused our discretion in not considering disclaimed
`claims 6 and 8–11 and denying institution in this proceeding.
`III. ORDER
`For the above reasons, Petitioner’s Request for Rehearing is denied,
`and our order stands as set forth in our Decision Denying Institution of
`Covered Business Method Patent Review (“Dec. on Inst.”).
`
`
`
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`CBM2016-00091
`Patent 9,037,502 B2
`
`Petitioner:
`
`Heidi Keefe
`Andrew Mace
`COOLEY LLP
`hkeefe@cooley.com
`amace@cooley.com
`
`
`
`Patent Owner:
`
`Ryan Schultz
`Andrew Kabat
`ROBINS KAPLAN LLP
`rschultz@robinskaplan.com
`akabat@robinskaplan.com
`
`
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