Ropes & Gray's podcast series, IP(DC), focuses on developments in intellectual property law from the vantage point of Ropes & Gray's office on Pennsylvania Avenue in Washington, D.C.
In this episode of IP(DC), appellate & Supreme Court partner Doug Hallward-Driemeier joins IP partners Scott McKeown and Matt Rizzolo to discuss the upcoming Supreme Court term as it relates to patent matters, current matters at the Federal Circuit, and ongoing legislative efforts in Congress to reform 35 U.S.C. Section 101 – patent subject matter eligibility.
Click the links below to advance directly to the corresponding sections of the transcript.
Inside Patent Reform Efforts
[00:49] Legislative Developments (or Lack Thereof)
Supreme Court Preview
[06:58] Berkheimer and Hikma: Section 101 Cert Petitions
[10:55] Click-to-Call: Reviewability of PTAB Time-Bar Decisions
[18:32] NantKwest: PTO Attorneys' Fees
[22:09] Regents of University of Minnesota: Sovereign Immunity Cert Petition
Federal Circuit Update
[25:33] AVX / General Electric: PTAB and Competitor Appellate Standing
[35:27] Papst Licensing and Collateral Estoppel Developments
[41:21] Facebook v. Windy City: PTAB Pop Panel and Chevron Deference
Transcript:
Scott McKeown: Welcome to the IP(DC) podcast, a podcast covering recent D.C.-based developments in intellectual property law. I'm Scott McKeown, chair of Ropes & Gray's Patent Trial and Appeal Board practice. And I'm joined, as always, by my partner, Matt Rizzolo, an IP litigator in Ropes & Gray's IP litigation group, based here in D.C. We are joined today by Doug Hallward-Driemeier, head of the appellate and Supreme Court practice here at Ropes & Gray. And to that end, we'll discuss the upcoming Supreme Court term as it relates to patent matters, what's going on at the Federal Circuit, and a bit of insight into ongoing legislative efforts in Congress to reform various matters, including 35 U.S.C. Section 101 – patent subject matter eligibility.
[00:49] Legislative Developments (or Lack Thereof)
So let me just kick things off with a bit of a discussion on the pending – well, it's not really pending legislation – but the effort to produce some pending legislation, especially since I boldly predicted that this legislation would be passed by the end of the year, which is very clear that that's not happening. So let me just give an update in terms of where that stands. As those that have listened to prior podcasts are well aware, this effort to reform subject matter eligibility started really around the holidays of 2018 with some closed-door sessions with various stakeholders. And then after that fact-finding was completed, we had a series of hearings back in June of 2019 with some 40+ witnesses that came before the Senate Judiciary Committee, including the former Chief Judge of the Federal Circuit, Paul Michel, two past directors of the Patent and Trademark Office, varies members of the biopharma community and law professors, all of which were throwing up their hands, saying patent subject matter eligibility determinations have become a complete crap shoot. Even Judge Michel saying he would be hard-pressed to make any sense of the current case law that's out there on 101. So there was all of this momentum in the June time frame. We had the senators running the hearing, Senators Tillis and Coons, promising us a draft bill within four weeks, right after the Fourth of July. In the interim, we had a decision come out of the Federal Circuit which basically echoed Judge Michel's comments that even they were sort of at their wits' end, trying to make heads or tails of the case law under 35 U.S.C. 101.
So there was a ton of momentum. It seemed as though the stage was set, so to speak, for this legislation to be passed relatively quickly. You have bipartisan support. You had it in the House and Senate. But then the wheels came off and it seems as though that has a lot to do with a last-minute provision that was added to the framework, that was sort of floated out there, on perhaps as we are under the hood tinkering with 35 U.S.C. 101, we would also make this change to 35 U.S.C. 112F, which is the statute that speaks to functional claiming. I think, or at least what I've been told, is that was added as perhaps a way to build consensus on the tech side, which with the idea that if we are taking what is now at least a very effective way to get out of a lawsuit relatively quickly with a summary determination under 101, if we are taking that away from tech, perhaps to get them on board with this legislation, we can throw them a bone, so to speak, of tamping down on functional claiming. But when that was put into the draft, it doesn't seem like it's moved tech at all – it seems like it's scared biopharma. Judge Michel wrote a letter to the drafters sort of arguing that this would impact every patent, and every patent would be construed a bit more narrowly. So the wheels started to come off there. There have been, since, some additional meetings with stakeholders. There's also been a judiciary hearing on a different bill, the STRONGER Patents Act, which to me is somewhat of a distraction – a little bit of political theatre perhaps trying to scare big tech into coming to the table with a, "Hey, we could do much worse things to you. Take a look at the STRONGER Patents Act that's been languishing four or five years." I don't know if that's a serious threat, but that's kind of where we are right now with the effort. There's been a promise of a bill in October. Of course, again, we were promised a bill in July. So it's definitely off the fast track. And with things like the STRONGER Patents Act being rolled out, perhaps for leverage, it seems like folks are digging in for a little bit more of a long-fought process here. So that legislative effort I think will ultimately bear fruit, but it seems like there's a lot longer road ahead of us.
With so much focus over the past couple months being on the legislative effort, many of us, at least speaking for myself, have been a bit distracted as to what has been going on at the Supreme Court in terms of potentially stepping in and providing some clarity on the question of 101 jurisprudence. Doug, maybe you can comment a little bit on the petitions that are pending, what they're proposing, and what they may be able to do here, perhaps before Congress gets to the issue?
Doug Hallward-Driemeier: Thanks, Scott. I guess, first, I'll offer that I would've loved to have been one of those 40 people testifying about the application of 101 and how difficult that is, because certainly, as an advocate who's argued either side in many cases, you can see that there's precedent involving even a very similar technology that comes out opposite directions. And you know, I don't want to say that that's just panel dependent, but I think it illustrates the difficulty that the Federal Circuit is having in their desire for greater instruction, whether that instruction comes, as you suggest, maybe from Congress or from the Supreme Court. And the Supreme Court has indicated some continuing interest in 101 issues. It's recently asked for the views of the solicitor general on two petitions for cert involving section 101. Although, I don't know that those two cases at least offer the ability to give the complete guidance that the parties or Federal Circuit might want.
Supreme Court Preview
[06:58] Berkheimer and Hikma: Section 101 Cert Petitions
Why don't we start with the Berkheimer petition in which the Court has asked for the solicitor general's views. That doesn't really involve the scope of 101, but rather the process by which 101 issues are decided. The issue presented is whether patent eligibility is a question of law to be decided by the court on the basis of the scope of the claims, or a question of fact for the jury, based on the state of the art at the time of the patent. That's, of course, a critically important issue for the parties to the extent that that is a question of fact that's going to be decided by the jury, or even by the court on summary judgment motions – it means that it's going to be pushed much farther back in the process. And so the pressure on the defendant to settle early is going to be greater. The likelihood of their getting out of the case early on, on a 101 motion, as happened in many instances shortly after some of the Supreme Court's precedential decisions there is going to be significantly diminished. So I think that that is an important question of great practical significance, even if it is not going to resolve one way or the other who wins those questions.
Matt Rizzolo: And I point out that we are actually already seeing that type of thing play out in district courts. Just this past week in the Eastern District of Texas, there was a case, PPS Data v. Jack Henry & Associates, where Judge Gilstrap sent the question of 101, or at least the second step of the Alice test, to the jury. And the jury found in that case that the claims at issue were invalid under 101. The question of whether the claims were well understood, routine or conventional at the time, was specifically sent to the jury. So I'm sure we'll see more of that as we go on, but we'll see what the Supreme Court comes up with.
Doug Hallward-Driemeier: It's an interesting question for practitioners, right? I think many have felt that the jury in the Eastern District of Texas was a very plaintiff-friendly place to litigate. But query whether that question as posed to the jury, which may be a little more susceptible to some hindsight thinking, is actually a forum that could ultimately favor defendants. Of course, we'll have to see because there aren't a lot of, you know, instances where juries have been asked that question, so I don't think we can generalize from one verdict, but it's an interesting question.
Matt Rizzolo: So you mentioned that there were a couple of cases at the Supreme Court on 101. What's the other one?
Doug Hallward-Driemeier: So the other is the Hikma v. Vanda case, which is one that comes out of the life sciences area. There, the question presented is "whether patents that claim a method of medically treating a patient automatically satisfies Section 101 of the Patent Act, even though they apply a natural law using only routine and conventional steps." Now, there, I'm quoting from the question presented. You know, notably, on the question presented page of the response brief, the opposition brief, Vanda says that question simply isn't presented here because that's not what the Federal Circuit did. But it does, obviously, tee up a question for how the Mayo standard is applied to patents that claim a method of treatment, not diagnosis.
[10:55] Click-to-Call: Reviewability of PTAB Time-Bar Decisions
Matt Rizzolo: As far as merits cases, there are a couple on the Supreme Court's docket for this term that concern patents. That's right?
Doug Hallward-Driemeier: Yes, there are two patent cases on which the Court has already granted cert. One of those comes out of the AIA and the IPR system that was set up with the PTAB, and it really is a question that follows from the Cuozzo decision a couple of years ago. In the AIA, Congress specified that the determination to institute by the director is not subject to review on appeal. And of course, courts being courts don't like to see their ability to exercise judicial review curtailed, and the Federal Circuit has taken a very narrow view of that. In the Cuozzo decision a couple years ago, the Supreme Court said, "No, Congress meant that, at least with respect to that determination in 314(a) of whether there's a reasonable likelihood that the Board would find that the patent was invalid, and other closely related questions." Pretty much immediately after that, the Federal Circuit said, "Well, closely related questions is really that question in 314(a), and virtually every other question is one that they think goes to the PTAB's jurisdiction, and therefore is subject to review on appeal."
The issue in the Click-to-Call case on which the Court has granted cert is whether the time bar in 315(b), which says that an IPR cannot be instituted if the petition is filed more than a year after the petitioner has been served with a complaint on that patent, is a determination as part of the institution decision that is subject to appellate review when the final written decision issues and ultimately comes up to the Federal Circuit. And you know, interestingly, the substance of that issue is not before the Court. In fact, on the substance, the Board itself has gone both directions here – has reversed itself. The Supreme Court said, "We don't want to look at that, but we do want to look at that question of what issues are open to the Federal Circuit to review on appeal from the final written decision, even though they're really part of that initial decision, whether or not to institute."
One thing I found fascinating in this is that there's an amicus brief filed by the PTAB Bar Association that says, "Look, we've got members who have all kinds of interests here, but what we want to make sure is that the Court understands that this issue isn't just related to 315(b) and the facts of this case, which involve a complaint that was filed and then voluntarily withdrawn under Rule 41(a) – does that count as service or not?" This issue comes up in all kinds of permutations, and they only talk about the permutations in IPR. Of course, one of the big questions that the Federal Circuit has asserted authority to review is whether a patent is a covered business method patent, which is part of the decision to institute in a CBM. So I think that amicus is actually very helpful to the Court, to see the full breadth of how its decision might impact proceedings and what the Federal Circuit is going to be looking at.
Scott McKeown: I would agree, and I think that amicus in particular was written to the conservative end of the Court to say, "Hey, just so you know, you would be giving this agency final word on all of these other things that you may not be thinking about, so if your concern here is the expansion of administrative power, then perhaps you need to consider the big picture here." Because it is interesting that, I think ultimately, what the Court... I mean, who knows why/what they found interesting, but it seems part of it was, "Well, we sort of left it open a little bit in Cuozzo when we used this word, 'shenanigans' and we didn't tell you exactly what was appealable and what wasn't, and then maybe in the Sass decision we said something slightly different." And since then, the Federal Circuit has sort of opened the door to a number of things, so maybe that was part of the interest in sort of clarifying some things that were going on. But you know, secondarily, I think that the amicus filing is a good way to let the Court know that there's a lot more going on here.
Matt Rizzolo: Doug, having worked in the SG's office, what do you make of the government's apparent about-face in this case? The government originally came in and said, "Cert should be denied," but then at the merit stage, the government supported the petitioner.
Doug Hallward-Driemeier: Well, those are two very distinct questions: One, whether they want the Supreme Court to get involved; but secondly, if the Court is going to be deciding, you know, how do they want the Court to decide this. I think probably one of the things that went into the recommendation against taking cert was the fact that on the underlying substantive question about how 315(b) applied to the situations of a voluntary dismissal, the Board was in the process of changing its views, and they probably didn't think that was a great context in which to have the Court looking at these issues. But now that it is focused on the question of appellate jurisdiction, you know, then the SG wants to make sure they get it right. Of course, the SG's views on that don't always align perfectly with those of the PTO. But here, I think they do because the solicitor general is saying to the Supreme Court, "Congress meant what it said in 314 when it said that this institution decision is just part of starting a process. And it's supposed to be a process that's efficient. And it's the height of inefficiency to go through a process in which the administrative agency that first issued the patent has gone back and looked at it more carefully, now with three heads rather than with one, with the benefit of presentation of argument on the other side, and it's concluded, as here, that a patent is invalid. Note that the decision on the merits that the patent is invalid is no longer subject to debate. And now, the argument is that we're going to have to throw all of that out and now we're going to go back to presuming this patent is valid, and the clear and convincing evidence that would apply in district court." And I think the solicitor general is standing up for the PTO and saying, "Look, once we've done all of that work, let's not set it aside when Congress has said, 'Look, that's just about the beginning. You, Federal Circuit, focus on the merits in the final written decision.'"
[18:32] NantKwest: PTO Attorneys' Fees
Matt Rizzolo: So Click-to-Call will be argued December 9th and it'll be worth keeping an eye on. I'm sure a lot of the eyes of PTAB practitioners around the country will be on the Supreme Court that day. Doug, what else is on the Supreme Court's docket for this term regarding patent cases?
Doug Hallward-Driemeier: There is another case involving patents that the Court did grant review in, although, I would forgive most of our listeners if it has slipped their notice because it involves a pretty arcane issue – it's called Peter v. NantKwest. And the issue involved is whether when a patent applicant has been unsuccessful – of course, they have the ability to take review of that up through the administrative process, ultimately the Federal Circuit and direct appeal, or they can file an action in district court under 35 U.S.C. 145 in which they have the ability to develop a factual record that might be different from the one that was before the patent examiner. But one of the counterweights to that is that Section 145 says that the applicant has to pay the expenses of that proceeding. So the issue here presented to the Supreme Court is whether the expenses include the cost of the employees at the PTO that were involved in litigating and defending the examiner's decision. And the government is arguing that that is clearly an expense of the process, and Congress has said that the PTO should not bear that cost – it should be the patent applicant who forced the government to incur it. Whereas, pretty uniformly, the rest of the patent environment, including here the ABA, which doesn't usually weigh in in the Supreme Court on patent issues because it has members that are kind of on both sides of that, said "No, here Congress is writing against the backdrop of the American rule on fee shifting, and that Congress has to speak very clearly when attorneys' fees are going to be shifted to the other party. And here, the reference to expenses is not one that one would expect includes effectively the attorneys' fees of the other side."
Scott McKeown: I would just add before we move on that that aspect of 145 is no longer a possibility – that was legislated away. So for the patents that are being filed now, applicants would not be able to go to the district court. And I suspect the reason that the government has decided to go this route, in terms of asking for expenses, is this is a terrible drain on the solicitor's office when these cases go into district court and there's discovery. So I think it's a little bit of an effort to, at least for those patents or applications, I should say that are still eligible for this, just so you know, everyone out there in the public, you may end up footing the bill. So that's what this is really about, and so it's an interesting debate from an academic perspective. But I think in terms of practice, no matter which way this goes, there's only a small pool of applicants that would still be able to take advantage of it.
[22:09] Regents of University of Minnesota: Sovereign Immunity Cert Petition
Matt Rizzolo: And that case will be argued October 7th. And before we move on from the Supreme Court to the Federal Circuit, I want to note an interesting issue at the intersection of sovereign immunity and patents. As some of you listening may recall, there have been a number of instances of patent owners raising sovereign immunity as a defense to IPR proceedings at the PTAB, and unsuccessfully raising that defense. There was a case involving the St. Regis Mohawk tribe and that case percolated through the Federal Circuit up to the Supreme Court. Cert was denied earlier this year and the courts had found that sovereign immunity could not be asserted, based on tribal immunity. Well, the cert petition that was filed this past week was filed by the University of Minnesota, which had asserted sovereign immunity based on state sovereign immunity. And that is an issue that has been raised multiple times by not just the University of Minnesota but others, including the University of Maryland, at the PTAB. The rulings on this issue have differed in their reasoning at the PTAB and at the Federal Circuit. But the Federal Circuit ultimately found, earlier this year, that sovereign immunity based on state sovereign immunity does not apply to PTAB proceedings, relying heavily on the tribal immunity rulings that it had previously issued. So that's something to keep an eye out for as the Supreme Court term rolls on. I am sure that there'll be amicus briefs and other briefings filed.
Scott McKeown: Before we move on from sovereign immunity, Doug, let me ask you this question: Given the Supreme Court has already denied cert to the tribes, what is it that may catch their attention with this state-based cert? Because at least at the Federal Circuit, when the states came up after the tribal argument, the question posed to them is, "Well, why would we decide this differently." It seems like this is the same issue for both entities.
Doug Hallward-Driemeier: Well, of course, it's possible that it won't get any more traction, but I think it is fair to say that the Supreme Court does take petitions by state solicitors general very seriously. It's also probably true that state universities are some of the most active participants in the patent system, and so they may see this as just having a more significant impact on the patent system, generally. I guess what I would note is that if the state's assertion of sovereign immunity from the PTAB were to be upheld, then I do imagine that we would see the tribes coming back to the Federal Circuit and saying that they, likewise, would benefit from that ruling by the Supreme Court.
Matt Rizzolo: I think it also could pose an interesting issue for the U.S. government as they consider any sort of response to the cert petition, given that we've seen just in the last month or so some IPR petitions filed against patents owned by the U.S. government. And you could certainly see some sovereign immunity issues potentially coming into play there as well.
Federal Circuit Update
[25:33] AVX / General Electric: PTAB and Competitor Appellate Standing
So why don't we move on to some of the issues that are percolating at the Federal Circuit, some of the rulings that have come out over the last few months? Scott, as a PTAB practitioner, I'm sure you have a lot of interest in the several rulings that have come out regarding whether unsuccessful petitioners are able to appeal adverse file written decisions to the Federal Circuit. Do you want to talk a little bit about some of those?
Scott McKeown: Sure. So what we're talking about here is, once through the PTAB, because anyone can file a petition at the PTAB – there's no Article III standing or anything akin to Article III standing, it's just a statutory right – but once you get through the administrative trial and then, as an appellant, you're trying to get before the Federal Circuit, what we've seen a lot of interest in from the Federal Circuit as of late is, "Well, where is your standing for these disputes that are not the traditional alternative to litigation?" Where perhaps someone is trying to clear the landscape, so to speak, before they go into a certain technology field, they're aware of some patents, or perhaps they've filed some petitions because their customers are being targeted in infringement suits, the question becomes, "Well, petitioner, whether you're a supplier or whether you're just concerned about some patents that are out there, where is your Article III standing?" And so a lot of appellants have struggled with this – this is an issue that has come up for the first time on appeal. We have declarations being submitted that weren't before the Board, so you almost have the Federal Circuit sort of acting as a fact finder in the first instance on these questions. And a number of appellants have found if they don't have the equivalent of DJ standing, for example, that their appeal is dismissed. And so there's been a couple cases recently where there's been another twist to that fact pattern where this competitor standing concept has been brought up, this argument that the government has given a right to a competitor and this right was improvidently granted, and therefore there is some harm that flows from that. And the first case was the AVX v. Presidio case, and Matt, I don't know if you have any insights into what particularly went on there?
Matt Rizzolo: Sure. So this is a case that came down on May 13th. And as you mentioned, these are two companies that are competitors to each other, and that really is something that's a little bit different than a lot of the traditional fact patterns that arose in the context of these cases. We saw a lot of the entities that had challenging patents as part of their business, I think RPX or Unified Patents, for example, where that could come into play. And in fact, we've actually seen this issue go all the way to cert petitions at the Supreme Court. There was one involving RPX, in fact, where cert was denied earlier this year. And then stepping back to AVX, I mean, there were a couple of issues that were raised and ultimately rejected by the Federal Circuit. I mean, one of them was that if the petitioner was unsuccessful in a final written decision, as it was here, the estoppel provisions would kick in, so in the future that petitioner would be estopped from challenging that patent in a future proceeding. And here, AVX said, "We are injured as a result of this estoppel provision." And the Federal Circuit rejected that, and there were a couple of interesting things here. First of all, they said that estoppel doesn't necessarily create an injury in fact. But even setting that aside, the Federal Circuit said that, "Under these facts, where you can't actually seek an appeal of a final written decision, there isn't any holding from the Federal Circuit that that statutory estoppel would apply in the future." So that's something that will be interesting to see how it plays out.
Scott McKeown: I found that particular line of argument a little bit confusing because, at least as the statute is written and certainly – and I'm talking about the estoppel statute and how it was previously written under inter partes reexamination – estoppel was specifically modified in the AIA to apply at the time of the final written decision. So the estoppel attaches at the time of the final written decision and there's nothing in the statute that states that that would be subject to appeal. Obviously it would be if it's reversed, but with that legislative history of changing it from the previous form of the statute and reexamination to moving the estoppel up, so to speak, at the time of the final written decision, I think you'd be hard pressed to argue that somehow the estoppel doesn't attach because you weren't able to appeal.
Matt Rizzolo: Yes, the Court there was looking toward whether the statutory estoppel incorporated traditional principles of collateral estoppel. So we'll see how that eventually plays out in future cases, I suppose. One other argument that was raised in the AVX case was whether AVX had plans or was currently engaging in activity that could arguably be covered by the patents. And here, the Federal Circuit said, "No, there was evidence that AVX had at least non-speculative plans to engage in conduct covered by the patent, so therefore, no Article III standing for the appeal." I note that there was no en banc petition filed in this case, so that was that as far as the AVX case goes.
But there was another case more recently. The opinion was in early July and there actually has been an en banc petition filed. And this is the General Electric v. United Technologies case. Very similar fact pattern as AVX. A couple of competitors in the airplane engine space. And in this case, just as in AVX, there was no evidence that GE practiced or, in fact, intended to practice the patent at issue. What GE claimed was that it had economic harm because it was forced to design around the patent that it was challenging, and that, it claimed, was enough to constitute an injury in fact that would give it standing to appeal. The Federal Circuit rejected that – they said, "Broad claims of economic losses stemming from efforts to design around a patent is not enough. You need to actually have concrete non-speculative plans to create a product that would potentially be infringing." One thing that's interesting about the GE case is that Judge Hughes penned a concurrence where he agreed with the result under the precedent, but said, "Look, the precedent here is too rigid. These competitor standing cases, we need some further guidance from the Supreme Court potentially."
Scott McKeown: I thought Judge Hughes's concurrence was especially compelling because it sort of pointed to a problem that the Federal Circuit seems to have when it deals with matters of administrative law or agency law and focusing too much on, "Well, we're the patent court. We're the patent experts. We see things a little bit differently." And they don't always appear to credit what's going on at other agencies. And I think Judge Hughes really laid that out that, "Look, you're looking for specific standing here that's particular to patents. Nobody else does that." And the facts here, I think, for GE are pretty compelling when you talk about billion dollar markets with 20-year development cycles for some of these engines. You can't expect a company that's in that space to go into some new engine or new technology without addressing the patent issues. So when I saw that concurrence, I was encouraged that this would go to en banc, and it seems to me that the facts are here to really push back on what the majority did here and really looking at this as being a patent-specific type of standing. And there's also administrative law out there with respect to standing that basically states that, "Well, the Article III standing is a bit more attenuated when you're coming out of an agency." And I've never seen the Federal Circuit really tackle that either, so this will be an interesting dispute to watch going forward.
Doug Hallward-Driemeier: I think Judge Hughes's concurring opinion is almost written for the Supreme Court. We know that the Supreme Court has really reacted not well to what it perceives as kind of patent exceptionalism at the Federal Circuit, where for a while the Court seemed to think that the general rules of practice or, you know, such as whether the standard for reviewing facts and the like applied equally in the patent context as other contexts. And so I think Judge Hughes is really keying in on a theme that will have some resonance with the Supreme Court if it gets there.
[35:27] Papst Licensing and Collateral Estoppel Developments
Matt Rizzolo: One of the other issues that we've seen pop up a lot at the Federal Circuit over the last few months is the issue of collateral estoppel, both as to district court proceedings and IPR proceedings. And Doug, I know you were involved in a case where that was a major issue. Do you want to speak a bit about that?
Doug Hallward-Driemeier: Yes. Earlier this year, in May, the Federal Circuit issued a decision in Papst Licensing v. Samsung. This was one of a number of co-pending appeals from a series of IPR proceedings that had challenged several patents in a family with overlapping claims on the basis of several different combinations of prior art. And Papst had lost pretty much across the board in these IPR proceedings, or at least there had been sufficient prior art found to render obvious each of the claims even though the petitioners hadn't been successful on all of their prior art. And Papst had filed appeals from all of these, but then, on the eve of argument, it dismissed several of the appeals. And immediately following that, there was a flurry of briefing about the collateral estoppel effects of those dismissals because really due to the overlapping nature of the patents, the Board's construction of claims in those cases and its reading of how the prior art read on those claims or those limitations, really also applied to the appeals that Papst was trying to continue to pursue. And we represented another party in one of these appeals, along with Samsung, briefs explaining that Papst simply could not succeed on its appeals in light of the subsidiary findings in those other IPR proceedings that had now become final in light of the dismissal of the appeals, and there was no chance that they would be reversed by the Federal Circuit. And the Federal Circuit agreed with us and held in favor of Samsung on the alternative, because they also found for Samsung on the merits. But an alternative basis for that holding was that the Board's decision and subsidiary findings in terms of what the prior art taught and that it taught those limitations was binding, and that in light of that, Papst just simply couldn't succeed in its appeals. And I think that this is going to have some really significant practical impact on these. You know, in many instances, we see series of IPRs being filed by co-defendants in these massive litigations, and it may lead the patent owner to proceed with all of their appeals. Certainly, people need to be thinking about the collateral consequences if they're not going to proceed to appeal from an adverse ruling at the PTAB.
Matt Rizzolo: And it seems to me that this also has a significant effect on parties who might be asserting related patents or patent families where there are overlapping claim limitations. I mean, am I correct that in the Papst case, some of those IPRs, they weren't necessarily the same patents, right? There were just similar limitations?
Doug Hallward-Driemeier: I think that it was significant that in that case the specification was identical across these patents, and therefore there was really very little argument that Papst could make that the limitations meant different things in the different patents.
Scott McKeown: We've also seen interest in collateral estoppel on the district court side when a couple of claims survive the PTAB process, but then when you get back to district court it looks like it's a feature that was embedded in another claim that had been cancelled. And there was at least one case with Intellectual Ventures where a dependent claim had survived. The district court looked at the art in some of the statements that went into the PTAB fact finding as to that particular feature, and under that Ohio Willow Wood case basically said, "You know, this claim is effectively dead as well."
Matt Rizzolo: So I will say one caveat on the collateral estoppel front, you mentioned parties might proceed to appeal with all of a bunch of different IPRs. There was a case from the Federal Circuit recently, the Power Integrations v. ON Semiconductor case, where the Federal Circuit did not apply collateral estoppel in part because it found that there the patent owner did not have a sufficient incentive to appeal one IPR finding. And I believe in that case it was because that patent that had been challenged was found to be not infringed in the underlying district court litigation anyway, so there was no real incentive for them to do so. So there are sometimes outs in that collateral estoppel analysis.
[41:21] Facebook v. Windy City: PTAB Pop Panel and Chevron Deference
Before we wrap up, I know there was an interesting brief filed in a pending Federal Circuit case this week by the PTO. Scott, you want to take a shot at that?
Scott McKeown: Sure. That's Facebook v. Windy City, which was a question about statutory interpretation on issue joinder, in other words, the idea of a party filing a petition and for one reason or another, realizing that they need to add a claim and the case has already been instituted – maybe they're outside of their one-year window; they can't file a second petition. So under 315(c), they would file a motion to join their own proceeding to join this issue. And it's been debated back and forth at the PTAB for years. This issue was the cause of the stacking of panels years ago to try to get some kind of consistency on this question. And at oral argument, the government had not participated in this appeal and it seemed as though the panel at the Federal Circuit was not in favor of this interpretation. And they have since asked for the views of the PTO, and that brief was filed two days ago. And the question posed to the PTO was, "Well, it looks like you've got this precedential opinion that came out of this new precedential opinion panel on this question. What should we do with it? Should we give it Chevron deference? You know, where does it fall in terms of authority relative to the Federal Circuit?" And I think ultimately, at least given the back and forth from the earlier argument, I think the Federal Circuit probably just finds that the statute is clear on its face and they don't necessarily need to even reach how much deference to give this decision. But that's not to say that others on the Court, particularly Judge Moore, I think have looked at this question before in the Aqua Products decision and found that the substantive rulemaking authority that was given to the Board, or I should say, the PTO under the AIA, was for regulations only. And that making, or I should say, providing guidance through adjudication, was a little bit different than the power that was conveyed to the agency. And perhaps without the traditional notice and comment rulemaking, it shouldn't be given deference. But I think at a high level, the issue will be dodged given that the statute will be determined to be clear. But the government is very interested in protecting this new concept, this new precedential opinion panel. I think my view of that brief is that they are correct that you should be able to get some deference from those decisions, but it may depend upon the issue that's addressed in those decisions. Is it a major issue? Is it a small gap? There seems to be some discussion in other agency decisions about perhaps that being a meaningful distinction. So we'll have to wait and see, but at a high level I think issue joinder will be shot down at the PTAB, but there's an interesting footnote in the solicitor's brief that perhaps you might be able to accomplish the same thing under the supplemental information rule. So as a practitioner, I'm more interested in that, but we'll look to see if there's any concurrence or dissents that discuss the Chevron deference given the precedential opinion panel's decisions on this point.
So with that, we've been going a while. Thanks to our listeners for sticking with us. We'll wrap up here and look forward to speaking with you on the next edition. So I want to thank Doug Hallward-Driemeier for joining us today. And as always, Matt and I will talk to you on the next one. Thank you.
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