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Fee Shifting Under § 285 Does Not Apply to Conduct Solely Arising in IPR

Considering for the first time whether fee shifting of § 285 applies to exceptional conduct arising solely from an inter partes review (IPR) proceeding, the US Court of Appeals for the Federal Circuit held that § 285 does not authorize an award of fees based on conduct at the United States Patent and Trademark Office (USPTO) during the course of an IPR proceeding. Amneal Pharma. LLC v. Almirall, LLC, Case No. 2020-1106 (Fed. Cir. June 4, 2020) (Dyk, J.).

Almirall owns certain Orange Book-listed patent rights to medication used to treat acne. Its competitor, Amneal, planned to market a generic version of the acne medication. Before seeking approval to do so, Amneal filed an IPR petition challenging the validity of certain claims of Almirall’s patents. Amneal then filed an Abbreviated New Drug Application (ANDA), identifying Almirall’s patents in the Paragraph IV certification. Almirall subsequently filed a district court action against Amneal for infringement. Shortly after the district court action was filed, the parties entered into settlement negotiations, during which Almirall offered Amneal a covenant-not-to-sue, provided that Almirall drop its pending IPR. The parties were unable to reach agreement at that time, and the IPR culminated in the Patent Trial and Appeal Board (PTAB)’s final written decision, finding the challenged claims not unpatentable. Amneal appealed the PTAB’s final determination. Shortly after the appeal was filed, the parties reached an agreement and jointly moved to dismiss the appeal. Almirall also moved for fees under § 285 for Amneal’s allegedly unreasonable conduct in maintaining its IPR, even after Amneal offered it a covenant-not-to-sue.

Comparing IPRs to interference proceedings, the Federal Circuit looked to a decision of its predecessor, the Court of Customs and Patent Appeals, which determined that § 285 did not extend to appeals of administrative proceedings at the USPTO, and IPRs were no different. Stopping short of proclaiming a categorical rule that § 285 applies only to conduct in district court proceedings, the Court explained that at most, § 285 speaks to awarding fees that were incurred during, in close relation to, or as a direct result of district court proceedings. In the circumstance here, where the alleged exceptional conduct was solely before the USPTO and an appeal of the USPTO decision—not a district court’s decision—an award under § 285 was not appropriate. In addition, the Court noted that the USPTO has its own procedures for sanctioning exceptional conduct under 37 C.F.R. § 42.12, where the PTAB may award “compensatory expenses, including attorney’s fees,” among other sanctions.




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Arthrex Extended to Inter Partes Re-examination

The US Court of Appeals for the Federal Circuit denied a petition for panel rehearing regarding the constitutionality of decisions issued by the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB), holding that its decision in Arthrex, Inc. v. Smith & Nephew, Inc. (IP Update, Vol. 22, No. 11) also applies to final decisions issued by administrative patent judges (APJs) in inter partes re-examinations. Virnetx v. Cisco Systems, Inc., Case No. 19-1671 (Fed. Cir. May 13, 2020) (O’Malley, J.). The Court also denied (per curiam) a concurrently filed petition for rehearing en banc.

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The “Plotting” Thickens: Claims that Solve Known Problem with Known Methods Are Obvious

The US Court of Appeals for the Federal Circuit applied KSR and its obviousness progeny, finding that patent claims directed to location plotting were obvious under 35 USC § 103. Uber Techs., Inc. v. X One, Inc., Case No. 19-1164 (Fed. Cir. May 5, 2020) (Prost, CJ).

X One sued Uber Technologies asserting a patent directed to exchanging location information between mobile devices, such that a user could add other mobile device users to a “Buddy List,” share her location with listed buddies or temporary “instant buddies,” and see the locations of her buddies on a map. The patent’s purported novelty lay in “two way position information sharing,” creation of location sharing “groups,” and “temporary location sharing” that “automatically expires.”

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“Waive” Goodbye to Belated Argument that Administrative Patent Judges’ Appointment is Unconstitutional

Addressing whether a party can waive a challenge to the constitutionality of Administrative Patent Judges’ (APJs’) appointment, the US Court of Appeals for the Federal Circuit found that the issue is non-jurisdictional and therefore waivable. Ciena Corp. v. Oyster Optics, LLC, Case No. 19-2117 (Fed. Cir. Jan. 28, 2020) (O’Malley, J.) (reissued as precedential May 5, 2020).

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PTAB Time Bar Application in Instituting IPR Proceedings Nonappealable

Addressing the scope of review of the Patent Trial and Appeal Board’s (PTAB’s) application of the one-year time bar of 35 USC § 315(b) in deciding whether to institute an inter partes review (IPR) proceeding, the Supreme Court of the United States held that application of the time bar by the PTAB is nonappealable. Thryv, Inc. v. Click-to-Call Techs., LP, Case No. 18-916 (Supr. Ct. Apr. 20, 2019) (Ginsburg, Justice) (Gorsuch, Justice, joined in part by Sotomayor, Justice, dissenting). The Court explained that an appeal based on the PTAB’s application of the time bar for filing an IPR petition is prohibited under 35 USC § 314(d), which states that the PTAB’s decision on institution “shall be final and nonappealable.”

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Assignor Estoppel Does Not Apply to AIA Challenges

The US Court of Appeals for the Federal Circuit reiterated that while assignor estoppel prevents a party that assigned a patent to another party from later challenging the validity of the assigned patent in district court, it does not preclude the party from challenging the validity of the assigned patent in an America Invents Act inter partes review (IPR) proceeding. Hologic, Inc. v. Minerva Surgical, Inc., Case Nos. 19-2054; -2081 (Fed. Cir. Apr. 22, 2020) (Stoll, J.) (Stoll, J., additional views).

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Emmy Award to the Rescue – Secondary Considerations Overcome Prior Art

The Patent Trial and Appeal Board (Board), in a decision designated as precedential, found that a Patent Owner’s substitute claims were patentable in view of evidence of secondary considerations even though the prior art weighed in favor of obviousness. Lectronics, Inc. v. Zaxcom, Inc., Case No. IPR2018-01129 (PTAB Jan. 24, 2020) (Deshpande, APJ.) (designated precedential on Apr. 14, 2020).

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With Notice and Opportunity to Respond, PTAB May Raise New Patentability Issues Based on Art of Record

In an opinion concerning the notice provisions of the Administrative Procedure Act (APA), the US Court of Appeals for the Federal Circuit held that the Patent Trial and Appeal Board (PTAB) may identify a new patentability issue regarding proposed substitute claims based on prior art of record—but must first notify the parties and provide an opportunity to respond. Nike, Inc. v. Adidas AG, Case No. 20-1262 (Fed. Cir. Apr. 9, 2020) (Stoll, J.).

The decision is part of a long-running battle between Nike and Adidas that began in 2012, when Adidas filed a petition for inter partes review (IPR) of a patent owned by Nike. Nike subsequently filed a motion to cancel the existing claims and substitute new claims. Particularly relevant is a new claim that recites a knit textile upper element of a shoe containing “apertures” that can be used to receive laces and that are “formed by omitting stitches” in the knit textile.

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