Substitute Claims Archives

Only under Rare Circumstances Can the Patent Trial & Appeal Board Find Proposed Substitute Claims Unpatentable on Its Own

The US Court of Appeals for the Federal Circuit addressed, for the first time, the issue of when the Patent Trial & Appeal Board (Board) may raise a ground of unpatentability that was not advanced by a petitioner in relation to proposed substitute claims. The Court upheld the standard defining the “rare circumstances” in which such a ruling is proper while questioning the Board’s reasoning and application of the standard. Hunting Titan, Inc. v. DynaEnergetics Europe GMBH, Case Nos. 20-2163; -2191 (Fed. Cir. Mar. 24, 2022) (Prost, C.J., Reyna, Hughes, JJ.) (Prost, C.J., concurring).

Hunting Titan challenged DynaEnergetics’ patent in an inter partes review (IPR) based on anticipation and obviousness grounds. The Board found all the original claims of the patent unpatentable as anticipated. DynaEnergetics moved to amend to add proposed substitute claims. Hunting Titan opposed the motion to amend but advanced only obviousness grounds against the proposed substitute claims. The Board determined sua sponte that the proposed substitute claims were unpatentable as anticipated and, therefore, denied the motion to amend. DynaEnergetics requested rehearing, and the Precedential Opinion Panel (POP) reversed the Board’s denial of the motion to amend and determined that Hunting Titan did not prove that the proposed substitute claims were unpatentable.

The POP decided that “only under rare circumstances” should the Board sua sponte raise a ground for unpatentability not advanced by the petitioner in relation to proposed substitute claims. The rare circumstances include only two situations:

When the petitioner is not involved in the motion to amend, such as when a petitioner chooses not to oppose the motion or ceases to participate in the proceeding altogether
When evidence of unpatentability is readily identifiable and persuasive, such as if the substitute claims are unpatentable for the same reasons as the original claims.

The POP stated that in most circumstances, it is best to rely on the adversarial system and expect the petitioner to raise the unpatentability grounds for consideration.

The Federal Circuit upheld the POP’s standard for when the Board may sua sponte find proposed substitute claims unpatentable but also found the POP’s reasoning “problematic” because it placed too much emphasis on the adversarial system. The Court noted that Board proceedings, such as IPRs, are fundamentally a review of an earlier administrative proceeding, as opposed to civil litigation, The POP’s rationale was based on the public interest being served by an adversarial system rather than on the public interest being served by maintaining integrity of the patent system.

The Federal Circuit also questioned the POP’s application of its new standard to the case at hand, noting that the readily identifiable evidence exception should have been applied when the Board found the proposed substitute claims unpatentable for the same reasons it found the original claims to be unpatentable.

In her concurring opinion, Chief Judge Prost noted that “[i]t makes little sense to limit the [Board], in its role within the agency responsible for issuing patents, to the petitioner’s arguments.” Instead, “the Board must determine whether the [...]

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PTAB May Reject Substitute Claims Under Any Basis of Patentability

The US Court of Appeals for the Federal Circuit considered for the first time whether a district court’s invalidity determination, when made final after all appeals are exhausted, divests the Patent Trial and Appeal Board (PTAB) of jurisdiction in a co-pending inter partes review (IPR) proceeding involving the same claims, and held that it does not. The Court also held that in an IPR proceeding, the PTAB is free to reject proposed substitute claims for failing to meet the subject matter eligibility requirements of § 101. Uniloc 2017 LLC v. Hulu, LLC, Case No. 19-1686 (Fed. Cir. July 22, 2020) (Wallach, J.) (Dyk, J., dissenting).

Hulu filed an IPR petition challenging claims of Uniloc’s patent directed to adjustable software licensing for digital products. After the PTAB instituted review, Uniloc filed a motion for substitute claims, conditional on whether the PTAB found the original claims unpatentable. Before the PTAB issued its final determination and before it ruled on the motion for substitute claims, a district court, in a related proceeding, held Uniloc’s asserted claims invalid as directed to patent-ineligible subject matter. Shortly thereafter, the PTAB issued a final written decision finding the challenged claims unpatentable over the prior art, and it found the substitute claims unpatentable under § 101. Uniloc appealed the PTAB’s use of § 101 to invalidate its substitute claims.

While Uniloc’s appeal of the Hulu IPR was pending, the Federal Circuit affirmed the district court’s invalidity finding as to the original claims. With respect to the Hulu appeal, the Federal Circuit ordered the parties to address whether the appeal was moot in view of the ultimate finality with respect to invalidity of the original claims, thereby divesting the PTAB of jurisdiction over the IPR.

The majority held that the finality of the district court’s invalidity finding did not necessarily divest the PTAB of authority to consider substitute claims. It determined that the mootness issue was waivable, and that Hulu had waived the argument because it failed to raise mootness during the pendency of the IPR at the time the district court issued its decision. Even if Hulu had not waived the argument, the majority found that the PTAB’s authority to consider substitute claims does not depend on any live dispute about the original claims, as long as the motion to amend in the IPR was timely filed.

As to the PTAB’s rejection of the claims under § 101, the majority held that although the PTAB is restrained in an IPR proceeding to invalidating a patent’s original claims only under the anticipation and obviousness grounds raised in the petition, the PTAB may use other invalidity tools as a “new ground of rejection” for substitute claims, including for lack of patentable subject matter under § 101. The majority also suggested that other grounds of patentability would be within the scope of the PTAB’s authority, including rejections under the various subsections of § 112. The majority was concerned that limiting the PTAB’s review might force it to issue substitute claims that fail to meet all the statutory [...]

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