IP Law Daily Patent owner’s promise not to sue mooted appeal; PTAB decisions vacated
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Thursday, February 9, 2017

Patent owner’s promise not to sue mooted appeal; PTAB decisions vacated

By Cheryl Beise, J.D.

PPG Industries, Inc., had standing to appeal Patent Trial and Appeal Board (PTAB) decisions reversing patent examiner invalidity determinations following inter partes reexaminations of two patents owned by Valspar Sourcing, Inc., the U.S. Court of Appeals for the Federal Circuit has ruled. However, Valspar’s provision of a unilateral covenant not to sue PPG for current or past infringement of the patents mooted any underlying controversy regarding the patented subject matter. The PTAB decisions were vacated and the appeal dismissed (PPG Industries, Inc. v. Valspar Sourcing, Inc., February 9, 2017, Newman, P.).

The appeal arose from two final decisions issued by the Patent Trial and Appeal Board following inter partes reexaminations of two patents owned by Valspar Sourcing, U.S. Patent Nos. 7,592,047 and 8,092,876, both relating to coatings for the interior of food and beverage cans. The reexaminations were instituted at PPG’s request, even though Valspar had not accused PPG of infringement. A patent examiner found the asserted claims invalid for obviousness, but the PTAB reversed. PPG appealed. Valspar sought to dismiss the appeal on jurisdictional grounds—PPG’s lack of standing and mootness.

Standing. On appeal, Valspar first argued that Valspar had no standing to appeal the PTAB decisions because there was no Article III case or controversy. Although Valspar subsequently filed suit against PPG in the federal district court in Minnesota, asserting infringement of related patents, Valspar maintained that PPG’s appellate standing in this case could not be based on a later-filed action.

The Federal Circuit held that PPG did have Article III standing to appeal the PTAB decisions. The evidence presented by PPG demonstrated that it possessed "a particularized, concrete interest in the patentability" of the subject matter, the court said. By the time PPG filed its notice of appeal in this case, it had already launched a commercial can-interior coating for the beverage can industry and PPG had received at least one customer inquiry suggesting that Valspar intended to pursue infringement litigation against PPG. This evidence sufficed to show that PPG had a legitimate concern that it would be sued by Valspar, a concern that was borne out by Valspar’s subsequent infringement action.

Mootness. Valspar also sought dismissal of the appeal on the ground of mootness. With its appellate brief, Valspar included a unilateral Covenant Not To Sue PPG with respect to the two patents that were the subject of the PTAB decisions. The covenant stated:

[Valspar] covenant[s] not to sue PPG Industries, Inc. or any of its subsidiaries or customers (collectively, "PPG") for infringement of any claim of [U.S. Patent No. 7,592,047] or [U.S. Patent No. 8,092,876] as of the date of this Covenant Not To Sue based on PPG’s manufacture, importation, use, sale and/or offer for sale of any currently existing products or use of methods and of prior existing products or prior use of methods.

The Federal Circuit agreed that Valspar’s Covenant Not To Sue, although tardily and unilaterally provided, mooted the proceedings on appeal. "The breadth of Valspar’s Covenant Not To Sue, absolving PPG (and its subsidiaries and customers) of any possible infringement of the subject matter of these patents" necessarily mooted the controversy as to the patented subject matter, the court said.

Under the circumstances, the Federal Circuit determined that vacatur was "most consonant to justice." The decisions of the Patent Trial and Appeal Board were vacated and the appeal dismissed.

The case is Nos. 2016-1406 and 2016-1409.

Attorneys: Edward Anthony Figg and Rachel Echols (Rothwell, Figg, Ernst & Manbeck, P.C.) for PPG Industries, Inc. Matthew A. Smith, Esha Bandyopadhyay, and Karen Irene Boyd (Turner Boyd LLP) for Valspar Sourcing, Inc.

Companies: PPG Industries, Inc.; Valspar Sourcing, Inc.

MainStory: TopStory Patent FedCirNews

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