By Cheryl Beise, J.D.
Under Supreme Court’s Thryv decision, the "no appeal" provision of 35 U.S.C. § 314(d) precludes judicial review of CBM institution decisions.
Following remand from the Supreme Court for reconsideration in view of its decision in Thryv, Inc. v. Click-to-Call Technologies, LP, the U.S. Court of Appeals for the Federal Circuit has held that the "no appeal" provision of 35 U.S.C. § 314(d) precludes judicial review of Patent Trial and Appeals Board’s covered business method (CBM) review institution decisions. The Federal Circuit was precluded from reviewing patent owner SIPCO LLC’s challenge to the Board’s threshold determination to institute CBM review of SIPCO’s communications patent. Turning to the merits, the Federal Circuit held that substantial evidence supported the Board’s determination that the challenged claims would have been obvious in view of a prior art patent. The court did not need to reach the Board’s patent-ineligibility determination under Section 101 (SIPCO, LLC v. Emerson Electric Co., November 17, 2020, Chen, R.).
SIPCO ’842 patent. SIPCO owns U.S. Patent No. 8,908,842 (’842 patent). The patent involves ways to communicate information from a previously unconnected, remote device to a central location. The ’842 patent describes a two-step communication path in which a remote device first communicates through a low-power wireless connection to an intermediate node, which in turn connects to a central location. For example, a user may wish to replace the bank and credit cards he or she carries with a remote transmitting unit, similar to an automobile remote key, that has one or more buttons each associated with a bank or credit card. When the user depresses the button, the remote transmitter transmits the user’s banking card account and PIN information to, for example, the ATM. The ATM then transmits the information over a network (e.g., a public-switched telephone network) to the central location for verification.
CBM review. Emerson Electric Co. filed a petition requesting CBM review of the ’842 patent on Sections 101 and 103 grounds. The Board instituted review on both grounds. The Board concluded claims 1, 7, 9, 16, and 17 of the ’842 patent recite are directed to the patent-ineligible abstract idea of establishing a communication route between two points to relay information. In the Board’s view, the claims were directed to transmitting data between locations using conventional or generic computer components. The Board also found the claims unpatentable for obviousness in view of U.S. Patent No. 5,157,687 (Tymes).
Under 37 C.F.R. § 42.301(b), the Board is required to consider "whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution." Applying just the second part of this regulatory standard, the Board found that the patent contained no technical solution to a technical problem.
SIPCO appealed the Board’s determination that the ’842 patent was subject to CBM review, as well as the Board’s invalidity determinations.
Federal Circuit decision. On September 25, 2019, the Federal Circuit reversed the Board’s finding that the ’842 patent does not satisfy the second part of the regulation defining "technological invention." SIPCO, LLC v. Emerson Elec. Co., 939 F.3d 1301, 1313 (Fed. Cir. 2019), judgment vacated, 207 L. Ed. 2d 1049 (June 15, 2020). The Federal Circuit vacated and remanded the case for the Board to consider the applicability of the first part of Section 42.301(b). Emerson petitioned for rehearing en banc, which the court denied.
Supreme Court remand. Emerson then filed a petition for a writ of certiorari in the Supreme Court asking whether " 35 U.S.C. [§] 324(e) permits review on appeal of the Director’s threshold determination, as part of the decision to institute CBM review, that the challenged patent qualifies as a CBM patent."
The Supreme Court granted the petition, vacated the Federal Circuit’s opinion, and remanded "for further consideration in light of the Court’s decision in Thryv, Inc. v. Click-to-Call Technologies, LP," 140 S. Ct. 1367 (2020). Emerson Elec. Co. v. SIPCO, LLC, 207 L. Ed. 2d 1049 (June 15, 2020). In Thryv, the Court held that the "no appeal" provision of 35 U.S.C. § 314(d) precludes judicial review of the PTAB’s application of Section 315(b)’s time bar proscription, because the time bar decision is "closely related" to the decision to institute inter partes review and is therefore rendered nonappealable by Section 314(d).
Following remand, the Federal Circuit recalled its mandate, reopened the appeal, and ordered supplemental briefing. Both parties filed supplemental briefs addressing the effect of Thryv. The Director of the USPTO was permitted to intervene.
Board’s institution of CBM review. In Thryv, the Supreme Court held that the Patent Office’s decision as to whether earlier litigation bars institution of inter parties review under 35 U.S.C. § 315(b) is "final and nonappealable" under the "no appeal" provision of 35 U.S.C. § 314(d). The Court held that judicial review is not available "where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review."
SIPCO argued that the Board exceeded its authority in conducting a CBM review for a patent that was not a CBM patent. The Federal Circuit rejected this argument because SIPCO’s "appeal challenges not the manner in which the agency’s review ‘proceeds’ once instituted, but whether the agency should have instituted review at all," the court said. Thryv held that the "No Appeal" provision of Section 324(e) bars judicial review of the threshold decision to institute inter partes review. SIPCO’s challenge was nothing more than a contention that the agency should have refused to institute CBM review.
Because the threshold determination that SIPCO’s ’842 patent qualified for CBM review was a nonappealable determination under 35 U.S.C. § 324(e), the Federal Circuit was precluded from reviewing SIPCO’s challenge to that threshold determination.
Obviousness. SIPCO’s challenge to the Board’s obviousness ruling focused on three claim limitations relating to "low power transceiver," "instruction data," and "establishing a communication link." The court reviewed each in turn.
SIPCO argued that the Board should have construed "low power transceiver" to require "a device that transmits and receives signals having a limited transmission range." The Board determined that the claimed "low power transceiver" would have been obvious over Tymes regardless of whether "low power" restricts the transceiver to having limited transmission range. Tymes itself emphasizes that its network of remote units, base stations, and a central computer is a low power network. The Board further credited the petitioner’s expert who explained that a skilled artisan would have understood such transmissions to be both low-power and limited-range. The Federal Circuit saw no reason to revisit its prior determination that "a skilled artisan would understand ‘low power’ to mean that the transceiver operates at a power level corresponding to ‘limited transmission range." The court found that the Board’s obviousness determination was supported by substantial evidence, even under SIPCO’s proposed construction.
The Board determined that two "instruction data" limitations in claim 1 and claim 17 were disclosed by a signaling mechanism through which Tymes’s remote unit is reassigned to a new base station. Claim 17 of the ’842 patent requires the low-power transceiver to "receive a signal including an instruction data from a remote device," whereas claim 1 requires the transceiver to "transmit a signal comprising instruction data for delivery to a network of addressable devices." Tymes’s remote unit is assigned to a particular base station through which the remote unit can communicate with the central station. These remote units (e.g., barcode readers) are mobile and each base station only covers a limited transmission range. SIPCO contended that the Board erred in construing "instruction data." The court, however, found that the Board correctly rejected SIPCO’s attempt to restrict the plain meaning of the claim language. "Even if we were to accept SIPCO’s construction, the Board was supported by substantial evidence in finding that Tymes’s distress call and response packet contain ‘code identifying a function to be performed,’" the court said.
Claim 1 requires a "controller configured to establish acommunication link between at least one device in the network of addressable devices and the central location using an address included in the signal" (emphasis added). SIPCO argued that the Board should have construed "establishing a communication link" to mean "to set up a communication link that did not previously exist." But, as the Board explained, when Tymes’s remote unit moves outside the range of its base station and is subsequently reassigned, the new base station establishes a communication link between the remote unit and the central host computer. This communications link through the new base station did not previously exist. Thus, even under SIPCO’s construction, the Federal Circuit found that substantial evidence supported the Board’s finding that Tymes discloses "establishing a communication link" as claimed.
The Federal Circuit affirmed the Board’s determination that the challenged claims would have been obvious in view of Tymes without reaching the Board’s patent-ineligibility decision under Section 101.
This case is No. 18-1635.
Attorneys: Gregory J. Gonsalves (Gonsalves Law Firm) for SIPCO, LLC. Douglas Hallward-Driemeier (Ropes & Gray LLP) for Emerson Electric Co. Kakoli Caprihan, U.S. Patent and Trademark Office, for Andrei Iancu.
Companies: SIPCO, LLC; Emerson Electric Co.
MainStory: TopStory Patent FedCirNews GCNNews
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