By Robert Margolis, J.D.
The determination of ineligibility of 19 claims in prior litigation was dispositive of those claims here.
The U.S. Court of Appeals for the Federal Circuit has affirmed a Patent Trial and Appeal Board’s decision rejecting Apple Inc.’s contention that certain claims in two patents owned by Voip-Pal.com, Inc. are obvious. The court also affirmed the Board’s resolution of Apple’s request for sanctions based on ex parte communications to the Board (and others) by Voip-Pal’s former CEO. The Federal Circuit did, however, vacate and remand the Board’s decision as to 19 claims in the two patents-at-issue, finding that a decision in prior litigation that those claims are ineligible for protection has mooted the consideration of those claims in this litigation (Apple Inc. v. Voip-Pal.Com, Inc., September 25, 2020, Reyna, J.).
Voip-Pal.com owns U.S. Patent Nos. 8,542,815 ("the ’815 patent") and 9,179,005 ("the ’005 patent") (collectively, the "Asserted Patents"), both titled "Producing Routing Messages for Voice Over IP Communications." They describe the field of invention as "voice over IP communications and methods and apparatus for routing and billing." They concern routing communications between two different types of networks—public and private.
Voip-Pal sued Apple for infringement of the Asserted Patents in February 2016 in federal district court in Nevada, and in June 2016, Apple petitioned the PTAB for inter partes review of several claims of the Asserted Patents. The Nevada court stayed the proceedings pending the inter partes review. Apple argued in the PTAB proceedings that the Asserted Patents were obvious over the combination of two U.S. Patents—Nos. 7,486,684 B2 ("Chu ’684") and 8,036,366 ("Chu ’366").
During the inter partes proceedings, Voip-Pal’s former CEO sent six letters to members of Congress, the President, federal judges, and administrative patent judges at the Board, without copying Apple. The letters registered various complaints and criticisms about the inter partes review system and requested judgment in favor of Voip-Pal or dismissal of Apple’s petition. The panel ultimately ruled in favor of Voip-Pal, finding all claims to be not invalid as obvious over Chu ’684 and Chu ’366.
Apple then moved for sanctions against Voip-Pal based on the letters, seeking an adverse judgment against Voip-Pal or that the panel’s decision be vacated, and a new panel be assigned to preside over new proceedings. After moving for sanctions, Apple appealed the panel’s final written decision to the Federal Circuit Court of Appeals, which stayed the appeal and remanded to the PTAB for the limited purpose of ruling on the sanctions request. A new PTAB panel replaced the prior panel, agreed the letters were sanctionable, but rejected Appel’s request for a directed judgment in its favor as a sanction. Instead, it determined that it would preside over Apple’s petition for rehearing. The new panel then denied the petition for rehearing. Both the Board’s sanctions ruling and its merits determination were considered on appeal.
Mootness. The Federal Circuit first addressed Apple’s argument that the court’s recent ineligibility determination in Voip-Pal.com, Inc. v. Twitter, Inc., 798 F. App’x 644 (Fed. Cir. 2020) ("Twitter"), renders the claims in this case moot. In Twitter, the Federal Circuit affirmed the dismissal of similar claims by Voip-Pal, agreeing with a California district court’s holding that the asserted claims were patent ineligible.
There was no dispute that 19 of the twenty claims deemed patent ineligible in Twitter overlap claims asserted in the inter partes proceedings. Thus, the Federal Circuit agreed with Apple that Twitter rendered those claims moot. The Federal Circuit thus vacated the PTAB’s final written decision as to those overlapping claims and directed it to dismiss Apple’s petitions as to these claims, given their mootness.
Non-overlapping claims. The mootness determination still left 15 claims from the inter partes proceeding that did not overlap with those decided in Twitter. Apple argued that because those claims are "essentially the same" as the claims held patent ineligible in Twitter, principles of res judicata should render the question of obviousness of the non-overlapping claims moot as well. Apple argued that res judicata precludes Voip-Pal from suing Apple for infringement of the non-overlapping claims in future litigation. The Federal Circuit disagreed with Apple that these claims are precluded, however, holding that the question only could be decided in a future litigation, since claim preclusion requires a judgment on the merits of a prior litigation. No such judgment on the non-overlapping claims has been rendered, the Federal Circuit pointed out, and those non-overlapping claims have not been held to be patent ineligible.
Sanctions determination. Apple also challenged the new Board panel’s sanctions order, arguing that the panel improperly rendered its own sanctions remedy, not one sought by Apple. According to Apple, the Board exceeded its authority under the Administrative Procedures Act by finding the ex parte letters were sanctionable, but not imposing one of the sanctions enumerated in 37 C.F.R. § 42.12(b). The Federal Circuit rejected that argument, noting the regulation provides that sanctions "may" "include" those enumerated. Use of the word "include" means the list is non-exhaustive. In addition, the word "may" gives the Board discretion on choosing a sanction. Finally, Apple’s request for a sanction of judgment in its favor was properly rejected, since such a merits determination on a patent should be a sanction of last resort, the Federal Circuit noted.
Non-obviousness. Apple also appealed the Board determination that the claims are non-obvious, arguing that the Board erred by holding that Apple did not establish a motivation to combine Chu ’684 with Chu ’366. The Federal Circuit was "not persuaded" and rejected Apple’s arguments. Apple had argued that a skilled artisan would have found Chu ’684 deficient and necessarily sought to improve it, but the Board found that Apple provided no "underlying evidentiary support" for this argument. The Board had found Apple’s expert testimony on the subject to be conclusory and insufficient to establish reasons for combining Chu ’684 with Chu ’366. In addition, the Board credited the testimony of Voip-Pal’s expert that Chu ’684 was not deficient. The Federal Circuit would not disturb the Board’s weighing of the merits of the parties’ respective experts’ testimony.
This case is No. 18-1456.
Attorneys: Mark Andrew Perry (Gibson, Dunn & Crutcher LLP) for Apple Inc. Lewis Emery Hudnell (Hudnell Law Group P.C.) for Voip-Pal.Com Inc.
Companies: Apple, Inc.; Voip-Pal.com, Inc.
MainStory: TopStory Patent GCNNews FedCirNews
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