IP Law Daily PTAB’s solar parking meter patent validity finding reversed; district court’s noninfringement judgment affirmed in part
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Thursday, January 31, 2019

PTAB’s solar parking meter patent validity finding reversed; district court’s noninfringement judgment affirmed in part

By Joseph Arshawsky, J.D.

Because a prior art patent cited as an anticipating reference during inter partes review of the claims of a solar parking meter patent was not conceived by the same inventors, the challenged claims were invalid. A district court’s finding that a parking meter company did not infringe the patent was affirmed, but its judgment of noninfringement of a related patent was reversed.

Duncan Parking Technologies Inc.’s ("DPT") appeal from a decision of the PTAB in an inter partes review—holding that claims 1-5 and 7-10 of U.S. Patent No. 7,854,310 (the "’310 patent") were not shown to be unpatentable as anticipated under Section 102(e)—was granted and the PTAB’s decision was reversed by the U.S. Court of Appeals for the Federal Circuit. IPS Group Inc.’s ("IPS") appeal from the decision of the U.S. District Court for the Southern District of California—granting summary judgment of non-infringement of the ‘310 patent—was rejected, and the decision affirmed by the Federal Circuit. However, the Federal Circuit vacated and remanded the district court’s decision granting summary judgment of noninfringement to Duncan on IPS’s claim of infringement of U.S. Patent No. 8,595,054 (the "’054 patent"), because the district court erred in construing the claims too narrowly (Duncan Parking Technologies, Inc. v. IPS Group, Inc., January 31, 2019, Lourie, A.).

IPS designs parking meter technology and is run by founder and CEO Dave King and Chief Technical Officer Alexander Schwarz, both engineers. King asserted that he conceived the idea for a credit-card enabled, solar-powered, single-space parking meter in May 2003, when he had trouble finding change to pay for a parking meter. IPS began work on the project shortly thereafter, and King consulted with Schwarz as he developed his idea. Eventually, King decided that IPS could gain greater market access by offering a retrofit device that replaces the internal components of an existing parking meter, rather than a costly replacement of the entire meter. IPS engaged a design firm, D+I, in November 2004 and provided it with a list of desired components and functionalities that King purportedly conceived, including a credit card reader, a solar panel, and a switch pad, among others.

The patents-in-suit. The ’310 and ’054 patents are similar but do not have the same specifications. The ’054 patent issued in 2013 from a PCT application filed on December 4, 2006, naming King and Schwarz as inventors. It claims a credit card-enabled, solar-powered, single-space parking meter device that can be used to retrofit the internal components of existing parking meters. Claim 1 is the sole independent claim and is representative. The ’310 patent issued in 2010 from an application filed on February 27, 2008, more than a year after the ’054 patent’s application had been filed, naming as inventors King and three engineers from D+I. It claims a credit card enabled, solar-powered, single-space parking meter. Claim 9 is exemplary. The patents disclose closely related preferred embodiments based on the prototype D+I created for IPS.

District court proceedings. In July 2015, IPS filed a complaint against DPT in the Southern District of California asserting infringement of the ’054 and ’310 patents. The district court in August 2017 granted DPT’s motion for summary judgment that DPT’s accused product, the Liberty® Single-Space Meter® ("the Liberty Meter"), does not infringe claims 1–9 or claim 11 of the ’310 patent because the Liberty Meter’s cover panel does not include a "plurality of buttons," as is required by the ’310 patent claims.

In December 2017, the district court further held that the Liberty Meter does not infringe any claim of the ’054 patent. The district court granted summary judgment of noninfringement because it found that the Liberty Meter’s keypad extends through an opening in the lower portion of the housing and, as a result, the lower portion of the Liberty Meter’s device is not "receivable within" its housing base.

PTAB proceedings. The PTAB held that, while Schwarz "contributed to the creation of at least some aspects of the block diagram of Figure 8 . . . [the PTAB was] skeptical that the general recitation in claims 1 and 9 of connections and operative associations of components constitutes more than what Mr. King broadly envisioned." The PTAB ultimately held that King was the sole inventor of the anticipating disclosure of the ’054 patent, and thus claims 1–5 and 7–10 were held not unpatentable as anticipated by the ’054 patent.

Appeal from the PTAB. DPT argued that Schwarz is a joint inventor of the relevant portions of the ’054 patent because he conceived the electrical system depicted in Figure 8. Thus, DPT contended that the ’310 patent claims were anticipated by the ’054 patent. The Federal Circuit agreed with DPT that the ’054 patent anticipates the challenged claims of the ’310 patent. The PTAB "clearly erred in concluding otherwise." A patent is anticipated under 35 U.S.C. § 102(e) if "the invention was described in . . . a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent" (emphasis added). "The statute’s reference to ‘by another’ means that an application issued to the same inventive entity cannot qualify as § 102(e) prior art."

The Federal Circuit reviewed whether the PTAB erred in concluding that the applied portions of the ’054 patent were invented by King alone and not by King and Schwarz jointly. The Federal Circuit concluded that the PTAB erred in not holding that King and Schwarz are joint inventors of the anticipating disclosure. In particular, Figure 8 discloses each of the electrical components claimed in the ’310 patent, along with a detailed diagram showing how each component is connected. It is clear that Schwarz conceived much of the ’054 patent’s electrical system, including designing the diagram showing how all the electronic components are connected. Schwarz invented "how the various electrical components of the meter are interconnected and operate together." Schwarz’s block diagram, depicted in Figure 8, organizes 26 separate electrical components and specific electrical connections between them. The record shows that Schwarz conceived many of these details. Schwarz’s contribution to the invention defined by the ’310 patent claims, as disclosed in the ’054 patent, was significant in light of the invention as a whole. Further, the ’054 patent’s parking meter device, its sole embodiment, contains the specific electrical system disclosed in Figure 8. Thus, the anticipating embodiment was the joint invention of King and Schwarz, an inventive entity different from that of the ’310 patent, and the ’054 patent is prior art under 35 U.S.C. § 102(e). Since IPS did not dispute the PTAB’s finding that this embodiment discloses every limitation of claims 1–5 and 7–10, the Federal Circuit held those claims of the ’310 patent unpatentable as anticipated.

Appeal of the district court’s decision regarding the ‘310 patent. The Federal Circuit found it necessary to consider IPS’s infringement arguments relating to claims 6 and 11 despite holding claims 1–5 and 7–10 unpatentable. IPS argued that the district court should not have granted summary judgment of noninfringement of the ’310 patent because the Liberty Meter infringes claim 9 either literally or through the doctrine of equivalents. The essence of IPS’s argument for literal infringement is that the district court applied its construction of the term "cover panel" as "the upper structural component of the exterior casing" too narrowly, relying on the preferred embodiment and the figures to limit the scope of the claimed invention to a cover panel that swings open. Specifically, IPS argued that the Liberty Meter’s keypad, a part of the device itself that extends through an opening in the housing base, meets the limitation of a "cover panel movably attached to the intermediate panel set . . . [with] a plurality of buttons" because it is "slidably attached" to the housing, which the ’310 patent specification discloses as an alternative cover panel mechanism.

The Federal Circuit was not persuaded by IPS’s arguments. The Liberty Meter’s keypad is an extension of its device, and construing part of the device as the cover panel is inconsistent with the claims of the ’310 patent. The specification is equally clear that the cover panel is a part of the housing and does not include the device. DPT is also correct that the cover panel is described as a singular component. Nor is the Liberty Meter’s keypad "attached" to an intermediate panel set, as required by the ’310 patent claims, simply by virtue of making contact with its housing. The word "attach" is never used in so broad a sense in the ’310 patent. Accordingly, there is no genuine dispute that the Liberty Meter does not meet the limitation of a "cover panel movably attached to the intermediate panel set . . . [with] a plurality of buttons," and the district court therefore did not err by granting summary judgment of noninfringement of the ’310 patent claims. The Federal Circuit agreed with DPT that the Liberty Meter’s keypad does not work in the same way as the claimed invention.

Under the doctrine of equivalents, the ’310 patent claims fundamentally distinguish the housing from the device. The district court correctly found that IPS’s doctrine of equivalents argument required vitiating a claim limitation. Allowing IPS to greatly expand the scope of the ’310 patent claims, to cover a parking meter with buttons located nearly anywhere on the outside of the meter, would disserve members of the public who seek to avoid infringing those claims. Thus, the district court did not err by granting summary judgment of noninfringement. The Federal Circuit therefore affirm the district court’s grant of summary judgment of noninfringement of claims 1–9 and 11 of the ’310 patent.

The ’054 patent. IPS also argued on appeal that the district court’s grant of summary judgment of noninfringement of the ’054 patent was erroneous. "Its arguments pertain essentially to claim construction." IPS argued that the district court construed the term "receivable within," in the claim limitation "a lower portion [of the parking meter device] . . . receivable within the housing base" too narrowly, requiring that the entire lower portion of the parking meter device be contained inside the parking meter housing. According to IPS, the district court’s claim construction as a whole, renders the preferred embodiment outside the scope of claim 1.

The Federal Circuit agreed with IPS and concluded that the district court erred by construing "receivable within" as meaning "capable of being contained [entirely] inside." Citing the Oxford Dictionary, the Federal Circuit stated: "A reasonable meaning of the term ‘receivable within’ in the context of the ’054 patent is ‘capable of being contained inside.’" But this definition contains no limitation to "completely" or "entirely" contained, nor is there any evidence that persons of skill in the art would understand it to be so limited. Indeed, DPT advertised the Liberty Meter on the basis that it "fits within" existing parking meter housings. The Federal Circuit also agreed with IPS that the district court’s claim construction excludes the preferred embodiment. The specification defines the coin slot as a part of the lower portion, even though it is not located "within" the housing base but is instead accessible through an opening. Whether the coin slot "protrudes" or not is beside the point; it is a part of the lower portion of the parking meter device but is not "capable of being contained [entirely] within" the housing base as required by the district court’s claim construction. As IPS notes, a claim construction that excludes the preferred embodiment is highly disfavored. The claims cannot be limited to a parking meter device with a lower portion "entirely" contained by the parking meter housing, and the Federal Circuit therefore held that the term "receivable within" should be construed as "capable of being contained substantially inside" the housing base. This construction is consistent with the plain meaning of the terms, as well as the evidence from the intrinsic record that the inventors aimed to design a parking meter device that could practically retrofit an existing parking meter, not to create a device completely sealed from the elements.

Because the Federal Circuit agreed with IPS that the district court’s claim construction of "receivable within" was erroneous, the court vacated the district court’s grant of summary judgment of noninfringement of the ’054 patent and remanded.

The case is Nos. 2018-1205 and 2018-1360.

This case is No. 2018-1205.

Attorneys: Stuart Alan Raphael (Hunton Andrews Kurth LLP) for Duncan Parking Technologies, Inc. Richard Torczon (Wilson, Sonsini, Goodrich & Rosati, PC) for IPS Group, Inc.

Companies: Duncan Parking Technologies, Inc.; IPS Group, Inc.

MainStory: TopStory Patent FedCirNews

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