Beyond the holding – A nuanced look at the Federal Circuit’s patent decisions | Episode 6

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The Federal Circuit gave us important guidance with its recent Intel v. Qualcomm decision. What can we anticipate for Article III jurisdiction going forward? And is the Court quietly reviving the “gist” doctrine of old for claim construction?

Featuring Wayne Stacy (BCLT) and Seth Lloyd (MoFo).

Episode Transcript


Seth Lloyd, Wayne Stacy


Wayne Stacy  00:00

Welcome, everyone to the Berkeley Center for Law and Technology’s Expert Series Podcast. I’m Wayne Stacy, the Executive Director for BCLT and your host today. Today we have Seth Lloyd from Morrison Forrester to walk us through a recent interesting ruling from the Federal Circuit. We have two heavyweights, Intel and Qualcomm fighting it out. And as often happens, when you have two heavyweights fighting it out, a lot of issues get brought to the surface, the Federal Circuit had to clean them up. So in light of what you saw with Intel, and Qualcomm, Seth, where do you want to kick off maybe Article Three, which is everyone’s favorite New Year topic?


Seth Lloyd  00:45

Yeah, that seems like a good place to start and is where the Court starts to. So just to kind of set the stage a little bit here, as you said, we have two kind of heavyweights fighting it out in the the the forum that they were fighting it out in at least before the appeal was the the PTABs of the Patent Trial and Appeal Board. So Qualcomm owns a patent to kind of these multi multi processor systems. It had asserted that patent not against Intel, but against one of Intel’s customers and Intel in in response to that and kind of related litigation, then went to the Patent Trial and Appeal Board and filed a petition for inter parties review on the patent. The process, the PTAB went forward, ultimately the the PTAB cancelled some of the claims that Intel had challenged, but not others. And Intel appealed the claims that were upheld. And that the Article Three issue came in at the appeal stage, which is sort of the kind of an interesting wrinkle that happens when you take this route from the PTAB to the Federal Circuit. And the reason, you know so in district court if there’s an article three injury or issue that’s generally going to be litigated in the District Court itself, and then you know, if the district court gets it right or wrong, people will fight about that on appeal, that the difference in the PTAB context is anybody right can go to the patent office and file a petition. I think the statutory language is basically anybody but the patent owner can file a petition for inter parties review. So there’s no check out the PTAB. But once you try to invoke the the authority of an Article Three court by safe at filing your appeal, now your article three requirements are going to kick in.


Wayne Stacy  02:37

Well, we saw some of this with some hedge funds filing early on. But are we really seeing this as an issue popping up? When you have two actual manufacturing corporations like Intel and Qualcomm? Do you see this as being a problem people will bump into going forward?


Seth Lloyd  02:57

Yeah, it is still popping. I mean, you’re right, kind of some of the early ones were maybe easier cases for the Federal Circuit, where you had parties who weren’t making any products or had any kind of real threat of infringement. But it is still popping up. I mean, sometimes it does seem like it’s popping up more in the pharmaceutical or the bio fields, because the lead time when somebody makes a product, but between making it and getting it to market is so long, and so there are fights there. But even in the even in kind of the electronic space, it can pop up. And the reason it popped up here is because as I mentioned earlier, Qualcomm, the patent owner had never sued Intel, right, it hit only sued one of Intel’s customers, and in fact, that suit actually settled. And so that customer may or may not, I don’t think the details of the settlement weren’t necessarily before the Federal Circuit, but it was on you know that that customer may be done, because because the case. So still, in this case, the court ultimately concluded there was Article Three injury. So they’re what Intel had standing to bring the appeal in, and they base that on two facts. So one is that when Intel’s customer was sued, the at least one a partial basis for the suit was Intel’s product. And Intel was still making that same product. So the potential for future infringement suits was still there. And Intel was selling or there was evidence that Intel had that he was selling that product not just to the customer who had been sued, but to at least one other customer as well. So all of that meant Intel still had kind of a real threat of infringement. The The one interesting piece and I think maybe somewhat advancement of the law here is that the what Intel made was only one component of the claimed invention. So I think the claimed invention here you’re acquired multiple processors, and Intel made just one of those processors that then was being combined together with others later on. And the court held at least on these facts, that that was still enough to give Intel injury, but I don’t I think that that doesn’t necessarily mean it will always be enough. I think the the language of the court used was that, at least on these facts, where the component Intel made was a core component, the exact language the court said was given the centrality of that component to the claim. So although Intel made just one component, it was sort of the court viewed as a key component of the invention. So given that centrality, and kind of the potential that Intel could be sued, even just for an indirect infringement, say inducement that that was enough to get into Article Three standard.


Wayne Stacy  05:53

Well, Seth there’s something interesting here the this concept of centrality, and the courts reference to evidence, this is all standing evidence that I don’t think I typically see in any kind of PTAB filings, or especially in a petition. So how does the Federal Circuit get a record on something like this? And then what should litigants be thinking about if they need to protect their appellate rights?


Seth Lloyd  06:23

Yeah, it’s a it does create some interesting issues that are or at least in the patent context, somewhat unique to the PTAB. So I think there are a couple takeaways for people in the industry. One is, before you file your petition, you need to think about this issue. If you’re, if you’re thinking of challenging a patent, there’s not going to be much of a bar to filing your petition at the patent office. But you need to think about if this goes south, and I get a bad decision from the patent office, am I going to be able to meet the requirements for Article Three standing to take my case to the Federal Circuit, and get judicial review? Because Because if not, the risk would be you get a bad PTAB decision, you you can’t appeal. But yet, you’re you might still be stopped from challenging the same claims on those references going forward. So you want to think about that ahead of time. And then the other kind of takeaway, as you were alluding to is, you need to think about building a record in the Federal Circuit. Maybe there’s opportunity. And at the patent office, if there is think about, you know, getting anything in the record that would help show why you’re at risk here. But at the very least once you’re at the Federal Circuit parties, I think often will produce affidavits, or similar declarations or written evidence that they can submit, attach with either an opening brief or often you’ll see in opposition to a motion to dismiss. But that the Federal Circuit has emphasized you can’t just tell us, you know, this is what’s going on, you need to you need to support it with with some kind of documentary evidence.


Wayne Stacy  08:02

Well, the other thing in this, there’s so many interesting pieces that came out of this opinion just shows you the level of fight and the efficiency of their briefing to get all of these issues within the right word limits. But the the issue of claim construction came up. And I thought one of the most interesting pieces of that was it was remanded instead of the Federal Circuit just taking, taking the issue and deciding and itself. So what, what’s going on here? Why was the Federal Circuit willing to send something back to the board that didn’t require any fact finding?


Seth Lloyd  08:39

Yeah, it’s a good question. And that kind of jumped out to me as well, right, usually, especially where, you know, the, the patent office did decide to claim construction issue. And so the issue was kind of right for the Federal Circuit. But the court ultimately held that the patent office basically hadn’t done the full analysis. And I think some of the one thing to keep in mind here is that this is the agency context. And so the unlike the result might have been different in the in the district court context, where, you know, it’s less about the the court kind of deferring to another co equal independent branch of government with in the patent office context, but just to kind of take it from kind of this high level down to like the the details here so that the fight here was about the claim term “Hardware Buffer.” Doesn’t sound like a particularly complicated term. But in the context here, it ended up being kind of a complicated issue. And one of the things that happened is that the dispute here about this term kind of arose pretty late in the process. It wasn’t the initial filings that the parties had before the patent office didn’t key in so much on this and then it arose late. In fact, I think there was some supplemental briefing on it as well. And that does seem to happen more in the patent office context, because the PTAB doesn’t do Markman briefing. If people are familiar with that, where you know, in the district court context, you’ll have an entire separate process to decide to claim construction. The Patent Office does claim construction sort of at the same time that it’s deciding the substantive issues of patentability. So it arose kind of late in the fight was to Qualcomm or Intel, I guess, starting with Intel, Intel’s construction was hardware buffers, plain and ordinary meaning, which people often say and sometimes isn’t particularly helpful. But Intel offered more said, which means it’s a buffer implemented in hardware. That was Intel’s construction, Qualcomm offered a couple of different options, but the one that the board ultimately agreed with was essentially kind of a negative construction in this was based on some of the description in the specification, and it was that the Hardware Buffer has to it has to exclude, it can’t be interpreted so broadly, that it covers the use of a temporary buffer. So Hardware Buffer is a buffer, but not a temporary buffer was was what the board ultimately held. And that the Federal Circuit ultimately disagreed with that. But as you said, it didn’t decide its own construction. 


Wayne Stacy  11:21

That very helpful, remand, you’re wrong now figure out why. So…


Seth Lloyd  11:27

It did give it did give the board a little bit of guidance. And maybe we can dive into that a little bit, too. So that the kind of nub of the claim construction issue that the Federal Circuit focused on, which I thought was was an interesting kind of principle was that when we’re doing claim construction, we you need to always keep in mind and ground that claim construction determination in what the patent shows is the actual invention. So the court kind of walkthrough said, Yeah, we have our usual hierarchy of sources of evidence about claim construction, you have the claim text, you have the the rest of the specifications, written description, and the court said to a lesser degree prosecution history. But when looking at these things, what the court emphasize kind of multiple times that you have to always make the determination nation of claim construction with I think the courts language was a full of understanding of what the inventors actually invented, and intended to, to envelop within the claim, and sort of elsewhere talked about kind of the substance of the invention. And I think the the point to me was, when people are kind of fighting about language, they get into kind of the semantics of the word, or even the grammar in the context of the claim. And it can be easy to kind of dice it up, and try to say, you know, this word has this very narrow meaning. And the courts point was, those are important tools. But don’t don’t use them without remembering to step back and say, Okay, but what is the invention here? And how does this term kind of play into what the inventor invented and is trying to describe or not really described, but it’s trying to claim as their invention.


Wayne Stacy  13:15

So it felt very much to me that they were trying to find any synonym they could for just the invention and heart of the invention, and avoid that language. But it very much felt like 45-50 years ago, when we were looking for the heart of the invention, something you know, Judge Rich could have written himself on this on this topic in the mid 70s. So it’ll be interesting to see how a district court applies this guidance in the future. His lawyer start citing it. Well, the last piece Seth I’d love to, to learn a little bit about is this means plus function ruling that came out in the Intel case, where the the Federal Circuit was trying to maybe right, potential wrong, caused by IPR estoppel and means plus function language.


Seth Lloyd  14:14

Yeah, I think that’s a that’s a fair assessment, Wayne, just to kind of give listeners understanding of what happened here and kind of the context. So people may be familiar with 35 USC 112 F or, you know, pre AIA was the 112 Paragraph 6 and this is the portion of section 112 that says, you can claim an element of a combination by claiming a means for performing a function or step — for performing a function without in the claim itself specifying the structure or acts that are required for the function. So it’s essentially kind of creates a shorthand for drafters. Sometimes it’s too cumbersome to kind of specify this structure in the claim. So instead, you can say, well, I’m claiming a means for performing acts. If you do that the statute says, then your claim is going to be interpreted and limited to the structures identified in the specification and equivalents thereof. In the reason this then creates a problems in the patent office is one one way claims can be indefinite is if you use that, that if you use language to trigger kind of the 112 F, or paragraph six interpretation, if you use means type language in your claim, but then your specification doesn’t include sufficient corresponding structure for performing the claimed function, your claim is indefinite. And the Federal Circuit has dealt now with a series of cases involving this where a claim that the patent office says the claim is indefinite, but because and kind of the other piece of this is that, that in the IPR context, the patent office can’t hold claims unpatentable for indefiniteness, right. So but the problem is, if a claim is indefinite, how do you determine whether it was anticipated or obvious? I don’t know what it means. So I don’t know if it’s been anticipated or is obvious. But I can’t say it’s indefinite. And so that’s created some issues for the patent office. And that’s kind of where things got got off track here.


Wayne Stacy  16:29

So is I take the what the Federal Circuit said, we understand the statute won’t let this be challenged. The PTAB can’t rule on it. But procedurally, you’re not going to be barred from challenging this in district court later on, just because there’s a catch 22 here.


Seth Lloyd  16:47

That’s right. So the Federal Circuit, I think, clarified and has made, has said this before as well, that if you have a situation where the PTAB says, We can’t determine the one or two or one of the three issues raised by the petition, because the claim is indefinite, then that the petitioner is not going to be a stopped. And so that’s, you know, I think you kind of mentioned the potential and fairness. Otherwise, you might have a situation where a petitioner files a petition on one or two, one or three grounds, patent office says we can’t decide it, because it’s indefinite. But petitioners, you know, therefore, we say, Petitioner fails to meet its burden of proof on patentability. And now, petitioners is stopped so the Federal Circuit made clear that can’t happen. And then it sort of clarified when when that situation can be triggered, and and said it made clear that this should be a relatively rare situation and what the court said, in order for this to happen, where the patent office does not decide patentability because of indefiniteness, two things have to take place in the patent office, the court instructed the patent office to kind of make both of these determinations. So the patent office should first actually I shouldn’t say first, because the court said the order, we leave it up to the to the patent office to decide which order but number one, the patent office needs to decide whether there is in fact, an indefinite claim element here under 112 6, so it can’t just say, well, the party, you know, one party says it’s indefinite, it actually has to decide for itself and then to the patent office also needs to decide whether the potential potential or determined in debt and indefiniteness actually makes it impossible. And that was the courts term impossible to decide the fun patentability issue. And so the court did kind of clarify that that’s not always going to be the case. So and that could be for a variety of reasons. Sometimes. Basically, there might be an element where even if that element is indefinite, because say it might have two meanings, and we’re not sure which one, they might not affect patentability, because both sides say, well, both sides sort of agreed, regardless of which definition. It either is, you know, it’s still in the prior art. Right. So, or, you know, it could be on the patentability side. We don’t need to decide indefiniteness because we decided that this other element that is clear, is not found in the prior art. So there the court basically made clear there will be plenty of situations where despite indefiniteness the patent office can and and should still decide the patentability issue and I think that should is what the court emphasize here. If the patent office can decide patentability then under the the AIA and particularly under the Supreme Court’s decision in SAS, that it has the obligation to decide the patentability only if it’s impossible to decide. The 102103 issues in light of indefiniteness is the patent office excused from that obligation?


Wayne Stacy  19:53

Well, Seth, thank you for walking us through a very rich and interesting opinion. I’m curious to see if if it will create some mess and things like claim construction down the line so that’s always the fun piece of watching these cases.


Seth Lloyd  20:09

Thanks Wayne.


Wayne Stacy  20:11

Take care.