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Commentary Federal Circuit Comment First Amendment

On-Sale Bar Remains Unchanged Post-AIA

The Federal Circuit in its recent opinion Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc.Nos. 2016-1284, 2016-1787 (Fed. Cir. May 1, 2017) held that Congress’ revision of the novelty provision in the American Invents Act (AIA) of 2011, 35 U.S.C. § 102 did not affect existing case law on the on-sale bar to obtaining a patent.

The § 102 of the 2011 AIA modified the prior § 102—otherwise known as the novelty provision. The new provision now reads:

(a)  NOVELTY; PRIOR ART. — A person shall be entitled to a patent unless—
(1)  the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.

The revision added the language “or otherwise available to the public.” This change raised a statutory interpretation question of whether the newly added catch-all phrase modifies “on sale.” In other words, the question at issue was whether the on-sale bar may only be triggered when the sale makes the invention “available to the public.”

Prior to the revision, case law had settled that any commercial activity, even secret sale or offer for sale may constitute as prior art under § 102 regardless of whether the sale or offer actually enables the public to practice the invention or not. After the addition of “or otherwise available to the public”, many, including the USPTO, took the position that § 102 only covers public sales enabling the public to practice the invention.

The Federal Circuit disagreed in Helsinn. In this case, Helsinn signed a contract with a third party to market and sell a drug product more than one year before filing for a patent. Although the sale was publicly announced, the details of the invention were not, and thus, Helsinn argued, the invention was not “available to the public.” The Federal Circuit held the on-sale bar was still triggered in this situation under the new § 102, just as it would be under the pre-AIA § 102. The court found that Senate floor statements about the provision mostly concerned the “public use” language in the statute rather than the “on-sale” language. The court furthermore declined to find that the AIA brought “a foundational change in the theory of the statutory on-sale bar.” The court held that the additional language at most just requires that the sale must be public, not that all the details of the patent must be disclosed to the public. The on-sale bar precedent has thus survived the AIA revision.

Inter Partes Reexamination Held Appropriate Even If Requester Changes Mind

In In Re AT&T Intellectual Property II, LP., No. 16-1830 (Fed. Cir. May 10, 2017), the Federal Circuit held that the Patent Trial and Appeal Board did not exceed its statutory authority when instituting an inter partes reexamination even though the requester had sought to have its request for reexamination denied.

LG Electronics, Inc. filed a request for inter partes reexamination of an AT&T patent in 2012. LG alleged that an article that it asserted as prior art anticipated several claims of the AT&T patent. A few months later, LG sought to have its request for reexamination denied before the Patent and Trademark Office (PTO) decided whether to initiate the reexamination. LG filed a petition to suspend the court’s rules and allow LG to file a second request for denial of the reexamination. In the petition, LG stated that it “does not believe that there is a reasonable likelihood of prevailing with respect to any of the claims challenged in the Request.” Two weeks later, the PTO granted LG’s initial request for inter partes reexamination and denied LG’s second petition. In its reexamination, the PTO ultimately invalidated the patent, and LG withdrew its request in the process.  After losing its appeal to the Board, AT&T appealed to the Federal Circuit arguing that the Board lacks statutory authority to institute a reexamination because LG withdrew its request, leaving the proceeding with neither a request nor a requester.

The Federal Circuit held that the decision to institute an inter partes reexamination is final and non-appealable. It also noted that LG had only sought to have its request denied but had not actually withdrawn its request. Thus, a request and a requester were present when the Board made its decision. According to the court, the Board therefore acted within its statutory authority and the Federal Circuit lacked authority to further consider the prudence or propriety of the Board’s institution decision.

Statements Made During Inter Partes Review Could Constitute Prosecution Disclaimers

In Aylus Networks, Inc. v. Apple Inc., No. 2016-1599 (Fed. Cir. May 11, 2017), a case of first impression, the Federal Circuit held that statements made by a patent owner during an inter partes review (IPR) proceeding can be relied upon to support a finding of prosecution disclaimer during claim construction, regardless whether the statements were made before or after an institution decision.

Aylus had sued Apple for infringement of its patent, which provides systems and methods for implementing digital home networks. Apple then filed petitions for IPR, challenging many of the patent’s claims. Several claims survived the IPR after Aylus submitted preliminary responses to Apple’s petitions for IPR and distinguished its patent from prior art.

Apple then moved for summary judgment with respect to the Aylus patent in the district court. The court relied on Aylus statements in Aylus’ preliminary responses during the IPR proceedings in construing one of the limitations to the Aylus’ patent’s claims. Based on this construction, the district court granted Apple’s motion for summary judgment and ruled that Apple did not infringe Aylus’ patent. Aylus appealed, arguing that statements made during IPR are not prosecution disclaimers because an IPR proceeding is an adjudicative proceeding as opposed to an administrative proceeding.

The Federal Circuit disagreed. It reasoned that an IPR proceeding involves reexamination of an earlier administrative grant of a patent, so statements made by a patent owner during an IPR proceeding can be considered during claim construction and relied upon to support a finding of prosecution disclaimer.