Beware of What You Say: Prosecution History Estoppel

In Samsung Electronics Co., Ltd. v. Elm 3DS Innovations, LLC, Appeal Nos. 2017-2474, -2475, -2476, -2478, -2479, 2480, -2482, -2483, -2018-1050, -1079, -1080, 1081, 1082, the Federal Circuit found that if the technology is complex, a party may be required to provide more evidence of a reasonable expectation of success for obviousness.

Samsung, Micron, and SK Hynix (collectively “Petitioners”) filed thirteen IPRs challenging the validity of eleven of Elm’s patents based on obviousness. The patents at issue related to stacked integrated circuit memory. During claim construction before the PTAB, the parties disputed the meaning of the term “substantially flexible.” Elm contended that the claim term should be given its ordinary meaning, while the Petitioners argued that the record supported a construction defined by an embodiment found in the specification. The PTAB agreed with Elm on the claim construction and relied on a general purpose dictionary to construe “substantially flexible” to mean “largely able to bend without breaking.” The PTAB went on to determine that the prior art did not disclose the “substantially flexible” limitation. Further, the PTAB found that a person of ordinary skill in the art would not have reasonably expected success in combining the fabrication process disclosed in two of the pieces of prior art with the dielectric material in another piece of prior art. The PTAB found that Petitioners’ expert’s testimony that the dielectric material disclosed in the prior art had certain benefits and the prior art disclosing fabrication processes was in the same technological field as the prior art disclosing the dielectric material was insufficient to show a reasonable expectation of success, particularly given the complexity of semiconductor fabrication. The PTAB held that the claims were patentable and not obvious.

The Federal Circuit affirmed the PTAB’s decisions, but noted that the PTAB’s claim construction incorrectly used a general-purpose dictionary definition of the claim term. The Federal Circuit found that Elm had clearly and unambiguously disclaimed claim scope to overcome various examiner objections or rejections during prosecution of at least some of the patents at issue. Nonetheless, the Federal Circuit affirmed the PTAB’s decisions that the claims were patentable and not obvious.

One-year Clock for Filing IPR Petition Applies to Litigants and Parties that Become Privies of the Litigant Prior to Institution.

In Power Integrations, Inc v. Semiconductor Components, Appeal No. 2018-1607, the Federal Circuit decided that an IPR is time-barred under 35 U.S.C. § 315(b) if, at the time of institution, the petitioner is in privity with a party who was served with a complaint for patent infringement over a year before the petition was filed.

In 2009, Power Integrations sued Fairchild for patent infringement. After expiration of Fairchild’s one-year IPR window under § 315(b), Semiconductor Components—who was not a party to the litigation—petitioned for IPR. At the time Semiconductor Components petitioned, they had entered into a merger agreement with Fairchild. The merger closed after the IPR petition was filed, but before the PTAB issued its institution decision. In instituting the IPR, the PTAB focused its § 315(b) analysis on when the petition was filed, and asked whether Semiconductor Components and Fairchild were in privity on that date. Because the merger had not closed at the time of filing, the PTAB determined that the petition was not time-barred.

The Federal Circuit reversed. Section 315(b) states that an IPR “may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” The Federal Circuit noted that the “is filed” language does not dictate when to determine if the privity relationship exists. Instead, the words “is filed” merely mark the end of the one-year window for filing an IPR petition. Section 315(b) provides a condition, which if true, dictates that an IPR “may not be instituted.” Accordingly, the PTAB may not institute if, at the time of institution, the petitioner is subject to the time-bar.

State Sovereign Immunity Does Not Bar an IPR

In Regents of the University Of Minnesota v. LSI Corporation, Appeal No. 2018-1559, state sovereign immunity does not apply to IPR proceedings asserted against patents owned by or assigned to states, regardless of whether the state has asserted the patent claims in a district court litigation.

The Regents of the University of Minnesota (“UMN”), an arm of the state of Minnesota, sued LSI Corp. and customers of Ericsson Inc. in district court for infringement of a number of patents. In turn, LSI and Ericsson separately petitioned for IPR against UMN’s patents. UMN filed a motion to dismiss the petitions based on state sovereign immunity. An expanded panel at the PTAB concluded that although state sovereign immunity applies to IPR proceedings, UMN waived its immunity by filing the district court suit. A concurring opinion concluded that state sovereign immunity was not implicated because IPR proceedings are in rem proceedings.

The Federal Circuit agreed that the IPR against UMN’s patents could continue, but held that state sovereign immunity does not apply to IPR proceedings. The Federal Circuit noted that because IPR proceedings are more similar to agency enforcement actions than civil litigation, they are an adjudication of a public right and are not barred by tribal sovereign immunity. The court reasoned that, because state and tribal sovereign immunity do not materially differ with regard to IPR proceedings, state sovereign immunity also does not apply to IPR proceedings. The Federal Circuit did not address the issue of whether, if state sovereign immunity were to apply to IPR proceedings, UMN waived its immunity by asserting patent claims in district court.

Separate from the opinion, Judges Dyk, Wallach, and Hughes also provided additional views on the matter, arguing that “state sovereign immunity also does not apply to IPR proceedings because they are in substance the type of in rem proceedings to which state sovereign immunity does not apply.”

Supreme Court Strikes Down Prohibition on Registering Immoral or Scandalous Trademarks

In IANCU v. Brunetti, Appeal No. 18-302, the Lanham Act’s prohibition on registering immoral or scandalous trademarks violates the First Amendment because it discriminates on the basis of viewpoint.

Designer Erik Brunetti sought to register the trademark “FUCT.” The USPTO denied the application because 15 U.S.C. 1052(a) prohibits registering trademarks that include immoral or scandalous matter. Brunetti challenged the “immoral or scandalous” bar in section 1052(a). The Federal Circuit held that provision violated the First Amendment.

The Supreme Court affirmed. In an earlier Supreme Court case, Matal v. Tam, the Supreme Court held a ban on registering trademarks that disparage persons was unconstitutional because it was based on viewpoint. The Supreme Court applied Matal and held that the “immoral or scandalous” bar was similarly unconstitutional because it discriminates on the basis of viewpoint. The statute, on its face, distinguished between ideals aligning with conventional societal norms, and those that defy society’s sense of decency, which resulted in a viewpoint-discriminatory application of the law. Thus, the provision violated the First Amendment.

Justice Alito concurred, but argued the decision does not prevent Congress from adopting a more carefully crafted statute to preclude the registration of marks containing vulgar terms. Chief Justice Roberts dissented in part, agreeing that the term “immoral” cannot be given a narrow construction to eliminate viewpoint bias, but arguing that the term “scandalous” could be construed narrowly to eliminate viewpoint bias.