Federal Circuit Lacks Jurisdiction to Review Finding that Assignor Estoppel Does not Bar Inter Partes Review

  • August 9, 2016

By: John T. Spangenberger

October Federal Circuit Review

In Husky Injection Molding Systems, the Federal Circuit dismissed an appeal of a decision by the Patent Trial and Appeal Board to institute an inter partes review. The Board had held in its decision that a petition for review cannot be barred by assignor estoppel. The Federal Circuit held that it lacked jurisdiction to review the Board’s determination with respect to assignor estoppel.

Schad, Husky’s former owner and former president, was a co-inventor on Husky’s patent for an injection molding machine. Schad left Husky to form Athena, a private equity group, and thereafter Athena filed a petition for IPR to invalidate Husky’s patent. Husky argued in response to the petition that Athena was barred from challenging the patent under the doctrine of assignor estoppel.

Assignor estoppel is an equitable doctrine that prevents someone who has assigned the rights to a patent from later contending that what was sold has no value. It historically applies in district court cases to prevent challenges to a patent based on statutory grounds for invalidity.

The Board held that traditional affirmative defenses relied upon in district court cases, such as assignor estoppel, do not apply to IPR proceedings, and based on the statute, anyone that does not own a patent may petition for review of that patent. In view of that decision, the Board instituted review and issued a final written decision invalidating some of the claims of Husky’s patent. Husky appealed to the Federal Circuit.

The Supreme Court has construed Section 314(d) of the Patent Act to forbid appellate review of the decision to institute IPR unless it implicates constitutional questions, depends on statutes that are not closely related to statutes governing the Patent Office’s decision to institute, or presents other questions of interpretation that reach, in terms of scope and impact, well beyond Section 314. The Federal Circuit may also review an institution decision if it is directed to the Board’s ultimate invalidation authority with respect to a specific patent.

The Federal Circuit dismissed Husky’s appeal because it lacked the authority to review the Board’s institution decision. The question of assignor estoppel was not beyond the scope of Section 314(d), because both assignor estoppel and Section 314 concerned the threshold determinations the Board must make before it can institute review. Nor did the decision reach beyond the Board’s statutory authority, because it only concerned who may challenge a patent, not the Board’s authority to invalidate a patent. Thus, the application of assignor estoppel to the Board’s institution decision was within the sole discretion of the Director.

Key Takeaway:

The Patent Trial and Appeal Board has held that assignor estoppel does not bar a former patent owner from challenging the validity of a patent in inter partes review, and the Federal Circuit lacks jurisdiction to challenge that decision.

Earlier Inherent Disclosure of a Partial Amino Acid Sequence Supports Claim of Priority for Full Sequence

In Yeda, the Federal Circuit held that the earlier disclosure of a partial amino acid sequence, along with additional information related to the biological characteristics of the protein, inherently disclosed the full N-terminus sequence of that protein sufficient to support a claim of priority.

Abbott is the owner of a patent directed to a protein referred to as TBP-II, which binds to and neutralizes a protein associated with various immunological diseases. Abbott’s patent claims priority to two German applications, which describe TBP-II and provide a partial N-terminus amino acid sequence for that protein. Neither reference disclosed the entire N-terminus amino acid sequence.

In 1996, the Board of Patent Appeals and Interferences declared an interference between Abbott’s patent, and an application assigned to Yeda. The validity of Abbott’s patent turned on whether its claims to the full N-terminus amino acid sequence for TBP-II could properly claim priority to the German applications. Following multiple proceedings, both the Board and the district court held that the claim of priority was valid. Yeda appealed.

The Federal Circuit affirmed the claim of priority, finding that the German references inherently disclosed the full TBP-II sequence. The parties agreed that the only protein having the partial N-terminus sequence and the associated biological characteristics was the TBP-II protein. This was sufficient to allow a person of ordinary skill in the art to recognize that Abbott invented what was claimed in the later patent, and possessed the claimed subject matter on the date of filing of the earlier applications.

Key Takeaway:

A partial amino acid sequence may inherently disclose the complete sequence where the partial sequence, in combination with other material disclosed in the patent, are sufficient to allow a person of skill in the art to recognize that the inventor invented and possessed the missing amino acids. This inherent disclosure may support a claim of priority to the full amino acid sequence.

Prosecution History Estoppel Applied to Non-Amended Patent Claim

In UCB, Inc., the Federal Circuit affirmed a decision by the United States District Court for the Eastern District of Virginia finding that prosecution history estoppel limited the scope of a non-amended claim, which prevented that claim from reaching embodiments that had been proposed in dependent claims, rejected by the examiner as not supported by the specification, and then withdrawn by the applicant.

Yeda held a patent with an independent claim directed to monoclonal antibodies, which Yeda believed included chimeric or humanized antibodies. However during prosecution, Yeda submitted additional claims in its application specific to “rat, hamster and human antibodies and chimeras thereof,” which were rejected by the examiner as comprising new matter that was not supported in the specification. Yeda withdrew the added claims, allowed the patent to issue with the original claim directed to monoclonal antibodies.

The district court looked to the prosecution history and concluded that for the first ten years of prosecution, neither Yeda nor the examiner understood the term ‘monoclonal antibodies’ to include chimeric or humanized antibodies. The examiner’s rejection on the ground of new matter, and the applicant’s acquiescence, prohibited Yeda from obtaining a claim construction that could include the withdrawn subject matter. Yeda appealed.

The Federal Circuit affirmed the claim construction that “a monoclonal antibody” did not encompass chimeric or humanized antibodies. Although the claim at issue was not amended during prosecution, it still ran afoul of the general rule of prosecution history estoppel that a patent applicant cannot later obtain claim scope that was requested during prosecution, rejected by the examiner, and then withdrawn by the applicant.

Key Takeaway:

Prosecution history estoppel bars an applicant from later obtaining claim scope that had been rejected by an examiner and withdrawn.

A “Processing System” Plays “No Discernable Role” in Definiteness of a Method Claim

In Cox Communications., the Federal Circuit held that the undefined claim term “processing system” did not render the claims indefinite, where the term appeared to perform no meaningful role in the claim.

Sprint is the owner of several patents directed to voice-over-IP technology, and specifically to methods related to the hand-off between traditional phone lines and data networks such as the internet. The patents describe the use of a “processing system” that receives a signal from a traditional telephone network and selects the path the calls should take through the data network.

The district court found that the “processing system” limitation rendered the patents invalid as being indefinite. It found that the processing system was a structural limitation that was only functionally described in the claims and specifications of the patents.

The Federal Circuit reversed, holding that the “processing system,” played no discernable role in defining the scope of the claims. To demonstrate, the Court showed that by removing the “processing system” from the claims, or replacing it with the word “computer,” there would be no discernable difference in claim scope. The specification otherwise provided sufficient detail regarding the structures involved in the performance of each of the method steps that a person of ordinary skill in the art would understand the metes and bounds of the claimed method with reasonable certainty.

Judge Newman filed a concurrence, agreeing with the result but taking issue with the majority’s apparent new test for determining whether a limitation has no discernable impact on the scope of the claims. Instead, Judge Newman would have reversed on the basis that the figures, flow charts, textual descriptions and general knowledge in the art would be sufficient to inform a skilled artisan of the structure comprising a “processing system” in the context of the patented invention.

Key Takeaway:

A method claim incorporating a structural limitation disclosed only in functional language may not be indefinite where the disputed limitation performs no meaningful role in the execution of a claimed method.


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