Federal Circuit Affirms PTAB’s Claim Construction, Despite Recitation Of Incorrect Legal Standard, And Concludes That Substantial Evidence Supports Its Unpatentability Findings
On September 30, 2020, the United States Court of Appeals for the Federal Circuit (“CAFC”) issued an opinion affirming the decision of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (“PTAB”), finding certain challenged claims unpatentable under the PTAB’s claim construction of “low-power radio frequency signal,” and finding that substantial evidence supports the PTAB’s underlying factual findings relating to the challenged claims. Emerson Electric Co. v. SIPCO, LLC, __ F.3d __ (Fed. Cir. Sept. 30, 2020).
The challenged ’692 patent, owned by SIPCO (patent owner–cross-appellant), relates to a computerized, remotely operated system for monitoring, reporting on, and controlling other remote devices/systems. At the time of the invention, the pre-existing systems typically implemented a local network of hard-wired sensors and actuators with a local controller. The ’692 patent purports to overcome certain expense- and failure-related disadvantages in the pre-existing systems by transferring system information from the remote device/system to a wide area network (“WAN”) gateway interface with integrated software applications to process the system information on a computer.
In November 2016, Emerson (petitioner–appellant) filed a petition for IPR of the ’692 patent on three different grounds of unpatentability. The PTAB initially determined that petitioner–appellant had only established a reasonable likelihood of prevailing on the third ground, but subsequently modified its institution decision, following the Supreme Court’s SAS Institute v. Iancu precedent, to include the other two grounds in the IPR. In its final written decision, the PTAB found that, while petitioner–appellant had failed to prove that the claims challenged in the first two grounds are unpatentable, it had shown by a preponderance of the evidence that the claims challenged in the third ground are unpatentable because they are anticipated by, or would have been obvious over, a prior art reference (“Cunningham”). In reaching this determination, the PTAB held that the patent’s “low-power radio frequency signal” limitations should be given their “plain and ordinary meaning,” or “construed to encompass transmitters/transceivers that transmit low power signals.” Applying that construction, the PTAB found that Cunningham discloses the “low-power radio frequency signal” limitations.
Petitioner–appellant appealed the PTAB’s decision finding the challenged claims in the second ground not unpatentable, challenging the PTAB’s (1) factual findings that Cunningham does not disclose the patent’s “control signal” and “translating” limitations and (2) refusal to grant petitioner–appellant’s request to submit new evidence. And, patent owner–cross-appellant cross-appealed the PTAB’s decision finding the challenged claims in the third ground unpatentable, challenging the PTAB’s (1) claim construction of the “low-power radio frequency signal” limitations and (2) factual findings that Cunningham discloses relatively “low-power” transceivers and a gateway that delivers an “encoded electrical signal” to a computer on the WAN.
With respect to petitioner–appellant’s first challenge, the CAFC explained that the language of the claims mandate that the “control signal” must be capable of being “translated” into an analog signal so that it can control a device, and that Cunningham’s “controlling information,” by contrast, only refers to “varying utility prices,” which the PTAB determined do not constitute the claimed “control signal” because the “utility prices” “do not cause a controlling action to be done to the device.” The CAFC concluded that, while “utility prices” may be information related to controlling the device or even used in determining whether to control the device, they do not cause a controlling action to be done to the device, and, thus, substantial evidence supports the PTAB’s finding that the “controlling information” in Cunningham is not a “control signal.” And, similarly because Cunningham fails to disclose a “control signal,” petitioner–appellant’s arguments with respect to the “translating” limitations (e.g., “translating the control signal from a network transfer protocol into an RF control signal”) necessarily fail, as the “translating limitations” include a “control signal.”
With respect to petitioner–appellant’s second challenge, the CAFC explained that the PTAB acted within its discretion when it denied petitioner–appellant’s request to obtain and file additional evidence, citing to the general rule that petitioners in IPR proceedings must adhere to the requirement that the initial petition identifies with particularity the evidence that supports the grounds for the challenge to each claim.
With respect to patent owner–cross-appellant’s first argument, related to the claim construction of “low power radio frequency signal,” patent owner–cross-appellant contended that the PTAB (1) improperly construed the limitation under the wrong standard—i.e., “broadest reasonable interpretation” (“BRI”), instead of the standard set forth in Phillips v. AWH Corp.—and that, based on its construction under the BRI standard, the PTAB adopted an erroneous claim construction. The CAFC explained that, while the PTAB did incorrectly recite the BRI standard for claim construction, the PTAB’s claim construction analysis was, in fact, consistent with the standard set forth in Phillips, and accordingly concluded that the PTAB’s flawed statements were harmless. The CAFC further rejected patent owner–cross-appellant’s arguments that the PTAB should have construed this limitation consistently with how the CAFC construed the limitation “low-power” in “low-power transceiver” in a prior appeal involving patent owner–cross-appellant and similar subject matter. The CAFC explained that it is not bound by prior constructions on different patents because claim construction issues are highly fact and case-specific, as they rely on intrinsic evidence—i.e., the claim language, the written description, and the prosecution history of the particular patent-at-issue.
Last, with respect to patent owner–cross-appellant’s challenge to the PTAB’s finding that Cunningham discloses the limitations of the claims challenged in the third ground, the CAFC found that substantial evidence supported the PTAB’s factual findings, citing to various quotations from Cunningham and other record evidence.
This decision reflects the CAFC’s willingness to look past facially incorrect statements of law, at least with respect to claim construction, as long as the underlying analysis comports with the correct legal standard.