Bloomberg BNA’s Patent Trademark & Copyright Law Daily™is the IP industry’s premier news service, offering objective, timely,and reliable daily news coverage and commentary from leading IP law...
By Tony Dutra
June 10 — The Federal Circuit ordered a rehearing June 10 for a software development platform patent after the Patent Trial and Appeal Board changed its interpretation of the patents' claims in the final decision ( SAS Inst., Inc. v. ComplementSoft, LLC , 2016 BL 185333, Fed. Cir., No. 2015-1347, 6/10/16 ).
The split decision today over SAS Institute Inc.'s challenge to ComplementSoft LLC's featured a rare criticism of Patent Trial and Appeal Board procedures by the court.
The board may have good reasons for setting “moving targets,” the court said. But it has to grant SAS's request for a rehearing to address the changes.
SAS challenged 16 patent claims. The PTAB instituted trial on nine, cancelling eight of those in the final decision. The court affirmed the eight cancellations and remanded only the single claim that was not cancelled.
But ComplementSoft still has seven claims to bring back to its litigation against SAS in the U.S. District Court for the Northern District of Illinois.
Judge Pauline Newman dissented in part because SAS can still contest the validity of the seven non-instituted claims. The bar against SAS raising arguments in court only applies to those disposed of in the final decision. Here, the PTAB followed its normal practice of ignoring the non-instituted claims in the final decision.Source Material:
U.S. Patent:No. 7,110,936
U.S. Patent No. 7,110,936 covers a computing environment used by software developers. A developer writes code, tests it for bugs and then edits as appropriate. The patent claimed an integrated environment with a visual representation that could generate code and display execution of the data processing steps, with particular application to data manipulation tasks like SAS's statistical analysis programs.
The Federal Circuit affirmed the board's validity judgments on all but claim 4, which has the phrase “graphical representations of data flows.” That phrase is not in the patent specification.
At the trial institution phase, the PTAB distinguished the phrase from “data flow diagram,” which was used in the specification. SAS and ComplementSoft built their arguments on that construction, only to see the board equate the two phrases in the final written decision.
SAS's rehearing request featured arguments that the new construction was erroneous. But SAS also contended that it “was prevented from presenting evidence tailored to that new claim construction during the IPR.” The board's rehearing denial addressed the former but not the latter.
The Federal Circuit faulted the PTAB for procedural error under Section 554(b)(3) of the Administrative Procedure Act, 5 U.S.C. §554(b)(3).
That section typically applies to patent owners and applicants, the court conceded, to prevent their loss of rights before a government agency. But it also applies to petitioners challenging patents in America Invents Act proceedings, like the inter partes review challenge here.
“[P]etitioners stand to lose significant rights in an instituted IPR proceeding because of the estoppel effects that trigger against them if the Board issues a final written decision,” the court said. Under the AIA, the estoppel referenced is the bar against SAS trying again in court with arguments it raised or even “could have raised” at the PTAB.
The court ordered the PTAB to rule on claim 4 again “after hearing from the parties on the new construction.”
Judge Kara F. Stoll wrote the court's opinion. Newman and Judge Raymond T. Chen joined as to the rulings noted above.
Newman registered the same dissent previously in Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309, 117 U.S.P.Q.2d 1753 (Fed. Cir. 2016) (28 PTD, 2/11/16). Her main concern is that the estoppel effects don't kick in as to claims not instituted.
The problem was more pronounced in this case, she said, because there were actually two “partial” decisions—not all claims instituted and, of those that were, not all cancelled. That means the board changed its view from a likelihood of invalidity at trial institution to the reverse in the final decision, which “adds to the uncertainty of the claims that the PTAB chose not to review,” she said.
SAS actually agreed in its brief, arguing that it will be put in an odd position of having arguments it can raise on the non-instituted claims that it can't raise as to claim 4.
However, the majority said that any other result was “foreclosed” by Synopsys.
Jones Day represented SAS. Loevy & Loevy represented ComplementSoft.
To contact the reporter on this story: Tony Dutra in Washington at email@example.com
To contact the editor responsible for this story: Mike Wilczek in Washington at firstname.lastname@example.org
Text available at http://src.bna.com/fNQ
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)