By Julie Shursky
- Proxyconn, Inc. (“Proxyconn”) filed suit against Microsoft Corporation (“Microsoft”), accusing Microsoft of infringing its U.S. Patent No. 6,757,717 (“the ’717 patent.”) Microsoft, 789 F.3d at 1295. This appeal arises from the inter partes review (“IPR”) of the ’717 patent. Id.
- The ’717 patent “relates to a system for increasing the speed of data access in a packet switched network.” at 1295.
- The United States Patent and Trademark Office, Patent Trial and Appeal Board (“Board”) issued a final written decision, finding all but one of the instituted claims (claim 24) to be unpatentable under 35 U.S.C. § 102 and additionally under 35 U.S.C. § 103. Id. (citing to Microsoft Corp. v. Proxyconn, Inc., IPR2012-00026 and IPR2013-00109, Paper No. 73 (PTAB Feb. 19, 2014). The Board further denied Proxyconn’s motion to amend. Id.
- Microsoft appeals the Board’s determination that claim 24 is patentable. Proxyconn cross-appeals, “challenging the Board’s use of the broadest reasonable interpretation (“BRI”) standard of claim construction during IPRs, its unpatentability determinations, and its denial of Proxyconn’s motion to amend.” Id.
BRI Standard for Claim Construction:
- At issue was the Board’s construction of the phrase “a gateway . . . connected to said packet-switched network in such a way that network packets sent between at least two other computers” recited in claim 6. Id. at 1298 (citing to ’717 patent, col. 10 l. 64-col. 11. l. 12) (emphasis in original).
- Before the Board, Proxyconn argued that the term “two other computers” referred only to the sender and receiver computers, while Microsoft contended that the term “two other computers” could represent any two computers that are connected on the network to a gateway, including a caching computer. Id. at 1298. The Board agreed with Microsoft’s interpretation, finding that “the ‘two other computers’ were not limited just to the sender/computer and the receiver/computer,” and therefore concluded that the reviewed claims were not patentable. Id.
- Upon review, the Federal Circuit disagreed with the Board’s conclusion, finding that the phrase “two other computers” could not include the caching computer. Id. at 1299. First, the panel noted that claim 6 of the ’717 patent separately recited the “two other computers” and the caching computer. Id. (citing to ’717 patent, col. 10 l.54- col. 11 l. 12). Specifically, the panel reasoned that, “[n]ot only are the ‘two other computers’ recited independently from, and in addition to, the gateway and caching computers, the word ‘other’ denotes a further level of distinction between those two computers and the specific gateway and caching computers recited separately in the claim.” Id. The Federal Circuit further found that “in each instance where [two other computers] is used, the phrase . . . describes components that are separate and distinct from the gateway and the caching computer.” Id.
- Accordingly, the court found that the specification clearly identified that caching computer and the “two other computers” to be “separate and distinct components of the overall system.” Id. To expand “two other computers” to include the separately identified caching computer unreasonably broadens the language in the claims and specification. Id. Therefore, the Court “vacate[d] the Board’s findings of unpatentability of claims 6, 7, and 9 and remand[ed] for proceedings consistent with [the] opinion.” Id.
- For similar reasons, the panel disagreed with the Board’s conclusion “that the terms ‘sender/computer’ and receiver/computer’ were broad enough to include the intermediary gateway and caching computers.” Id. at 1300. Rather, the Court concluded that such an interpretation “does not reasonably reflect the language and disclosure of the ’717 patent.” Id. Accordingly, the Court also vacated the Board’s findings of unpatentability of claims 1, 3, 10, 22, and 23 and remanded back to the district court.
Claim 24 is Patentable:
- Ultimately at issue in claim 24 is whether the term “comparing” is the same as the term “searching. Id. at 1301-02. The Federal Circuit concluded that the two terms were not identical, and thus agreed with the Board. Id. at 1302 (“Based on the clear language of the specification, the Board was correct in concluding that the broadest reasonable interpretation of ‘searching for data with the same digital in said network cache memory’ includes searching in a set of potentially many data objects.”).
- The Court also agreed with the Board that “the download requests that DRP’s client sends to the server after receiving the index from the server and comparing it to the local index meets the ‘receiving a response signal’ limitation of claim 11,” and thus concluded that DRP anticipates claims 11, 12, and 14 of the ’717 patent. Id. at 1303.
Board’s Denial of Proxyconn’s Motion to Amend Claims 1 and 3:
- Proxyconn also challenged “the Board’s denial of its motion to amend claims 1 and 3.” Id. at 1303. Proxyconn argued that the Board exceeded its own authority “by imposing the additional requirements of [a prior Board opinion] and by relying on the DRP reference” rather than exclusively relying on statutes and regulations governing motions to amend. Id. at 1305-06.
- Proxyconn sought to substitute claims 35 and 36 with claims 1 and 3 respectively. Microsoft argued that the substituted claims were not patentable for anticipation by the DRP reference. Id. at 1305. Proxyconn made several other arguments, but failed to argue that substitute claims 35 and 36 were patentable over the DRP reference. Id.
- Prior to addressing the arguments on either side, the Federal Circuit reviewed the legal framework governing amendments during IPR proceedings. Id. at 1303.
- Under the America Invents Act (“AIA”), Congress granted specific authority to the Board in relation to IPR proceedings. Id. 1303-04. Specifically, the Board promulgated two regulations under the AIA that are relevant to this case: (1) “37 C.F.R. § 42.20, which applies generally to motions practice,” and (2) “37 C.F.R. § 42.121, which imposes specific requirements on the amendment process.” Id. at 1304.
- In addition to the two regulations, the Board also issued a six-member panel decision in Idle Free Systems, Inc. v. Bergstrom, Inc., IPR012-00027, 2013 WL 5947697 (PTAB June 11, 2013), where it provided further recitation of several important requirements for a patent owner’s motion to amend. Id. at 1304. According to Idle Free, the Board requires a patentee to show that the substitute claim is patentable over prior art that is “known to the patent holder.” Id. Although the Idle Free decision is not binding, the Board frequently relies on that decision in denying motion to amend. Id.
- First, the Federal Circuit agreed with the Board that “§ 42.121(a)(2) is not an exhaustive list of grounds upon which the Board can deny a motion to amend.” Id. at 1306. Next, the Court determined that it is in the Board’s discretion to choose between rulemaking and adjudication. Id. at 1307. Given the Board’s lack of experience with motions to amend, the Federal Circuit agreed that the Board should retain the ability to deal with such motions on a case-by-case basis to ensure an effective administrative process. Id. As such, the Court recognized that “there is merit to [the Board’s] arguments,” in not creating a black letter rule on motions to amend, and thus held that the Board has not “abused its discretion in choosing adjudication over rulemaking.” Id. at 1307.
- Finally, since the Board’s reliance on the DRP reference “was front and center throughout the course of the proceedings” and Proxyconn “was [not] taken by surprise,” the Federal Circuit found that “the Board acted permissibly in requiring Proxyconn to establish the patentability of substitute claims 35 and 36 over the DRP reference.” Id. at 1308.
- In this decision, the Federal Circuit provides guidance on how the BRI standard should apply during IPR proceedings. Further, by affirming the Board’s denial of a patentee’s motion to amend, the Federal Circuit resolved the issue of whether the patentee bears the burden of proving patentability of proposed claim amendments during an IPR proceeding. Specifically, the Federal Circuit determined that the Board has discretion in adjudicating that a patentee must show that its proposed substitute claims are patentable over prior art.