On March 19, 2018, the Court of Appeals for Federal Circuit handed down Dell Inc. v. Acceleron, LLC (and an erratum)[1] In this case, the panel, composed of Judges Moore, Reyna, and Taranto, ruled that the PTAB had to follow its own rules of practice, after it had decided on late-entered arguments that went counter to established rules and procedures.
The facts are as follows.
Acceleron owns U.S. Patent No. 6,948,021 (‘021), directed to computer network apparatus containing hot-swappable components that can be removed and replaced without turning off or resetting the computer system.
Claim 3 was deemed representative, and is a dependent claim of claim 1 and 2, which read:
- A computer network appliance, comprising:
a plurality of hot-swappable CPU modules, wherein each CPU module is a stand-alone independently-functioning computer;
a hot-swappable power module;
a hot-swappable ethernet switch module; and
a backplane board having a plurality of hot-swappable connectors, wherein the at least one backplane board interconnects each of the CPU modules with the at least one power module and the at least one ethernet switch module, such that the at least one power module and the at least one ethernet switch module can be used as a shared resource by the plurality of CPU modules.
2. The computer network appliance of claim 1, further comprising a chassis providing physical support for a CPU module, the power module, the ethernet switch module and the backplane board.
3. The computer network appliance of claim 2, wherein the chassis comprises caddies providing air flow from the front to the rear of the chassis.
(Emphasis added.)
Dell initiated an inter partes review in 2014 of the ‘021 patent. Dell alleged claims 1-3 of the ‘021 patent was invalid as anticipated under 35 U.S.C. §102(e)[2] over U.S. Patent No. 6,757,748 to Hipp (“Hipp”). Hipp is directed to a high-density server network in which a large number of web server processing cards are installed within a single chassis. Acceleron responded that the ‘021 claim 3 only recited a single chassis comprising multiple caddies, while Hipp only includes a single articulating door. It can seen as reference 262 in Figure 11 of the Hipp patent.
At the oral arguments, Dell introduced for the first time an argument that the slides, on which the power slides rest (reference 280), qualifies as additional “caddies” for purposes of claim 3. Acceleron objected, but the PTAB denied the objection. The PTAB then cancelled claim 3, among others as either anticipated or obvious, specifically relying on Dell’s “slide” argument. [3]
In the first appeal, the Fed Circuit vacated the cancellation of claim 3 and remanded for reconsideration.[4] With respect to claim 3, the court remanded back to the PTAB on the ground that:
the Board denied Acceleron its procedural rights by relying in its decision on a factual assertion introduced into the proceeding only at oral argument, after Acceleron could meaningfully respond.[5]
Upon remand, the PTAB opted not to consider Dell’s “slides” argument because it was not responsive to Acceleron’s response. Thus, the Hipp reference was deemed only instructive as to the single articulating door, which corresponded to “caddies” recited in the ‘021 claim 3. As a result, the PTAB found claim 3 not anticipated.[6] Dell subsequently appealed.
The panel disagreed with Dell’s argument that the PTAB’s failure to recognize its “slides” argument as contrary to Fed Circuit precedent. The panel noted, from the first Dell appeal:
The agency must timely inform the patent owner of the matters of fact and law asserted . . . , must provide all interested parties opportunity for the submission and consideration of facts and arguments . . . and hearing and decision on notice, . . . and must allow a party to submit rebuttal evidence as may be required for a full and true disclosure of the facts.[7]
Further from Dell I, the panel noted:
We do not direct the Board to take new evidence, or, even, to accept new briefing. The Board may control its own proceedings, consistent with its governing statutes, regulations, and practice.[8]
Unless it chose to exercise its waiver authority under 37 C.F.R. §42.5(b), the Board was obligated to dismiss Dell’s untimely argument given that the untimely argument in this case was raised for the first time during oral argument.[9]
So, in other words, since the PTAB has authority under its rules to waive a procedural requirement, and it did not do so when Dell presented its “slides” argument for the first time during oral arguments, it is obligated to follow its own rules of practice. Certainly, other rules of practice exist, including 37 C.F.R. §42.70, governing when a party may raise issues at oral arguments “at a time set by the Board. The request must be filed as a separate paper and must specify the issues to be argued.” Presumably, Dell did not do this with its “slides” argument and only introduced the argument during oral arguments itself. While this may seem that the Fed Circuit is covering the PTAB’s own mistake at allowing the “slides” argument in the first place, it is actually a bit harsher in its undertone: the PTAB must stop making up its own rules, and follow the rules that have been established. Imagine that – the USPTO’s own patent trials and appeals adjudication body must follow its own rules.
[1] ___F.3d___ (Fed. Cir. 2018) (Dell II), aff’g No. IPR2013-00440, 2016 WL 8944607 (PTAB Aug. 22, 2016).
[2] See also MPEP 2136.
[3] See No. IPR2013-00440, 2014 WL 7326580 (PTAB Dec. 22, 2014).
[4] See Dell Inc. v. Acceleron, LLC (Dell I), 818 F.3d 1293, 1301-02 (Fed. Cir. 2016).
[5] Id. at 1301.
[6] See No. IPR2013-0440, 2016 WL 8944607, at *4 (PTAB Aug. 22, 2016).
[7] See Dell I, supra at 1301.
[8] 37 C.F.R. §42.5(a) (citing Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1367 (Fed. Cir. 2015)).
[9] See Dell II, supra (slip op. at 10) (including Errata Sheet).