Fed Circuit Watch: No Challenge to Partial Institution Raises No SAS Issue

On June 7, 2018, the Court of Appeals for Federal Circuit handed down PGS Geophysical AS v. Iancu,[1] which has a tangential relationship to the WesternGeco LLC, of the recent WesternGeco LLC v. ION Geophysical Corp. [2] recently decided by the U.S. Supreme Court.  This case is one of several transition cases pending with the Fed Circuit when the Supreme Court ruled in SAS Inst. v. Iancu,[3] that struck down partial institution of IPR-challenged claims before the PTAB.

The facts are as follows.

PGS owns U.S. Patent No. 6,906,981 (‘981), entitled “Method and system for acquiring seismic data using multiple seismic sources.”  It is directed to methods and systems for surveying marine seismic activity for undersea oil and gas exploration.  The claimed methods use multiple firing sequences fired by seismic sources to receive energy sources from the seabed.  The firing sequences are time-delayed and differs depending on the firing sequence.  The time delays also act as data encoders for purposes of identifying the source of seabed energy.  WesternGeco, PGS’ competitor, filed three IPRs challenging the ‘981 patent claims.

Claim 31 was deemed representative in the opinion.  However, Claim 1 is probably a better representative of the field and the claimed invention:

1. A method for seismic surveying, comprising:

towing a first seismic energy source and at least one seismic sensor system;

towing a second seismic energy source at a selected distance from the first seismic energy source; and

actuating the first seismic energy source and the second seismic energy source in a plurality of firing sequences, each of the firing sequences including firing the first source and the second source and the recording signals generated by the at least one seismic sensor system, a time interval between firing the first source and the second source varied between successive ones of the firing sequences, the times of firing the first and second source indexed so as to enable separate identification of seismic events originating from the first source and seismic events originating from the second source in detected seismic signals.

(Emphasis added.)

The following table shows the respective IPRs, claims of the ‘981 patent challenged by WesternGeco in the IPRs, and the PTAB decision with respect to the institution and final decision on patentability.

IPR	Claims Challenged	PTAB Institution	Claims Unpatentable
2015-00309	1 – 22	1-7, 10-22	1, 2, 7, 10, 11, 16, 21
2015-00310	23 – 30	23-30	23, 24, 30
2015-00311	31 – 38	31-38	31, 32, 35-37

The decision to institute inter partes review was made by the PTAB in June 2015, which predates the SAS ruling.  In the Final Decisions issued (309, 310, 311) in June 2016, the PTAB determined that claims 1, 2, 7, 10, 11, 16, 21, 23, 24, and 30 as unpatentable as anticipated by U.S. Patent No. 6,545,944.  Further, the PTAB determined claims 1, 2, 6, 16, 17, 21-24, 28, 29, 31, 32, and 35-37 as unpatentable as obvious over U.S. Patent Nos. 5,924,049 (Beasley) and 4,953,657 (Edington).

Both PGS and WesternGeco appealed.  However, in the interim to the ruling, WesternGeco settled with PGS and withdrew from the appeal.  The USPTO intervened to defend the PTAB decision in the appeal.  On appeal, PGS did not challenge the §102 ruling.  Nor did PGS challenge the §314 partial institution decision.  The remaining issue challenged on appeal by PGS were the §103 findings.  WesternGeco also did not intervene to request any type of relief in support of its contentions in the original IPR petitions.

As to the institution decision, the Fed Circuit panel, composed of Judges Wallach, Moore, and Taranto, with Judge Taranto writing for the court, noted the recently-decided SAS case.  The Supreme Court enunciated that the “petitioner is master of its complaint and normally entitled to judgment on all of the claims it raises.”[4]  Additionally, language in §314 is either a binary institution of review of all claims or no institution at all.[5]  After a lengthy discussion of administrative review law, the panel noted that no party involved – PGS, WesternGeco, or the USPTO – requested any type of SAS-type relief.  Additionally, Judge Taranto stated:

We have no legal authority that requires us sua sponte to treat the Board’s incorrect denial of institution as to some claims and grounds as a basis for disturbing or declining to review the Board’s rulings on the instituted claims and grounds or as to a basis for reopening the IPRs to embrace the non-instituted claims and grounds.[6]

As to obviousness, Judge Taranto noted that an obviousness inquiry requires whether a POSITA would have been motivated to combine the teachings of the prior art to achieve the claimed invention, and would have had a reasonable expectation of success in so doing.[7]  PGS did not dispute the combination of Beasley and Edington taught all limitations as claimed in the ‘981 patent.  PGS did, however, contend that the PTAB erred in analyzing properly the motivation to combine Beasley and Edington.

As noted by the panel, WesternGeco, when it argued in its petition for motivation to combine, asserted that Beasley taught encoding, while Edington taught time delays.  Combined, both references made it obvious to a POSITA to use the Edington encoding technique with the Beasley system to achieve a predictable result of firing simultaneously.

Beasley states: “if desired, the leading and trailing sources may be arranged to emit encoded wavelengths using any desired type of coding.  The respective sources are then programmed to be activated concurrently instead sequentially.”  Beasley, col. 7, lines 54-58.[8]

Judge Taranto further noted that Beasley could be read to have small time delays within its firing embodiment.  As for Edington, he noted that Edington’s time delay encoding is the type of source signature encoding required by Beasley.  As such, it would have been reasonable for a POSITA to combine the Edington coding with the Beasley system.

PGS had contended that the PTAB did not make an adequate motivation finding, by arguing that the finder of fact must go beyond the baseline question of whether a POSITA would have combined the prior art and query whether that POSITA would be motivated to combine the art.  Judge Taranto quashed this argument:

The Board affirmatively focused on the “other types of encoding” language of Beasley as an affirmative suggestion to look elsewhere, especially to a time-delay reference, in light of Beasley’s contemplation of small time delays between firing seismic sources, as we have discussed.  “The motivation to modify a reference can come from the knowledge of those skilled in the art, from the prior art reference itself, or from the nature of the problem to be solved.”[9]   We are left with no meaningful doubt about the Board’s motivation finding and its basis.[10]

The Fed Circuit panel was clear about allowing the partial institution of claims review in an IPR – no party challenged the partial institution itself.  It was made clear that the decision may have turned out differently had at least one party presented a challenge at some point during the institution or the appeal.  However, this was not in the facts.  Transition issues will continue for the Fed Circuit as it deals with the aftermath of the Supreme Court SAS ruling.

 

[1] ___F.3d___ (Fed. Cir. 2018) (slip op.), aff’g WesternGeco LLC v. PGS Geophysical AS, IPR2015-00309, 2016 WL 3193820 (P.T.A.B. Jun. 8, 2016), IPR2015-00310, 2016 WL 3193821 (P.T.A.B. Jun. 8, 2016), and IPR2015-00311, 2016 WL 3193823 (P.T.A.B. Jun. 8, 2016).

[2] 585 U.S.___, 138 S. Ct.___ (2018).

[3] 584 U.S.___, 138 S. Ct. 1348 (2018).

[4] See SAS, supra, 138 S. Ct. at 1355.

[5] Id.

[6] See PGS, supra (slip op. at 11).

[7] See Insite Vision Inc. v. Sandoz, Inc., 783 F.3d 853, 859 (Fed. Cir. 2015).

[8] See PGS, supra (slip op. at 15).

[9] See SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349, 1356 (Fed. Cir. 2000).

[10] See PGS, supra. (slip op. at 17).