Fed Circuit Watch: PTAB Error to Not Consider Arguments in Reply Brief

On August 27, 2018, the Court of Appeals for the Federal Circuit handed down Ericsson Inc. v. Intellectual Ventures I LLC,[1] in which the rules played an important role in decisions made in the case.

The facts are as follows.

Intellectual Ventures I owns U.S. Patent No. 5,602,831 (‘831), entitled “Optimizing packet size to eliminate effects of reception nulls,” and directed to increasing reliability of wireless communications systems of a moving wireless receiver through minimization of burst error effects.  The ‘831 specification describes the problem in wireless communications where signal fading occurs, resulting in transmission errors where some transmitted bits of information, or packets, are not successfully received by the receiver.  These transmission errors are referred to in the ‘831 patent as “burst errors” or “nulls.”  The ‘831 patent discloses an improvement over the prior art, namely, new methods of mitigating the effects of burst errors through encoding packets into packet blocks by interleaving packets together in a register, and varying the number of packets encoded in each packet block.  The interleaving of packets is known in the art, but the varying of the number of packets encoded is novel, according to the specification.

 

Claims 1 and 9 were deemed representative.

1. A method for transmitting a message packet to a receiver, comprising:

identifying changes in signal drop-out characteristics each associated with the receiver;

encoding packets into packet blocks;

transmitting each packet block to the receiver; and

varying the number of packets encoded in the packet block according to the changes in the signal drop-out characteristics.

9. A system for transmitting messages, comprising:

a receiver having a variable speed of motion, the receiver receiving packet blocks containing the messages;

a transmitter for transmitting the packet blocks to the receiver; and

an encoder for combining and varying the number of packets transmitted in each of the packet blocks according to the variable speed of the receiver.

(Emphasis added.)

There were two cited prior art references.  First, U.S. Patent No. 4,939,731 (“Reed”), describes a data transmission protocol in which data signals are transmitted as a data packet.  Each packet includes “S-blocks,” or one or more data blocks.

Second, U.S. Patent No. 5,425,051 (“Mahany”) describes a radio frequency communication network with adaptive parameters, and teaches changing the size of data packets to reduce data loss caused by signal fading.

Ericsson Inc. petitioned for inter partes review of the ‘831 patent, proposing claim construction under the broadest reasonable interpretation (BRI) standard (MPEP 2111), rather than the Phillips standard.  The BRI standard is used in patent prosecution to construe claim terms in the broadest reasonable interpretation in light of the specification.  The Phillips standard is used in district court, ITC proceedings, and soon-to-be, in PTAB post-grant proceedings, which construes claim terms based on the ordinary and plain meaning of the claim terms in light of the specification and prosecution history. [2]  Interestingly, Ericsson’s use of BRI for claim construction in its petition was not questioned by the PTAB (or the Fed Circuit for that matter), although it is precedent that the Phillips standard is used in expired patents,[3] like the ‘831 patent, which expired March 31, 2015, before the Ericsson IPR petition’s filing date.  The PTAB instituted IPR review on two grounds: 1) claims 1-3, 6, 7, 9, and 12-14 were likely obvious over Reed and Mahany, and 2) claim 8 was likely obvious over Reed, Mahany, and Webb (which was not at-issue in this case).  Using the BRI standard, the PTAB construed “encoding packets into packet blocks” and “encoder for combining and varying the number of packets transmitted in each of the packet blocks,” in claims 1 and 9 did not require interleaving.

Upon institution, IV argued in its response that the claims must be construed under the Phillips standard, consistent with CSB-Systems.  It specifically argued that “encoding packets into packet blocks” is construed as “forming blocks by interleaving packets together,” and “encoder for combining . . . “ is construed as “encoder for forming blocks by interleaving packets together and varying the number of packets transmitted.”  In its reply brief, Ericsson argued that interleaving was known in the prior art, and that Reed taught interleaving packets, and together, Reed and Mahany taught interleaving packets together.

In its final decision, the PTAB disregarded Ericsson’s reply argument regarding the interleaving as known in the prior art, as well as the Reed and Mahany teachings, stating that the reply brief was “not an opportunity to identify for the first time, new and different prior art elements that are alleged to satisfy claim requirements.”

The Fed Circuit panel was composed of Judges Reyna, Taranto, and Chen, with Judge Reyna writing for a unanimous court.  Judge Reyna found the PTAB’s final decision erroneous.

The portions of the Reply the Board declined to consider expressly follow from these contentions raised in the Petition – namely, that there is no substantial difference between interleaving R-blocks within S-blocks, and interleaving S-blocks with R-blocks . . .

The Board’s error was parsing Ericsson’s arguments on reply with too fine of a filter.[4]

Because interleaving was an important aspect of the PTAB’s decision determining claim 1 was not obvious, Ericsson should have been given an opportunity to respond it that contention in its reply brief.

Judge Reyna wanted to make clear that Fed Circuit precedent supported the PTAB’s discretionary decision-making on rejecting arguments raised for the first time in a reply.  However, here, he emphasized that Ericsson was not raising a new argument for the first time; rather, Ericsson was identifying an unidentified aspect of a prior art previously mentioned to expand on an argument it raised in its initial brief.  Specifically, Ericsson was arguing that Reed teaches S-blocks (i.e., packets) further encoded into packet blocks through interleaving.  As a result, the PTAB decision was vacated and remanded for further proceeding.

 

[1] ___F.3d___ (Fed. Cir. 2018) (slip op.), vacating and remanding Case No. IPR2015-01367 (P.T.A.B. Feb. 2018).

[2] See Phillips v. AWH Corp., 415 F.3d 1303, 1316 (Fed. Cir. 2005) (en banc).

[3] See In re CSB-Syst. Int’l Inc., 832 F.3d 1335, 1341 (Fed. Cir. 2016).

[4] See Ericsson, supra (slip op. at 11).