The Federal Circuit recently issued a decision in SoftView LLC v. Apple Inc. clarifying the scope of patent owner estoppel set forth in 37 C.F.R. § 42.73(d)(3)(i). 2024 WL 3543902 (Fed. Cir. July 26, 2024). The regulation prohibits a patent applicant or owner “from taking action inconsistent with [an] adverse judgment, including obtaining in any patent[] [a] claim that is not patentably distinct from a finally refused or canceled claim.” 37 C.F.R. § 42.73(d)(3)(i). The Federal Circuit upheld the validity of 37 C.F.R. § 42.73(d)(3)(i) under 35 U.S.C. § 316(a)(4) and the PTAB’s interpretation of the regulation.  The Federal Circuit held that the estoppel regulation applies to new and amended claims, but not to previously issued claims.  Softview LLC v. Apple Inc. (Fed. Cir. July 26, 2024).

This case represents the latest in Softview’s patent litigation against multiple phone manufacturers.  In an inter partes review (“IPR”), the Patent Trial and Appeal Board (“PTAB”) invalidated 18 of the 319 claims in SoftView LLC’s (“SoftView”) U.S. Patent No. 7,461,353 (“the ’353 patent”). See Kyocera Corp. v. SoftView LLC, No. IPR2013-00007, Paper 51 at 36 (PTAB Mar. 27, 2014). In subsequent ex parte and inter partes reexaminations, SoftView amended 107 of its challenged claims to incorporate limitations from claims invalidated in the IPR. See ex parte Reexamination of U.S. Patent No. 7,461,353, 90/009,994, Amendment and Response Under 37 C.F.R. § 1.530 (USPTO Aug. 8, 2017). Both the amended and unamended claims were ultimately rejected as being either essentially the same as a canceled claim or a combination of limitations that had been invalidated in the IPR. The PTAB held that because the pending claims were not patentably distinct from the invalidated claims, the pending claims were invalid under 37 C.F.R. § 42.73(d)(3)(i). SoftView raised two core arguments on appeal.

First, SoftView challenged the PTAB’s interpretation of the term “patentably distinct” as used in 37 C.F.R. § 42.73(d)(3)(i). SoftView argued that the regulation was intended to codify common law collateral estoppel and that the PTAB’s interpretation gave a broader preclusive effect than if the common law collateral estoppel principles had been applied. The Federal Circuit affirmed the PTAB’s interpretation of “patentably distinct,” which was “the same meaning as that term is given in obviousness-type double patenting cases and in interference proceedings.” SoftView, 2024 WL 3543902, at *6. “Patentably distinct” has an established meaning in patent law and it was presumed that the Patent and Trademark Office (“PTO”) intended to adopt that meaning when it issued the regulation. SoftView responded that the term “not patentably distinct” should have been interpreted to mean “substantially the same.” Although the Federal Circuit agreed that the two terms were equivalent, this point did not advance SoftView’s contention that the PTAB misapplied the estoppel regulation. The Federal Circuit explained that the PTAB “plainly would have reached the same conclusion if it had used the ‘substantially the same’ test for which SoftView has advocated, as that test is defined to invoke the ‘not patentably distinct’ standard.” Id. at *8.

Second, SoftView argued that the PTAB’s estoppel analysis was based on the IPR decision canceling claims rather than comparing the claims to the prior art. The Federal Circuit held that 37 C.F.R. § 42.73(d)(3)(i) “unambiguously support[ed]” the PTAB’s decision and that the regulation goes beyond common law collateral estoppel by comparing claims that an applicant is “obtaining” with “finally refused or canceled” claims. Id. at *9. At issue was whether the PTAB had statutory authority to issue the regulation.

SoftView contended that the PTO had statutory authority to regulate procedural matters, but not substantive issues of patent law, such as 37 C.F.R. § 42.73(d)(3)(i). The Federal Circuit rejected this argument, finding authority in 35 U.S.C. § 316(a)(4) for the PTAB to prescribe regulations “establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title.” Despite the PTAB’s authority to promulgate the estoppel regulation, the Federal circuit disagreed with the application of the regulation to previously issued claims.

The Federal Circuit rejected the PTAB’s application of the regulation to previously issued claims, explaining that “[b]y its terms, the regulation applies to ‘obtaining’ a claim—not maintaining an existing claim.” SoftView, 2024 WL 3543902, at *11. Although two other panels of the PTAB have previously held that section 42.73(d)(3)(i) does not apply to issued claims, the SoftView panel found those rulings distinguishable because they occurred in IPR cases as opposed to an inter partes reexamination. In contrast, the Federal Circuit found “no meaningful distinction between maintaining a non-distinct claim in an IPR proceeding and maintaining such a claim in an inter partes reexamination,” specifically noting that “the regulation does not draw any such distinction.” Id. at *13-14.

The Federal Circuit further distinguished obtaining a new claim from maintaining a previously issued claim in the context of the regulation. Obtaining a new claim that is not patentably distinct from a finally refused or canceled claim “can fairly be viewed as an effort to circumvent the prior adverse judgment.” Id. at *14. On the other hand, maintaining an already issued claim “cannot be viewed as circumventing a subsequent decision on related claims.” Id. Relying on the plain language of the regulation, the Federal Circuit concluded that maintaining previously issued claims falls outside the scope of estoppel. Although the Court, perhaps in dicta, affirmed the PTAB’s general methodology in determining whether a claim is “patentably distinct,” as used in the rule, the PTAB’s decision was vacated as to the issued claims that were invalidated based on estoppel.

Takeaway:

The SoftView decision affirms that broad estoppel will apply when attempting to amend or obtain new claims in a continuation application. However, patent applicants and owners will not have previously issued claims cancelled under 37 C.F.R. § 42.73(d)(3)(i) based on IPR decisions.