Precedential and Key Federal Circuit Opinions

1.  BACKERTOP LICENSING LLC [OPINION] (23-2367, 23-2368, 24-1016, 24-1017 Prost, Hughes, and Stoll) 

Hughes, J. The Court affirmed the District Court’s orders (1) requiring Ms. Lori LaPray, sole owner of Backertop Licensing LLC (“Backertop”), to appear in-person before the District Court for testimony regarding potential fraud on the court; and (2) the district court’s order of monetary sanctions for failing to appear. 

The District Court’s order to compel Ms. LaPray’s attendance was an appropriate means to investigate potential misconduct involving Backertop, a corporate party of which she is the sole representative. In the District Court’s detailed memorandum, it found that patent monetization firm IP Edge and affiliated consulting shop Mavexar appear to have created all of the plaintiff LLCs, including Backertop; recruited outside individuals to serve as their sole owners; assigned patents to the plaintiff LLCs for little or no consideration; retained the rights to the majority of royalties and settlement proceeds; and reported a complete assignment to the United States Patent and Trademark Office (USPTO)—all without disclosing IP Edge’s ongoing rights in any patent-related proceedings. The District Court also found that IP Edge and Mavexar then directed infringement litigation asserting those patents—including overseeing the attorneys and agreeing to settlements—with seemingly little to no input from the plaintiff LLCs’ owners. The District Court developed concerns that this arrangement may conceal from the court the real parties in interest: IP Edge and Mavexar; that those real parties in interest may have perpetrated a fraud on the court by fraudulently conveying to a shell LLC the patents and filing a fictitious patent assignment with the USPTO designed to shield those parties from potential liability they would otherwise face in asserting the patents in litigation; that the plaintiff LLCs and their counsel may have violated local disclosure rules by failing to disclose IP Edge’s or Mavexar’s funding for the litigation; and that plaintiff LLCs’ attorneys may have violated the Rules of Professional Conduct by filing, settling, and dismissing litigation at the direction of Mavexar, a non-legal consulting firm, without the informed consent of the plaintiff LLCs’ owners.

The District Court stated that Ms. LaPray’s attendance in person was required to assess her credibility given the representations and positions of counsel and Ms. LaPray and their apparent lack of communication. As such, the District Court was within its inherent authority to order Ms. LaPray to appear before it to investigate fraud on the court, and the order imposing monetary sanctions when she did not appear was not an abuse of discretion.

2.  MILLER MENDEL, INC v. CITY OF ANNA, TEXAS [OPINION] (22-1753, 22-1999 Moore, Stoll, and Cunningham)

Cunningham, J. The Court affirmed the district court’s judgment on the pleadings that the asserted claims of Miller Mendel, Inc’s (“Mendel”) U.S. Patent No. 10,043,188 (“the ’188 patent”) are patent ineligible under 35 U.S.C. § 101. The Court also affirmed the denial of City of Anna, Texas’s (“City”) motion for attorneys’ fees under 35 U.S.C. § 285.  

The ’188 patent recites “a method for a computing device with a processor and a system memory to assist an investigator in conducting a background investigation of an applicant for a position within a first organization.” First, the Court found the claims patent-ineligible. At Alice step one, the Court explained that the claims of the ’188 patent are directed to the abstract idea of “receiving, storing, transmitting, determining, selecting, and generating information[.]” At Alice step two, the Court explained that the claim limitations fail to transform the claimed abstract idea into a patent-eligible application because, among other things, the specification describes nothing more than “already available computers” performing “already available basic functions.” Second, the Court explained that the district court’s denial of attorney's fees was not an abuse of discretion because the conduct did not rise to the level of unreasonable or vexatious. 

3.  KOSS CORP. v. BOSE CORP. [OPINION] (23-1173, 23-1179, 23-1180, 23-1191 Hughes, Stoll, and Cunningham)

Hughes, J. The Court determined that because the claims at issue in the appealed inter partes review (“IPR”) decisions were invalidated in prior district court litigation, the appeals of the IPR decisions were moot. Accordingly, the Court dismissed the appeals. 

In response to a patent infringement action brought by Koss Corporation (“Koss”), Bose Corp. (“Bose”) petitioned for IPR of the three asserted patents. In a separate action, Koss had also filed a patent infringement action against Plantronics, Inc. (“Plantronics”) asserting the same three patents. In the action against Plantronics, the District Court granted Plantronics’ motion to dismiss, finding all claims of the asserted patents invalid under 35 U.S.C. § 101. In response, Koss filed an amended Complaint re-asserting two of the patents, but limiting its allegations to certain claims involving signal strength technology. Plantronics once again filed a motion to dismiss, which the parties fully briefed. Instead of waiting for the District Court to rule on Plantronics’ second motion to dismiss, Koss voluntarily stipulated to dismiss the litigation with prejudice, but did not ask the district court to vacate its earlier order finding all claims of the asserted patents invalid. The District Court subsequently entered an order formally dismissing the case against Plantronics with prejudice. Koss did not appeal. Following this dismissal, Bose moved to dismiss the appeals of the at-issue IPRs as moot. On appeal, the Court held that the district court’s invalidity order became final and appealable when it merged with a stipulated dismissal with prejudice, which concluded litigation. Koss neither appealed the order nor sought to have it vacated by the District Court. Thus, the Court held the patent claims are invalid removing any case or controversy and rendering the appeals moot. 

4.  ZYXEL COMMUNICATIONS CORP. v. UNM RAINFOREST INNOVATIONS [OPINION] (22-2220, 22-2250 Dyk, Prost, and Stark)

Dyk, J. The Court affirmed the Patent Trial and Appeal Board’s (“Board”) decision to grant UNM Rainforest Innovation’s (“UNMRI”) motion to amend. 

During the IPR proceedings, UNMRI filed a motion to amend with proposed substitute claims and requested preliminary guidance under the Board’s Motion to Amend Pilot Program. The PTAB’s guidance found that UNMRI’s motion only provided written description support for the newly added limitations, instead of showing support for the proposed substitute claim as a whole, but also noted that it was more likely than not that the specification as filed has adequate support. UNMRI filed a reply including written description support for the remaining claim limitations. ZyXEL Communications Corporation (“ZyXEL”) filed a sur-reply arguing the procedural point that UNMRI did not satisfy the requirement that the motion itself contain support for all of the claim limitations of the substitute claims, but not disputing that there was sufficient written description support. The Court rejected this argument because the purpose of providing preliminary guidance in the MTA Pilot Program is to allow for the correction of errors in the original motion. 

Even if allowing the reply brief to supply the missing information had been inconsistent with the regulations, the Court concluded that any error was harmless error. ZyXEL was on notice of the written description arguments and had ample opportunity to respond in its sur-reply. If ZyXEL wanted to present an expert declaration with its sur-reply, it could have made a request to the Board to waive its rules and permit it to file an expert declaration. As such, ZyXEL was not prejudiced by the Board’s decision to allow the reply brief to supplement the initial motion. 

5.  SOFTVIEW LLC v. APPLE INC. [OPINION] (23-1005, 23-1005 Lourie, Bryson, and Reyna)

Bryson, J. The Court upheld the Patent and Trademark Office’s (“PTO”) authority to implement rules governing the procedures followed during inter partes review (“IPR”) proceedings, including the estoppel standard adopted in the regulation, specifically 37 C.F.R. § 42.73(d)(3) precluding patent applicant or owner from taking action inconsistent with the adverse judgment. 

The Leahy-Smith America Invents Act’s (“AIA”) gave the PTO “rulemaking authority to implement” IPR proceedings and the PTO promulgated rules governing IPR proceedings pursuant to its authority under 35 U.S.C. § 316(a)(4). Relevant here, the rule that “addressed the operating of estoppel principles in patent office proceedings” under 37 C.F.R. § 42.73(d)(3), prohibits a patent owner “from taking action inconsistent with the adverse judgment” in various proceedings, including IPR proceedings. Softview LLC (“Softview”) challenged the Patent Trial and Appeal Board’s (“Board”) interpretation of the term “patentably distinct” as used in § 42.73(d)(3)(i) contending that the regulation was intended to codify the common law doctrine of collateral estoppel and that the Board improperly interpreted the regulation as giving broader preclusive effect to the decision in the IPR proceedings involving the ’353 patent claims that it would have been the case if the Board had applied common law collateral estoppel principles. The Court determined that the plain text of the regulation unambiguously supports the Board’s action because section 42.73(d)(3)(i) goes beyond the common law rule by calling for a comparison between the claims an applicant is “obtaining” and the “finally refused or canceled claim.” The Court further explained that whether the Board’s action was lawful thus depends on whether the PTO had statutory authority to issue the regulation.” The Court held the PTO had the requisite statutory authority. 

While the Court agreed the PTO was authorized to promulgate section 42.73(d)(3)(i), the Court disagreed with the Board’s application of that regulation to previously issued claims, explaining that the regulation applies to “obtaining” a claim—not maintaining an existing claim. As such, the Court vacated the Board’s decision for the issued claims.  

*Appellees were represented by WilmerHale.