On July 26, 2024, the Court of Appeals for the Federal Circuit (“CAFC”) issued a precedential opinion reversing-in-part decisions from the U.S. Patent Trial and Appeal Board (“PTAB”) in two inter partes reexamination proceedings that had found all claims of SoftView LLC’s U.S. Patent No. 7,461,353 (“the ’353 patent”) invalid under the estoppel provision set forth in 37 C.F.R. § 42.73(d)(3)(i). SoftView LLC v. Apple Inc., __ F.3d __ (Fed. Cir. July 27, 2024). In its decision, the CAFC upheld the validity of § 42.73(d)(3)(i) and the estoppel standard adopted in the regulation but held that the regulation applies only to new claims and amended claims.
The estoppel provision of 37 C.F.R. § 42.73(d)(3)(i) reads, in relevant part, as follows:
42.73(d)(3) … A patent applicant or owner is precluded from taking action inconsistent with the adverse judgment, including obtaining in any patent:
(i) A claim that is not patentably distinct from a finally refused or canceled claim.
The CAFC’s decision addresses three key issues concerning this provision:
1) the meaning of “not patentably distinct” in § 42.73(d)(3)(i);
2) whether the exercise of estoppel under § 42.73(d)(3)(i) exceeds the USPTO’s authority; and
3) which patent claims are subject to estoppel under § 42.73(d)(3)(i).
Background
In 2011, Apple filed a request for inter partes reexamination for the ’353 patent, which is directed to displaying internet content on mobile devices. Slip Op. at *3. Over the next two years, requests for ex parte reexamination proceedings and an inter partes review (“the IPR”) of the ’353 patent were additionally filed. Id. at *4. The PTAB stayed all proceedings pending the outcome of the IPR. Id.
On March 27, 2014, the PTAB issued a final written decision in the IPR, finding each of 18 challenged claims of the ’353 patent unpatentable. Id. The CAFC affirmed this decision in SoftView LLC v. Kyocera Corp., 592 F. App’x 947 (Fed. Cir. 2015). Id.
The stay of the reexamination proceedings was then lifted on November 27, 2015. Id. In the inter partes reexamination proceedings, the examiner found the majority of the claims unpatentable over the prior art under 35 U.S.C. § 103. Id. at *4-5. On appeal, the PTAB reversed the examiner’s obviousness rejections but newly rejected the claims based on § 42.73(d)(3)(i). Id. at *5. Specifically, the PTAB rejected the amended and originally issued claims as not being “patentably distinct” from the claims found obvious in the IPR. SoftView appealed.
“Not Patentably Distinct” Standard under 37 C.F.R. § 42.73(d)(3)(i)
On appeal, the CAFC first addressed the estoppel standard under § 42.73(d)(3)(i). Section 42.73(d)(3)(i) precludes a patent applicant or owner from claiming subject matter that is “not patentably distinct from a finally refused or canceled claim.” SoftView had argued that the “not patentably distinct” standard should be interpreted as meaning “substantially the same,” in order to align more closely with common law estoppel. Slip Op. at *7-8. But the CAFC rejected this narrow interpretation. Id. at *8.
The CAFC held that the term “patentably distinct” in § 42.73(d)(3)(i) invokes its established meaning in the obviousness-type double patenting and interference context. Id. at *6. As such, the CAFC held that the “not patentably distinct” standard should be understood in the same way, i.e., a patent applicant or owner cannot claim subject matter that is anticipated by, or obvious in light of, finally refused or canceled claims. Id.
USPTO Authority to Promulgate 37 C.F.R. § 42.73(d)(3)(i)
The CAFC next addressed whether the exercise of estoppel under § 42.73(d)(3)(i) exceeds the USPTO’s statutory authority. SoftView had argued that the USPTO lacked authority because § 42.73(d)(3)(i) invalidates claims that would not necessarily be unpatentable on statutory grounds, e.g., 35 U.S.C. §§ 102 and 103, over the prior art. Id. at *9. Thus, according to Softview, § 42.73(d)(3)(i) is an impermissible rule on a substantive issue of patent law because it implements a non-statutory estoppel effect of IPR decisions.
The CAFC rejected this argument and held that the USPTO was authorized to issue the § 42.73(d)(3)(i) estoppel provision under 35 U.S.C. § 316(a)(4). Id. at *10. Section 316(a)(4) authorizes the USPTO to prescribe regulations “establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title.” Id. at *10-11. The CAFC found that the estoppel provision of § 42.73(d)(3)(i) prevents a patent owner or applicant from acting inconsistently with the outcome of an IPR proceeding and ensures that the decisions in those proceedings have practical effect. Id. at *11. Therefore, the CAFC held that preventing such inconsistent action via the estoppel provision in § 42.73(d)(3)(i) falls within the rulemaking authority to issue regulations granted to the USPTO under § 316(a)(4). Id.
Scope of Patent Claims Subject to 37 C.F.R. § 42.73(d)(3)(i)
The CAFC last considered which patent claims are subject to § 42.73(d)(3)(i). The PTAB had rejected both amended claims and originally issued claims of the ’353 patent under § 42.73(d)(3)(i). Id. at *11-12. The CAFC held, however, that this estoppel provision does not apply to originally issued claims, but rather only to new or amended claims. Id. The CAFC explained that § 42.73(d)(3)(i) only prevents a patent applicant or owner from “obtaining” a claim that is not patentably distinct from finally refused or canceled claims—not maintaining existing claims. Id. The CAFC therefore affirmed the PTAB’s rejection of the amended claims of the ’353 patent but vacated and remanded with respect to the issued claims. Id.
Implications and Future Proceedings
The CAFC’s decision clarifies the standard and scope of the estoppel provision of § 42.73(d)(3)(i). The impact of SoftView is significant. On the one hand, previously issued, but unchallenged, patent claims may not be subject to estoppel arising out of an IPR decision finding other, even patentably indistinguishable, claims unpatentable. On the other hand, estoppel can still be applied by the USPTO to reject new and amended claims that are patentably indistinct from claims held unpatentable in an IPR.
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