Argument Recap

May the Patent Trial and Appeal Board reject a motion to amend a patent in an inter partes review because the Board concludes that a proposed substitute claim does not comply with the eligibility requirement? The Federal Circuit considered that question during an oral argument last week in Uniloc 2017 LLC v. Hulu, LLC. As discussed in our argument preview, the case attracted an amicus brief in favor of the Board’s position that it may consider eligibility in this context. Here is our argument recap.

Brian M. Koide argued for Uniloc. He began by outlining his argument in terms of Chevron deference. He first argued, for example, that, under step one of the Chevron analysis, the America Invents Act unambiguously precludes eligibility challenges of proposed claim amendments in inter partes review proceedings.

Before he could move beyond his introductory remarks, however, he was interrupted and asked to address the preliminary question of whether the case is moot because all the original claims were invalidated in another proceeding. Koide explained that he is requesting relief in the form of an order to the PTAB that it enter and issue the proposed claims. He suggested that the USPTO agreed with his position that the case is not moot. Moreover, he argued “it would be fundamentally unfair” to have the timing of the various cases effectively “rob you of your right to move to amend.” In response to a comment that a finding of mootness has likely felt “fundamentally unfair” to previous parties in previous cases, Koide conceded that point and highlighted his view that, nevertheless, there is no precedent directly on point.

Judge Wallach pointed out that Koide had not made any arguments on the merits that the proposed substitute claims met the eligibility requirement, and so he asked whether Uniloc had waived the issue on appeal. Koide responded that it had not waived the issue and that it should be entitled to a remand to address the issue given the arbitrary and capricious nature of the denial of its motion to add the substitute claims. In response to follow up questions from Judge Taranto, Koide confirmed that he is seeking a reversal here and a remand with instructions to issue the proposed substitute claims.

Judge Taranto then asked whether there was any other circumstance in which the Patent Office issues a claim for the first time without the possibility of considering an invalidity ground. Koide admitted he was not aware of any such circumstance, but he pushed back against the question by pointing out these proposed claims were closely related to the original claims, and so he wouldn’t call them untested, and in fact the claims have been reviewed through their original examination of the closely-related claims.

Former USPTO Solicitor Nathan K. Kelley argued for Hulu. Responding to preliminary questions about the burden Uniloc bears in this appeal, Kelley highlighted Hulu’s position that Uniloc waived its position on the merits of the eligibility of the proposed claims by failing to present any argument to the PTAB on that issue.

Kelley and the panel then engaged in a discussion of the amendment process in inter partes review proceedings. Following that discussion, Kelly argued that the motion in this case, which was a motion contingent upon the invalidation of the original claims, became moot when a collateral district court action invalidated all of the original claims. The contingent aspect of the motion, he argued, never occurred because the PTAB did not find the original claims invalid. Judges Taranto and O’Malley, however, expressed some level of disagreement with the position that the language of the motion required the PTAB to issue a final written decision invalidating the original claims.

Judge Taranto then asked whether it is simply too late for Uniloc to seek issuance of its substitute claims outside of this inter partes review. Kelley said yes it is too late, but also pointed out that Uniloc could have filed a narrowing reissue application prior to the invalidation of its original patent claims. But had they done that, Kelley continued, and if the claims issued, those claims would have been subject to a post grant review proceeding, which would have allowed the PTAB to entertain an eligibility challenge. He ended his argument by saying: “If they got [these claims] based on the reasons that they’re arguing, they will be the first patentees in our system—since the early part of the [19th] Century when we switched to an examination system—that will have obtained new, unexamined claims in U.S. patents not subject to scrutiny under the patentability provisions in effect.”

Farheena Y. Rasheed argued for the USPTO, which intervened in the case. She argued that the statute permits the Board to consider the eligibility of proposed substitute claims. On the mootness issue, she argued that the case is not moot and that this is Uniloc’s one shot to get the substitute claims. That shot, however, would require the Federal Circuit, she argued, to reverse and find that the statute does not permit the Board to consider eligibility of substitute claims, which she contended would be incorrect.

Jeffrey E. Sandberg also argued for the government with respect to the issue of Chevron deference. He maintained that the Board’s interpretation of the relevant statute is the only plausible interpretation, and that anyway the Federal Circuit should defer to the USPTO as a matter of Chevron deference.

In rebuttal, Koide conceded he didn’t know if Uniloc had a pending continuation application related to the patent at issue in this appeal and therefore whether this is Uniloc’s only opportunity to obtain issuance of the proposed substitute claims. Then he argued that if Hulu and the government are correct, any patentability requirement may be addressed in an inter partes review, including invalidity based on non-patent publications, public use, and on-sale bar activity, which, he argued, is clearly contrary the statute. Hulo and the governement, he argued, seem to be “picking and choosing,” and “it is a slippery slope.”

We will keep track of this case and report on its disposition.