Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01116/USCOURTS-ca13-15-01116-0/pdf.json

Parties Involved:
Automated Creel Systems, Inc.
Cross-Appellant
Shaw Industries Group, Inc.
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

SHAW INDUSTRIES GROUP, INC.,

Appellant

v.

AUTOMATED CREEL SYSTEMS, INC.,

Cross-Appellant

______________________ 

2015-1116, 2015-1119

______________________ 

Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. 

IPR2013-00132, IPR2013-00584. 

______________________ 

Decided: March 23, 2016

______________________ 

THAD CHARLES KODISH, Fish & Richardson, P.C., Atlanta, GA, argued for appellant. Also represented by ERIN 

ALPER; JOHN A. DRAGSETH, Minneapolis, MN.

SCOTT D. SMILEY, The Concept Law Group, P.A., Fort 

Lauderdale, FL, argued for cross-appellant. Also represented by MARK C. JOHNSON. 

MONICA BARNES LATEEF, Office of the Solicitor, United 

States Patent and Trademark Office, Alexandria, VA, 

argued for intervenor Michelle K. Lee. Also represented 

Case: 15-1116 Document: 69-2 Page: 1 Filed: 03/23/2016
2 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

by NATHAN K. KELLEY, SCOTT WEIDENFELLER, WILLIAM 

LAMARCA. 

______________________ 

Before MOORE, REYNA, and WALLACH, Circuit Judges.

Opinion for the court filed by Circuit Judge MOORE. 

Opinion concurring specially in the judgment filed by 

Circuit Judge REYNA. 

MOORE, Circuit Judge. 

Shaw Industries Group, Inc. appeals from the United 

States Patent and Trademark Office’s (“PTO”) Patent 

Trial and Appeal Board’s (“Board”) final written decision

in consolidated inter partes reviews (“IPR”) of claims 1–21 

of U.S. Patent No. 7,806,360. Shaw also petitions for writ 

of mandamus. Automated Creel Systems (“ACS”) crossappeals. We affirm-in-part, vacate-in-part, and remand. 

We deny Shaw’s petition for writ.

BACKGROUND

ACS is the owner of the ’360 patent, which relates to 

“creels” for supplying yarn and other stranded materials

to a manufacturing process. ’360 patent, col. 1, ll. 14–17. 

An exemplary creel supply system of the patent comprises 

creel magazines with a stationary frame and two movable 

carts. Id. at figs. 1, 12; col. 3, ll. 18–19, 59–61. The carts 

carry multiple levels of spools (or packages) of stranded 

material that can be routed using guides. Id. at col. 3, 

ll. 62–63. Continuous runtime can be achieved by 

(1) tying the material from various packages together, 

and (2) replenishing empty packages on one cart while 

packages on the opposite cart are used. Id. at col. 8, 

ll. 32–41; col. 9, l. 64 to col. 10, l. 16; col. 11, l. 1 to col. 12, 

l. 16.

Claims 1–5, 8–12, 14, 19, and 20 (“the non-interposing 

claims”) involve creel magazines with two packages of 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 3

stranded material at each level. They allow for transfer of 

stranded material from one package to another across the 

frame. For example, claim 5 recites:

5. A creel magazine for feeding stranded material 

to a manufacturing process comprising:

a magazine having a stationary magazine 

frame comprising a common guide for said 

stranded material;

a first and a second removable cartridge 

positioned adjacent said magazine frame 

on respective opposite sides of said magazine frame,

said first removable cartridge having at 

least one support arm supporting an active package of stranded material thereon;

said second removable cartridge having at 

least one support arm supporting a ready 

package of stranded material thereon 

wherein a trailing end of said stranded 

material carried by said active package is 

connected to a leading end of said stranded material carried by said ready package;

wherein said common guide is an annular 

turning surface and said stranded material is sequentially fed to said common 

guide from said active package then from 

said ready package.

Claims 6, 7, 13, 15–18, and 21 (“the interposing 

claims”) involve creel magazines with more than two 

packages of stranded material at each level. They allow 

for transfer of stranded material from one package to 

another across the frame (like the non-interposing 

claims), as well as on the same side of the frame. For 

example, claim 6 recites:

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4 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

6. The creel magazine of claim 5, further comprising an additional support arm supported adjacent 

to said at least one support arm for supporting an 

additional ready package on said removable cartridge, to be selectively interposed between said 

active package and said ready package on said 

second removable cartridge to feed said stranded 

material. 

In February 2012, ACS sued Shaw for infringement of 

the ’360 patent in the U.S. District Court for the Northern 

District of Georgia. Automated Creel Sys., Inc. v. Shaw 

Indus. Grp., Inc., No. 1:12-cv-00424-RWS (N.D. Ga. 2012). 

ACS voluntarily dismissed the suit without prejudice. 

Within one year of service of the complaint, see 35 U.S.C. 

§ 315(b), Shaw petitioned for IPR of all twenty-one of the 

’360 patent claims. Shaw proposed fifteen grounds of 

rejection. Most of the grounds were directed to the noninterposing claims. There were only three grounds directed at the interposing claims: (1) ground 3, alleging 

that all of the interposing claims would have been obvious 

over German Patent Application Publication 

DE 3429153 A1 (“Munnekehoff”) in view of U.S. Patent 

No. 5,624,082 (“Ligon”); (2) ground 8, alleging that all of 

the interposing claims would have been obvious over 

German Patent DE 7413531 (“Barmag”) in view of Ligon; 

and (3) ground 11, alleging that all of the interposing 

claims were anticipated by U.S. Patent No. 4,515,328 

(“Payne”) (“the Payne-based ground”). The Board instituted IPR on all claims except claim 4.1 It did not, however, institute IPR on all fifteen grounds argued by Shaw. 

With regard to the interposing claims, the Board instituted IPR on the grounds that these claims would have been

 

1 The Board held that Shaw did not demonstrate a 

reasonable likelihood of prevailing on its grounds with 

regard to claim 4. 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 5

obvious over Munnekehoff or Barmag in view of Ligon

(grounds 3 and 8, respectively). Shaw Indus. Grp., Inc. v. 

Automated Creel Sys., Inc., No. IPR2013-00132, 2013 WL 

8563792 (P.T.A.B. July 25, 2013) (“First Institution 

Decision”). The Board denied Shaw’s petition on the 

Payne-based ground. The Board explained that the 

Payne-based ground was “denied as redundant in light of 

[its] determination that there is a reasonable likelihood 

that the challenged claims are unpatentable based on the 

grounds of unpatentability on which we institute an inter 

partes review.” Id. at *20 (citing 37 C.F.R. § 42.108). 

There were no substantive determinations of the Paynebased ground in the Board decision.

In September 2013 (over one year after service of the 

complaint), Shaw filed a second petition, requesting IPR 

of claim 4. The Board instituted IPR based on two of the 

six grounds proposed by Shaw—alleged obviousness over 

Munnekehoff in view of U.S. Patent No. 4,572,458 

(“Bluhm”) (ground 3) and alleged obviousness over Barmag in view of Bluhm (ground 6). Shaw Indus. Grp., Inc. 

v. Automated Creel Sys., Inc., No. IPR2013-00584, 2013 

WL 8595536 (P.T.A.B. Dec. 31, 2013) (“Second Institution 

Decision”). It denied the other proposed grounds, writing 

that it “exercise[d] [its] discretion under 37 C.F.R. 

§ 42.108 to institute an inter partes review based solely on 

the asserted grounds directed to combinations with 

Bluhm and deny the remaining grounds as redundant.” 

Id. at *12–13. It rejected ACS’s argument that 35 U.S.C. 

§ 315(b) precluded it from instituting IPR. It determined 

that because ACS had voluntarily dismissed the suit 

without prejudice, it “nullifie[d] the effect of the alleged 

service of the complaint on Petitioner.” Id. at *6. 

The two IPRs proceeded in parallel. The Board then 

consolidated them and issued one final written decision, 

concluding that Shaw (1) had not shown by a preponderance of the evidence that the interposing claims were 

unpatentable based on the instituted grounds, and (2) had 

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6 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

shown by a preponderance of the evidence that the noninterposing claims (including claim 4) were unpatentable 

based on the instituted grounds. Shaw Indus. Group, Inc. 

v. Automated Creel Sys., Inc., Nos. IPR2013-00132, 

IPR2013-00584, 2014 WL 3725531 (P.T.A.B. July 24, 

2014) (“Final Decision”). Shaw appeals as to the interposing claims and ACS appeals as to claim 4. The PTO 

submitted a brief (“PTO Br.”) and presented oral argument as intervenor. See 35 U.S.C. § 143.

DISCUSSION

I. SHAW’S APPEAL AND PETITION FOR WRIT

A 

Under 28 U.S.C. § 1295(a)(4), we have jurisdiction to 

review the Board’s final written decisions in IPRs. St. 

Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 

F.3d 1373, 1376 (Fed. Cir. 2014); see also 35 U.S.C. 

§ 141(c) (“A party to an inter partes review who is dissatisfied with the final written decision of the Patent Trial 

and Appeal Board under section 318(a) or 328(a) may 

appeal the Board’s decision only to the United States 

Court of Appeals for the Federal Circuit.”); id. § 319 (“A 

party dissatisfied with the final written decision of the 

Patent Trial and Appeal Board under section 318(a) may 

appeal the decision pursuant to sections 141 through 

144.”). We lack jurisdiction, however, to review the 

Board’s decisions instituting or denying IPR. St. Jude, 

749 F.3d at 1376; see also 35 U.S.C. § 314(d) (“The determination by the Director whether to institute an inter 

partes review under this section shall be final and nonappealable.”). This is true regardless of whether the Board 

has issued a final written decision. In re Cuozzo Speed 

Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015), cert. 

granted sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. 

Ct. 890 (U.S. Jan. 15, 2016) (No. 15-446). 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 7

Shaw argues we have jurisdiction to review the 

Board’s final written decision, including its decision not to 

consider the Payne-based ground as redundant. Appellant’s Opening Br. 58. It argues that § 314(d) is inapplicable because it is not seeking review of the Board’s 

institution decision, but rather asking us “to review the 

Board’s authority, and correctness in exercising the same, 

in deeming a subset of asserted grounds redundant of 

instituted grounds.” Appellant’s Reply Br. 65. It argues 

that “whether the Board can deem grounds ‘redundant,’ 

and whether the Board properly exercised that authority, 

is not a decision whether to institute.” Id.

We disagree. As we recently explained, Congress authorized the PTO to prescribe regulations regarding 

institution and governance of inter partes reviews. Harmonic Inc. v. Avid Tech., Inc., No. 15-1072, 2016 WL 

798192, at *8 (Fed. Cir. Mar. 1, 2016). The PTO exercised 

this authority in promulgating 37 C.F.R. § 42.108, which 

allows the Board to institute IPR on only some of the 

challenged claims and to institute IPR of a given claim 

based on only some of the proposed grounds. Id. (citing 37 

C.F.R. § 42.108(a), (b)).

We can see benefit in the PTO having the ability to 

institute IPR on only some of the claims and on only some 

of the proposed grounds, particularly given the Board’s 

statutory obligation to complete proceedings in a timely 

and efficient manner. 35 U.S.C. § 316. For example, in 

Liberty Mutual Insurance Co. v. Progressive Casualty 

Insurance Co., No. CBM2012-00003, 2012 WL 9494791, at 

*1 (P.T.A.B. Oct. 25, 2012), the petitioner presented over 

four-hundred grounds of unpatentability for twenty 

patent claims. The Board determined that “numerous 

redundant grounds would place a significant burden on 

the Patent Owner and the Board, and would cause unnecessary delays.” Id. It wrote that “multiple grounds, 

which are presented in a redundant manner by a petitioner who makes no meaningful distinction between 

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8 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

them, are contrary to the regulatory and statutory mandates, and therefore are not all entitled to consideration.” 

Id. at *2. The Board made specific findings that certain 

groups of grounds were redundant. It ordered the Petitioner to choose which ground in each group to maintain, 

and even explained which ground it would proceed with if 

the Petitioner did not choose. The PTO has made similar 

constraints in prosecution by requiring applicants to 

narrow the number of claims they wish to prosecute. See, 

e.g., Hyatt v. U.S. Patent & Trademark Office, 797 F.3d 

1374, 1376 (Fed. Cir. 2015) (discussing the PTO’s requirement that the patentee select some of the hundreds 

of thousands of claims to prosecute, absent a showing that 

more claims were necessary).

Here, Shaw proposed three grounds of unpatentability 

for the interposing claims: the Payne-based anticipation 

ground and two other multiple reference obviousness 

grounds. The Board did not consider the substance of the 

Payne reference or compare it to the art cited in the other 

two proposed grounds.2 It made no specific findings that 

the three grounds overlapped with one another or in-

 

2 We understood the Board’s “redundancy” denial to 

amount to nothing more than a choice by the Board for 

efficiency purposes not to review three different grounds 

as to the interposing claims. Though it is not entirely 

clear, we did not read the Board’s opinion as deciding any 

substantive issues with regard to the Payne grounds. For 

example, the denial is not a determination that the IPR 

standard is not met as to the Payne grounds. Nor is it a 

determination of substantive redundancy with regard to 

Payne and Munnekehoff or Barmag. The PTO confirmed 

our understanding of the denial of the Payne-based 

grounds during oral argument. Oral argument at 31:23–

32:59, 38:18–38:21, available at http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2015-1116.mp3. 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 9

volved overlapping arguments. It did not order Shaw to

either choose which ground to maintain or show that the 

grounds were not, in fact, redundant.3 Instead, the Board 

merely denied IPR of the claims based on the Payne-based 

ground, writing without making any specific findings that 

the ground was “redundant” of the other two grounds. We 

cannot say we agree with the PTO’s handling of Shaw’s 

petition. We also cannot say that the PTO’s decision 

made the proceeding more efficient, particularly given 

that the Payne-based ground was alleged anticipation by 

a single reference while the two instituted grounds were 

alleged obviousness over combinations of references.

We have no authority, however, to review the Board’s 

decision to institute IPR on some but not all grounds. 

“Denial of a ground is a Board decision not to institute 

inter partes review on that ground.” 37 C.F.R. 

§ 42.108(b). We thus lack jurisdiction to review the 

Board’s decision not to institute IPR on the Payne-based 

ground, which includes its decision not to consider the 

Payne-based ground in its final written decision. 

B 

Shaw alternatively petitions for a writ of mandamus 

instructing the PTO to reevaluate its redundancy decision 

and to institute IPR based on the Payne-based ground. A 

 

3 In its second IPR petition, Shaw preemptively argued that the proposed grounds there were not redundant. Petition for IPR, Shaw Indus. Grp., Inc. v. 

Automated Creel Sys., Inc., No. IPR2013-00584 (Sept. 13, 

2013) (J.A. 1085–132). The Board did not address the 

argument. As in the first institution decision, the Board 

merely denied IPR on four of the proposed grounds, 

writing without any specific findings that they were 

“redundant” of the other two. Second Institution Decision, 2013 WL 8595536, at *12.

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10 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

writ of mandamus is a “drastic and extraordinary remedy” that can only be used in “exceptional circumstances 

amounting to a judicial usurpation of power or a clear 

abuse of discretion.” Cheney v. U.S. Dist. Court for D.C., 

542 U.S. 367, 380 (2004) (internal quotations omitted). A 

writ requires (1) that the petitioner have no other adequate means to attain the desired relief, (2) that the 

petitioner have a “clear and indisputable” right to the 

writ, and (3) that the issuing court, in the exercise of its 

discretion, be satisfied that the writ is appropriate under 

the circumstances. Id.

Shaw argues that these three conditions are satisfied. 

First, it argues it has no other means to attain the desired 

relief “since review by appeal is unavailable.” Pet. 5 

(quoting Cuozzo, 793 F.3d at 1275). It argues that because it brought the Payne-based ground in its petition 

and the PTO denied IPR on that ground, it may be estopped from arguing the ground in any future proceedings. Second, Shaw argues that it has a “clear and 

indisputable right” to have the PTO consider a reasonable 

number of grounds and references given the “estoppel 

rules.” Id. at 4 (quoting Cheney, 542 U.S. at 380). Third, 

it argues that we should find in our discretion that the 

writ is appropriate. 

Shaw’s argument is predicated on its concern that the 

statutory estoppel provisions would prevent it from raising the Payne-based ground in future proceedings. Section 315(e) of Title 35 provides: 

(1) Proceedings before the Office.–The petitioner 

in an inter partes review of a claim in a patent 

under this chapter that results in a final written 

decision under section 318(a) . . . may not request 

or maintain a proceeding before the Office with 

respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 11

(2) Civil actions and other proceedings.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final 

written decision under section 318(a) . . . may not 

assert in either a civil action arising in whole or in 

part under section 1338 of title 28 or in a proceeding before the International Trade Commission 

under section 337 of the Tariff Act of 1930 that 

the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

35 U.S.C. § 315(e) (emphasis added). The PTO argues 

that Shaw’s statutory interpretation of the estoppel 

provision is incorrect because “the denied ground never 

became part of the IPR.” PTO Br. 38. We agree with the 

PTO that § 315(e) would not estop Shaw from bringing its 

Payne-based arguments in either the PTO or the district 

courts. Both parts of § 315(e) create estoppel for arguments “on any ground that the petitioner raised or reasonably could have raised during that inter partes 

review.” Shaw raised its Payne-based ground in its 

petition for IPR. But the PTO denied the petition as to 

that ground, thus no IPR was instituted on that ground. 

The IPR does not begin until it is instituted. See Cuozzo, 

793 F.3d at 1272 (“IPRs proceed in two phases. In the 

first phase, the PTO determines whether to institute IPR. 

In the second phase, the Board conducts the IPR proceeding and issues a final decision.” (citations omitted)). 

Thus, Shaw did not raise—nor could it have reasonably 

raised—the Payne-based ground during the IPR. The 

plain language of the statute prohibits the application of 

estoppel under these circumstances. In light of our construction of the statute, mandamus is not warranted. 

Thus, we deny Shaw’s petition for writ of mandamus.

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12 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

C 

We turn now to Shaw’s challenges to the Board’s determination that Shaw had not shown by a preponderance 

of the evidence that the interposing claims would have 

been obvious over Munnekehoff or Barmag in view of 

Ligon. We review the Board’s ultimate conclusion of 

obviousness de novo and its factual findings for substantial evidence. In re Gartside, 203 F.3d 1305, 1316 (Fed. 

Cir. 2000). The parties do not dispute that Munnekehoff 

taught all of the limitations of the interposing claims 

except the transfer of stranded material from one package 

to another on the same side of the frame. Shaw argues

that this limitation was taught by Ligon. The Board

rejected Shaw’s argument, finding that adding a second 

package as taught in Ligon to either side of the frame in 

Munnekehoff would cause tangling and result in an 

inoperable assembly, absent complete redesign. In making this finding, the Board considered the explanation by 

Shaw’s expert, Dr. Youjiang Wang, that “tube Q” could be 

used to prevent tangling. The Board wrote that “[t]he use 

of tube Q . . . is not disclosed in the cited references” and 

that Dr. Wang did not “provide any basis (in Ligon or 

otherwise) for adding the additional tube to the 

Munnekehoff assembly in the manner proposed.” Final 

Decision, 2014 WL 3725531, at *11.

Shaw argues that the Board found that Munnekehoff 

did not disclose the “tube Q” relied on by Dr. Wang. Such 

a finding would be undisputedly erroneous, as ACS admits that Munnekehoff has a structure corresponding to 

Dr. Wang’s “tube Q.” ACS argues, however, that the 

Board did not make such a finding. ACS argues that 

instead, the Board found that Munnekehoff did not disclose “tube Q” the same way that Dr. Wang illustrated, 

i.e., as a structure that an artisan would have used to 

prevent tangling. 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 13

The language of the Board’s decision as to “tube Q” is 

ambiguous at best. If the Board found that “tube Q” was 

not disclosed in Munnekehoff, it was an undisputed error. 

The parties dispute what impact the error would have on 

the Board’s ultimate conclusion, but given the factual 

nature of the teachings of a reference, we leave to the 

Board such fact findings in the first instance. Thus, we 

vacate-in-part and remand. 

II ACS’S CROSS-APPEAL

A 

ACS challenges the Board’s decision that the second 

IPR was not barred pursuant to 35 U.S.C. § 315(b). This 

section provides:

An inter partes review may not be instituted if the 

petition requesting the proceeding is filed more 

than 1 year after the date on which the petitioner, 

real party in interest, or privy of the petitioner is 

served with a complaint alleging infringement of 

the patent.

It argues that we have jurisdiction to review the decision 

because it is not challenging the Board’s institution 

decision but rather the Board’s interpretation of § 315(b).

Our court recently faced a similar challenge in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 

(Fed. Cir. 2015). We held that we lack jurisdiction to 

review “the Board’s determination to initiate IPR proceedings based on its assessment of the time-bar of § 315(b), 

even if such assessment is reconsidered during the merits 

phase of proceedings and restated as part of the Board’s 

final written decision.” Id. at 658 (citing 35 U.S.C. 

§ 314(d)). We noted that a “narrow exception to the bar 

on judicial review exists for claims that the agency exceeded the scope of its delegated authority or violated a 

clear statutory mandate.” Id. (quoting Hanauer v. Reich, 

82 F.3d 1304, 1307 (4th Cir. 1996)). Section 315(b) keys 

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14 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

the time bar at issue to the service of the patent infringement complaint. The Board decided that ACS’s

voluntary dismissal of the suit without prejudice “nullifie[d] the effect of the service of the complaint.” Second 

Institution Decision, 2013 WL 8595536, at *6. The Board 

reasoned that we “consistently ha[ve] interpreted the 

effect of dismissals without prejudice as leaving the 

parties as though the action had never been brought.” 

Id. (citing, e.g., Graves v. Principi, 294 F.3d 1350, 1356 

(Fed. Cir. 2002); Bonneville Assocs., Ltd. v. Barram, 165 

F.3d 1360, 1364 (Fed. Cir. 1999)). Thus, the Board concluded that Shaw’s petition was not time barred. 

It is true we have held in other cases that dismissals 

without prejudice leave the parties as though the action 

had never been brought. While these cases did not address § 315(b) or whether service of a complaint can be 

nullified, based on Achates, we lack jurisdiction to review 

this aspect of the Board’s decision. We note that the 

Supreme Court’s decision to grant certiorari as to the 

second question in Cuozzo Speed Technologies, LLC v. 

Lee, 136 S. Ct. 890 (2016) may affect this court’s holding 

regarding the reviewability of the decision to institute in 

Achates. As of now, we are constrained by our earlier 

precedent.

B 

As to the merits, the Board determined that Shaw 

showed by a preponderance of the evidence that claim 4 

would have been obvious over Munnekehoff or Barmag in 

view of Bluhm. The Board’s factual findings are supported by substantial evidence and we see no error in its 

conclusion of obviousness. Thus, we affirm the Board’s 

decision with regard to claim 4. 

CONCLUSION

We affirm-in-part, vacate-in-part and remand the 

Board’s decision. We deny Shaw’s petition for writ.

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 15

AFFIRMED-IN-PART, VACATED-IN-PART, AND 

REMANDED

COSTS

No costs.

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United States Court of Appeals 

for the Federal Circuit ______________________ 

SHAW INDUSTRIES GROUP, INC.,

Appellant

v.

AUTOMATED CREEL SYSTEMS, INC.,

Cross-Appellant

______________________ 

2015-1116, 2015-1119

______________________ 

Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. 

IPR2013-00132, IPR2013-00584.

______________________ 

REYNA, Circuit Judge, concurring specially. 

I fully join the panel opinion. I write separately on 

the Patent Trial and Appeal Board’s (“Board”) application 

of the so-called “Redundancy Doctrine.” The Board’s 

improper, conclusory statements declining to implement 

inter partes review (“IPR”) of grounds it found to be “redundant” leave me deeply concerned about the broader 

impact that the Redundancy Doctrine may have on the 

integrity of the patent system. In particular, other tribunals will be tasked with deciding whether estoppel applies 

based on cryptic statements the U.S. Patent and Trademark Office (“PTO”) makes under the guise of its presumed “complete discretion” over IPR institution.

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2 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

I 

In both petitions, the Board implemented one ground 

for each claim-at-issue and declined to implement all 

additional grounds as “redundant.” In the first petition 

the Board stated, in full: “With respect to claims 1–3 and 

5–21, the additional asserted grounds are denied as 

redundant in light of our determination that there is a 

reasonable likelihood that the challenged claims are 

unpatentable based on the grounds of unpatentability on 

which we institute an inter partes review. See 37 C.F.R. 

§ 42.108.” Shaw Indus. Grp., Inc. v. Automated Creel 

Sys., Inc., IPR2013-00132, 2013 WL 8563792, at *20 

(PTAB July 25, 2013). As is apparent, the Board’s only 

basis for not instituting the additional grounds was that 

those grounds are “redundant” of the instituted grounds, 

without any reasoned basis why or how the denied 

grounds are redundant. In the second petition, the Board 

discussed Shaw’s arguments, made no findings about the 

grounds and concluded, “we exercise our discretion under 

37 C.F.R. § 42.108 to institute an inter partes review 

based solely on the asserted grounds directed to combinations with Bluhm and deny the remaining grounds as 

redundant.” Shaw Indus. Grp., Inc. v. Automated Creel 

Sys., Inc., IPR2013-00584, 2013 WL 8595536, at *13

(PTAB Dec. 31, 2013). Shaw Industries argues these 

statements apply the “Redundancy Doctrine” through 

which the Board arbitrarily and capriciously denies some 

grounds but not others. Appellant’s Opening Br. 62–75. 

The PTO emphatically denies that any such Redundancy Doctrine exists. E.g., PTO Br. 17 (“As an initial 

matter, there is no ‘redundancy doctrine,’”); Oral Argument 40:25 (“There is no Redundancy Doctrine.”) (hereinafter “Hr’g”), available at http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2015-1116.mp3. Because no 

explanation other than the redundancy finding was 

provided by the Board, the lack of a doctrine on redundancy deprives the Board’s decisions of any basis. But the 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 3

PTO has a ready answer: it need not provide any basis for 

its institution decisions. Hr’g at 46:13 (“We do not even 

have to state in our institution decisions why we’re choosing not to go forward.”). The PTO argues this is so because “the Director [of the PTO] has complete discretion 

to deny institution.” PTO Br. 20 (capitalization altered). 

II

The PTO’s claim to unchecked discretionary authority

is unprecedented. It bases this claim on the statute that 

makes institution or denial of inter partes review “final 

and nonappealable.” See 35 U.S.C. § 314(a), (d). Regardless of appealability, administrative discretion is not and 

never can be “complete” because it is always bounded by 

the requirement that an agency act within the law and 

not violate constitutional safeguards. See 35 U.S.C. 

§ 2(b)(2) (PTO “may establish regulations, not inconsistent with law”). There is good reason for this. “Expert 

discretion is the lifeblood of the administrative process, 

but unless we make the requirements for administrative 

action strict and demanding, expertise, the strength of 

modern government, can become a monster which rules 

with no practical limits on its discretion.” Burlington 

Truck Lines, Inc. v. United States, 371 U.S. 156, 167 

(1962) (internal quotation marks omitted).

Indeed, regardless of whether the Board’s institution 

decisions can be appealed, the Board cannot create a 

black box decisionmaking process. Conclusory statements 

are antithetical to the requirements of the Administrative 

Procedures Act (“APA”), which the PTO and its Board are 

subject to. 35 U.S.C. § 2(b)(2)(B); see also Dickinson v. 

Zurko, 527 U.S. 150, 154 (1999). The APA requires 

“reasoned decisionmaking” for both agency rulemaking 

and adjudications because it “promotes sound results, and 

unreasoned decisionmaking the opposite.” Allentown 

Mack Sales & Serv., Inc. v. N.L.R.B., 522 U.S. 359, 374–

75 (1998) (citation omitted). The APA requires that Board

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4 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

decisions evince both its authority to render the decision 

and a reasoned basis for rendering that decision. Id. at 

372 (“Not only must an agency’s decreed result be within 

the scope of its lawful authority, but the process by which 

it reaches that result must be logical and rational.”). The 

problem here is not that the Board’s reasoning is illogical 

or irrational; the problem is that there is no reasoning at 

all.

Both Board decisions only cite 37 C.F.R. § 42.108 as 

its authority for denying institution of certain grounds, 

and the PTO maintains this position on appeal. PTO Br.

19–32. The regulation allows for selective institution of 

certain grounds and not others. 37 C.F.R. § 42.108(a); 

Harmonic Inc. v. Avid Tech., Inc., No. 15-1072, 2016 WL 

798192, at *7 (Fed. Cir. Mar. 1, 2016). The regulation, 

however, does not itself provide a reason to deny some 

grounds and institute others, it only provides the authority to do so. This authority neither satisfies nor exempts 

the Board from its obligation to include “findings and 

conclusions, and the reasons or basis therefor, on all the 

material issues of fact, law, or discretion presented on the 

record.” 5 U.S.C. § 557(c) (emphasis added); Burlington 

Truck Lines, 371 U.S. at 167. The sole basis advanced by 

the Board is that the additional grounds are redundant.

Despite repeatedly denying any Redundancy Doctrine

exists, the PTO argues the decision is supported by reasoning not articulated in the Board’s final written decision. Before this Court, the PTO argues efficiency; that is, 

the Board may choose among the grounds asserted because a particular ground may resolve the case and a 

multiplicity of grounds would increase the Board’s workload and make it difficult to meet its statutory deadlines. 

PTO Br. 26–32; Hr’g at 39:35–46:20.1 The Board’s insti-

 

1 The PTO cites the considerations Congress instructed the PTO to take into consideration in regulating 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 5

tution decisions, however, say nothing about efficiency so

we, normally, would deem it improper for the PTO to 

make these arguments on appeal. Burlington Truck 

Lines, 371 U.S. at 168–69 (“The courts may not accept 

appellate counsel’s post hoc rationalizations for agency 

action; Chenery requires that an agency’s discretionary 

order be upheld, if at all, on the same basis articulated in 

the order by the agency itself”). But the Redundancy 

Doctrine exists, as articulated repeatedly in the Board’s 

other decisions, and we assume that the word “redundant” here means that Doctrine was applied, even if no 

citation was provided. For the PTO to deny that a Redundancy Doctrine exists in light of its caselaw development 

strains credulity.

In a prior Order issued by the Chief, Vice Chief, Lead, 

and six other Administrative Patent Judges from the 

Board, the Board devoted seventeen pages exclusively to 

discussing and applying two “types of redundancy.” 

Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co., CBM2012-00003, 2012 WL 9494791, at *2 (Oct. 25, 2012).2 

Both types of redundancy discussed were substantive

redundancies between grounds with “essentially the same 

teaching to meet the same claim limitation” or exactly the 

same references combined in different ways. Id. Shaw 

Industries directs us to numerous other Board decisions 

 

IPRs as the statutory basis for applying 37 C.F.R. 

§ 42.108(a) in this fashion, namely that it “consider . . .

the efficient administration of the Office, and the ability 

of the Office to timely complete proceedings instituted 

under this chapter.” 35 U.S.C. § 316(b). 

2 Notably, this Order is listed among the Board’s 

“Representative Orders, Decisions and Notices” at 

http://www.uspto.gov/patents-applicationprocess/appealing-patent-decisions/decisions-andopinions/representative-orders. 

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6 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

discussing, relying on and further developing the Redundancy Doctrine born in Liberty Mutual. See Appellant’s 

Opening Br. 59–62.3 In some of these decisions the Board 

appears to find redundancy not on any substantive basis, 

but rather on the basis that it need only hear one ground 

for each claim and that hearing multiple grounds might

require “redundant” effort on its part. See, e.g., EMC 

Corp. v. PersonalWeb Techs. LLC, IPR2013-00087, 2013 

WL 6514050, at *2 (June 5, 2013) (“the references are 

redundant insofar as each ground of unpatentability is 

sufficient to invalidate the claims.”) (quotation omitted). 

The Board’s invocation of the Redundancy Doctrine 

represents, at least in some instances, a substantive 

decision. Even here, despite the PTO insistence that 

labeling of grounds as “redundant” doesn’t reflect a substantive determination, the PTO’s own statements and 

arguments seem to indicate the contrary conclusion. The 

PTO insists that the Board did consider the rejected

grounds in making its institution decision and cannot say

efficiency was the sole basis that the redundant grounds 

were not instituted. E.g., Hr’g at 50:48 (“I wouldn’t say 

that it’s not that they’re considered, the Board is going to 

do their job . . . .”); Hr’g at 51:20 (“[The Board] may be 

choosing not to go forward on the Payne ground for reasons other than likelihood of success.”). The statutory 

scheme’s estoppel provisions make such ambiguity about 

whether substantive determinations were made problematic. 

The effects of estoppel are profound. Under 35 U.S.C. 

§ 315(e)(2), “[t]he petitioner in an inter partes review of a 

 

3 Particularly troubling are instances where, as 

here, the Board found Section 102 anticipation grounds 

redundant of Section 103 obviousness grounds without 

explanation. See, e.g., Oracle Corp. v. Clouding IP, 

IPR2013-00088, 2013 WL 8595567, at *7 (May 14, 2013). 

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SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS 7

claim in a patent under this chapter that results in a final 

written decision . . . may not assert either in a civil action 

. . . or in a proceeding before the International Trade 

Commission . . . that the claim is invalid on any ground 

that the petitioner raised or reasonably could have raised

during that inter partes review.” (emphasis added). 

Indeed, the potential for estoppel is one of the important 

considerations for defendants in deciding whether or not 

to file an IPR petition.4 

The PTO asserts that estoppel will not attach to redundant grounds because grounds that are not instituted 

are not those the petitioner “raised or reasonably could 

have raised.” See, e.g., PTO Br. 32 n.20, 37–39; Hr’g at 

32:38–44. (“We would not find estoppel on that Paynebased ground because we did not institute on it.”). 

Whether estoppel applies, however, is not for the Board or 

the PTO to decide. Nor is it for us to decide in the first 

instance, despite the invitation from Shaw Industries, 

because the issue is not properly before us. See Appellant’s Opening Br. 75–76. Instead, whether the “redundant” grounds are subject to estoppel must be determined 

in the first instance by the district court or the U.S. 

International Trade Commission. 35 U.S.C. § 315(e)(2). 

These tribunals should not have to parse cryptic statements or search out uncited doctrines to make this determination.

 

4 E.g., Saurabh Vishnubhakat, Arti K. Rai, Jay P. 

Kesan, Strategic Decision Making in Dual PTAB and 

District Court Proceedings, BERKELEY TECH, L.J. (forthcoming 2016) (manuscript 15), available at

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=27310

02. 

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8 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS

III

The Board should, at a minimum, provide a reasoned 

basis how or why grounds are “redundant.” The PTO 

claims the Board’s statement here refers to efficiency 

concerns, but in failing to clearly articulate the basis of its 

decision, the Board’s final written decision fails to satisfy 

its obligations under the APA. Regardless of the reviewability of that decision, the lack of a reasoned basis deprives future tribunals of the necessary basis to 

determine whether estoppel should apply. The PTO has 

lost sight of its obligation to “consider the effect of” its 

implementation of the IPR process on “the integrity the 

patent system” as a whole. 35 U.S.C. § 316(b).

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