Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-19-01059/USCOURTS-ca13-19-01059-0/pdf.json

Parties Involved:
Acoustic Technology, Inc.
Appellant
Itron Networked Solutions, Inc.
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________

ACOUSTIC TECHNOLOGY, INC.,

Appellant

v.

ITRON NETWORKED SOLUTIONS, INC.,

Appellee

______________________

2019-1059, 2019-1060

______________________

Appeals from the United States Patent and Trademark 

Office, Patent Trial and Appeal Board in Nos. IPR2017-

01030, IPR2017-01031.

______________________

 

Decided: February 13, 2020

______________________

MICHELLE ARMOND, Armond Wilson LLP, Newport 

Beach, CA, argued for appellant. Also represented by 

DOUGLAS R. WILSON, Austin, TX. 

 ADAM R. BRAUSA, Durie Tangri LLP, San Francisco, 

CA, argued for appellee. Also represented by MARK A.

LEMLEY. 

 ______________________

Before MOORE, REYNA, and TARANTO, Circuit Judges.

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REYNA, Circuit Judge.

On September 8, 2017, the Patent Trial and Appeal 

Board instituted inter partes review based on two petitions 

filed by Silver Spring Networks, Inc. Nine days after institution, Silver Spring agreed to merge with Itron, Inc., an 

entity undisputedly time-barred under 35 U.S.C. § 315(b). 

Silver Spring and Itron completed the merger during the 

proceedings. The Board later issued a final written decision and found the challenged claims unpatentable. On appeal, Acoustic asks that we vacate the Board’s final written 

decision on grounds that the inter partes review was timebarred due to Silver Spring’s and Itron’s merger-related activities. Acoustic also challenges the Board’s obviousness 

findings. Because we find that Acoustic waived its timebar and obviousness arguments, we affirm. 

BACKGROUND 

I. ’574 Patent and “WAN Means”

Acoustic Technology, Inc. (“Acoustic”) owns U.S. Patent 

No. 5,986,574 (“the ’574 patent”), which relates to communications systems for utility providers to remotely monitor 

groups of utility meters, e.g., electricity meters.1 According 

to Acoustic, the claimed inventions were “a considerable 

improvement over prior art designs that called for the additional expense of installing supporting communications 

equipment and infrastructure.” Central to this appeal is 

the “WAN means” claim limitation, which relates to the 

1 The ’574 patent is a parent of continuation U.S. Patent Application No. 09/703,298, which issued as U.S. Patent No. 6,509,841. Acoustic filed a related appeal 

involving U.S. Patent No. 6,509,841 on the same day it filed 

this appeal. Acoustic Tech., Inc. v. Itron Networked Solutions, Inc., Case No. 2019-1061. We heard oral arguments 

in this case and Case No. 2019-1061 on December 4, 2019. 

We have issued opinions in both cases simultaneously.

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systems’ ability to transmit information over a Wide Area 

Network (“WAN”).

In one embodiment, shown in Figure 1 below, a plurality of “servicing means 16” (e.g., on-site utility meters) communicate with a “relay means 14,” which in turn 

communicates with a “control means 12” (e.g., a remote 

computer at a utility facility). J.A. 202, Fig. 1; J.A. 205–

206 at 2:27–3:32. The relay means communicates with the 

plurality of servicing means over a Local Area Network. 

The relay means and the control means, on the other hand,

communicate over a wide area network via a “WAN 

means.” 

Claim 16 of the ’574 patent, reproduced below, is representative of the claims at issue on appeal and recites a 

relay means in the form of a “concentrator meter”:

16. A concentrator having means for relaying 

communication between a plurality of metering devices and at least one control station comprising:

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concentrator comprising a meter and 

means for monitoring an amount of usage 

of a medium;

LAN means for receiving data from said 

plurality of metering devices over a local 

area network;

WAN means for transmitting data associated with both said plurality of metering 

devices and said monitoring means over 

a wide area network to said at least one 

control station; and 

a housing comprising a meter receiving 

said monitoring means, said LAN means 

and said WAN means. 

J.A. 209 at 9:22–35 (emphasis added).

II. IPR Petitions

In March 2010, Acoustic sued Itron Inc. (“Itron”) for infringement of the ’574 patent. Acoustic and Itron later

agreed to settle the suit. As part of the settlement agreement, Acoustic licensed the ’574 patent to Itron. As a result 

of the lawsuit, Itron was time-barred from seeking inter 

partes review (“IPR”) of the ’574 patent as of March 26, 

2011. See 35 U.S.C. § 315(b).

Six years after suing Itron, Acoustic sued Silver Spring

Networks, Inc. (“Silver Spring”) for infringement of the ’574 

patent. In response, on March 3, 2017, Silver Spring timely 

filed two IPR petitions that challenge the ’574 patent and 

that gave rise to this appeal: IPR2017-01030 and IPR2017-

01031 (“the petitions”). 

Several weeks before Silver Spring filed the petitions, 

Silver Spring and Itron began privately discussing “a potential business combination.” J.A. 6556. The first contact 

occurred on February 12, 2017, when a representative of 

Itron phoned a Silver Spring board member to express 

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Itron’s interest in a potential merger. The next day, Itron’s 

CEO continued the discussion with a director of Silver 

Spring. One week later, on February 20, 2017, Itron’s CEO 

requested a meeting with Silver Spring to discuss “a potential acquisition.” J.A. 6556. 

Silver Spring and Itron continued to discuss a potential 

merger after Silver Spring filed the petitions. Representatives from each company met on March 10, 2017, one week 

after Silver Spring filed the petitions, and again on 

April 12, 2017. 

The Board instituted inter partes review on September 8, 2017. Nine days later, on September 17, 2017, Silver 

Spring and Itron agreed to merge. Itron publicly announced the agreement the next day. Silver Spring asserts 

that, up until the day the parties reached an agreement, 

Silver Spring was exploring potential business relationships with more than a dozen other companies. 

Silver Spring and Itron completed the merger on January 5, 2018, while the inter partes review proceedings remained underway. Acoustic learned of the merger three 

days later. On January 17, 2018, Silver Spring filed updated mandatory notices that listed Itron as a real-partyin-interest. 

The Board entered final written decisions on August 

21, 2018, nearly a year after Silver Spring and Itron agreed 

to merge and seven months after they completed the merger. The Board’s final written decisions found the challenged claims unpatentable on all three asserted grounds: 

obvious in view of Argyroudis, obvious in view of Argyroudis and Selph, and obvious in view of Mayo and Roach. 

Acoustic never raised a time-bar challenge to the Board.

Acoustic appeals the Board’s final written decisions. 

We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

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DISCUSSION

Acoustic raises two issues on appeal. First, Acoustic 

asserts that the PTAB’s final written decisions should be 

vacated because the underlying IPR proceedings are timebarred under 35 U.S.C. § 315(b). Second, Acoustic challenges the Board’s obviousness findings on grounds that 

the Board erroneously construed “WAN means” of claims 3, 

16, 17, and 20 of the ’574 patent.

I. Time-Bar

Acoustic argues that we must vacate the Board’s final 

written decisions because the inter partes reviews were

time-barred under 35 U.S.C. § 315(b). Section 315(b) 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.

35 U.S.C. § 315(b) (emphasis added). Congress included 

the “real parties in interest” provision in § 315(b) to “safeguard patent owners from having to defend their patents 

against belated administrative attacks by related parties.” 

Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 

1336, 1350 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 1366

(mem.) (2019). 

The Board evaluates § 315(b) at the time it decides 

whether to institute proceedings. Power Integrations, Inc. 

v. Semiconductor Components Indus., LLC, 926 F.3d 1306, 

1315 (Fed. Cir. 2019). In Power Intergrations, we held that 

the real-party-in-interest determination must consider all

relationships that arise before the date of institution, including relationships that arise after the petition filing 

date. Id. at 1314–15 (“[Section] 315(b) requires consideration of privity and [real-party-in-interest] relationships 

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arising after filing but before institution.”). We expressly 

declined to decide whether the Board is required to reevaluate § 315(b) in view of a new real-party-in-interest that 

arises after institution. Id. at 1314 n.8 (“We do not address the impact of a change in RPI . . . occurring after institution.”).

Acoustic argues that the underlying IPRs are timebarred because Itron was a real-party-in-interest “both before and after the IPRs were instituted.” Appellant Br. 47. 

Before institution, Acoustic asserts, Itron was a real-partyin-interest because “the executives met; Itron conducted 

due diligence; the details of the merger were discussed; and 

the formal ‘merger agreement’ was prepared and negotiated.” Reply Br. 16–17. After institution, Acoustic contends, Itron was “unquestionably” a real-party-in-interest 

because Silver Spring became a wholly-owned subsidiary 

of Itron, and Itron “controlled [Silver Spring] and had a significant interest” in the inter partes review proceedings. 

Id. at 22–23. 

Acoustic contends that Silver Spring’s post-institution 

status as a real-party-in-interest is important because “institution is not a static decision” and the Board has the authority to reevaluate § 315(b) when a real-party-in-interest 

arises after institution. Reply Br. 20–21. The Board’s ability to assess § 315(b) after institution is necessary, Acoustic 

explains, in order to avoid an “end-run around Section 

315(b)” where parties delay their corporate deals until

shortly after institution and avoid the consequences of the 

time-bar. 

Itron advances several arguments in response to 

Acoustic’s time-bar arguments. First, Itron argues that 

Acoustic waived its time-bar challenge of the IPRs because 

Acoustic did not raise those arguments before the Board. 

Second, Itron argues the time bar of § 315(b) does not apply 

to the underlying IPR proceedings because Itron merged

with Silver Spring after the Board instituted the

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proceedings. Third, Itron asserts that the Board is not authorized to reevaluate § 315(b) after institution and that 

Acoustic’s proposed reading of the statute “offers no logical 

stopping point for the Board to assess the time bar.” Appellee Br. 36. 

We hold that Acoustic has waived its time-bar challenge to the IPRs because it failed to present those arguments before the Board. We retain case-by-case discretion 

over whether to apply waiver. Monsanto Tech. LLC v. E.I. 

DuPont de Nemours & Co., 878 F.3d 1336, 1342 n.8 (Fed. 

Cir. 2018). We have “frequently declined to hear arguments that the applicant failed to present to the Board.” In 

re Watts, 354 F.3d 1362, 1367 (Fed. Cir. 2004). When a 

party raises arguments on appeal that it did not raise to 

the Board, they “deprive[] the court of the benefit of the 

[Board’s] informed judgment.” In re NuVasive, Inc., 842 

F.3d 1376, 1380 (Fed. Cir. 2016) (explaining the importance of “a comprehensive record that contains the arguments and evidence presented by the parties”). 

There is no dispute that Acoustic failed to raise § 315(b) 

time-bar arguments before the Board. Acoustic became

aware of the merger as of January 8, 2018, more than seven 

months before the Board issued its final written decisions. 

J.A. 7026. Yet, Acoustic does not provide any reason for its 

failure to challenge the proceedings as time-barred. Because Acoustic failed to present its time-bar arguments to 

the Board and “deprive[d] the court of the benefit of the 

[Board’s] informed judgment,” we exercise our discretion to 

apply waiver. In re NuVasive, 842 F.3d at 1380.

Acoustic attempts to excuse its waiver by asserting, 

without legal authority, that the time-bar is “jurisdictional” and thus “may be raised at any time.” Appellant 

Br. 29. We disagree.

Acoustic is correct that we have previously described 

the time-bar restrictions on the Board’s institution powers 

as “jurisdictional.” Appellant Br. 29–32 (citing Click-toCase: 19-1059 Document: 58 Page: 8 Filed: 02/13/2020
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Call Techs., LP v. Ingenio, Inc., 899 F.3d 1321, 1325 

(Fed. Cir. 2018); Wi-Fi One, LLC v. Broadcom Corp., 878

F.3d 1364, 1373 (Fed. Cir. 2018)). But our application of 

waiver differs between challenges to an agency’s “jurisdiction” and challenges to a federal court’s jurisdiction. PGS 

Geophysical AS v. Iancu, 891 F.3d 1354, 1362 (Fed. Cir. 

2018). As we explained in PGS:

Even if the Board could be said to have acted “ultra 

vires” in refusing to institute reviews of some 

claims and grounds . . . the Board’s error is waivable, not one we are required to notice and act on 

in the absence of an appropriate request for relief 

on that basis. Several courts of appeals have recognized the same for a challenge to an agency’s “jurisdiction,” after the Supreme Court, in City of 

Arlington v. FCC, rejected a distinction between 

agency “jurisdiction” errors and other errors for 

certain deference purposes . . . .”

Id. (compiling cases) (citations omitted). We hold that 

time-bar challenges under § 315(b) are not immune from 

waiver.

To permit litigants to raise § 315(b) time-bar challenges for the first time on appeal would encourage what 

the Supreme Court has referred to as “sandbagging,” i.e., 

“suggesting or permitting, for strategic reasons, that the 

[tribunal below] pursue a certain course, and later—if the 

outcome is unfavorable—claiming that the course followed 

was reversible error.” Freytag v. Comm’r of Internal Revenue, 501 U.S. 868, 895 (1991). Here, had Acoustic raised a 

time-bar challenge before the Board, the Board was fully 

empowered to dismiss the petitions for untimeliness if the 

challenge had merit. But allowing Acoustic to raise a timebar challenge for the first time on appeal would afford it a

significant and unfair advantage: Acoustic could wait for 

the Board’s decision on the merits, which if favorable would 

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have estoppel effect, and then challenge the Board’s jurisdiction on appeal only if the Board finds the claims obvious. 

Although we do not address the merits of Acoustic’s 

time-bar argument, we note Acoustic’s concerns about the 

concealed involvement of interested, time-barred parties. 

But because Acoustic never raised this issue to the Board, 

we decline to resolve whether Itron’s pre-merger activities 

render it a real-party-in-interest, or whether the Board has 

any authority or obligation to reevaluate § 315(b) post institution.

II. “WAN Means”

Acoustic argues that we should reverse the Board’s obviousness findings on grounds that the Board erroneously 

construed the “WAN means” term. Specifically, Acoustic 

argues that the Board erred by defining the corresponding 

structure for “WAN means” as “any device.” The Board 

should have instead limited the corresponding structure to 

a “conventional WAN radio,” Acoustic explains, because 

that is the only structure disclosed in the specification. 

Acoustic asserts that because the Board erroneously construed “WAN means,” it “never identified a conventional 

WAN radio in the prior art,” and its finding that the prior 

art discloses a “WAN means” is not supported by substantial evidence. Appellant Br. 57–63 (“[T]here is no substantial evidence establishing that the prior art contains ‘a 

conventional WAN radio’ or its equivalent under the correct claim construction.”).

Itron contends that the obviousness arguments Acoustic makes to this Court rely on a different construction of 

“WAN means” than what Acoustic argued below. As a result, Itron explains, the Board has not yet addressed the 

non-obviousness arguments that Acoustic raises for the 

first time on appeal. We agree. 

Before the Board, Acoustic argued non-obviousness by 

asserting that the prior art did not teach a conventional 

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WAN radio capable of transmitting over publicly available

Wide Area Networks. J.A. 512, J.A. 3301. Acoustic distinguished the asserted prior art references based on their 

failure to disclose a system for transmitting over publicly 

available WAN. For example, Acoustic argued that the 

way data is exchanged in Argyroudis “is different than exchanging data over a publicly available WAN.” J.A. 512. 

Acoustic likewise argued that the “transceiving means in 

Mayo . . . would not be a WAN means for transmitting over 

a publicly available wide area network.” J.A. 3301. The 

Board considered and rejected these arguments. J.A. 37; 

J.A. 84. 

Acoustic’s argument on appeal is new. Rather than arguing that the prior art fails to disclose a conventional radio capable of transmitting over publicly available WAN, 

Acoustic now argues that the prior art fails to disclose any 

conventional WAN radio. Appellant Br. 50 (asserting that 

“there is no substantial evidence establishing that the prior 

art contains ‘a conventional WAN radio’ or its equivalent”). 

Acoustic’s argument on appeal makes no mention of publicly available WAN. 

Because Acoustic never presented to the Board the 

non-obviousness arguments it now raises on appeal, we 

find those arguments waived. In re Watts, 354 F.3d at 1367 

(explaining that we have “frequently declined to hear arguments that the applicant failed to present to the Board”); 

In re NuVasive, Inc., 842 F.3d at 1380 (explaining that failure to raise arguments to the Board “deprives the court of 

the benefit of the Board’s informed judgment.”); see, e.g., 

J.A. 576–578. 

CONCLUSION

We have considered Acoustic’s other arguments and 

find them unpersuasive. We affirm. 

AFFIRMED

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COSTS

No costs.

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