Opinion ID: 3187995
Heading Depth: 2
Heading Rank: 1

Heading: shaw’s appeal and petition for writ

Text: 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). 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  (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  (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 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 . 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. 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.
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 . 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 es- topped 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 peti- tioner raised or reasonably could have raised during that inter partes review. 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 pa- tent 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 proceed- ing before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the peti- tioner 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. 12 SHAW INDUSTRIES GROUP v. AUTOMATED CREEL SYSTEMS
We turn now to Shaw’s challenges to the Board’s de- termination 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 . 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. 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 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 . 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.