Court Opinion

ID: 4313917
Source: CourtListenerOpinion
Date Created: 2018-09-20 16:00:29.608452+00
Date Added: 2024-06-11T09:24:20.331622
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

SOUTH-TEK SYSTEMS, LLC, POTTER ELECTRIC
               CO, LLC,
               Appellants

                           v.

  ENGINEERED CORROSION SOLUTIONS, LLC,
                  Appellee
           ______________________

                      2017-2297
                ______________________

    Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2016-
00136.
                 ______________________

             Decided: September 20, 2018
               ______________________

    DAVID E. BENNETT, Coats & Bennett, PLLC, Cary,
NC, argued for appellants. Also represented by EDWARD
H. GREEN, III, BRANDEE NICOLE WOOLARD.

    JASON E. STACH, Finnegan, Henderson, Farabow,
Garrett & Dunner, LLP, Atlanta, GA, argued for appellee.
Also represented by BENJAMIN AARON SAIDMAN.
                 ______________________
2         SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION
                                                 SOLUTIONS

    Before DYK, O’MALLEY, and HUGHES, Circuit Judges.
HUGHES, Circuit Judge.
     South-Tek Systems, LLC and Potter Electric Co, LLC
filed a petition requesting inter partes review of the U.S.
Patent No, 9,144,700 on four grounds for invalidity. The
Patent Trial and Appeal Board instituted review of all
claims in the ’700 patent, but on only two of the grounds
raised. The Board then determined that the petitioners
failed to establish that the challenged claims are un-
patentable. We affirm the Board’s determination that the
challenged claims are not unpatentable over the two
grounds for invalidity that it considered. We remand,
however, for the Board to consider whether those claims
are unpatentable over the two non-instituted grounds.
                             I
    Engineered Corrosion Solutions, LLC owns the ’700
patent, which relates to a “dry pipe” fire protection sprin-
kler system. When not operating to suppress fires, sprin-
kler systems must prevent water from flowing through
the system. “Dry pipe” systems accomplish this by filling
the system’s pipes with a compressed gas that creates
enough pressure to hold back a water source. When heat
causes a sprinkler head to open, the compressed gas flows
out of the system, reducing the pressure and allowing
water to flow out as well.
    One difficulty associated with maintaining dry pipe
sprinkler systems is preventing pipe corrosion. Many
factors affect whether and how quickly pipes deteriorate.
Relevant here, residual water left in the pipes after
system use or testing can accelerate corrosion. That
water may contain microbiological organisms that estab-
lish colonies in the pipes and create leaks through micro-
biological induced corrosion. The water, along with
oxygen trapped in the pipes, can also cause oxidative
corrosion in pipes made of certain metals.
SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION         3
SOLUTIONS

    To combat these corrosion risks, the ’700 patent
recites a sprinkler system that expels oxygen and water
using compressed nitrogen. The Board found that it
would have been obvious to use compressed nitrogen from
a nitrogen generator in such a sprinkler system, but that
the prior art did not disclose the claimed “vent” used to
expel oxygen from the system. Thus, two limitations of
the claimed sprinkler system are relevant for this appeal.
First, the system requires a drum drip drain that enables
water to exit the system. Second, the system requires a
vent that allows gas, including oxygen, to exit. Claim 1 is
representative:
   A water-based fire protection system comprising:
   a dry pipe sprinkler system comprising at least
   one fusible sprinkler, a source of pressurized wa-
   ter, a piping network connected to the at least one
   fusible sprinkler, one or more drains, and a dry
   pipe valve coupling the source of pressurized wa-
   ter to the piping network, the dry pipe valve hav-
   ing a clapper, the piping network pitched toward
   the one or more drains, and the one or more drains
   including a drum drip;
   a nitrogen generator coupled to the piping net-
   work, the nitrogen generator operable to pressur-
   ize the piping network with nitrogen and
   maintain the clapper of the dry pipe valve in a
   closed position until the water-based fire protec-
   tion system is actuated; and
   at least one vent positioned within the piping net-
   work, the at least one vent operable to allow gas
   including oxygen displaced by the nitrogen to exit
   the piping network at a preset or adjustable limit
   while maintaining enough pressure within the
   system to prevent the clapper of the dry pipe
   valve from opening until the water-based fire pro-
   tection system is actuated to thereby increase the
4         SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION
                                                  SOLUTIONS

    concentration of nitrogen and decrease the con-
    centration of oxygen in the piping network to re-
    duce or eliminate the rate of corrosion in the
    piping network.
’700 patent col. 18 ll. 14–37 (emphases added).
    In November 2015, South-Tek Systems, LLC and
Potter Electric Co, LLC (collectively, South-Tek) filed a
petition requesting inter partes review of every ’700
patent claim. South-Tek’s petition raised four grounds for
invalidity, all of which were obviousness challenges based
on different combinations of four prior art references.
    Each ground relied on U.S. Patent No. 6,540,028
(Wood). Wood discloses a “condensate drain for a dry pipe
sprinkler system.” J.A. 836. The drain is a “normally
closed control valve” that opens “at a predetermined air
pressure between the system minimum and maximum
pressures.” J.A. 837. When the drain opens, “condensed
water, or air when water is not present, is discharged
through the discharge nozzle until the air pressure drops
to a predetermined level.” Id. This enables residual
water to automatically exit the system as the air pressure
cycles between its minimum and maximum levels.
    The petition also relied on a document published by
Viking Corporation titled “Dry Pipe Sprinkler System”
(Viking), U.S. Patent No. 7,322,423 (Ringer), and U.S.
Patent No. 7,717,776 (Wagner). Viking discloses the
components, operation, and maintenance of a typical dry
pipe sprinkler system. The system’s components include
a pipe system, a water source held back by compressed
nitrogen, and a “two-valve drum drip” that functions as a
drain. J.A. 828. Ringer similarly discloses a dry pipe
sprinkler system. Wagner discloses the use of oxygen
sensors to measure and control the oxygen level in a room
to suppress fires.
SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION         5
SOLUTIONS

    The Board instituted review on Grounds 1 and 2 of
South-Tek’s petition. Ground 1 alleged that claims 1–2
and 5–9 were invalid as obvious over a combination of
Wood, Viking, and admitted prior art. Ground 2 alleged
that claims 3–4 were invalid as obvious over a combina-
tion of Wood, Viking, admitted prior art, and Wagner.
    The Board, however, declined to institute review on
Grounds 3 and 4. Ground 3 alleged that claims 1–2 and
5–9 were invalid as obvious over a combination of Wood,
Ringer, and admitted prior art. Ground 4 alleged that
claims 3–4 were invalid as obvious over a combination of
Wood, Ringer, admitted prior art, and Wagner.
     In its final written decision, the Board upheld the
validity of every challenged claim over Grounds 1 and 2.
The Board also denied South-Tek’s post-trial motion to
file supplemental information about the meaning of the
claim term “drum drip.”
   South-Tek now appeals. We have jurisdiction under
28 U.S.C. § 1295(a)(4)(A).
                             II
    We review the Board’s ultimate obviousness conclu-
sions de novo and its underlying factual findings for
substantial evidence. In re Giannelli, 739 F.3d 1375, 1379
(Fed. Cir. 2014). The Board’s factual determinations
include the scope and content of the prior art, differences
between the prior art and the claimed invention, and
whether a person having ordinary skill would have been
motivated to combine the prior art. Intercontinental
Great Brands LLC v. Kellogg N. Am. Co., 869 F.3d 1336,
1343 (Fed. Cir. 2017).

    The Board found that Viking’s sprinkler system dis-
closes most of the limitations recited by the claims, but
that it fails to disclose the claimed “vent.” Recognizing
this deficiency, South-Tek argued that Wood’s condensate
drain could have been added to Viking’s system to satisfy
6         SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION
                                                   SOLUTIONS

the vent limitation. The Board, however, determined (1)
that Wood’s condensate drain could not function as a vent
and (2) that a person of ordinary skill would not have
been motivated to add Wood’s condensate drain to Vi-
king’s system.
    The Board lacked substantial evidence for its finding
that Wood’s condensate drain could not operate as a vent
if added to Viking’s system. Rather than construe “vent,”
the Board relied on the claims’ functional description of a
vent as “operable to allow gas including oxygen displaced
by the nitrogen to exit the piping network at a preset or
adjustable limit while maintaining enough pressure
within the system to prevent the clapper of the dry pipe
valve from opening until the water-based fire protection
system is actuated . . . .” ’700 patent col. 18 ll. 29–34. The
Board then determined that South-Tek “offer[ed] no
persuasive evidence that Wood’s condensate drain is
operable to allow gas to exit the piping network at a
present or adjustable limit while maintaining enough
pressure” to hold back the water source. J.A. 29–30.
    But Wood explicitly describes its condensate drain as
operating in this way. It offers the following example:
    An example of an application is a piping system
    which is normally pressurized with air. An air
    compressor is automatically set to cut in at 30 psi
    and cut out at 40 psi, thereby maintaining 30 to
    40 psi of air pressure at all times. The automatic
    drain device might be set to open above 35 psi and
    close when the pressure drops below 35 psi. Each
    time the compressor completes a 10-psi cycle, one
    half of the cycle will be automatically discharging
    condensed water or air.
J.A. 837. In this application, the condensate drain allows
gas, including oxygen, to exit the piping system. The
drain opens at a preset limit of 35 psi and closes below 35
psi to maintain sufficient pressure to hold back a water
SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION          7
SOLUTIONS

source until the sprinkler system activates. This suffices
to satisfy the ’700 patent claims’ vent limitation.
    The Board’s observation that “Wood discloses that its
fundamental objective is to drain condensed water,”
rather than “balance pressures,” does not alter this analy-
sis. J.A. 30. Regardless of its “fundamental objective,”
Wood’s condensate drain operates just as the claimed
vent. It is irrelevant that the prior art primarily used the
drain for a different purpose. See KSR Int’l Co. v. Teleflex
Inc., 550 U.S. 398, 420 (2007) (“[F]amiliar items may have
obvious uses beyond their primary purposes . . . .”).
Thus, the Board lacked substantial evidence for its de-
termination that Wood’s condensate drain cannot operate
as a vent. 1
     Nonetheless, the Board had substantial evidence for
its finding that a person of ordinary skill would not have
been motivated to combine Wood’s condensate drain with
Viking’s sprinkler system. South-Tek’s petition argued
that it would have been obvious “to add a vent operative
to vent displaced oxygen while maintaining system pres-
sure, as taught by Wood.” J.A. 92. But South-Tek failed
to present any evidence that a person of ordinary skill
would have been motivated to use Wood’s condensate
drain as an air vent. Instead, South-Tek only argued that
a person of ordinary skill would have been motivated to
use Wood’s drain to allow water to drain from Viking’s
system. Viking’s system already includes a drum drip
drain that serves this purpose. Given the redundant
functions of Viking’s drum drip and Wood’s condensate
drain, the Board found a person of ordinary skill would

   1    Because we determine that Wood’s condensate
drain satisfies the claims’ “vent” limitation, we need not
reach South-Tek’s argument that the Board erred by
implicitly adopting an improper construction of “vent.”
8         SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION
                                                   SOLUTIONS

not have been motivated to add a condensate drain to
Viking in addition to the system’s drum drip drain.
    South-Tek does not challenge the Board’s finding that
there would not have been a motivation to add Wood’s
automatic drain to Viking’s system. On appeal, South-
Tek argues that a person of ordinary skill would have
been motivated to substitute Wood’s condensate drain for
Viking’s drain. Because Wood’s condensate drain auto-
matically discharges water as a sprinkler system cycles
between its minimum and maximum air pressures,
South-Tek contends that it would have been viewed as an
improvement over the Viking drains that had to be man-
ually opened and closed.
    South-Tek, however, waived this substitution theory
by failing to argue it in its petition. “[I]t is of the utmost
importance that petitioners in the IPR proceedings adhere
to the requirement that the initial petition identify ‘with
particularity’ the ‘evidence that supports the grounds for
the challenge to each claim.’” Intelligent Bio-Sys., Inc. v.
Illumina Cambridge Ltd., 821 F.3d 1359, 1369 (Fed. Cir.
2016) (quoting 35 U.S.C. § 312(a)(3)). The Board does not
err by refusing to consider arguments improperly raised
in a petitioner’s reply brief for the first time. Id. at 1369–
70. Here, the Board recognized that South-Tek’s petition
only argued that Wood’s condensate drain could be added
to Viking, not that Wood’s drain could replace Viking’s
drum drip drains. See J.A. 32. Thus, the Board did not
err by declining to consider South-Tek’s new theory that a
person of ordinary skill would have been motivated to
substitute Wood’s drain for Viking’s drains.
    We are not persuaded by South-Tek’s argument that
the Board should have understood the petition’s reference
to “add[ing] a vent . . . as taught by Wood” to mean substi-
tuting Wood’s drain for Viking’s drains. Even setting
aside the plain difference between addition and substitu-
tion, the claim chart in South-Tek’s petition confirms the
SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION         9
SOLUTIONS

Board’s understanding of South-Tek’s arguments. That
chart identifies Viking’s drum drip drain as satisfying the
claims’ “one or more drains including a drum drip” limita-
tion. The chart never suggests that Wood’s condensate
drain, or any other element of Viking, could similarly
satisfy that limitation. Thus, the claim chart makes clear
that the obviousness theories in South-Tek’s petition did
not contemplate replacing Viking’s drain.
    In sum, the Board had substantial evidence for its
finding that a person of ordinary skill would not have
been motivated to combine Wood and Viking. South-Tek
does not challenge the Board’s rejection of the motivation
to combine arguments made in its petition, instead rely-
ing exclusively on a new argument that the Board rea-
sonably refused to consider. Thus, because South-Tek’s
obviousness theories relied on Wood to supply the claimed
“vent” limitation, the Board did not err in determining
that none of the challenged claims would have been
obvious over Grounds 1 and 2 of South-Tek’s petition.
                             III
    South-Tek also argues that the Board erred by failing
to construe the claim term “drum drip” and by denying
South-Tek’s motion to file supplemental information
about the meaning of “drum drip.” Neither argument has
merit.
    We review the Board’s ultimate claim construction de
novo and any underlying factual determinations involving
extrinsic evidence for substantial evidence. In re Cuozzo
Speed Techs., LLC, 793 F.3d 1268, 1279–80 (Fed. Cir.
2015). The Board, however, only needs to construe terms
“that are in controversy, and only to the extent necessary
to resolve the controversy.” Vivid Techs., Inc. v. Am. Sci.
& Eng’g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999). We
review the Board’s denial of motions to file supplemental
information after an IPR has been instituted for abuse of
10        SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION
                                                  SOLUTIONS

discretion. Ultratec, Inc. v. CaptionCall, LLC, 872 F.3d
1267, 1271 (Fed. Cir. 2017).
    The Board did not err by declining to construe “drum
drip.” South-Tek argues that such a construction is
necessary to resolve the parties’ dispute over whether
Wood’s condensate drain satisfies the claims’ drum drip
limitation. The Board, however, rejected South-Tek’s
obviousness theories because there would not have been a
motivation to combine Wood and Viking. Accordingly, it
was unnecessary for the Board to determine whether
Wood’s condensate drain satisfied the claims’ drum drip
limitation.
     For the same reason, the Board did not abuse its dis-
cretion by denying South-Tek’s motion to file supple-
mental information related to the meaning of drum drip.
That information would have been irrelevant to the basis
for the Board’s decision.
                             IV
    In light of the Supreme Court’s decision in SAS Insti-
tute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), South-Tek also
challenges the Board’s decision to institute review of the
’700 patent claims on only two of the four grounds raised
in South-Tek’s petition. We agree that remand is appro-
priate for the Board to address the non-instituted
grounds.
     The Supreme Court explained in SAS “that the peti-
tioner’s petition, not the Director’s discretion, is supposed
to guide the life of” an IPR. Id. at 1356. The Court thus
held that the Board cannot institute review of fewer than
all of the claims that a petitioner challenges. Id. at 1359–
60. Since SAS, we have recognized that the Court’s
reasoning also prohibits the Board from instituting review
of fewer than all of the grounds that a petitioner raises.
See PGS Geophysical AS v. Iancu, 891 F.3d 1354, 1359
SOUTH-TEK SYSTEMS, LLC   v. ENGINEERED CORROSION         11
SOLUTIONS

(Fed. Cir. 2018) (“We will treat claims and grounds the
same in considering the SAS issues currently before us.”).
     Here, the Board instituted review on Grounds 1 and 2
of South-Tek’s petition, but declined to institute review on
Grounds 3 and 4. SAS forecloses this type of partial
institution. Although South-Tek did not challenge this
partial institution before the Board, we find that waiver
does not apply to South-Tek’s prompt remand request
following the significant change in law brought about by
SAS. See Adidas AG v. Nike, Inc., 894 F.3d 1256, 1258
(Fed. Cir. 2018) (“In several cases since SAS, we have
found . . . waiver inapplicable to a prompt remand request
due to the significant change in the law.”); Polaris Indus.
Inc. v. Arctic Cat, Inc., 724 F. App’x 948, 950 (Fed. Cir.
2018) (“Polaris’s failure to challenge the Board’s partial
institution before the Supreme Court’s issuance of SAS is
therefore excused.”). Thus, remand is appropriate for the
Board to address Grounds 3 and 4 of South-Tek’s petition.
                             V
    Because the Board had substantial evidence to sup-
port its finding that a person of ordinary skill would not
have been motivated to combine Wood and Viking, it did
not err in determining that the ’700 patent claims would
not have been obvious over the combinations of prior art
identified in Grounds 1 and 2 of South-Tek’s petition. As
a result, we affirm the Board’s determination that the
’700 patent claims are not unpatentable over Grounds 1
and 2. We remand, however, for the Board to consider
whether those claims are unpatentable over the two non-
instituted grounds.
            AFFIRMED AND REMANDED