In re IPR Licensing, Inc. (Fed. Cir. 2019) (Note – IPRL is a subsidiary of InterDigital).

After IPRL sued ZTE for infringement (D.Del), that ZTE (et al.) turned around and petitioned for inter partes review of IPRL’s U.S. Patent No. 8,380,244 (dual mode communications using cellular and WiFi networks). The PTAB originally sided with the patent challenger — finding all of the challenged claims obvious. On appeal, however, the Federal Circuit vacated that decision as to Dependent Claim 8 that particularly required CDMA compatibility. In particular, the Federal Circuit found insufficient evidence to “support the Board’s articulated motivation to combine the asserted references to arrive at the invention defined in claim 8.” In particular, although the cited prior art states that data connections could be provided via CDMA, the reference did not teach using CDMA to “maintain a communication session” as required by the claim. IPRL I Decision.

On remand, the Board rewrote its decision but again concluded that Claim 8 was unpatentable as obvious based upon the same prior art record. And, on appeal (before a new panel), the Federal Circuit has again faulted the Board’s analysis — this time on procedural grounds:

[IPRL] argues that the only additional evidence the Board cited in support of its conclusion on remand was not part of the record before the Board. We agree.

What happened here in particular is that the Board relied upon the Universal Mobile Telecommunications System Standards (“UMTS”) as prior art for showing the ability to maintain a communication session using CDMA. The problem: UMTS had been introduced as prior art in the original petition, but only to Count 3; while in its pre-SAS institution decision the Board only instituted as to Count 1 (that did not rely on UMTS).

On appeal here, the Federal Circuit explained that:

The Board … cannot rely on evidence relating solely to grounds on which it never instituted. To hold otherwise would allow the Board’s final written decision to rest on arguments that a patent owner has no ability to rebut or anticipate. . . . ZTE’s petition does not mention UMTS in discussing ground one—the only ground on which the Board instituted review. IPRL’s response therefore never referenced it either. Nor did ZTE’s reply. Dr. Bims, ZTE’s expert, also confirmed that the Board’s review was not based on UMTS. . . . The Board’s decision to rely on the Draft UMTS Standards to fill the gap in its evidentiary finding was, thus, erroneous.

Slip Op. The Federal Circuit then considered whether to remand for the PTAB to consider all of the grounds as required by SAS. However, the Board found that ZTE had waived its right to request such a remand. (Although ZTE had briefed the case and presented oral arguments, it subsequently withdrew from the appeal based upon a settlement agreement between the parties).

Reversed and Vacated.

I’ll note here that it is unlikely that the PTO will touch this case again with ZTE’s withdrawal and the lack of remand. However, it would be interesting if the agency did pick it up and reopen the IPR as to all of the grounds.

Note also that the patentee appealed the substance of the obviousness argument — arguing that the claim wasn’t obvious even considering UMTS. On appeal, the Federal Circuit “express[ed] no opinion on the merits of the Board’s reliance on the Draft Standards or its conclusions about what those standards might have taught one of skill in the art.”