Federal Circuit invalidates another patent upheld at PTAB after IPR

Judge Dyk

On Friday, August 4th, the U.S. Court of Appeals for the Federal Circuit issued a decision in Homeland Housewares, LLC v. Whirlpool Corporation, which ought to be completely unnerving to every owner of a U.S. patent grant. Hearing an appeal from a decision of the Patent Trial and Appeal Board (PTAB), the panel voted 2-1 in favor of Homeland Housewares and overturned a final written decision that had confirmed that challenged claims from a Whirlpool patent were valid. So even when a patent owner manages to escape the clutches of the PTAB and prevails no patent is ever truly safe any longer.

The Whirlpool patent before the Federal Circuit, which had the validity of the claims upheld at PTAB, is U.S. Patent No. 7581688, titled Blender with Crushed Ice Functionality. The ‘688 patent claims a cycle of operation for a blender having a motor, a container and a cutter assembly in which the motor automatically controls the cutter assembly’s rotational speed to effect a pulsing, each pulse having a constant speed phase, a deceleration phase and an acceleration phase. The resulting invention addressed shortcomings in conventional blender devices with a crushed ice functionality as those other prior art devices would often result in ice that was either over or under crushed. Further, conventional devices had difficulties mixing crushed ice with other contents to an even consistency.

Whirlpool’s ‘688 patent faced one petition for inter partes review (IPR) at the PTAB, challenged by both Homeland Housewares and Capital Brand, LLC, in June 2014; Capital Brand is described as the parent company of Homeland Housewares in the original petition for inter partes review. Petitioner Homeland Housewares argued that claims 1 through 16 (i.e., all of the claims of the ‘688 patent) were invalid as anticipated subject matter under pre-America Invents Act (AIA) 35 U.S.C. § 102(b) governing the patentability of inventions based on novelty. The petition charged that the claims of the ‘688 patent were anticipated by a series of patents, including U.S. Patent No. 6609821, titled Blender Base with Food Processor Capabilities. Issued in August 2003 and assigned to Sunbeam Products of Boca Raton, FL, it claims a blender base with a reversible motor, a user interface and a microcontroller having memory including preprogrammed motor routines associated with different sequences of motor functions. The ‘821 patent describes shortcomings in conventional blending devices, including difficulties in achieving a satisfactory mixing of ice contents, which the invention was designed to address.

The final written decision in the IPR, which was issued in October 2015, found that petitioner Homeland Housewares did not prove that the challenged claims of the ‘688 patent were invalid. The final written decision notes that, during the trial, Whirlpool had challenged the PTAB panel’s construction of the term “settling speed,” arguing that the PTAB’s construction was incomplete because “it does not reflect the mechanism which allows the blender contents to be processed again.” In light of Whirlpool’s argument, supported by unrebutted testimony from an engineer of blender devices, the PTAB decided not to adopt any explicit construction of the term “settling speed” for the final written decision upholding validity of the challenged claims.

“Claim construction is an issue of law that we review de novo where, as here, there is no relevant extrinsic evidence,” the recent Federal Circuit decision reads, citing to the U.S. Supreme Court’s 2015 decision in Teva Pharmaceuticals USA v. Sandoz, Inc. The Federal Circuit majority opinion (written by Judge Dyk and joined by Chief Judge Prost) disagreed with the constructions of the “settling speed” claim offered by both Whirlpool and Homeland Housewares. The Federal Circuit held that the proper construction of the claim was a “speed that slows significantly enough to allow the contents to reach the ‘settled’ condition to be processed again.” The Federal Circuit majority found this to be the broadest reasonable construction of the claim consistent with the patent’s specification:

“Here… our claim construction is not new, but simply represents a midpoint between the two opposing constructions now urged by the parties. Significantly, this construction is also practically identical to the construction utilized by the Board in its Institution Decision.”

Using its construction of “settling speed,” the Federal Circuit majority opinion held that PTAB erred in finding that figure 25 of the ‘821 patent did not anticipate Whirlpool’s ‘688 patent. Analysis of “low speed” options depicted by figure 25 of the ‘821 patent led the Federal Circuit majority to find that the settling speed limitation depicted by the figure was consisted with the court’s construction as well as elements of the pulsing cycle claimed in Whirlpool’s ‘688 patent. As for the unrebutted testimony presented by Whirlpool, the Federal Circuit found that “we must disregard the testimony of an expert that is plainly inconsistent with the record.” Thus, all of the claims of Whirlpool’s ‘688 patent were invalidated by the Federal Circuit as anticipated by the ‘821 patent.

A dissenting opinion was given by Circuit Judge Pauline Newman:

The court today rewrites the claims of the ’688 patent, adopting a “claim construction” that states the invention more broadly than did the patentee. The court then holds its broadened claims anticipated by the prior art, on which the patentee has provided an improvement that is not shown in the prior art.

The court errs in its analysis of the subject matter that is claimed, and strays from the substantial evidence standard of review of PTAB findings of fact.

Judge Newman, in her dissent, stated that the PTAB correctly found that the claims of the ‘688 patent were not anticipated by the prior art. The anticipation finding in the court’s majority opinion “ignored the limitations in the ‘688 claims,” Newman wrote. “As the Board discussed, [the ‘821 patent] does not show the ’688 method whereby each pulse includes a predetermined operating speed, a deceleration phase to the settling speed, and an acceleration from the settling speed to the operating speed—all limitations in claim 1.”

While Judge Newman may be rightly disappointed in the how the majority ruled in this patent case, patent owners across the country ought to be downright mortified at the outcome. This case calls into question any idea that patent claims are considered valid even if they escape a final written decision by the PTAB. In recent months, we’ve raised the question as to whether 90 percent of patents challenged at the PTAB are invalid. In light of the Federal Circuit’s decision to overturn a final written decision after using a different claim construction, that 90 percent figure is starting to look generous. And this is the second time in less than one month that the Federal Circuit has saw fit to step in and overturn a final written decision issued by the PTAB that upheld the validity of patent claims.

The story told by this Whirlpool tale, which is becoming too common, is truly mind-boggling. An informed observer could easily conclude that both the Executive and Judicial branches of the federal government are doing their best to dismantle what should be Constitutionally-valid private property rights.