On Wednesday, May 30th, the Court of Appeals for the Federal Circuit entered a decision in Tinnus Enterprises v. Telebrands Corporation which reversed and remanded an earlier decision by the Patent Trial and Appeal Board (PTAB) to invalidate a patent covering the award-winning Bunch O Balloons toy developed by inventor Josh Malone. The Federal Circuit panel of Circuit Judges Kathleen O’Malley, Evan Wallach and Todd Hughes found that the PTAB erred in its analysis of the indefiniteness standard used to invalidate the patent-at-issue. Further, the CAFC found that the patent’s validity should have survived a test for indefiniteness even under the standard which the PTAB applied.
The Federal Circuit’s decision follows an appeal from a post-grant review (PGR) proceeding conducted by the PTAB to determine the validity of U.S. Patent No. 9051066, titled System and Method for Filling Containers with Fluids. It covers an apparatus comprising a housing with an opening at a first end and a plurality of holes at a second end, a plurality of flexible hollow tubes connected to those holes, a plurality of containers attached to those tubes, and a plurality of elastic fasteners clamping containers to their respective hollow tubes providing a connecting force that is not less than a weight of the respective container when substantially filled with water; the fasteners also automatically seal the containers when they detach after they are filled with water and the hollow tubes are shaken to overcome the connecting force. As the Federal Circuit’s decision notes, the ‘066 patent’s specification does not define the term “substantially filled” and that the claim was originally added by an amendment by the patent examiner; it was not included in the original patent application.
In June 2015, patent-infringing party Telebrands filed a petition for a PGR proceeding on the ‘066 patent, challenging the validity of that patent on 35 U.S.C. § 103 for obviousness and 35 U.S.C. § 112 for indefiniteness. In January 2016, the PTAB instituted the PGR proceeding on the ‘066 patent on both the 103 and 112 grounds. That December, the PTAB issued a final written decision terminating that PGR, finding that the claim term “substantially filled” was indefinite, thus invalidating all challenged claims of the ‘066 patent. The PTAB’s indefiniteness finding was determined after analysis of the “substantially filled” claim based on the indefiniteness standard set by the Federal Circuit in its 2014 decision in In re: Packard.
After the PTAB instituted the PGR on the ‘066 patent, Tinnus asserted the ‘066 patent against Telebrands in U.S. district court based on allegations that Telebrands’ Balloon Bonanza toy infringed the patent. The district court analyzed the patent for indefiniteness based on the standard set out by the U.S. Supreme Court in 2014’s Nautilus v. Biosig Instruments. Using that standard, the district court found that Telebrands had not raised a substantial question of patent validity based on the term “substantially filled” being indefinite.
On appeal to the Federal Circuit from the PTAB, Tinnus argued that the PTAB exceeded its statutory authority when it instituted the PGR under the “reasonable likelihood” standard of proving patent ineligibility; such a standard is utilized in inter partes review (IPR) proceedings, while PGRs require a higher “more likely than not” standard of proving ineligibility. However, the Federal Circuit found that the PTAB did not err in applying the standard because the tribunal made explicit determinations under the “more likely than not” standard, despite mentions of having proven a “reasonable likelihood.”
As to Tinnus’ appeal of the ‘066 patent not being invalid for indefiniteness, the Federal Circuit found that the PTAB erred in its analysis and that the ‘066 patent survives the indefiniteness standard under either Packard or Nautilus. When reading the term “substantially filled” in the context of the surrounding claim language, the Federal Circuit found that it was clear that the term does not merely reference the volume of the container. Rather, it informs a person of ordinary skill regarding the strength of the elastic fastener found in the claims.
“The claim language indicates that, to meet the limitation of ‘elastic fastener’ with the requisite ‘connecting force,’ the apparatus must be ‘substantially filled’ such that it detaches when shaken. Thus, a person of ordinary skill would understand that, to avoid infringement, one could select an elastic fastener that is either weak enough that the container would fall off without shaking or strong enough that a container would not fall off despite shaking.”
The Federal Circuit further found that the examination history of the ‘066 patent provided evidence that the claim term is not indefinite. The appellate court cited the patent examiner’s insertion of that claim language as well as the examiner’s reasoning that the added language defined a functional capability of the elastic fasteners which is not taught by the prior art. “Additionally, we presume that an examiner would not introduce an indefinite term into a claim when he/she chooses to amend the claim for the very purpose of putting the application in a condition for allowance,” the Federal Circuit found. Thus, under the Nautilus standard, the Federal Circuit held that the claims, viewed in light of the specification and the prosecution history, informed a person of ordinary skill in the art about the scope of the claims with reasonable certainty.
The same reasoning which upheld the claims under the Nautilus standard also upheld the language of the claims under the Packard standard, according to the CAFC’s decision. That standard, which holds that a claim term is indefinite when it contains words or phrases whose meaning is unclear, does not render “substantially filled” as indefinite when properly analyzed in the context of claim language relating to the functional capability of the elastic fasteners. While the PTAB pointed to mentions of a “desired size” that the containers must reach before detaching, the Federal Circuit found that the specification does not equate the “desired size” term with the “substantially filled” claim term. The Federal Circuit also found that the PTAB erred in determining that the use of “expandable containers” added further ambiguity to the “substantially filled” term; rather, the appellate court held that, if the balloons detach after shaking, then they are substantially filled.
In reversing the PTAB’s decision, the Federal Circuit remands the case back to that tribunal for further proceedings consistent with the appeal decision and the Supreme Court’s recent decision in SAS Institute v. Iancu. Inventor Josh Malone, who created Tinnus Enterprises to commercialize his Bunch O Balloons toy invention, offered the following comment on the Federal Circuit’s decision:
“This decision vindicates what advocates for stable and effective patent rights have warned – the PTAB is a slower, costlier, and less competent tribunal that has no business interfering in patent infringement disputes (exclusively on the side of the infringer). The PTO should focus its energies on examining and granting patents and leave these high stakes private disputes to the real courts.”