On Friday, November 16th, the Court of Appeals for the Federal Circuit issued a nonprecedential opinion in Amazon.com, Inc. v. ZitoVault, LLC, affirming a decision by the Patent Trial and Appeal Board (PTAB) that e-commerce giant Amazon failed to prove a patent owned by security solutions provider ZitoVault was unpatentable. The Federal Circuit majority of Circuit Judges Kara Stoll and Kathleen O’Malley disagreed with Amazon’s that the PTAB erred in its claim construction. Dissenting, Chief Judge Sharon Prost wrote that she believed the PTAB’s analysis of a specific claim term was flawed, and she would have vacated the PTAB decision and remanded the case for further consideration.
The patent-at-issue was ZitoVault’s U.S. Patent No. 6484257, titled System and Method for Maintaining N Number of Simultaneous Cryptographic Sessions Using a Distributed Computing Environment. Issued in November 2002, it claims a software architecture for conducting a plurality of cryptographic sessions over a distributed computing environment. The innovation addresses major computational challenges experienced in providing secure communication, including solutions to both overcome network bandwidth latency barriers to secure encryption and the problem of processor saturation due to encryption decryption loads.
Amazon filed for an inter partes review (IPR) of the ‘257 patent after ZitoVault asserted that patent in infringement proceedings. Amazon’s petition included three grounds for unpatentability in light of U.S. Patent No. 6065046, titled Computerized System and Associated Method of Optimally Controlled Storage and Transfer of Computer Programs on a Computer Network (“Feinberg”). The PTAB instituted the IPR on each ground of unpatentability petitioned by Amazon.
During the course of the IPR proceeding, the legal issues of patentability between Amazon and ZitoFault boiled down to whether Feinberg disclosed the term “sessions” as that term was understood within the context of the ‘257 patent. A response filed during the IPR by ZitoVault included expert testimony that a “session” “must refer to a connection with a defined beginning and end” in order that the server can determine which incoming data refers to which session. At oral argument in front of the PTAB, Amazon conceded that a “session” would have a beginning and an end. In the PTAB’s final decision, the Board applied a modified claim construction which led it to determine that Amazon employed an “excessively generic” analysis which left “uncertain what Petitioner regards as a session in Feinberg, much less how it begins and how it ends.” The PTAB then rejected Amazon’s anticipation and obviousness arguments challenging the validity of the ‘257 patent.
The Majority Opinion
On appeal, Amazon challenged the PTAB’s construction of “sessions.” The Federal Circuit majority found that the PTAB’s construction comported with the broadest reasonable interpretation (BRI) standard because the construction was reasonable based on the record evidence and the understanding of one skilled in the art that a “session” needed a beginning and an end. Amazon also appealed the PTAB’s finding that sufficient proof wasn’t provided supporting the argument that Feinberg disclosed “sessions.” The Federal Circuit also rejected this argument, finding that Amazon never explained during the course of the IPR proceeding how or when Feinberg distinguishes between sessions. Finally, Amazon argued that the PTAB violated its due process rights by relying on an argument raised by ZitoVault for the first time at oral argument before the Board. Although the Federal Circuit has rejected arguments presented for the first time at oral argument, the appellate court found that ZitoVault advocated for the inclusion of a “pre-conversation” requirement in the “sessions” term in its patent owner response filed with the PTAB. Further, Amazon availed itself of two opportunities to address this argument, both in its reply brief and at oral argument. “Amazon cannot credibly argue that it was taken unaware,” the Federal Circuit majority found.
Prost in Dissent
In her dissent, Chief Judge Prost explained that she would have found that the PTAB’s analysis of the term “sessions” was flawed for several reasons. While Judge Prost agreed that the PTAB’s original construction of the term was problematic for being overbroad, the way it implemented the revised construction was unsound. This error was comprised of the Board’s conclusion to import a requirement that “each session have an instruction with protocol-level detail about how to initiate and terminate a data stream.” Judge Prost found that two arguments made by ZitoVault to the PTAB for importing this requirement were arguments that the majority could accept but “I cannot.” While Amazon agreed that “sessions” must include a beginning and an end, Judge Prost didn’t feel that the company conceded that such beginnings and endings must require defined instructions governing how those actions occur. Further, neither the claims nor the specification of the ‘257 patent require a technique for beginning or ending a session, and no clear intrinsic evidence was cited by the PTAB in support of this requirement. Although the specification provides a single example of how a session might be established and terminated, this example was provided in the context of a preferred embodiment of the invention and no claim other than claim 9 of the ‘257 patent discusses the termination of a session.
Nonprecedential Designation With a Dissent?
Obviously, the term nonprecedential means something different in application at the Federal Circuit than in theory, or in written definition. According to Rule 32.1(b) of the Federal Circuit’s Rules of Appellate Procedure, “An opinion or order which is designated as nonprecedential is one determined by the panel issuing it as not adding significantly to the body of law.”
If Chief Judge Prost would have decided this case differently, and would have remanded the case to the PTAB for further consideration because, in her view, the claim construction was flawed, how is it possible that this panel decision could not add significantly to the body of law of the Circuit? If there is a dispute between and among the Judges of the Court doesn’t that as a matter of fact demonstrate that reasonable minds could differ? Doesn’t Chief Prost’s dissent conclusively demonstrate that legitimate arguments exist supporting both sides of this case?
We should all be able to agree that if one of the Judges of the Federal Circuit dissent there must be a legitimate disagreement of at least some kind, with at least some merit. That being true, it is difficult to understand why a nonprecedential designation is appropriate in this, or similar situations.
The Federal Circuit has been using Rule 36 far too much, as we have reported (see here, here, here and here), and while nonprecedential designation is a reasonable alternative, the rules are supposed to apply to everyone across the board, including the Court. That means when the decision would be one that would add to the bod of law of the Circuit then nonprecedential designation is inappropriate.
Was this case designated nonprecedential because the opinion was written by a staff attorney and not much time was spent by the Judges? It feels like the Federal Circuit is using Rule 36 and perhaps nonprecedential opinions in ways the their own Appellate Rules do not support as a tool to manage hopelessly large and growing docket that otherwise could not be managed given the number of Judges.