“The jury’s main contribution is objectiveness and their ability to sniff out the truth. Those 12 sets of juror eyes can observe the witness take the stand and endure cross-examination. They can learn from witness demeanor, body language, tone of voice, etc. By short-circuiting access to a jury trial, the AIA denies a patent holder their Seventh Amendment right.”
I’m the first named inventor on U.S. Patent No. 7058524, which was filed on October 25, 2002. The title of the patent is “Electrical Power Metering System”. Unfortunately, I was never able to produce, let alone market the meter. There were many barriers to entry for my essentially hardware-based invention. I was working full time and had a growing family to be concerned with. Following retirement in 2013, I decided to attempt to license the ‘524’ technology. In early fall 2014, I partnered with a Non-Practicing Entity (NPE). I received an up-front sum and had an agreement with the NPE to share (fairly in my view) in any ‘back-end’ licensing revenue. After extensive investigation and attempts at licensing, in 2016 the NPE asserted against Duke Energy in Delaware. We believed Duke’s new smart meters, particularly those using Itron’s OpenWay Riva technology, were infringing the ‘524 patent.
Following the “Infringer Handbook,” Duke made a motion to dismiss the case based on Alice-abstractness. Fortunately for us, Judge Robinson did not agree that a physical meter was all that abstract.
In early 2017, we moved to step two in the “Infringer Handbook.” Itron, who designed and manufactured the power meters, apparently indemnifies Duke. As a result, Itron petitioned the Patent Trial and Appeal Board (PTAB) on Duke’s behalf. Itron submitted their petition, just in time, prior to the one-year time limit.
Itron, the petitioner, raised three pieces of prior art. The PTAB settled on a single, abandoned, patent application by a would-be inventor named Suh. The grounds chosen by the PTAB were Obviousness (re: 35 U.S.C. 103). The PTAB Administrative Patent Judges (APJs) instituted a trial. Our district court case against Duke in Delaware was stayed before we could get a jury trial.
Sunk by Secret Prior Art
Suh is what is termed Secret Prior Art. Suh’s application was ‘secret’ in the sense that there is no way for the inventor to have access to it before filing their patent application. Suh’s patent application was not published by the USPTO until about a week after I filed the ‘524 application. Apparently, use of secret prior art is a favorite move by the Infringer Community (see the Yelderman article, titled: “Prior Art in Inter Partes Review” 104 Iowa L. Rev. 2705 (2019)).
Infringers like to bring secret prior art to the PTAB. Perhaps petitioners and APJs believe this strengthens their argument that the examiner and/or the inventor made a mistake; or maybe they just like to rub the patent holder’s nose in this judicial mistake that’s still outstanding? (See Andrew Berks, “Secret Prior Art – Time for Another Look”, April/May 2017, published by New York Intellectual Property Law Association).
Suh was not considered by the ‘524 examiner. Fairness, common sense, and good policy would dictate that the hypothetical Person of Ordinary Skill in the art (POSITA), should have been able to access the prior art. This lack of access is likely the reason the rest of the world does not allow secret material to be used as prior art. As articulated in the Berks article above, due to an outstanding judicial error from years ago this loophole allows secret prior art to be treated like actual prior art in the United States. In our case, the secret prior art—a patent application—was abandoned; so there is no potential conflict with another patent. Good policy would be to completely ignore secret prior art like Suh. As per Berks:
“Several modern cases have recognized the flaw in Hazeltine. In OddzOn Products, Inc. v. Just Toys, Inc., 34 the court relied on Kimberly-Clark Corp. v. Johnson & Johnson to conclude that “patent laws have not generally recognized as prior art that which is not accessible to the public.”35 More recently, Judge Newman noted in a dissent in Solvay S.A. v. Honeywell International Inc. 36 that “[i]nvalidation by secret prior art is disfavored,” citing OddzOn and Kimberly-Clark.”
Credit this ‘Hazeltine loophole’ to section 102(e), which deals with anticipation; and not section 103, which deals with obviousness. Go figure.
Another judicial tenet in deciding obviousness requires showing that a POSITA was somehow motivated to seek out the prior art in question. Our hypothetical POSITA must have had a criminal streak; he or she must have been motivated to break into the USPTO, search it omnisciently, find the Suh application and think: “Wow! This makes 524 obvious.”
Although I did not have access to Suh before filing the ‘524-patent application, it really did not matter. Suh is irrelevant as prior art to the ‘524 patent. The ‘524 examiner had access to Suh’s patent application during the prosecution of ‘524. The ‘524 examiner chose different and stronger prior art to reject ‘524. The examiner found an article published by the IEEE, in 2000, by Swedish author, Jerker Delsing, titled: “The IP-meter, design concept and example implementation of an Internet enabled power line quality meter“.
We subsequently modified our claim language during prosecution and gained allowance from the examiner. The language we added, circa 2001, turned out to be the same language contested in the inter partes review (IPR) at the PTAB. This (bold font) language was added to the last element of ‘524’s claim 17:
“transmitting the IP-based power consumption information from the processor to a destination autonomously in IP format over an external power line network.“
This language limited the scope of claim 17.
Predictably, the APJs in their Final Written Decision found all the challenged ‘524 claims invalid on the ground of obviousness.
We were surprised by such an outrageous decision.
Hope Dies at the CAFC
The NPE, on their nickel, filed an appeal to the U.S. Court of Appeals for the Federal Circuit (CAFC). We were encouraged to be heard by a real (Article III) court, although still without a jury.
At the oral argument, we appeared in front of Judges Wallach, Reyna and Hughes. Wallach seemed intent on disrupting our attorney’s argument with questions. Indeed, Wallach seemed more interested in what he termed “house-keeping” than in finding the truth.
Here’s a link to the recording of the oral argument at the CAFC. It’s about 15 minutes long, including the dead air while Wallach directs our attorney’s attention from one cherry-picked piece of the record to another.
The hearing was short, but not so sweet. At an expense we could not afford, I brought my wife and four children. I reasoned that the outcome of the CAFC decision would impact them more and longer than it would me, so they should be present. This was to finally be our day in a real, Article III court, with constitutionally appointed judges. I wanted my children to witness what transpired. We were met in the courtroom by Josh Malone, who was kind enough to attend and lend moral support. Unfortunately, things did not go well.
From what I gather, based on my experience, when CAFC judges give patent holder attorneys a hard time, it’s par for the course. In our hearing, the judges badgered, asked disruptive questions, and even berated our attorney. This was in stark contrast to how the CAFC justices treated the appellee’s attorney. The infringer’s attorney was allowed to present their case in an uninterrupted manner. If they were interrupted, it was often to ask leading, clarifying and/or supportive questions. No wonder around 75% of appeals from the PTAB to the CAFC fail.
Patent Owners Deserve Jury Trials
In my opinion, the key broken piece in the system is the way the AIA removed the probability of a jury trial from the patent holder by creating a post-grant system that allows for abuse and delay of other proceedings.
The majority of APJs do not have the experience of a hypothetical POSITA, let alone the expertise of specialized examiners or Supervisory Patent Examiners. Perhaps this explains why APJs so often find the petitioner’s expert witness persuasive?
Without the technical experience to review the patent material, APJs are essentially glorified full-time jurors. APJs are jurors chosen only by the Infringer Community for the resulting kangaroo court. I say this because many of the APJs have worked for the Infringer Community and/or law firms used by the infringers before coming to work at the PTAB. To my knowledge, this fact has not resulted in a single recusal by an APJ to work a case. The same APJs who decide to institute a trial get to sit in judgment for that trial. Normal rules of judicial ethics and conduct have been thrown out the window at the PTAB. Many APJs were recruited and hired by former USPTO Director Michelle K. Lee. Lee volunteered many of the unfair rules of the PTAB process and has been reported to have stacked APJ panels to get the decision she wanted. Some of these rules have been corrected by current USPTO Director Andrei Iancu.
When Judges Ignore Facts
In my experience, APJs essentially ignore the patent holder’s expert witness unless he makes a misstatement or happens to agree with the petitioner. In our case, the APJs ignored and discredited our expert’s arguments, evidence, testimony; the ‘524-patent; the secret prior art; and of course, all of the patent holder attorney’s argument.
There is really only one avenue to influence an APJ’s opinion. That chance is through the deposition of the petitioner’s expert witness. Our attorney caught the petitioner’s expert telling the truth, while defending an untruth, during deposition. Petitioner’s expert essentially admitted that ‘524 was novel and non-obvious. He was unable to identify any prior art (let alone Suh) that taught use of HomePlug on an external power line, other than the ‘524 patent (See p. 62, line 9 – p. 64, line 22 of document at this link). Petitioner’s expert did this, while focused on defending his contention that HomePlug and X10 (mentioned in 524) are examples of Developed Data Transmission Overlay Technology (DDTOT). Coincidentally, these were the only examples of DDTOT that came to the expert’s mind. In truth, no one knows, including Google, what Suh meant by DDTOT in 2002. Neither Suh nor Dang explain DDTOT, or provide support for it, in any way.
This was the one salient point our attorney had a chance to make at the CAFC. Petitioner’s expert got caught in deposition attempting to use the ‘524 patent as prior art to make the ‘524 patent obvious. The PTAB APJs ignored this fact. What did the CAFC judges do with this truth? Other than a rapid glance from Hughes toward Wallach when our attorney made this point, there was no acknowledgement from the CAFC judges. In the end, the CAFC judges also, conveniently, ignored the fact that Suh was not relevant as prior art.
During deposition, as soon as Itron’s expert became aware of his accidental truth telling, he clammed up. Itron’s expert refused to answer the question repeatedly and became non-responsive. Itron’s attorney objected and described this as “question asked and answered”.
Unfortunately, the CAFC judges are even less technically equipped to understand patent material than are the APJs. Wallach asked most of the questions, which were clearly designed to put our attorney off balance. All questions were anti-patent holder in nature. Only one question was technically oriented. It, too, was designed to put the patent holder in a bad light.
Wallach echoed the single technical question, first asked by Itron: “What’s the difference, between transmitting on an internal power line and transmitting on an external power line?”
This is a good question. I would have loved to answer it in a real court, in front of a jury. Our attorney, not being an IP network expert, responded as best he could. But really this was a question for an expert to answer and for a jury to listen to.
The jury’s main contribution is objectiveness and their ability to sniff out the truth. Those 12 sets of juror eyes can observe the witness take the stand and endure cross-examination. They can learn from witness demeanor, body language, tone of voice, etc. A jury is not required to be technically competent, only impartial. Rules requiring the selection and sequestering of a jury are designed maintain this impartiality. Jury deliberations allow careful consideration and discussion of the issues. Unfortunately, at the PTAB and the CAFC, there is no jury. By short-circuiting access to a jury, the AIA denies a patent holder their Seventh Amendment right.
A better answer to Wallach’s question might have been:
The difference in transmitting on the internal, versus the external power line, is demonstrated by the ability of the destination to receive the message. A successful transmission involves sending and receiving a message that survives the journey. The internal power line is a relatively sheltered transmission environment compared to the external power line. The external power is exposed to increased noise levels, spikes, surges, sags; and a multitude of sources of transmission all competing for very limited bandwidth. The multitude of transmission occur in an uncoordinated and conflicting manner on the external power line, resulting in collisions and lost data. The distance that must be traveled on the external power line is typically hundreds of miles. Whereas, on the internal power line the transmitter is in close proximity to the receiver, within a home. The internal power line requires only one transmission, one hop. The external power line requires a series of receptions and re-transmissions (e.g. a network). As disclosed by 524, these must be directed re-transmissions (an IP Network) to reach the destination (the electric utility back office).
But I doubt, from the tone of the questions asked at the CAFC, that even this answer would have changed the foregone conclusion of this set of CAFC judges.
The Final Blow: Rule 36
We were Rule 36-ed by the CAFC. The good news was that we made it home with the family before getting the “ruling”. The bad news was that we never really got that day in court and maxed out our credit cards, yet again.
Here’s an excellent article on the CAFC’s use of Rule 36 by IPWatchdog’s Gene Quinn.
Given no day in court, no jury trial, a cancelled franchise (re: the SCOTUS Oil States decision) and a one-word CAFC decision (affirmed); I felt compelled to prepare a short video to explain why I believe Suh does not make ‘524 obvious. I kept the video as non-technical as possible. Please view it here, if you can spare 10 minutes.
Dear reader, assuming you’ve had time to deliberate; as a juror in the Court of Public Opinion (COPO), have you reached a verdict?
What say you?
The pending Inventor Rights Act seeks to mitigate many of the problems described above. Learn more about it here.
Note: IPWatchdog reached out to Itron’s counsel for comment on this article but had not received one as of the time of publication.
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