CAFC Affirms PTAB Obviousness Finding, Holds ‘Real Parties in Interest’ Question Final and Non-Appealable

By IPWatchdog
May 28, 2020

“The CAFC reasoned that, based on Cuozzo and Click-to-Call, there is ‘no principled reason why preclusion of judicial review under § 314(d) would not extend to a PTAB decision concerning the real parties in interest requirement of § 312(a)(2).’”

Last week, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed a decision on appeal from the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board  (PTAB) in ESIP Series 2, LLC, v. Puzhen Life USA, LLC. The CAFC found no error in the PTAB’s holding that the claims at issue were obvious and determined that the PTAB’s decision to institute inter partes review (IPR) despite ESIP’s contention that Puzhen failed to identify all real parties in interest was final and non-appealable.

PTAB Proceedings

U.S. Patent No. 9,415,130 (the ‘130 patent), which is owned by ESIP, is directed to a “system and method for combining germicidal protection and aromatic diffusion in enclosed habitable spaces.” The claims of the ‘130 patent disclose a micro-cyclone for separating larger particles from ultra-fine droplets. Claim 1 recites a step of “separating out a second distribution of the droplets by passing the flow through a wall between a first chamber and a second chamber, the flow path spiraling axially and circumferentially, simultaneously and continuously, through an arcuate channel formed through the wall; and passing a first distribution of the droplets out of the separator into the breathable air.”

In the petition for IPR, Puzhen asserted that claims 1, 3, and 17 of the ’130 patent were obvious in view of U.S. Patent No. 7,878,418 to Sevy and U.S. Patent No. 4,243,396 to Cronenberg, and in view of Sevy and U.S. Patent No. 8,001,963 to Giroux. The PTAB found that Sevy, which was directed to atomizers that separated large particles from a mist, disclosed each of the elements of the challenged claims except the “arcuate channel” and “separating” elements. The PTAB also found that both the Cronenberg and Grioux references sufficiently disclosed the “arcuate channel” limitation and concluded that a skilled artisan would have been motivated to combine the teachings of Cronenberg and Grioux with the teachings of Sevy to arrive at the claimed invention.

ESIP argued that Puzhen’s petition was barred from institution because it failed to identify “’all real parties in interest’ as required by 35 U.S.C. § 312(a) (2).” In particular, ESIP asserted that doTERRA International, LLC, and Puzhen Life Co., Ltd. should have been identified in the petition. The PTAB concluded that doTERRA International, LLC, and Puzhen Life Co., Ltd. were not real parties in interest “within the meaning of 35 U.S.C. § 312(a)(2) and that Puzhen’s petition was not barred from institution.” ESIP appealed to the CAFC asserting that the PTAB erred in its obviousness holding and in its finding that doTERRA International, LLC, and Puzhen Life Co., Ltd. were not real parties in interest.

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Obviousness

The CAFC reviewed each of ESIP’s four challenges to the PTAB’s factual findings. First, with respect to ESIP’s assertion that Sevy does not teach separating droplets by passing the flow through an orifice in a wall, the CAFC noted that the PTAB properly relied on Sevy’s teaching of a “separator plate” that segregates atomizer droplets for this limitation. Second, the CAFC addressed ESIP’s argument that Giroux does not teach a vortex resulting in “larger droplets being separated from the vortex or separated from the air flow”, as asserted by the PTAB. The CAFC found no error in the PTAB’s reliance on expert testimony to support its conclusion that Giroux’s vortex “sends the larger droplets to the outside rings and keeps the smaller droplets in the air stream for a longer period of time.” Third, the CAFC addressed ESIP’s argument that there was no motivation to replace the aperture in Sevy with the arcuate passageway of Cronenberg. The CAFC found no error in the PTAB’s finding that “Sevy and Cronenberg teach two alternative methods for achieving the separation of droplets from the mixed droplet-air flow, and that a skilled artisan would have been motivated to substitute one method for the other.” Fourth, the CAFC considered ESIP’s argument the PTAB erred in finding that a skilled artisan would have been motivated to combine Sevy with Giroux because the PTAB failed to articulate a reason why the helical baffle of Giroux would be formed through a wall as required by the asserted claims. The CAFC agreed with the PTAB that “both Sevy and Giroux teach methods for removing large droplets from [the] mixture of air and liquid droplets,” and thus a skilled artisan would have been motivated to “substitute a channel defined by a helical baffle, as taught by Giroux, for the straight orifice in Sevy’s plate.”

The CAFC concluded that each of the PTAB’s factual findings was supported by substantial evidence and, therefore, affirmed the finding of obviousness.

Real Party in Interest

The CAFC next considered ESIP’s argument that the PTAB erred in instituting the IPR because Puzhen failed to identify all “real parties in interest”, as required under § 312(a)(2). Citing Cuozzo Speed Techs., LLC v. Lee, the CAFC noted that the Supreme Court has explained that § 314(d) bars appellate review of “questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” The CAFC also cited Thryv, Inc v. Click-To-Call Techs., LP, wherein the Supreme Court held that a  “challenge  to a petition’s timeliness under § 315(b) raises ‘an ordinary dispute about the application of’ an institution-related statute and is barred from appellate review by § 314(d).” The CAFC reasoned that, based on Cuozzo and Click-to-Call, there is “no principled reason why preclusion of judicial review under § 314(d) would not extend to a PTAB decision concerning the ‘real parties in interest’ requirement of § 312(a)(2).” Thus, the CAFC concluded that the PTAB’s § 312(a)(2) holding was final and non-appealable.

 

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