Over O’Malley’s Dissent, CAFC Affirms PTAB View that IPR Claim Amendments Are Subject to Eligibility Analysis

By Rebecca Tapscott
July 23, 2020

“If a patent owner seeking amendments in an IPR were not bound by § 101 and § 112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification.. allowing patents with otherwise invalidated claims to return from the dead as IPR amendments.” – CAFC majority opinion

AffirmedOn July 22, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (the Board) in Uniloc 2017, LLC v. HULU, LLC. In particular, the CAFC found that the case was not moot despite a prior CAFC judgment of invalidity and that the Board did not err in rejecting Uniloc’s Request for Rehearing on the basis of Section 101 invalidity of the proposed substitute claims. Judge O’Malley issued a strong dissent, accusing the majority of “breath[ing] life into a dead patent and us[ing] the zombie it has created as a means to dramatically expand the scope of inter partes review (“IPR”) proceedings.”

The ‘960 Patent

U.S. Patent No. 8,566,960 (the ’960 patent), which was owned by Uniloc, was directed to a system for adjusting a license for a digital product over time. In 2016, Uniloc filed suit in the Eastern District of Texas against Hulu, LLC, Netflix, Inc., and others (the petitioners) alleging infringement of the claims of the ’960 patent. The district court found all claims of the ’960 patent ineligible under Section 101. In 2018, Uniloc appealed, and the CAFC affirmed the district court’s decision. Prior to the district court’s decision, the petitioners filed a petition for inter partes review (IPR) asserting that all claims of the ’960 patent were anticipated or obvious over prior art. The Board instituted review and Uniloc filed a response and contingent motion to amend the claims. The Board issued a final written decision, holding that the petitioners had established unpatentability of some, but not all, of the original claims. The Board also denied Uniloc’s motion to amend, holding that the substitute claims, while not unpatentable over the prior art, were patent ineligible under Section 101. Uniloc requested a rehearing in August 2018, which the Board denied, “concluding that § 101 eligibility may be considered by the PTAB in determining proposed substitute claim patentability in IPR proceedings.” That decision was designated as precedential. Uniloc then appealed to the CAFC and the UPSTO intervened.


The CAFC initially considered the parties’ arguments regarding mootness of the case, which were submitted in response to an earlier CAFC order. While Hulu asserted that the CAFC lacked jurisdiction on the ground of mootness, the USPTO Director and Uniloc disagreed. The CAFC noted that it may only dismiss the case for mootness if it would be impossible to grant any effectual relief to Uniloc in the event that it prevails. Noting that a judgment allowing for the addition of the Substitute Claims to Uniloc’s patent would be effectual relief, the CAFC agreed with the Director and Hulu that the case was not moot.

The CAFC rejected Hulu’s arguments that the Board could not reach the motion to amend because the motion depended on a finding that the original claims were unpatentable, noting that Hulu waived this argument because it did not make the argument “during the IPR”. The CAFC also rejected Hulu’s argument that “once the dispute in the IPR over the original claims was mooted by the final federal-court judgment of invalidity of those claims (which occurred after the Final Written Decision but before rehearing was sought), the USPTO lacked statutory authority to consider the proposed substitute claims.” The CAFC noted that Hulu did not offer any arguments for concluding that the USPTO loses authority to consider proposed substitute claims in an IPR “once the original claims no longer present a live dispute”. Thus, the CAFC concluded that there was no “mootness impediment” to its consideration of the case.

Congress’ Unambiguous Intent

The Court then considered whether the Board was correct in denying Uniloc’s Motion to Amend the ’960 patent due to a finding that the Substitute Claims were directed to patent ineligible subject matter under Section 101. Uniloc argued that the Board’s review of proposed substitute claims should have been limited to issues of anticipation or obviousness under Section 311(b), but the CAFC disagreed.

The CAFC explained that “the text, structure, and history of the IPR Statutes…indicate Congress’s unambiguous intent to permit the PTAB to review proposed substitute claims more broadly than those bases provided in § 311(b).” The opinion further explained that Section 311 is “confined” to the Board’s authority to review existing patent claims in an IPR proceeding, rather than to proposed substitute claims that have not been subject to any prior patentability review by the USPTO. The CAFC stated that “prohibiting the PTAB from reviewing patent eligibility [of proposed substitute claims would strip the PTAB of a critical legal tool.”

Citing the USPTO’s Intervenor Brief, the Court said:

“[I]f a patent owner seeking amendments in an IPR were not bound by § 101 and § 112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification.. allowing patents with otherwise invalidated claims ‘to return from the dead as IPR amendments”.

The CAFC addressed Uniloc’s argument that the Board’s review of patent ineligibility was contrary to the CAFC’s decision in Aqua Products Inc. v. Matal, wherein the court reasoned that IPRs do not “allow the patent owner to inject a wholly new proposition of unpatentability into the IPR by proposing an amended claim” because any proposed substitute claim must be narrower than the claim it replaces and any question of patentability would therefore be a continuation of a “proposition of unpatentability” already present when the IPR was instituted. The CAFC disagreed with Uniloc’s argument, noting that the language Uniloc relied upon was limited to the question of “whether a petitioner challenging the proposed substitute claims bears § 316(e)’s burden of proof”. Asserting that Aqua Products was silent on the question of whether a petition may raise a patent-ineligibility challenge to a proposed substitute claim, the CAFC concluded that the Board did not err in its Section 101 review of Uniloc’s Substitute Claims or in the subsequent denial of Uniloc’s Motion to Amend. Thus, the CAFC affirmed the Board’s Rehearing Denial.

Dead Patents Walking

In a lengthy written dissent, Circuit Judge O’Malley asserted that the Board was estopped from issuing substitute claims in place of the invalid original claims of the’960 patent and it was improper to the Board to consider the Section 101 invalidity of the claims. O’Malley expressed strong disagreement with the majority, stating “the majority breath[ed] life into a dead patent and use[d] the zombie it … created as a means to dramatically expand the scope of inter partes review (“IPR”) proceedings.”

Initially, O’Malley explained that the case was moot because the Board lacked authority to issue substitute claims and, therefore, the court could not grant relief to Uniloc. Focusing on the term “substitute”, O’Malley explained that there cannot be a substitute claim if there is no original claim that is capable of being substituted out, or relinquished, in favor of a substitute claim. O’Malley further explained that, after the CAFC’s affirmance of the district court’s ineligibility determination, Uniloc no longer had any patent rights that it could relinquish in exchange for substitute claims. With respect to the majority’s reasoning that Hulu waived its arguments by not raising them during the IPR, O’Malley noted that mootness is a “threshold jurisdictional issue” that cannot be waived because it implicates Article III’s case or controversy requirement.

O’Malley then addressed the majority’s holding regarding the Board’s review of Section 101 invalidity. Citing Aqua Products, O’Malley noted that the statutory framework as a whole provides that IPRs do not allow a patent owner to “inject a wholly new proposition of unpatentability into the IPR by proposing an amended claim” because a patent owner is only allowed to propose narrowed claims that address the issues raised in the IPR. O’Malley explained that if the original patent claims were found to be invalid prior to amendment, narrowing the claims in an IPR proceeding would not create a new question of patentability. O’Malley further noted that Congress set forth in Section 311 that IPRs are limited to “§§ 102 or 103 and to prior art consisting of patents or printed publications”, thus, that limitation applied to both challenged claims and proposed substitute claims, despite Congress’s failure to articulate that the standard applied to both.

In addition, O’Malley opined that the majority’s conclusion was “contrary to public policy supporting the IPR system”, which was intended to be an efficient, cost effective way of adjudicating patent validity rather than a full-blown examination. O’Malley explained that the legislative history makes it clear that substitute claims are intended to preserve the “narrower patent right that is merited in view of the art”. Explaining that allowing examination equivalent to that performed by a patent examiner during prosecution to be performed in an IPR would shift the task of patent examination to an Administrative Patent Judge, O’Malley reiterated that the majority’s opinion was improper and inefficient.

O’Malley concluded by stating the majority incorrectly declared that “dead patents can walk, at least as far as needed to die again on the same § 101 sword that killed it two years ago.”

The Author

Rebecca Tapscott

Rebecca Tapscott is an intellectual property attorney who has joined IPWatchdog as our Staff Writer. She received her Bachelor of Science degree in chemistry from the University of Central Florida and received her Juris Doctorate in 2002 from the George Mason School of Law in Arlington, VA.

Prior to joining IPWatchdog, Rebecca has worked as a senior associate attorney for the Bilicki Law Firm and Diederiks & Whitelaw, PLC. Her practice has involved intellectual property litigation, the preparation and prosecution of patent applications in the chemical, mechanical arts, and electrical arts, strategic alliance and development agreements, and trademark prosecution and opposition matters. In addition, she is admitted to the Virginia State Bar and is a registered patent attorney with the United States Patent and Trademark Office. She is also a member of the American Bar Association and the American Intellectual Property Law Association.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 2 Comments comments.

  1. Pro Say July 23, 2020 8:01 pm

    Thought CBMs die off in a couple of months?

    But no! Behold the rise of zombie CBMs!

    Coming soon to an IPR near you . . . courtesy of the CAFC.

  2. B July 25, 2020 12:45 pm

    Interesting Facts:

    (1) Nathan Kelley, former head of the USPTO’s Solicitor’s office, argued for Hulu.

    (2) The claim is a CBM and is automatically abstract . . . just because

    (3) THE BIG LIE : “[Hulu] ha[d] shown by a preponderance of
    the evidence that [the Substitute Claims] are directed to
    non-statutory subject matter under 35 U.S.C. § 101.”

    (4) “Ineligibility was the sole ground on which the PTAB denied
    the motion to amend.” Why? What purpose does such a denial serve?

    (5) THE BIGGER LIE “[t]he scope of reexamination proceedings is limited to ‘substantial new question[s] of patentability . . . which are questions that have not previously been considered by the [US]PTO” So these sorry idiot judges are telling us that the USPTO never considered 101 when the claims were originally prosecuted?

    More CAFC vacuous trash.