“The CAFC noted that since a joining party cannot enter any ‘grounds other than those already instituted, the party is not statutorily estopped from raising other invalidity grounds.’”
On September 24, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed-in-part and reversed-in-part the U.S. District Court for the Eastern District of Texas’s claim construction and remanded to the district court in Network-1 Technologies, Inc. v. Hewlett-Packard Company. In particular, the CAFC concluded that the district court erred in construing the claim term “main power source” and held that a party joined to an inter partes review (IPR) proceeding is not estopped from raising new invalidity grounds in district court, since the joinder provision does not allow parties to raise grounds not already instituted. The CAFC ultimately affirmed-in-part, reversed-in-part, vacated and remanded the district court’s judgment for a new trial on infringement.
District Court and PTAB
Network-1 filed an infringement suit against Hewlett-Packard (HP) for allegedly infringing U.S. Patent No. 6,218,930 (the ’930 patent) in the United States District Court for the Eastern District of Texas. The ’930 patent, titled “Apparatus and Method for Re- motely Powering Access Equipment over a 10/100 Switched Ethernet Network,” included claims directed to a “low level current” delivered over a data signaling pair to an access device, wherein a network switch senses the resulting “voltage level” on the data signaling pair. HP responded to the infringement suit, urging that the ’930 patent was invalid and not infringed. A jury determined that the patent was invalid and not infringed. Post-trial, Network-1 moved for judgment as a matter of law (JMOL) on validity and requested a new trial on infringement. The district court granted the motion for JMOL but denied Network-1’s request for a new trial.
Parallel with the district court proceedings, the ’930 patent was reexamined twice before the U.S. Patent and Trademark Office. The first reexamination confirmed the patentability of three claims and added 14 new claims. The second reexamination confirmed the patentability of the new claims. In addition, another defendant, Avaya, petitioned for IPR of the ‘930 patent after Network-1 filed the district court suit. The Board instituted review of claims 6 and 9 of the ’930 patent on the grounds of: (1) anticipation under 35 U.S.C. § 102(b) by Matsuno, and (2) obviousness under 35 U.S.C. § 103(a) by De Nicolo and Matsuno. Following institution of the IPR, HP moved to join the IPR on the grounds already instituted and the Board granted the request. In a final written decision, the Board came to the conclusion that neither claim 6 nor claim 9 was unpatentable over the instituted grounds.
Network-1 appealed the district court’s final judgment of non-infringement to the Federal Circuit, arguing the district court erred in its claim construction. In a cross-appeal, HP asserted that the district court erroneously determined that HP was estopped from raising certain validity challenges under 35 U.S.C. § 315(e)(2) because HP was joined as a party in the IPR before the Patent Trial and Appeal Board (Board). HP also argued that Network-1 improperly broadened claim 6 of the ’930 patent during reexamination.
The CAFC considered Network-1’s argument that the district court erred in construing the claim terms “low level current” and “main power source,” and that the error entitled Network-1 to a new trial on infringement. Noting that Network-1 was the party seeking to undo the district court’s non-infringement decision, the CAFC explained that Network-1 “must establish that [the challenged jury] instructions were legally erroneous, and that the errors had prejudicial effect.”
Despite Network-1’s argument that the district court incorrectly construed “low level current” to have a lower bound, the CAFC noted that the district court correctly construed “low level current” because the ’930 patent explicitly teaches a low level current with an upper boundary edge that is “unable to sustain start up.” Network-1 even submits that the term “current” requires some flow of electric charge because “[i]f there is no flow, there is no ‘current.’” Further, the specification of the ’930 teaches that an access device capable of receiving remote power will signal a varying voltage level and recites that “[t]he varying level is created by the remote power supply beginning to start up but the low current level is unable to sustain the start up.” Thus, the CAFC concluded that the district court did not err in its construction of “low level current.”
With respect to the district court construction of “main power source” as “a DC power source” Network-1 urged that the phrase “should be construed consistent with the ordinary meaning of ‘power source’ to include both AC and DC power sources.” The CAFC noted that the specification did not express a preference for DC power sources, and nothing in the claims of the ‘930 patent precluded that conversion of AC power to DC power. The CAFC also noted that “the district court’s construction not only excluded inoperable embodiments that do not convert AC to DC power, but also excluded operable embodiments, like the preferred embodiment.” Citing Cordis Corp. v. Medtronic AVE, Inc., the CAFC explained “we skeptically view a construction that renders all embodiments inoperable, but we have instructed that it is nonetheless improper to add limitations to constructions to exclude only certain inoperable embodiments.” Thus, the CAFC concluded that the district court erred in its construction of “main power source” and that Network-1 established that it was prejudiced by the erroneous claim construction and entitled to a new trial on infringement.
In its cross-appeal, HP contended that “the district court erroneously granted JMOL with respect to the ’930 patent’s validity based on its determination that HP was estopped under 35 U.S.C. § 315(e) from presenting obviousness challenges as a consequence of its joinder to the Avaya IPR.” In particular, the district court held that HP was estopped from raising obviousness challenges that it could have reasonably raised during the IPR. HP argued that the district court misapplied the estoppel provision under 35 U.S.C. § 315(e)(2) and that “no validity ground that it raised at trial ‘reasonably could have [been] raised’ through its joinder to the Avaya IPR.” Noting that joinder and any resulting joinder are controlled by the America Invents Act (“AIA”), the CAFC cited Facebook, Inc. v. Windy City Innovations in stating that “the joinder provision does not permit a joining party to bring into the proceeding new grounds that were not already instituted.” Thus, the CAFC noted that since a joining party cannot enter any “grounds other than those already instituted, the party is not statutorily estopped from raising other invalidity grounds.” Disagreeing with the district court that HP’s obviousness challenges on appeal give it a “second bite at the apple,” the CAFC vacated the district court’s JMOL decision on validity with respect to estoppel and remanded for further proceedings.
The CAFC also addressed HP’s argument that some of the asserted claims were invalid under 35 U.S.C. § 305 because Network-1 improperly broadened claim 6 through the addition of claim 15 and 16 in the first reexamination. Noting that the addition of dependent claims did not change the scope of independent claim 6, the CAFC concluded that claim 6 was not invalid for improperly enlarging the scope of the claim. Thus, the CAFC affirmed the district court’s conclusion that claim 6 was not invalid for claim broadening.
Image Source: Deposit Photos
Image ID: 10042948