AIA Post-grant Reviews Not Precluded by Assignor Estoppel
By Kevin E. Noonan —
On Friday, the Federal Circuit handed down its decision in Arista Networks, Inc. v. Cisco Systems, Inc., deciding that the Board had erred in certain of its determinations regarding Arista's inter partes review challenge to certain claims of Cisco's U.S. Patent No. 7,340,597 (for reasons discussed briefly below). More importantly, the Court affirmed the Patent Trial and Appeal Board's decision that the doctrine of assignor estoppel does not preclude institution of any of the various post-grant challenges to granted patents contained in the patent law revisions enacted under the Leahy-Smith America Invents Act (35 U.S.C. §§ 311-319, §§ 321-329, and 125 Stat. 329-31 (2011)).
The challenged claims of the '597 patent were directed to secured communications over computer networks. Claims 1 and 29 are representative according to the Court's opinion:
1. An apparatus comprising:
a communications device comprising:
a subsystem; and
a logging module, coupled to said subsystem, and configured to detect a change to a configuration of said subsystem of said communications device, and communicate information regarding said change to said configuration of said subsystem of said communications device.
29. The communications device of claim 1, wherein the logging module is configured to communicate the change to the configuration of the subsystem by broadcasting the change to the con- figuration of the subsystem.
As explained in the opinion:
In one embodiment, a network communications device includes a "logging module" that monitors and reports configuration changes. ['597 patent] at col. 3 ll. 43–48, col. 6 ll. 7–10. When the logging module detects a configuration change, it can indicate that change in various ways, for example, by way of "an indicator lamp, a message to a display, a message to another network device, broadcast message to specially-configured security devices, or other such mechanisms." Id. at col. 7 ll. 25–30.
In some embodiments, the logging module communicates a configuration change by "broadcast[ing] the change in the configuration of communications interface . . . to one or more security monitors on the network." Id. at col. 7 ll. 39–41; see also id. at col. 8 ll. 52–54. Such broadcasting occurs by way of a multicast address. Id. at col. 11 ll. 45–50. To monitor these broadcasts, in some embodiments, a given security monitor must "subscribe to this multicast address." Id. at col. 11 ll. 50–51, col. 13 ll. 57–67 (describing the process of configuring a security monitor, including "subscribing to a logging module's multicast address in order to receive broadcasts from the logging module").
The PTAB issued a Final Written Opinion invalidating claims 1, 14, 39-42, 71, 72, 84, and 85 as either being anticipated by the cited prior art or obvious. The Board held that Arista had not established by a preponderance of the evidence that claims 29, 63,64, 73, and 86 were invalid.
The Federal Circuit reversed and remanded this aspect of the PTAB's decision, in an opinion by Chief Judge Prost joined by Judges Schall and Chen. The issue before the Court in these cross-appeals hinged on the meaning of the term "broadcast" in the claims, and the panel held that neither of the competing interpretation of this term under the parties alternate claim construction was persuasive. The Court construed the terms "broadcast" and "broadcasting" de novo, and remanded to the Board to decide whether Arista had borne their burden of establishing invalidity (on either anticipation or obviousness) "in the first instance."
The more significant question considered by the panel was whether the Board erred in deciding that assignor estoppel did not preclude inter partes review of the challenged claims. "Assignor estoppel prevents a party who assigns a patent to another from later challenging the validity of the assigned patent" explained the Court, citing Mentor Graphics Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374, 1377 (Fed. Cir. 1998), and (in present circumstances, perhaps more significantly) Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342, 349 (1924). As explained in the opinion, the named inventor of the '597 patent was employed by Cisco and assigned all right, title, and interest in the claimed invention to Cisco as a condition of his employment. This inventor later left Cisco and was part of the initial group that started Arista. Cisco challenged institution of the IPR on assignor estoppel grounds but the Board instituted the IPR in the face of this challenge. Accordingly, the first question the panel addressed was whether the decision to institute (and reject Cisco's assertion that the IPR should be barred under assignor estoppel) could be review by the Court under 35 U.S.C. § 314(d) as interpreted by the Supreme Court in Cuozzo Speed Technologies v. Lee, 136 S. Ct. 2131 (2016), and the Federal Circuit's application of this precedent in Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364 (Fed. Cir. 2018) (en banc). This question turned on whether the issue of assignor estoppel was "closely related" to the decision to institute (in which case institution would not be reviewable under § 314(d)). But the opinion notes that the Supreme Court did not decide whether review was barred if the appeal "'implicate[s] constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond [§ 314(d)].'"
The Federal Circuit had addressed the issue of whether assignor estoppel could bar filing of an IPR, in Husky Injection Molding Sys. Ltd. v. Athena Automation Ltd., 838 F.3d 1236, 1241 (Fed. Cir. 2016), deciding that it would not. The panel acknowledged that the Court's intervening en banc decision in Wi-Fi One required additional analysis. The opinion focused on the further explication in Wi-Fi One that the "closely related" language in the Supreme Court's Cuozzo opinion was "tied to" the "reasonable likelihood" determination the Board must make under § 314(a). Under the Court's Wi-Fi One decision, the Supreme Court's Cuozzo opinion "strongly points toward unreviewability being limited to the Director's determinations closely related to the preliminary patentability determination or the exercise of discretion not to institute.'" Relying on this reasoning (in frank rejection of the panel opinion in Husky), the panel held that "it is clear that we may review the Board's decision as to whether § 311(a) contemplates application of assignor estoppel." This decision was bolstered, in the Court's opinion, by the question being more akin to the issue of the time-bar under § 315(b), which is "not focused on particular claims" and is "unrelated to the Director's preliminary patentability assessment or the Director's discretion not to initiate an IPR even if the threshold 'reasonable likelihood' is present."
Turning to the merits, the panel opined that this was an issue of statutory interpretation. The PTAB engaged in this exercise with regard to an earlier precedential decision of the Board that "§ 311(a) 'presents a clear expression of Congress's broad grant of the ability to challenge the patentability of patents through inter partes review,'" citing Athena Automation Ltd. v. Husky Injection Molding Sys. Ltd., IPR2013-00290, Paper 18 at 12–13 (P.T.A.B. Oct. 25, 2013)). The Board further supported its conclusion by noting that "Congress has not expressly provided for assignor estoppel in the IPR context, where it has in other contexts," citing Redline Detection, LLC v. Star Envirotech, Inc., IPR2013-00106, Paper 40 at 4 (P.T.A.B. Oct. 1, 2013)). Before the Court, Cisco had asserted assignor estoppel as "a well-established common-law doctrine that should be presumed to apply absent a statutory indication to the contrary." While finding "some merit" in this argument under Supreme Court's Westinghouse precedent, the panel noted that intervening decisions (in particular, Lear, Inc. v. Adkins, 395 U.S. 653, 664–66 (1969)) called the continued viability of assignor estoppel into question. Nevertheless, "'Congress is understood to legislate against a background of common-law adjudicatory principles,'" citing Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108 (1991), but that this presumption can be rebutted where "a statutory purpose to the contrary is evident," citing Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783 (1952).
That is the case here, in the Court's opinion. The panel based its decision on the language of § 311(a), which states that "a person who is not the owner of a patent" can file a petition for IPR. This language "leaves no room for assignor estoppel in the IPR context" according to the opinion (the panel agreeing with Arista's argument in this regard) and where, as here, the statutory language is "unambiguous" the Court is obliged to "enforce it according to its terms," citing King v. Burwell, 135 S. Ct. 2480, 2489 (2015). The panel expressly rejected Cisco's argument that not applying assignor estoppel in the IPR context was inconsistent with its availability as a defense before a district court or the International Trade Commission that could result in "forum shopping," saying that this outcome was "an intentional congressional choice":
Such a discrepancy between forums—one that follows from the language of the respective statutes—is consistent with the overarching goals of the IPR process that extend beyond the particular parties in a given patent dispute. See Cuozzo, 136 S. Ct. at 2144 ("[I]nter partes review helps protect the public's 'paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.'" (quoting Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 816 (1945)).
The panel also viewed this argument as being grounded in policy, which is more appropriately directed to Congress than to the Court.
While this interpretation of the statute is consistent with (and supported by ample citation to) Supreme Court precedent and proclivities, the Court's penchant for weighing in on statutory interpretation questions involving the AIA make it certainly possible that this decision might also come under Supreme Court review. It is less likely that the Court would disagree with the Federal Circuit's decision here but may be tempted to put its imprimatur on this aspect of the proper statutory interpretation of the AIA.
Arista Networks, Inc. v. Cisco Systems, Inc. (Fed. Cir. 2018)
Panel: Chief Judge prost and Circuit Judges Schall and Chen
Opinion by Chief Judge Prost
November 20, 2018 – "Lessons From PTAB Full or Partial Denials to Avoid Institution of an IPR or Avoid a Denial" (Strafford) – 1:00 to 2:30 pm (EST)
