Patentlyo

PTAB Reconstruing Claims: Estoppel?

Dennis Crouch

March 1st, 2018

Knowles Electronics v. Cirrus Logic (Fed. Cir. 2018) [Knowles Case]

Construing Claims: In a 2011 decision, the Federal Circuit construed the claims of Knowles Electronics’ U.S. Patent No. 6,781,231, including the claim term “package” as used in the claimed microelectromechanical system to mean a “self-contained unit that has two levels of connection, to the device and to a circuit (or other system).” MEMS Tech. v. Int’l Trade Comm’n, 447 F. App’x 142 (Fed. Cir. 2011). When passing judgment on the same patent five years later, the PTAB offered a slightly different construction during an inter partes reexamination. In Judge Newman’s view, that difference allowed for the PTAB to find the claims anticipated while the 2011 Federal Circuit decision found the patents valid. She writes:

The difference between [the two] constructions may not appear to be large, but the PTAB’s construction sufficed to hold claims 1–4 invalid on the ground of anticipation whereas the Federal Circuit’s construction sustained validity on the ground of anticipation

The problem, for Judge Newman, is that a decision from the PTAB’s controlling court should control the actions of the PTAB and limit its power. For its part, the PTAB generally refuses to be bound by prior claim construction decisions by District Courts, but this is the first case where the PTAB has disregarded a prior interpretation by the Federal Circuit.

Although I began with Judge Newman’s opinion. Her opinion was in dissent, the Majority (Judges Wallach and Chen) avoided the question of whether the PTAB’s must follow Federal Circuit claim construction decisions. Rather, the majority held that the PTAB construction is in “accord with the definitions adopted in Mems Tech.” Based upon this claim construction, the majority agreed that the claims were anticipated by the proffered prior art.

Written Description: The patentee also added several claims during the reexamination. However, those were rejected for lack of written description. On appeal here, the Federal Circuit affirmed – holding that the newly added limitation that “solder pads are ‘configured to mechanically attach … the package to a surface of an external printed circuit board using a solder reflow process'” was not supported by the original specification. In particular, the specification did not identify the “solder reflow process” as the connection mechanism. Here, the PTAB held that such a process was not so well known in the art that the disclosure shows possession of that process. This factual conclusion by the PTAB was easy to defend on appeal since it need only be supported by substantial evidence. Judge Newman did not offer any dissenting opinion on this aspect of the judgment.

Intellectual Property Plays a Big Role in Silicon Valley Deals, Amanda G. Ciccatelli, IP Watchdog, Feb. 26th, 2018

Silicon Valley is home to the most valuable intellectual property in the entire world – including patents, logotypes, symbols, copyrights, trademarks, and many other valuable IP. Therefore, Silicon Valley has also become home to some of the most famous intellectual property disputes ever litigated.

With this much intellectual property that is worth billions of dollars, and as countless high-profile deals continue to churn, Silicon Valley technology companies should focus most of their attention on their valuable IP assets. At all stages during the acquisition process, companies need to keep a pulse on their IP and identify risks or gaps in ownerships that could complicate or even derail a deal. Even companies that aren’t actually involved in a deal may need to survey their IP assets to prepare for potential growth or acquisition down the road.

Today, Silicon Valley technology companies will often do almost anything to gain competitive advantage. Lawsuits relating to stolen trade secrets, missing files and suspicious hires are a big part of the Silicon Valley ecosystem currently. In fact, Apple spent most of the last decade in court with Samsung fighting over smartphone patents. And Snap accused Instagram of copying Snapchat Stories. In the 1990s, Apple vs. Xerox and Apple vs. Microsoft fought over copyright infringement. Another recent example, which recently settled for $245 million, is the Waymo lawsuit, which sought $1.8 billion in damages, alleged that Anthony Levandowski, a former Uber engineer who previously was an engineer at Google, pilfered 14,000 confidential documents from Google, where he helped run its self-driving division, to start Otto, a company in the same field, back in 2016.

“It is Silicon Valley’s trial of the century, when it comes to trade secrets,” said Jed Ferdinand, an intellectual property attorney, in a recent Barron’s article.  This particular case highlights the countless problems that plague the system of protecting IP in Silicon Valley today. Ultimately, Waymo kept the inventions as trade secrets instead of patenting them – and trade secrets give a perpetual monopoly on new technologies so long as the invention remains secret.

Amidst all of what is happening, IPWatchdog sat down with John Brockland, technology and IP transactions partner at Hogan Lovells, to discuss the importance of protecting company IP in Silicon Valley. Throughout his career, he has handled many prominent matters across the full technology spectrum, representing companies ranging from startups to large multinationals in many industries.

“When we represent a client doing an acquisition of a technology company, the IP (along with the talented employees) is among the most important assets of the company,” he explained. “The same is true for strategic investments and partnering deals. Particularly for early-stage companies, the company’s technology and IP often drive valuation, even more than existing revenues from customers.”

Since technology and IP are so important today, it pays for companies to focus attention on properly managing their IP assets, which includes making sure appropriate employee agreements are in place, carefully reviewing and negotiating inbound and outbound licensing agreements, devising an appropriate patent strategy, and many other significant tasks.

So, how big of a role does IP play in Silicon Valley deals? According to Brockland, IP is especially central to Silicon Valley deals. He advises many large technology companies who are repeat players in the market, doing multiple transactions each year—some very large and some small and works with them to tailor IP diligence for each deal.

“In almost any size transaction involving a technology company, our client asks us to look carefully at the company’s IP and the agreements the company has entered into with third parties to secure rights in IP and to permit others to use that IP,” he said. “Depending on how a transaction is structured, the terms on which IP is assigned or licensed between the parties in a deal can also be a critical area of focus for our client.”

At all stages during the acquisition process, companies need to keep a pulse on their IP and identify key risks or gaps in ownerships that could complicate or even derail a deal. Brockland says that the good news is that many of the problems we encounter with a company’s IP and its related contracts can be fixed. However, it is almost always easier to fix those problems early, and not when the company is undergoing or has just undergone an acquisition or other strategic events.

In addition, even the problems that can be solved tend to slow things down and generate uncertainty that both parties to a transaction would rather avoid. Companies that aren’t involved in a deal sometimes need to survey their IP assets to prepare for potential growth or acquisition down the road. The dynamism, which can make Silicon Valley such a great place to work (including practicing law), also generates uncertainty.

“Nobody knows what transactional opportunities could arise next month or even next week,” Brockland explained. “If a company maintains a good handle on its IP assets and its related agreements, then the company will be better prepared to take advantage of opportunities when they arise and avoid complications and headaches that result from having to fix IP problems under time pressure and when a strategic deal is on the table.”