CAFC addresses "SAS Institute" issues in PGS Geophysical

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PGS Geophysical AS owns U.S. Patent No. 6,906,981, which describes and claims methods and systems for performing “marine seismic surveying” to determine the structure of earth formations below the seabed. WesternGeco, L.L.C., a competitor of PGS’s, filed three petitions requesting inter partes reviews (IPRs) of claims 1– 38 of the ’981 patent. The Patent Trial and Appeal Board of the Patent and Trademark Office (PTO), acting as the PTO Director’s delegate, instituted three IPRs, but it specified for review only some of the claims WesternGeco challenged and only some of the grounds for WesternGeco’s challenges, not all claims or all grounds. In its final written decisions in the IPRs, the Board ruled partly for PGS and partly for WesternGeco on the reviewed claims and grounds. Both PGS and WesternGeco appealed, but WesternGeco then settled with PGS and withdrew, leaving only PGS’s appeals as to certain claims of the ’981 patent that the Board ruled unpatentable for obviousness. The Director intervened to defend the Board’s decisions. 35 U.S.C. § 143.

We affirm. We first conclude that, although SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), now makes clear that the Board erred in limiting the scope of the IPRs it instituted and hence the scope of its final written decisions, we have jurisdiction to address the merits of the Board’s final written decisions and that we need not, and will not, sua sponte revive the “non-instituted” claims and grounds.

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We first consider whether we have jurisdiction to address PGS’s appeals and whether, if so, we may and should decide those appeals and do so without sua sponte remanding for the Board to address the claims and grounds that WesternGeco included in its petitions but
that the Board excluded from the IPRs. Both PGS and the Director answer yes to those questions. So do we. The issue arises because of the Supreme Court’s recent decision in SAS, which held that the IPR statute does not permit a partial institution on an IPR petition of the sort presented here. 138 S. Ct. at 1352–54. Neither PGS nor the Director asks for any SAS-based action— whether to block our deciding the appeal on the instituted claims and grounds or to revive the “non-instituted” claims or grounds. Nor has a request for SAS-based relief been filed by WesternGeco, which settled with PGS and withdrew from the appeals long ago.

We will treat claims and grounds the same in considering the SAS issues currently before us. In light of SAS, the PTO issued a “Guidance” declaring that the Board will now institute on all claims and all grounds included in a petition if it institutes at all. PTO, Guidance on the impact of SAS on AIA trial proceedings (Apr. 26, 2018).2 The cases currently in this court, which emerged from the Board under pre-SAS practice, raise certain transition issues. We will address those issues without distinguishing non-instituted claims from non-instituted grounds. Equal treatment of claims and grounds for institution purposes has pervasive support in SAS. Although 35 U.S.C. § 318(a), the primary statutory ground of decision, speaks only of deciding all challenged and added “claim[s],” the Supreme Court spoke more broadly when considering other aspects of the statutory regime, and it did so repeatedly.

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We read those and other similar portions of the SAS opinion as interpreting the statute to require a simple yes-or-no institution choice respecting a petition, embracing all challenges included in the petition, and we have seen no basis for a contrary understanding of the statute in light of SAS. We note that it is a distinct question (not presented here) whether, after instituting on the entire petition, the Board, in a final written decision, may decide the merits of certain challenges and then find others moot, the latter subject to revival if appellate review of the decided challenges renders the undecided ones no longer moot.

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Finality is also seen by drawing on the analogy to civil litigation the Court invoked in SAS. What the Board did here is analogous to a situation in which a district court, upon receipt of a two-count complaint, incorrectly dismisses one count early in the case (without prejudice to refiling in that forum or elsewhere) and proceeds to a merits judgment on the second count. Once the second count is finally resolved, there would be a final judgment in that situation, with both counts subject to appeal. The early dismissal would be final as to that claim, see United States v. Wallace & Tiernan Co., 336 U.S. 793, 794 n.1 (1949) (involuntary dismissal without prejudice is reviewable final judgment if it stands alone); H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1383 (Fed. Cir. 2002) (same); Cyprus Amax Coal Co. v. United States, 205 F.3d 1369, 1372 (Fed. Cir. 2000) (same), though not immediately reviewable. Under broadly recognized principles addressing review of partial dispositions once the rest of the case is resolved, see 15A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure §§ 3914.7, 3914.9 (2d ed. 2018), the early dismissal would become reviewable upon “the entry of a judgment adjudicating all the claims,” Fed. R. Civ. P. 54(b).

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Having found jurisdiction, we readily conclude that we may decide PGS’s appeals of the Board decisions and that we need not reopen the non-instituted claims and grounds. In this case, no party seeks SAS-based relief. We do not rule on whether a different conclusion might be warranted in a case in which a party has sought SASbased relief from us. We have uncovered no legal authority that requires us sua sponte to treat the Board’s incorrect denial of institution as to some claims and grounds either as a basis for disturbing or declining to review the Board’s rulings on the instituted claims and grounds or as a basis for reopening the IPRs to embrace the non-instituted claims and grounds. Even if the Board could be said to have acted “ultra vires” in refusing to institute reviews of some claims and grounds—and then proceeding to merits decisions concerning the claims and grounds included in the instituted reviews—the Board’s error is waivable, not one we are required to notice and act on in the absence of an appropriate request for relief on that basis. See CBS Broad., Inc. v. EchoStar Commc’ns Corp., 450 F.3d 505, 520 n.27 (11th Cir. 2006) (finding challenge to FCC action as ultra vires waived). S

**As to the obviousness issue-->

As relevant here, “[t]he obviousness inquiry entails consideration of whether a person of ordinary skill in the art would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and . . . would have had a reasonable expectation of success in doing so.” Insite Vision Inc. v. Sandoz, Inc., 783 F.3d 853, 859 (Fed. Cir. 2015) (internal quotation marks and citation omitted). Such a motivation and reasonable expectation may be present where the claimed invention is the “combination of familiar elements according to known methods” that “does no more than yield predictable results.” KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 415–16 (2007). Whether there would have been such a motivation on the relevant priority date is an issue of fact, and we review the Board’s finding on the issue for substantial-evidence support. Skky, Inc. v. MindGeek, s.a.r.l., 859 F.3d 1014, 1021 (Fed. Cir. 2017), cert. denied, 2018 WL 1994802 (U.S. Apr. 30, 2018) (No. 17-349). “Substantial evidence . . . means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229 (1938); Skky, Inc., 859 F.3d at 1021.
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PGS contends that the Board did not really make the needed motivation finding. It cites decisions in which we have explained that the finder of fact in a case like this must go beyond the question of whether one of ordinary skill in the art could have combined the references at issue (in the way claimed) to answer the question of whether such an artisan would have been motivated to do so. See, e.g., Personal Web Techs., LLC v. Apple, Inc., 848 F.3d 987, 993–94 (Fed. Cir. 2017); InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327, 1352 (Fed. Cir. 2014). Although the questions are related, clarity in distinguishing them is important, and its absence has sometimes justified a remand. E.g., Personal Web, 848 F.3d at 994. Nevertheless, while “we may not supply a reasoned basis for the agency’s action that the agency itself has not given, we will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974) (citing SEC v. Chenery Corp., 332 U.S. 194, 196–97 (1947)); In re NuVasive, Inc., 842 F.3d 1376, 1383 (Fed. Cir. 2016). And in this case, we think that, in the end, the Board did not fail to address the motivation question. We understand the Board to have answered that question. Immediately after stating that PGS “does not dispute Petitioner’s assertion that the combination of Beasley and Edington describes each element of independent claim 1, but merely asserts that an ordinarily skilled artisan would not have combined Beasley and Edington,” it concluded: “Accordingly, upon reviewing the record developed during trial, we are persuaded by Petitioner’s position regarding the relevant teachings of Beasley and Edington and address in detail only the disputed issues relating to the combinability of Beasley and Edington.” 309 Final Decision, 2016 WL 3193820, at *11. The Board also affirmatively focused on the “other types of encoding” language of Beasley as an affirmative suggestion to look elsewhere, especially to a time-delay reference, in light of Beasley’s contemplation of small time delays between firing seismic sources, as we have discussed.

“[T]he motivation to modify a reference can come from the knowledge of those skilled in the art, from the prior art reference itself, or from the nature of the problem to be solved.” SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349, 1356 (Fed. Cir. 2000). We are left with no meaningful doubt about the Board’s motivation finding and its basis.

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