CAFC finds PTAB applied "too fine of a filter"; vacates PTAB decision in ERICSSON INC. v. Intellectual Ventures

The CAFC vacated a PTAB decision because of failure to consider items in a reply:


Ericsson Inc. and Telefonaktiebolaget LM Ericsson
appeal the final written decision of the U.S. Patent and
Trademark Office’s Patent Trial and Appeal Board,
finding that claims 1–3, 6–9, and 12–14 of U.S. Patent No.
5,602,831 are not unpatentable under 35 U.S.C. § 103.
Because we conclude that the Board improperly did not
consider portions of Ericsson’s Reply, we vacate and
remand.



Of relevance


Ericsson’s Reply discussed how interleaving is known
in the prior art, that Reed alone teaches interleaving
packets together, and that Reed and Mahany together
teach the “interleaving packets together” limitation.
In the Final Written Decision, the Board found that
Ericsson had not proven the challenged claims obvious in
light of Reed and Mahany. The Board’s decision relied
entirely on its conclusion that Reed taught only one type
of interleaving, interleaving of R-blocks within an S-block
(or a “packet,” in the nomenclature of the ’831 patent), as
opposed to the interleaving of packets with other packets
within a packet block (i.e., S-blocks with S-blocks) as
required in the ’831 patent. In characterizing the issue,
the Board conceded that “the issue is not whether the
general concept of interleaving was known in the prior
art—it was.” J.A. 15. “Rather, the issue is whether the
prior art teaches interleaving packets together to form
packet blocks in a way that results in varying the number
of packets encoded in the packet blocks.” Id. In concluding
that Reed did not teach this limitation, the Board
rejected the portions of Ericsson’s Reply that argued that
to a person of ordinary skill, given that interleaving
packets together was known in the art, “[t]he difference
between interleaving R-blocks together and interleaving
S-blocks together is insubstantial at best,” holding that
this was a new theory beyond the scope of a proper reply
as defined in 37 C.F.R. § 42.23(b).

(...)

The Board’s error was parsing Ericsson’s arguments
on reply with too fine of a filter. Given the acknowledgment
in the patent that interleaving was known in the
art, Ericsson was entitled to argue on reply that the
distinction in the specific type of interleaving between
Reed and the ’831 would have been insubstantial to a
person of skill in the art. The error was exacerbated by
the fact that the significance of interleaving arose after
the Petition was filed, in that the Board adopted a different
construction of the “encoding” terms after the Petition
instituting inter partes review was granted.