Wednesday, May 09, 2018

WesternGeco, winner in court, loses at PTAB, CAFC. Exxon v. Lubrizol cited.

In WesternGeco v. Ion Geophysical:

The Board issued six final written decisions, finding
all of the instituted claims in the six proceedings to be
unpatentable as anticipated or obvious. It also rejected
WesternGeco’s arguments that the IPR proceedings were
time-barred under 35 U.S.C. § 315(b). We conclude that
substantial evidence supports the Board’s unpatentability
determinations, as well as its conclusion that the proceedings
were not time-barred. We thus affirm the Board’s

The business involved:

WesternGeco, PGS, and ION are all participants in
the marine seismic survey industry. WesternGeco
launched its commercial steerable streamer system, the
Q-Marine, in 2000. J.A. 4794. Subsequently, PGS commissioned
ION to design and build a competing commercial
streamer system, the DigiFIN, which launched
several years later. Id.

In court, the WesternGeco patents were found infringed and VALID:

In August 2012, a jury
returned a verdict finding ION had infringed all four
patents asserted and that ION had failed to prove that
any of the asserted patents were invalid. On appeal, this
court affirmed all aspects of the District Court’s judgment
except for willful infringement and damages.

BUT, later at PTAB:

The Board issued six final written decisions (two decisions
per patent), finding that various claims were either
anticipated by or would have been obvious over several
prior art references. See generally Petroleum Geo-Servs.,
Inc. v. WesternGeco L.L.C. (PGS I), No. IPR2014-00687,
2015 WL 10378275 (P.T.A.B. Dec. 15, 2015)

The legal issues before the CAFC in 2018:

WesternGeco contends that the Board’s decisions invalidating
claims of the WesternGeco Patents are wrong
on the merits and should be reversed. But WesternGeco
argues we need not reach the merits because Wi-Fi One
has made time-bar decisions under § 315(b) judicially
reviewable, and, as a threshold matter, we should vacate
and dismiss the petitions as time-barred. In WesternGeco’s
view, (1) ION was served with a patent infringement
complaint well over a year before the IPR petitions
were filed and unquestionably would have been timebarred
from filing any petitions challenging the WesternGeco
Patents had it not been joined with PGS’s petitions;
and (2) PGS’s petitions should be time-barred because
ION was a “real party in interest,” or “privy” of PGS.
Consequently, WesternGeco argues that the Board never
should have instituted the requested IPRs because no
party timely filed the petitions

An interesting issue as to the meaning of "privy":

Neither the AIA nor the Patent Act defines the statutory
term “privy.” But “privy” is a well-established common-law
term, and it is a “cardinal rule of statutory
construction” that where Congress adopts a common-law
term without supplying a definition, courts presume that
Congress “knows and adopts the cluster of ideas that were
attached” to the term. FAA v. Cooper, 566 U.S. 284, 291–
92 (2012); Microsoft Corp. v. i4i P’ship Ltd., 564 U.S. 91,
103–04 (2011). Where Congress adopts a term that is
used in common law across multiple legal subjects, courts
“cannot rely on any all-purpose definition but must con-
sider the particular context in which the term appears.”
Cooper, 566 U.S. at 294.5

The AIA’s legislative history supports adopting the
common law meaning of privity. The proposed administrative
review procedures, including IPR, were intended
to provide “quick and cost effective alternatives to litigation.”
H. REP. NO. 112-98, at 48 (2011). Another expressed
congressional goal was to “establish a more
efficient and streamlined patent system that will improve
patent quality[.]” Id. at 40. At the same time, Congress
recognized the importance of protecting patent owners
from patent challengers who could use the new administrative
review procedures as “tools for harassment.” Id.
(“While this amendment is intended to remove current
disincentives to current administrative processes, the
changes made by it are not to be used as tools for harassment
or a means to prevent market entry through repeated
litigation and administrative attacks on the validity of
a patent.”).


But, importantly, the reach of privity cannot extend
beyond the limits of due process. In Taylor v. Sturgell,
the Supreme Court observed that a person who was not a
party to a suit generally has not had a “full and fair
opportunity to litigate” the claims and issues settled in
that suit. 553 U.S. at 894. Because nonparty preclusion
risks binding those who have not had a full and fair
opportunity to litigate, the Supreme Court has cautioned
that there is a general rule against nonparty preclusion,
subject to certain exceptions. Id. at 892–93; see Aspex
Eyewear, Inc. v. Zenni Optical, Inc., 713 F.3d 1377, 1382
(Fed. Cir. 2013) (“A full and fair opportunity to litigate is
the touchstone of any preclusion analysis.”); see also Cal.
Physicians’ Serv., 163 Cal. App. 4th at 1522 (“Notions of
privity have been expanded to the limits of due process.”).


Substantial evidence supports the Board’s finding
that ION lacked the opportunity to control PGS’s IPR
petitions. See Taylor, 553 U.S. at 894; Wi-Fi One, LLC v.
Broadcom Corp., No. 2015-1944, 2018 WL 1882911, at *8
(noting control as a factor to determine privity). The
Board found no evidence to suggest that ION directed,
funded, controlled, or influenced the PGS IPR petitions.
See J.A. 35–38, 198–99, 204–06. Nor is there evidence
supporting WesternGeco’s contention that ION used PGS
as a proxy. Id. The litigation history suggests that PGS
filed its IPRs as a defensive measure in response to WesternGeco’s
lawsuit against PGS, rather than at ION’s
instruction. When ION tried to join the IPRs, PGS actively
opposed the attempted joinder. Even when ION was
joined, the PTO gave ION only spectator status. Moreover,
ION did not disclose any prior art references to PGS
in connection with the IPR proceedings, nor did it pay for
PGS’s IPRs. The Board reasonably found that ION did
not control or direct the IPR petitions.


For these reasons, we affirm the Board’s conclusion
that PGS and ION are not privies within the meaning of
§ 315(b).8 Substantial evidence supports the Board’s
conclusion that ION’s relationship with PGS is not sufficiently
close such that the ION proceeding would have
given PGS a full and fair opportunity to litigate the
validity of the claims of the WesternGeco Patents. Accordingly,
the petitions are not barred under 35 U.S.C.
§ 315(b).

As to the merits of the validity issue for the '607 patent:

The only merits issue on appeal for the ’607 Patent is
the construction of the claim term “predicting positions.”
The Board construed this term to mean “estimating the
actual locations” of streamer positioning devices. J.A. 54–
60, 226–32. By contrast, WesternGeco’s proposed construction
requires the prediction to be performed in a
particular way—using “behavior-predictive model-based
control logic.” Id. After considering the intrinsic evidence,
we agree with the Board’s construction.

Of a hindsight argument:

WesternGeco objects to the Board’s conclusion as impermissible
hindsight. That argument lacks force in this
case. PGS’s expert testified from the perspective of one of
ordinary skill in the art as of the priority date, and WesternGeco
identifies nothing to suggest that his testimony
or the other evidence cited by the Board invoked facts
unavailable to the skilled artisan as of the priority date.
J.A. 11107, 20340–61. As discussed, substantial evidence
before the Board shows that one of ordinary skill would
have been motivated to modify Workman to attempt to
keep streamers straight and parallel, whether in a zero or
non-zero feather angle mode, with a reasonable expectation
of success.
The Board appropriately relied on the prior art and
expert testimony about how the skilled artisan would
have modified the prior art. Substantial evidence supports
its obviousness determination.

Exxon v. Lubrizol is cited:

Contrary to WesternGeco’s argument, the Board was
permitted to issue a new construction in the final written
decision given that claim construction was a disputed
issue during the proceedings. See Intellectual Ventures II
LLC v. Ericsson Inc., 686 F. App’x 900, 905 (Fed. Cir.
2017). Moreover, the Board is not bound to adopt either
party’s preferred articulated construction of a disputed
claim term. See Exxon Chem. Patents, Inc. v. Lubrizol
Corp., 64 F.3d 1553, 1556 (Fed. Cir. 1995); see also Homeland
Housewares, LLC v. Whirlpool Corp., 865 F.3d 1372,
1376 (Fed. Cir. 2017).

The facts in this case can be distinguished from SAS
Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341,
1351 (Fed. Cir. 2016), rev’d and remanded on other
grounds, SAS Institute, Inc. v. Iancu, --- S. Ct. ---, No. 16-
969 (Apr. 24, 2018), on which WesternGeco relies. In
SAS, the Board construed the relevant term in its institution
decision, but in the final written decision sua sponte
issued and adopted a significantly different construction,
even though neither party had disputed the Board’s
original construction and premised their arguments in the
proceeding on that construction. Because the appellant
had no notice that the Board’s construction could change
or an opportunity to address the new construction, this
court vacated the decision and remanded on that issue.
Id. at 1351–53.

One notes that Exxon v. Lubrizol had nothing to do with a
Board decision:

The central issue in this appeal is claim interpretation. Exxon's claims are to a lubricating oil composition suitable for use as a crankcase lubricant in internal combustion engines. The claimed composition is defined as comprising--meaning containing at least--five specific ingredients. Exxon contends that its patent claims a "recipe" of ingredients that extends to any product made by using the claimed ingredients, even if the product itself--as a result of chemical complexing--fails to include one of the claimed ingredients. Lubrizol argues that since Exxon claims a composition product--not a process for making a product or a product made by a claimed process--the '890 patent only extends to final products that include the specified claimed ingredients.

The trial judge, candidly expressing considerable difficulty in understanding the chemistry and law involved in the case, treated the issue of claim interpretation as a matter of deciding which of the two parties offered the correct meaning of the claims. The jury was charged according to Exxon's preferred claim interpretation.


More often, however, it is likely that the adversaries will offer claim interpretations arguably consistent with the claims, the specification and the prosecution history that produce victory for their side. In any event, the judge's task is not to decide which of the adversaries is correct. Instead the judge must independently assess the claims, the specification, and if necessary the prosecution history, and relevant extrinsic evidence, and declare the meaning of the claims. No matter when or how a judge performs the Markman task, on appeal we review the issue of claim interpretation independently without deference to the trial judge.


We thus hold that the judge erred as a matter of law in giving Exxon's preferred claim interpretation to the jury, and in using that interpretation in ruling on Lubrizol's post trial motion. Under the proper charge, the jury would not have been asked if Lubrizol used Exxon's starting ingredients. Instead, the jury would have been asked to find whether Exxon had proved by a preponderance of the evidence that Lubrizol's products at some time contained each of the claimed recipe ingredients in the amounts specifically claimed.


Because Lubrizol is entitled to a judgment of noninfringement as a matter of law and thus to vacation of the order awarding Exxon its attorneys' fees and costs and of the injunction entered against Lubrizol, we need not reach the other grounds asserted by Lubrizol for reversal of the judgment of infringement or in the alternative for a new trial. Because there is no basis for a damage award against Lubrizol, we vacate the damage award in appeal No. 94-1309.


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