United States: In Case Of First Impression, Federal Circuit Rules That A Patent Owner's Statements In An IPR Proceeding Can Create Prosecution Disclaimer

In Aylus Networks, Inc. v. Apple Inc., Appeal No. 2016-1599 (Fed. Cir. May 11, 2017), the Federal Circuit ruled that a patent owner's statements during an inter partes review (IPR), even if before an institution decision, can create prosecution disclaimer.

After the patent owner filed suit, the defendant filed two petitions for IPR. In the patent owner's preliminary responses to the petitions, it argued, for the purpose of distinguishing the asserted claims over the prior art, that the claim limitation—"wherein the CPP logic is invoked to negotiate media content delivery between the MS and the MR"—requires that only the CPP logic be invoked, even though the asserted claims were open ("comprising") claims. The district court, applying prosecution disclaimer, therefore granted the defendant's motion for summary judgment of noninfringement, since the patent owner conceded that the defendant did not infringe the asserted claims under that construction. The patent owner appealed the noninfringement determination to the Federal Circuit.

The Federal Circuit described the following as an issue of first impression for the court: "whether statements made by a patent owner during an IPR proceeding can be relied on to support a finding of prosecution disclaimer during claim construction." Relying on the reasons that a patent owner's statements in other contexts can create prosecution disclaimer, the court concluded that they can do so also in an IPR proceeding.

The court explained that prosecution disclaimer "promotes the public notice function of the intrinsic evidence and protects the public's reliance on definitive statements made during prosecution." Slip op. at 9 (citing Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1323-24 (Fed. Cir. 2003)). The court further reasoned that "prosecution disclaimer ensures that claims are not 'construed one way in order to obtain their allowance and in a different way against accused infringers.'" Id. (quoting Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1576 (Fed. Cir. 1995)).

The court observed that it had applied prosecution disclaimer not only in the context of pre-issuance prosecution but also in post-issuance PTO proceedings such as reissue and reexamination. Slip op. at 10. It reasoned that extending the doctrine to IPR proceedings would serve the same purposes as in all of the other contexts in which the court had applied the doctrine. Id. at 10-11. And it rejected the patent owner's argument that an IPR proceeding is adjudicative rather than administrative. The court noted that the Supreme Court in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), characterized an IPR proceeding as being in significant respects "more like a specialized agency proceeding." Slip op. at 11 (quoting Cuozzo at 2143). Indeed, the Federal Circuit relied on the Supreme Court's explanation that an IPR "involves what used to be called a reexamination" and that, like reexamination, an IPR proceeding "offers a second look at an earlier administrative grant of a patent." Slip op. at 11-12 (quoting Cuozzo at 2144).

The court also rejected the patent owner's argument that it did not make its statements in an IPR proceeding because it made them in a preliminary response before the board instituted the IPR. The court acknowledged that it had "said that an 'IPR does not begin until it is instituted.'" Id. at 13 (quoting Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016)). The court reasoned nevertheless that a preliminary response filed before institution, like a response filed after institution, is an official paper available to the public. Whether before or after institution, "the public is 'entitled to rely'" on the patent owner's representations about claim scope to avoid prior art. Id. at 13-14 (quoting Biogen Idec, Inc. v. GlaxoSmithKline LLC, 713 F.3d 1090, 1095 (Fed. Cir. 2013)).

The court's extension of prosecution disclaimer to IPR proceedings appears to be sound. As in other proceedings, patent owners will not be able to argue a narrow claim construction in an IPR proceeding to sustain validity and then argue a broad construction in a district court to encompass an accused product.

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