United States: Federal Circuit Avoids Addressing Joinder, Questions Expanded Panel Use

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB or Board) decision finding claims invalid as obvious, but did not directly address the PTAB's determination that joinder was appropriate. Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co., Case No. 16-2321 (Fed. Cir., Aug. 22, 2017) (per curiam) (Dyk, J, concurring). In a concurrence, however, two members of the panel opined that the PTAB's use of expanded panels to reach a position consistent with other panels was objectionable.

Nidec owns a patent directed to a low-noise heating, ventilating and air conditioning (HVAC) system. Compared to conventional HVAC systems, the patented system has an improved motor controller that uses sinewave communications instead of conventional square-wave communications. The use of sinewave communications results in less vibration and noise from the motor, since sinewave communications have more gradual and continuous oscillations in voltage as compared to square-wave communications.

Broad Ocean filed a first inter partes review (IPR) petition challenging certain claims of the patent as obvious over a combination of a US patent to Bessler and a published doctoral thesis by Peter Franz Kocybik. Broad Ocean also alleged that the challenged claims were anticipated by Japanese Patent Publication (Hideji). The PTAB instituted review on the ground of obviousness over Bessler and Kocybik, but declined to institute on the ground of anticipation by Hideji because Broad Ocean failed to submit an affidavit attesting to the accuracy of the submitted translation as required by 37 CFR § 42.63(b).

Broad Ocean filed a second IPR petition asserting that certain claims of the patent were anticipated by Hideji. This time, it included the required affidavit. Broad Ocean also requested that the second IPR petition be joined with the already-instituted IPR involving the first petition, since Broad Ocean was a party to both proceedings. A panel of three judges decided by a 2–1 vote to deny institution of the second petition as time barred under 35 USC § 315(b) because that petition was filed more than one year after Broad Ocean was served with a complaint alleging infringement of the '349 patent.

Broad Ocean requested rehearing of the panel's decision, which the PTAB granted by using an expanded panel of five judges. The expanded panel set aside the original panel's decision and concluded, by a vote of 3–2, that § 315(c) permits a party to join new issues to a proceeding to which it already is a party. The two members of the original panel that ruled against joinder were now in the minority.

Having determined that joinder was appropriate, the expanded panel instituted review of the second IPR petition and joined it with the already-instituted IPR involving the first petition. After proceeding through the trial, the PTAB determined that the challenged claims were obvious in view of Bessler and Kocybik and anticipated by Hideji. Nidec appealed.

On appeal, Nidec argued that the PTAB improperly applied the joinder and time bar statutes to allow joinder and institution of the second IPR petition. The Federal Circuit, however, found that it did not need to resolve the joinder issue because it affirmed the PTAB's conclusion that the challenged claims were obvious over the combination of Bessler and Kocybik as asserted in the first petition, which was timely filed.

As to the obviousness combination, Nidec argued that the PTAB erred in finding the challenged claims obvious in view of Bessler and Kocybik for two reasons. First, Nidec argued that the PTAB wrongly construed the term "HVAC system" in the claim preamble to be non-limiting. The Court found that regardless of whether Nidec was correct, the ultimate obviousness finding did not change, since the PTAB specifically found that even if the preamble was limiting, Bessler teaches HVAC systems.

Second, Nidec argued that Bessler teaches away from the asserted combination because its purpose is to reduce the complexity of HVAC systems. According to Nidec, incorporating sinewave communications into an HVAC system, as recited in the challenged claims, increases the complexity of HVAC systems and this therefore contrary to the fundamental goal of Bessler. The Federal Circuit rejected this argument, finding that Bessler simply states that its invention provides an HVAC system without a system controller, but does not teach away from use of sinewave communications in HVAC systems. The Court thus affirmed the PTAB's obviousness finding.

In a concurring opinion, Judge Dyk, joined by Judge Wallach, expressed concern regarding the US Patent and Trademark Office's (PTO's) position on joinder and expanded panels. The judges addressed the relationship between the joinder provision of § 315(c) and the time bar exception in § 315(b) and found that the time bar exception was designed to apply to situations where a time-barred party seeks to join an existing IPR timely filed by another party without adding any new patentability issues. To that end, the concurrence noted that the joinder provision does not allow, as was the case here, a time-barred petitioner to add new issues to an already existing IPR. The concurrence also questioned the use of expanded PTAB panels in situations where the PTO is dissatisfied with a three-member panel's earlier decision as an inappropriate mechanism for achieving uniformity of PTAB decisions.

Federal Circuit Avoids Addressing Joinder, Questions Expanded Panel Use

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