Uniloc 2017 LLC v. Hulu, LLC., No. 19-1686 (Fed. Cir. Jul. 22, 2020)
In Uniloc, the Federal Circuit affirmed a Patent Trial and Appeal Board finding that substitute claims filed by the patent owner during an inter partes review are subject to patentable subject matter eligibility analysis. The Federal Circuit affirmed the PTAB’s decision, finding its determination was supported by the text, structure, and history of the Patent Act’s inter partes review sections.
Uniloc held a patent to a system for adjusting digital product licenses to allow for product installation on multiple devices. The patent was challenged in IPR by Hulu. During inter partes review, Uniloc filed a motion to amend the patent to have substitute independent claims entered. Hulu opposed, arguing the substitute claims were directed to patent-ineligible subject matter. The PTAB agreed with Hulu, noting Hulu had provided sufficient evidence to show the claims were ineligible and ultimately denied Uniloc’s motion. Uniloc appealed the PTAB’s decision to the Federal Circuit.
The Patent Act provides that a patentee in IPR may move once to amend the patent to either cancel challenged claims or to propose a reasonable number of substitute claims. Proposed substitute claims may not enlarge the scope of the claims or introduce new matter. The challenger in IPR has the burden of proving the unpatentability of any proposed substitute claims. However, the Federal Circuit had not previously decided whether the challenger was limited to proving unpatentability on the same narrow grounds available to challenge claims in IPR in the first place, which would not include subject matter eligibility, or whether unpatentability can be alleged under any ground set forth in the Patent Act.
The Federal Circuit affirmed the PTAB’s statutory authority to evaluate proposed substitute claims for subject matter eligibility, holding that the Patent Act requires the PTAB to determine the patentability of proposed substitute claims, which is broader than the grounds available for challenging a claim in IPR. The Federal Circuit further noted the inter partes review statutes provide that the U.S. Patent and Trademark Office will issue and publish a certificate incorporating in the patent any new or amended claim determined to be patentable, additionally noting new or amended matter incorporated into the claims has the same effect as if originally granted. Accordingly, it affirmed the PTAB’s authority to review substitute claims filed by the patentee during inter partes review proceedings for all aspects of patentability.
Judge Kathleen O’Malley dissented from the majority holding, asserting that in the context of substitute claims added during inter partes review, the proposed claims are not new and thus do not require full examination. Judge O’Malley argued “[s]ubstitute claims are not unexamined—they are narrower versions of claims that already went through examination, including under § 101.” The dissent reasoned that the purpose of inter partes review in creating a light-weight, cost-effective means for adjudicating patent validity would be undermined if proposed substitute claims were submitted to a full examination.
Key Takeaway:
In inter partes review, proposed substitute claims filed by a patentee will be evaluated for patentability, including a determination for subject matter eligibility under 35 U.S.C. § 101.
