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25 March 2022PatentsAlex Baldwin

Fed Circ gripes over panel’s ‘problematic’ reasoning

The US Court of Appeals for the Federal Circuit has made a rare criticism of a precedential opinion panel (POP) decision, as it upheld a Patent Trial and Appeal Board (PTAB) ruling in favour of oil drilling tech company DynaEnergetics.

In a precedential opinion handed down Thursday, March 22, the Federal Circuit panel ruled that prior art asserted by rival Hunting Titan anticipated DynaEnergetics’ original claims, but allowed DynaEnergetics to amend one of its patents.

It noted, however, that Hunting Titan had grounds to oppose an earlier PTAB decision which could have likely swayed the verdict.

Hunting Titan initially requested an inter partes review of claims in DynaEnergetics’ US Patent number 9,581,422, which covers a “perforating gun and detonator assembly”.

The PTAB ultimately sided with Hunting Titan, finding all of the claims of the ‘422 patent invalid.

DynaEnergetics moved to amend the ‘422 patent and proposed substitute claims, which Hunting Titan opposed. The PTAB appeal board initially determined that both the original and substitute claims were unpatentable and anticipated by a 2011 patent referred to as “Schacherer”.

DynaEnergetics requested a rehearing and a POP review of the board’s denial of the motion to amend. The Panel granted DynaEnergetics’s request for rehearing, vacated the PTAB’s decision denying DynaEnergetics’s motion to amend, and then—after concluding that Hunting Titan had not proven by a preponderance of the evidence that proposed substitute claims 16–22 are unpatentable—granted the motion to amend the ’422 patent to add the proposed substitute claims.

As a result, Hunting Titan launched an appeal at the Federal Circuit.

Circuit’s analyses

In its precedential opinion, the appellate court reinforced that this was a unique case, and made it clear that its ruling did not pass judgment on the patentability of the amended claims.

The Circuit panel said: “We emphasise, however, that this affirmance is based only on this narrow ground. We are not determining the patentability of the proposed substitute claims, nor are we deciding whether the panel abused its discretion in determining that the Schacherer anticipation ground was not readily identifiable and persuasive such that the board should have sua sponte raised this ground of unpatentability.

“We do not decide whether the board has an independent obligation to determine patentability of proposed substitute claims. These questions need not be answered to resolve the appeal before us.”

On every defence DynaEnergetics levied to protect its original patent claims, the Federal Circuit panel was unconvinced, ruling that “substantial evidence” supported the fact that the Schacherer prior art anticipated all the original claims.

Hunting Titan challenged the POP’s decision to vacate the PTAB’s original decision to deny the motion to amend the ‘422 patent, citing Federal Circuit proceedings in Aqua Products v Matal (2017) and Nike v Adidas (2022).

It argued that, in line with these prior cases, the board had an obligation to identify patentability issues for a proposed substitute claim based on prior art.

However, the Federal Circuit disagreed with this, claiming that “neither Aqua Products nor Nike established that the board maintains an affirmative duty, without limitation or exception, to sua sponte raise patentability challenges to a proposed substitute claim”.

However, it noted that Aqua claimed that the board “may” sua sponte identify patentability issues for substitute claims, but is not required. The court added that it found the POP’s reasoning to “confine discretion” of sua sponte patentability issues to rare circumstances “problematic”.

The Federal Circuit added: “It does strike us as odd, however, that the [POP] determined that the Schacherer anticipation ground was not readily identifiable and persuasive such that the [PTAB] should have sua sponte raised this ground of unpatentability against DynaEnergetics’s proposed substitute claims.”

Despite this, it affirmed the panel’s decision to grant the motion to amend as Hunting Titan failed to challenge the POP’s decision to “forbode” the board from raising sua sponte patentability issues.

Prost’s clarification

In a concurring opinion added to the ruling, Circuit Judge Sharon Prost claimed that, if Hunting Titan had challenged the POP’s decision to not allow a sua sponte analysis of patentability of the amended patent, “it likely would have succeeded”.

Prost said: “It makes little sense to limit the board, in its role within the agency responsible for issuing patents, to the petitioner’s arguments in this context. Rather, based on consideration of the entire record, the board must determine whether the patent owner’s newly-presented, narrower claims are . . . ‘unpatentable in the face of the prior art cited in the [inter partes review].’”

She also took issue with the POP’s decision on what constitutes a “readily identifiable and persuasive” standard to conduct a sua sponte analysis.

“POP should have let the board do what it did here: evaluate whether the prior-art reference that anticipated the original claims also anticipated the new claims.

“Such an evaluation can hardly be deemed overly zealous or creative on the board’s part. Indeed, among potential unpatentability bases to raise sua sponte, this would seem to be square one. But the POP disagreed.”

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