Section 101 Kills Substitute Claims in Inter Partes Review

The PTAB issued a final written decision finding certain claims unpatentable over the prior art and denied Uniloc’s contingent motion because Hulu had shown the substitute claims were directed to non-statutory subject matter under § 101. Uniloc filed a request for rehearing only of the PTAB’s denial of the contingent motion to amend. While the request was pending, a federal court in a parallel proceeding issued a final decision invalidating the patent claims, but Hulu did not contend that the PTAB lost any authority to consider the substitute claims. The PTAB denied Uniloc’s request for rehearing, and the Director designated the denial as precedential.

On appeal, the Federal Circuit first considered whether the case was moot due to the parallel final decision finding the claims invalid. The majority held the case was not moot because it was possible to grant Uniloc effectual relief if Uniloc were correct on the merits. Judge O’Malley disagreed in her dissent, contending that in an IPR, a patent owner must be capable of relinquishing a patent right in exchange for a substitute claim. Because the claims were held invalid by a final, Article III court decision, the patent owner was no longer capable of relinquishing the patent right: “The majority breathes life into a dead patent and uses the zombie it has created as a means to dramatically expand the scope of inter partes review proceedings.”

The court then considered whether it was permissible for the PTAB to consider non-prior art grounds of unpatentability of proposed substitute claims in an IPR. The majority relied on the statutory language, similarities with reexamination statutes, and the legislative history to find that the limits of §311(b), which govern the filing of a petition for IPR, do not extend to the PTAB’s review of proposed substitute claims. Section 311 governs the filing of a petition for IPR and does not bind the patentability determination of substitute claims, governed by §316, which does not limit patentability considerations to Sections 102 and 103. The Federal Circuit held that prohibiting the PTAB from reviewing patent eligibility would indeed strip the PTAB of a critical legal tool, and quoted the PTO’s intervenor brief: “If a patent owner seeking amendments in an IPR were not bound by § 101 and § 112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification.”

Judge O’Malley disagreed and contended that the PTAB does not have the authority to conduct a full-blown examination of substitute claims. The dissent contended that the use of the word patentability only once in § 318 should garner a single meaning of that word, whereas the majority held it means something different for claims challenged in a petition and substitute claims proposed in a contingent motion to amend. Judge O’Malley further noted that the legislative purpose of IPR proceedings was to provide an efficient resolution of patentability, and that the full-blown examination of substitute claims runs afoul of that intent. The dissent stated that the majority “declares that dead patents can walk, at least as far as needed to die again on the same § 101 sword that killed it two years ago.”