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Similarity in Revised PTAB Claim Construction Avoids APA Misstep

In addressing whether a claim construction adopted by the Patent Trial and Appeal Board (PTAB) “changed theories midstream,” the US Court of Appeals for the Federal Circuit affirmed the PTAB’s construction—and its patentability determinations—finding no violation of the Administrative Procedures Act (APA) where the PTAB’s construction was “similar enough” to a party’s proposed construction. Hamilton Beach Brands, Inc. v. f’real Foods, LLC, Case No. 18-1274 (Fed. Cir. Nov. 16, 2018) (Reyna, J).

F’real Foods manufactures self-service machines for producing milkshake products. F’real asserted a patent directed to a “splash shield” that can be automatically rinsed after each use against Hamilton Beach Brands in 2014, but dismissed the action more than a year later, after determining that it mistakenly failed to reassign the patent to itself following merger activities. F’real subsequently filed another action joining its holding company, and Hamilton filed for inter partes review (IPR) three months later in 2016.

Before the PTAB, neither f’real nor Hamilton proposed a construction for the “nozzle terms” in the pre-institution briefing, and the PTAB instituted without construing these terms. F’real then proposed a construction for the nozzle terms in its patent owner response, and Hamilton responded to this construction in its reply. Both parties argued about the nozzle terms at the hearing. In finding the challenged claim patentable, the PTAB adopted a construction for the nozzle terms in its final written decision that was similar to that proposed by f’real. Hamilton appealed the final written decision, arguing that the PTAB violated the APA by improperly adopting a construction without providing an opportunity to respond.

The Federal Circuit affirmed the PTAB, finding no APA violation because the parties had a chance to address claim construction in post-institution briefing and at the oral hearing. In rejecting Hamilton’s argument under SAS Institute v. Iancu that the PTAB “may not change theories midstream by adopting a construction in its final written decision that neither party requested or anticipated,” the Court noted that the similarity between the PTAB’s adopted construction and f’real’s proposed construction was sufficient to not run afoul of the standard, and was thereby permissible under the APA.

The Federal Circuit also found substantial evidence to support the PTAB’s finding that the challenged claim was not obvious despite the prior art’s recital of cleaning a machine, because Hamilton failed to prove that the prior art provided a motivation to clean components with a fixed nozzle directed towards the splash shield. 

Finally, the Court declined to address f’real’s request that the IPR should have been denied in the first instance under the § 315 time bar because the relief sought by the statutory bar, i.e., vacatur and remand, differed from the relief sought by affirming the PTAB and thereby mandated being reviewed as a cross appeal. In dicta, however, the Court did note that f’real’s dismissal on the 2014 action alone would not preclude application of the time bar.

Practice Note: Be prepared to discuss claim constructions similar to those proposed by adversaries in post-institution briefing and at the oral hearing, as such constructions by the PTAB are permissible under the APA as long as they fall below the “changing the theories midstream” standard. Consider filing a cross-appeal when seeking alternative relief that differs from affirming the PTAB’s decision on the merits, i.e., the assertion of statutory bars.

© 2019 McDermott Will & Emery

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About this Author

Paul Devinsky, Intellectual Property Attorney
Partner

Paul Devinsky is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C., office.  He focuses his practice on patent, trademark and copyright litigation and counseling, as well as on trade secret litigation and counseling, and on licensing and transactional matters and post-issuance PTO proceedings such as reissues, reexaminations and interferences.

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