Petitioner Prevails In Institution Decision Do-Over After Director Steps In

By Connor Scholes, Ashvi Patel, and Josh Nightingale –

On November 6, 2023, the PTAB issued an decision instituting inter partes review of U.S. Patent No. 10,681,009 B2 (“the ’009 patent”) in Keysight Technologies, Inc. v. Centripetal Networks, Inc., IPR2022-01421, Paper 16 (PTAB Nov. 6, 2023). This is the second decision the PTAB has issued in this proceeding: after the PTAB originally denied institution of review in August, that decision was vacated and remanded by USPTO Director Kathi Vidal (the blog post covering the Director’s decision can be found here). On remand, the PTAB changed course and instituted review of the ’009 Patent.

The ’009 Patent is directed to “Rule Swapping in a Packet Network” and describes methods and systems for use in computer network protection devices, such as firewalls. Keysight Technologies, Inc. (“Petitioner”) sought inter partes review of every claim of the ’009 Patent, arguing that the claims are obvious over the same references cited in a previous IPR against U.S. Patent No. 9,647,148 (“the ’148 Patent”), which is the “great-grandparent of the ’009 Patent.” The PTAB originally determined that it was an appropriate exercise of discretion to deny institution of inter partes review of the ’009 Patent under 35 U.S.C. § 325(d).

In their since-vacated decision, the PTAB determined whether to institute inter partes review by applying the two-prong test laid out in Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH, IPR2019-01469 (PTAB Feb. 13, 2020) (“Advanced Bionics”). When applying this analysis, the PTAB will first ask whether “the same or substantially the same prior art or arguments were presented” to the USPTO. If so, they will then ask whether the Petitioner seeking to institute inter partes review has shown that the USPTO materially erred in its evaluation of the challenged claims. The PTAB found that, while Petitioner’s arguments had been previously presented to the USPTO—Patent Owner Centripetal Networks, Inc. had provided the PTAB’s Final Written Decision on the ’148 Patent (“’148 FWD”) to the Examiner during prosecution of the ’009 patent—Petitioner did not demonstrate that the USPTO had materially erred. Thus, the PTAB determined that denying institution of inter partes review of the ’009 Patent was appropriate.

Petitioner filed a request for rehearing shortly after, arguing that the PTAB erred in their evaluation of the second Advanced Bionics prong and should rehear the case. They claimed that the Examiner of the ’009 Patent did not fully analyze the PTAB’s ’148 FWD, and that the PTAB should have evaluated the strength of their arguments for unpatentability. Before the PTAB took up the request for rehearing, however, Director Vidal thereafter initiated sua sponte Director Review of the PTAB’s decision.

Upon review, Director Vidal agreed that the first prong of the Advanced Bionics test was met: Petitioner’s arguments are the same or substantially the same as those presented in the ’148 FWD, which was provided to the Examiner during prosecution of the ’009 Patent. However, Director Vidal disagreed with the PTAB’s evaluation of the second prong, instead siding with the Petitioner. Director Vidal noted that the Examiner of the ’009 Patent overlooked the significance of the ’148 FWD: “Petitioner’s arguments and cited evidence establish there is substantial overlap in the subject matter described in the ’009 patent and the ’148 patent (subject to the ʼ148 FWD), generally, and the claimed subject matter recited by the challenged claims of the ’009 patent and of the ’148 patent, specifically.”

Thus, Director Vidal found that (i) the second prong of the Advanced Bionics test was met, (ii) the Examiner had committed material error during prosecution of the ’009 Patent, and (iii) the PTAB should consider the merits of Petitioner’s patentability challenge. The PTAB’s decision was therefore vacated and remanded. In this recent decision, the PTAB took up the issue of whether or not the ’009 Patent was obvious in view of the references cited by Petitioner.

In its Patent Owner Preliminary Response, Centripetal argued for a favorable claim construction for claim limitations: “based on the logic and the grammar of the claims, the claims require processing the first and second rule sets before putting those rule sets into effect on the network protection device.” Further, they argued that “to optimize performance of the network protection device . . . means to increase the efficiency and speed of the network protection device, including when swapping between the first and second rule sets.” In doing so, Patent Owner tried to distinguish their ’009 Patent claims from those that had been deemed unpatentable in the ‘148 Patent. Patent Owner also argued in response that the limitations in the challenged claims are distinct from those in the ’148 Patent, and that Petitioner was “downplaying the critical distinctions that led to allowance of the ’009 Patent.”

The PTAB acknowledged some differences between the ’148 and ’009 Patents but was ultimately unconvinced by Patent Owner’s arguments. Declining to apply Patent Owner’s preferred construction, the PTAB turned to whether Patent Owner’s claims were obvious.

Petitioner argued that every claim in the ’009 Patent is obvious in view of combinations of five references that teach various elements of network protection devices and processes. In the ’148 FWD, the PTAB found claims of the ’148 Patent were unpatentable in view of these five references; that decision was subsequently affirmed by the Federal Circuit. Petitioner argued that the same references render challenged claims in the ’009 Patent obvious and that collateral estoppel (i.e., issue preclusion) applies to prevent Patent Owner from relitigating the validity of claims that were nearly identical to those challenged in the ’148 Patent proceedings.

The PTAB found that collateral estoppel was not applicable, but found that “there would have been motivation to combine the references, and that combinations of those references demonstrate the obviousness of all claims of the ‘148 Patent.”  The PTAB therefore instituted inter partes review of claims 1-30 of the ’009 Patent.

Takeaway

This case demonstrates that the USPTO’s new appeal process, which includes the possibility of sua sponte Director Review, can quickly change the outcome of a patent challenge. Even when, as here, a petitioner did not request director review, the Director may, at her own discretion, step in to review—and, if appropriate, reverse or remand—a PTAB decision. While the USPTO’s Revised Interim Director Review Process notes that “sua sponte Director Review is reserved for issues of exceptional importance,” the procedure also provides that “[t]he Director retains authority to initiate review sua sponte of any other issue.”