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In re: Vivint, Inc., Appeal No. 2020-1992 (Fed. Cir. Sept. 29, 2021)

In an appeal from the United States Patent Trial and Appeal Board, the Federal Circuit addressed whether a party may challenge the validity of an issued patent by ex parte reexamination when the challenger has repeatedly tried to use inter partes review (“IPR”) to forward the same argument. The Federal Circuit held that, when applying 35 U.S.C. § 325(d), the Patent Office cannot deny institution of IPR based on abusive filing practices and then grant a nearly identical reexamination request that is even more abusive.

In 2015, Vivint sued Alarm.com for infringing four patents, including U.S. Patent No. 6,717,513 (the “Patent”). While defending itself in district court, Alarm.com requested the Patent Office institute a number of post-issuance review proceedings, including three IPR petitions challenging the validity of claims in the Patent (the “Petition”). The Patent Office declined the Petition, viewing it as an example of “undesirable, incremental petitioning, reasoning that allowing similar, serial challenges to the same patent, by the same petitioner, risks harassment of patent owners and frustration of Congress’s intent in enacting the Leahy-Smith America Invents Act. 

More than a year later, Alarm.com requested ex parte reexamination of all claims of the Patent, repackaging the arguments raised in the Petition and citing two new references in support of its basis for rejection (obviousness). 

Based on Alarm.com’s request, the Patent Office ordered reexamination for all claims of the Patent. It concluded that Alarm.com had raised substantial new questions of patentability despite the prior IPRs. The Patent Office did not, however, cite 35 U.S.C. § 325(d), which gives the Patent Office authority to deny reexamination when “the same or substantially the same prior art or arguments previously were presented to the Office.”

Vivint then petitioned the Patent Office under 37 C.F.R. § 1.181, seeking dismissal of the ex parte reexamination. It argued that the Patent Office has authority to deny reexamination under § 325(d) because that statute applies to ex parte reexaminations and IPRs with equal force, and that the Patent Office could not decline to institute IPR based on abusive filing practices, yet grant reexamination on essentially the same facts. The Patent Office dismissed Vivint’s petition, holding that any § 1.181 petition raising § 325(d) must be filed before reexamination is ordered, and thus, the Patent Office reasoned that it had no authority to consider petitions filed after reexamination was ordered. 

In a second petition under § 1.181, Vivint sought reconsideration of the § 325(d) issue. It argued that raising § 325(d) in a petition would have been impossible before ex parte reexamination was ordered, so the Patent Office should not have faulted Vivint for its timing. And Vivint argued that, even if the Patent Office generally lacks authority to terminate a reexamination, it had authority to do so in this case under the Administrative Procedure Act (APA). Vivint also claimed the Patent Office acted arbitrarily and capriciously by applying the same law to the same facts and reaching a different conclusion.

The Patent Office denied Vivint’s second § 1.181 petition. It reasoned that, though Patent Office rules prevented Vivint from filing a § 1.181 petition before ex parte reexamination was ordered, Vivint could have sought waiver of those rules. Also, the Patent Office rejected Vivint’s APA arguments, viewing them as an attempt to circumvent statutory limits. Likewise, the Patent Office explained how granting ex parte reexamination was not inconsistent with denying IPR. It contrasted the statutory frameworks used to make each decision. And it reasoned that, even if the IPR was denied based solely on § 325(d) considerations, the differences between ex parte reexamination and IPR could justify such an outcome. But, like the first petition, the Patent Office’s ultimate decision focused on the timing of Vivint’s petition as the basis for denying relief.

Ultimately, an examiner issued a final rejection for all claims of the Patent, and Vivint appealed to the Board. The Board affirmed, holding that Alarm.com’s request raised substantial new questions of patentability. The Board did not address § 325(d).

On appeal, Vivint made two arguments. First, Vivint argued, because the ex parte reexamination request repackaged arguments in the Petition, it did not present a new question of patentability. The Federal Circuit rejected this argument, clarifying that a question of patentability is new until it has been considered and decided on the merits, and finding that Alarm.com’s request relied on a new reference that had not been presented to, or considered by, the Patent Office. Also, the Patent Office never considered or decided the questions of patentability raised in the Petition. Instead, the Patent Office found Alarm.com’s serial filing to amount to an abuse of process and, therefore, refused to address the merits of the patentability arguments. 

Second, and more significantly, Vivint argued that the Patent Office abused its discretion and acted arbitrarily and capriciously by ordering reexamination, and thereafter, refusing to terminate that proceeding, in light of § 325(d). The Federal Circuit agreed. 

The Federal Circuit began its analysis by noting that the Patent Office had the discretion to terminate an ongoing reexamination on the basis set forth in § 325(d) even if no petition requesting such relief was filed until after reexamination has been ordered. 

Next, the Federal Circuit held that it was arbitrary and capricious for the Patent Office to order reexamination over § 325(d), or, at minimum, refuse to terminate reexamination once Vivint requested it do so. The Federal Circuit reasoned that the Petition decision was focused on Alarm.com’s abusive filing practices, which the Patent Office viewed as “a case of undesirable, incremental petitioning.” And that the Patent Office’s reasoning actually relied on § 325(d) considerations for its core analysis – that “allowing similar, serial challenges to the same patent, by the same petitioner, risks harassment of patent owners and frustration of Congress’s intent in enacting the [AIA].”

According to the Federal Circuit, following the Petition decision, Alarm.com continued to engage in abusive filing practices. The Federal Circuit noted that Alarm.com copied, word-for-word, two grounds from the Petition – the very petition deemed “a case of undesirable, incremental petitioning” – into its ex parte reexamination request. And for the portions it did not copy, Alarm.com used prior Board decisions as a roadmap to correct past deficiencies. Indeed, the Federal Circuit found that the ex parte reexamination request was a more egregious abuse than the Petition under the same considerations already analyzed by the Board, as the Petition was the third filing in a string of “undesirable, incremental petitioning” practices, and Alarm.com’s ex parte reexamination request was another, fourth iteration of Alarm.com’s abuse of process. 

The opinion can be found here.

By Mario E. Delegato 

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SRI International, Inc., v. Cisco Systems, Inc., Appeal Nos. 2020-1685, et al (Fed. Cir. Sept. 28, 2021)

On appeal for the second time, the Court of Appeals for the Federal Circuit: (1) reinstated the jury’s finding that Cisco Systems, Inc. willfully infringed SRI International, Inc.’s patents; (2) reversed the district court’s JMOL of no willful infringement by Cisco; (3) reinstated the district court’s enhanced damages award against Cisco; and (4) affirmed the district court’s attorneys’ fees award to SRI.

When reinstating the jury’s finding that Cisco was willful, and then reversing the JMOL of no willful infringement by Cisco, the Federal Circuit relied on: (1) the jury’s unchallenged finding that Cisco induced infringement of SRI’s patents; and (2) there being substantial evidence that Cisco had no reasonable basis to believe it: (a) did not infringe; or (b) had a reasonable defense to infringement. When reinstating the award of enhanced damages (which had been wiped out by the now reversed JMOL), the Federal Circuit approved of the district court’s citation to the factors in Read Corp. v Portec, Inc., 970 F.2d 816, 826-27 (Fed. Cir. 1992). Under the Read Corp. factors, Cisco’s (i) overly aggressive and drawn-out litigation conduct, (ii) status as the world’s largest networking company, (iii) apparent disdain for SRI and its business model, and (iv) loss on all issues during summary judgement, despite formidable efforts to the contrary, all favored enhanced damages. Finally, in affirming the attorneys’ fees award to SRI, the Federal Circuit agreed with the district court that because “Cisco’s entire case was weak, yet it pursued the case aggressively and in an unreasonable manner anyway,” the case was “exceptional” as required for an attorneys’ fees award under 35 U.S.C. § 285.

A copy of the opinion can be found here.

By Tyler Hall

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