This case provides a sobering and cautionary example of the strictness with which the Board and Federal Circuit interpret the procedural aspects of IPRs and other proceedings before the Patent Office. . . .
In Microsoft Corp. v. FG SRC, LLC, No. 2020-1928 (Fed. Cir. June 17, 2021), the Court of Appeals for the Federal Circuit affirmed the refusal of the United States Patent and Trademark Office Patent Trial and Appeal Board (“the Board”) to address Microsoft’s obviousness challenge to two patent claims—despite the apparent merit of the challenge. The reason for that ruling was Microsoft’s failure to state the obviousness challenge with particularity in its petition for inter partes review (“IPR”).
Microsoft’s petition targeted U.S. Patent No. 6,434,687 (“the ’687 patent”). The claims of the ’687 patent are directed to methods for rapidly processing user-specific demographic data to accelerate the selection and download of website data tailored to the user. The petition relied on two items of prior art: (1) a white paper titled “The Architecture of the Obelix – An Improved Internet Search Engine” (“Obelix”) and (2) U.S. Patent No. 6,098,065 (“Skillen”).
Facially, Microsoft’s petition asserted that claims 1-3 and 18 of the ’687 patent were anticipated by Obelix, and that claims 2, 3, and 25 were obvious in view of the combined teachings of Obelix and Skillen. See Microsoft, No. 2020-1928 at 5. In other words, Microsoft’s petition “rolled the dice” on Obelix’s anticipation of claims 1 and 18—providing no express alternative basis for asserting obviousness of those two claims.
The Board determined that Obelix anticipated claim 1 only, finding that Obelix does not teach “selecting a content of said site in response to said processed N data elements” (“content selection claim element”) as recited in claims 2 and 18. See id. at 6. Nonetheless, the Board decided that claims 2 and 3 were obvious in view of Obelix and Skillen, noting with regard to claim 2, that Skillen provided the content selection claim element that was missing in Obelix. Id.
Finally, the board effectively determined that due to Microsoft’s failure to mount an obviousness challenge to independent claim 18, the obviousness of dependent claim 25 had not been shown. In other words, Microsoft failed to argue that Skillen taught claim 18’s content selection claim element and thereby failed to demonstrate the obviousness of claim 25 which incorporates that element from claim 18. See id. at 7.
On appeal, Microsoft argued that although its petition may not have expressly asserted the obviousness of claim 18, the petition nonetheless “fairly raised the issue of obviousness of claim 18 over Obelix and Skillen, and the Board therefore erred in failing to address claim 18 based on that ground.” Id. Microsoft argued further that the Board “could only have concluded that claim 18 would have been obvious . . . based on the claim’s similarity with claims 2 and 3, which the Board held unpatentable.” Id. at 8.
The Federal Circuit was not persuaded by Microsoft’s attempt to explain how it “fairly raised the issue of obviousness of claim 18 over Obelix and Skillen.” For example, Microsoft focused the court’s attention on a section in its petition asserting that claim 18’s content selection claim element was “satisfied for the reasons set forth above with respect to claim 2.” Id. at 8 (emphasis added). The Federal Circuit gave this critique of the attempted justification:
The statement regarding claim 18 on which Microsoft relies appears in a section of its petition titled 'Claims 1-5, 8-12, 16-19, and 22-25 Are Anticipated by Obelix.' J.A. 129. As such, one might reasonably understand Microsoft’s statement to refer to the reasons 'set forth above' with respect to claim 2 under the same heading, arguing that the selecting limitation of claim 2 is also anticipated by Obelix. But no. Instead, Microsoft argues that the Board should have understood the statement to refer to the reasons set forth way above (34 pages above, in fact) with respect to claim 2, in a completely different and unrelated section titled 'Identification of Challenged Claims' where Microsoft stated that 'Claims 2-4, 13, and 25 Are Obvious over Obelix in view Skillen.' J.A. 112.
Id. at 8-9 (emphasis in original).
The Federal Circuit’s pointed reaction to Microsoft’s explanation is understandable. Recall that Microsoft had expressly argued that claim 18 was anticipated by Obelix—meaning that Obelix disclosed all of the claim’s elements, including the content selection claim element. Recall also that claim 18 and claim 2 share the content selection claim element in common. Microsoft’s assertion that the content selection claim element was “satisfied for the reasons set forth above with respect to claim 2,” therefore, is properly understood as insisting that Obelix (not Skillen) satisfied claim 18’s content selection claim element in the same way that Obelix satisfied that element for claim 2.
The Board, however, ultimately determined that the content selection claim element was taught, not by Obelix, but instead by Skillen. Without an express assertion of claim 18’s obviousness over Obelix and Skillen, Microsoft was left to piece together an apparent winning argument from stray statements in its petition and elsewhere in the proceeding’s record. That effort further included pointing to passages in Microsoft’s expert declaration and to the patent owner’s apparent acknowledgement that Microsoft was challenging claim 18 on obviousness grounds over Obelix and Skillen. See id. at 9.
Despite the apparent merit of asserting that claim 18 would have been obvious over the combination of Obelix and Skillen, the Federal Circuit found neither error nor abuse of discretion in the Board’s refusal to entertain the assertion. The Federal Circuit remarked that the IPR “petitioner is the ‘master of its complaint.’” Id. at 9 (quoting SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1355 (2018)). The court emphasized further that IPR petitioners must “‘adhere to the requirement that the initial petition identify ‘with particularity’ the ‘evidence’ that supports the grounds for the challenge to each claim.’” Id. at 9-10 (quoting Intelligent Bio-systems, Inc. v Illumina Cambridge Ltd., 821 F.3d 1359, 1369 (Fed Cir. 2016)).
Applying those rules to Microsoft’s situation, the Federal Circuit concluded that “there is no plausible argument that Microsoft’s petition challenged claim 18 based on obviousness over Obelix and Skillen with particularity whatsoever.” Id. at 10. The court explained that “[i]t is not the Board’s job to cobble together assertions from different sections of a petition or citations of various exhibits in order to infer every possible permutation of a petitioner’s argument” and further stressed that “[a]rguments must be made with particularity, not opacity. . . .” Id. Finally, concerning the patent owner's alleged acknowledgement of Microsoft's obviousness challenge to claim 18, the court concluded, "While the understanding of an opposing party may be relevant to whether a petitioner’s argument was fairly raised, it is not conclusive, and it does not change the content of the petition." Id.
This case provides a sobering and cautionary example of the strictness with which the Board and Federal Circuit interpret the procedural aspects of IPRs and other proceedings before the Patent Office. The case also exemplifies the difficulties that practitioners encounter not only in foreseeing the substantive hurdles that lie ahead but also in strategically weighing the merits of alternative arguments—here, anticipation versus obviousness. When trying cases before juries, practitioners often rightfully recoil from the overuse of alternative case theories, fearing that the presentation of alternative possibilities will be viewed by the jury as just that—mere “possibilities” lacking the conviction of even the presenting attorney. The Patent Office, however, is well versed in the myriad arguments that may be propounded both for or against patent claim validity, and as this case cautions, we are ordinarily best served by the clear and best presentation of all reasonable theories.