Federal Circuit Denies Sipco’s Appeal of CBM Institution

26 January 2021 PTAB Trial Insights Blog
Authors: Sasha Vujcic George E. Quillin

In a precedential decision, the Federal Circuit held that the threshold determination that appellant SIPCO LLC’s patent qualifies for covered business method (CBM) review is non-appealable.1 Accordingly, the Federal Circuit held that it is precluded from reviewing SIPCO’s challenge to that threshold determination.2

Background

SIPCO owned a patent for a two-step communication path in which a remote device communicates through a low-power wireless connection to an intermediate node, which connects to a central location.The PTAB instituted CBM review and found claims unpatentable as patent ineligible subject matter under 35 U.S.C. § 101 and as obvious under 35 U.S.C. § 103.The Board determined that the patent qualified for CBM review, in part, because the Board found that there was no technical solution to a technical problem.The Federal Circuit reversed the Board’s finding that there was no technical solution, vacated the Board’s decision, and remanded to consider applicability of relevant statutes.The appellee, Emerson Electric LLP, after its petition for rehearing in banc was denied, filed a petition for a writ of certiorari, which the Supreme Court granted.The Supreme Court vacated the Federal Circuit’s opinion, and remandedin light of Thryv.9  In Thryv, the Supreme Court had held that the Patent Office’s decision whether earlier litigation bars institution of inter partes review under 35 U.S.C. § 315(b) (“time bar” provision) is final and non-appealable under the “no appeal” provision of 35 U.S.C. § 314(d).10

On Remand from the Supreme Court

On remand, the Federal Circuit recalled its mandate, ordered supplemental briefing, and granted the PTO’s motion to intervene.11  On the appealability issue, the Federal Circuit held that the decision to institute CBM review was non-appealable under 35 U.S.C. § 324(e) which is a “no appeal” provision specifically for CBMs.12  The Federal Circuit reasoned by drawing parallels with Thryv and ESIP Series 2,13 and by contrasting14 Facebook.15  In Thryv, the Supreme Court held that 315(b)’s time limitation is a condition on institution of inter parties review,16 and, in ESIP, the Federal Circuit held that a patent owner could not appeal the Board’s determination that a petition identified all real parties in interest.17 In the same regard, the Federal Circuit noted that AIA § 18(d) conditions institution of CBM review for only those patents that do not include technological inventions.18  In Facebook, on the other hand, the Federal Circuit held that a Board post-institution decision on joinder was appealable because that decision did not implicate the institution decision.19

On the merits of patentability, the Federal Circuit affirmed the Board’s obviousness determination.20

Potential Ramifications

The ruling in SIPCO shows that the decision in Thryv may have a far greater reach than originally anticipated.  While determination of whether an appellant satisfies the time-bar provision held to be non-appealable in Thryv is fairly straightforward, determining whether a claim discloses a technical solution to a technical problem is likely to produce different reasoning, and potentially a different outcome, based on the technical understanding of the PTAB judge making the determination.  While the sun set on CBM reviews on September 16, 2020, the Federal Circuit may use this decision to expand the PTAB’s power further by ruling other PTAB decisions to be non-appealable.

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1 SIPCO, LLC vs Emerson Electric Co., 980 F.3d 865, 867 (Fed. Cir. 2020).

Id.

Id.

Id.

5 Id.

Id.

Id.

Id. at 867.

Thryv, Inc. v. Click-to-Call Technologies, LP, 140 S. Ct. 1367 (2020).

10 SIPCO, 980 F.3d at 868-869.

11 Id. at 867.

12 Id.

13 ESIP Series 2, LLC v. Puzhen Life USA, LLC, 958 F.3d 1378 (Fed. Cir. 2020).

14 SIPCO, 980 F.3d at 869-870.

15 Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321 (Fed. Cir. 2020).

16 SIPCO, 980 F.3d at 869.

17 Id at 870.

18 Id. at 869.

19 Id. at 870.

20 Id.

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