How Selecting The Wrong Prior Art References Will Doom An IPR

The Federal Circuit recently affirmed a Patent Trial and Appeal Board (“PTAB”) inter partes review (“IPR”) decision in Palo Alto Networks, Inc. v. Finjan, Inc., No. 2017-2059, holding that the PTAB did not err in concluding that a person of ordinary skill would not have combined certain prior art identified by Palo Alto Networks, Inc. (“PAN”) in a way that would teach a claim limitation common to the challenged claims.   The Federal Circuit’s opinion underscores that the prior art references selected for assertion by an IPR petitioner are the key to any IPR petition’s ultimate success.

As related in the opinion, on September 30, 2015, PAN petitioned the PTAB for an IPR of claims 1, 2–7, 9, 12–16, 19–23, 29 and 35 (“challenged claims”) of U.S. Patent No. 8,225,408 (the “’408 patent”) issued to Finjan, Inc. (“Finjan”).  The ‘408 patent relates to “methods and systems for detecting malware in data streamed from a network onto a computer,” by building “a parse tree data structure” from the “incoming content” that is evaluated for “specific patterns of content that indicate malware.” The following limitation is common to the challenged claims:

dynamically building, by the computer while said receiving receives the incoming stream, a parse tree whose nodes represent tokens and patterns in accordance with the parser rules

After institution, the PTAB adopted PAN’s unopposed construction for “dynamically building” based on the plain claim language, to mean “requires that a time period for dynamically building overlap with a time period during which the incoming stream is being received.” PAN had alleged that the challenged claims were invalid on two grounds: (1)that the claims would have been obvious over U.S. Patent No. 7,636,945 issued to Chandani (“Chandnani”) and U.S. Patent No. 5,860,011 issued to Kolawa (“Kolawa”); and (2) that the claims would have been obvious over Chandnani, Kolawa, and U.S. Patent No. 7,284,274 issued to Walls (“Walls”).

The Chandnani patent was the focus of the PTAB’s decision.  Chandnani teaches a method of “detecting malware in a data stream, including determining the programming language of the data stream and detecting viral code.”  Chandani also “teaches tokenizing the incoming data stream by breaking it into smaller pieces known as tokens.” Chandani summarizes its tokenizing procedure as follows:

To tokenize the data stream, a script language used in the data stream is determined using the language check data. The data stream is analyzed using the language check data to select the language definition data to use for the detection process. Next, the selected language definition data and the data stream are supplied to the lexical analyzer. The data stream is lexically analyzed again, this time using the language definition data, to generate a stream of tokens. As mentioned above, each generated token corresponds to a specific language construct, and may be a corresponding unique number or character.

The PTAB determined that the dispositive issue was whether PAN demonstrated that the prior art teaches or suggests “dynamically building” a parse tree “while” receiving an incoming stream of program code as required by its construction of “dynamically building.” The PTAB found that Chandnani did not teach the “dynamically building” limitation of the ’408 patent because it does not demand or even imply that the data stream is being received while being tokenized.

On appeal, PAN challenged the PTAB’s interpretation of the Chandnani reference.  The Federal Circuit held that the PTAB’s finding was “supported by substantial evidence because the reference itself, by using the word ‘again,’ indicates that the data stream is lexically analyzed more than once and not simultaneously.” The Federal Circuit also found that the PTAB did not err by relying on Finjan’s expert, Dr. Medvidovic, who opined that:

simply because Chandnani’s tokenizer operates on a data stream does not demand or even imply that the data stream is being received while being tokenized…

Chandnani would still temporarily store the entire data stream in memory at least between the first and second lexical analyses.

PAN also argued that the PTAB erred by “analogizing Walls to Chandnani and by not meaningfully reviewing Walls as a separate reference that discloses the dynamically building limitation.” In response, the Federal Circuit concluded that the PTAB “did not fail to meaningfully consider the teachings of Walls” because the PTAB “considered the disclosure of Walls and the expert testimony regarding Walls from both parties” and “performed its own review of Walls” before reaching its decision.

PAN further argued that the PTAB “erred by not considering particular cross-examination testimony from Finjan’s expert witnesses when analyzing whether the prior art taught ‘dynamically building’.”  In response, the Federal Circuit noted that the PTAB “acknowledged Dr. Medvidovic’s cross-examination testimony and explained its reasoning for why Chandnani does not disclose the required claim limitation.”  In reaching its decision, the Federal Circuit relied on its prior decision in PGS Geophysical AS v. Iancu, where it held that “we may not supply a reasoned basis for the agency’s action that the agency itself has not given, [but] we will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.”

TAKEAWAY:  This case presents a further example of the Federal Circuit’s deference to the PTAB’s evaluation of substantive evidence in IPR proceedings and to the PTAB’s decision-making processes around such evaluations.  Further, practitioners who anticipate challenging a patent via an inter partes review should exercise great care in ensuring that identified prior art in their petition is consistent with their claim constructions.

Comparative Advertising: A Quick Guide

What is a comparative advertisement? The EU Misleading and Comparative Advertising Directive 2006 (the “Directive”) defines a comparative advertisement as an ad that explicitly or by implication identifies a competitor or goods or services offered by a competitor. It seems like an intuitive concept, but there are a whole host of legal requirements, which advertisers should bear in mind when considering a comparative advertising campaign. Continue Reading

In re Tomahawk and the Securities Law Implications for Airdropped Tokens

The legal status of cryptocurrency token airdrops under U.S. securities regulations remains a topic of great interest.  Many issuers wonder if they might use airdrops to avoid scrutiny of their token under U.S. securities regulations.  While the definitive answer remains unsettled, a recent order from the SEC suggests it may (rightly or wrongly) treat airdrops as securities. Continue Reading

‘Unhealthy’ Food Ads Banned Under New ASA Rules

Retailers should continue to monitor the Committee of Advertising Practice Code (CAP Code) governing the advertising of High in Fat, Salt and Sugar (HFSS) products to children. Last year, CAP introduced rules banning the advertising of HFSS products in children’s media and media where children comprise at least 25% of the audience. This includes placing ads within 100m of a primary school, for example. CAP intends to restrict the advertising of products that “most contribute to the problem of childhood obesity”. Continue Reading

The Service Date of a Patent Infringement Complaint Begins the One Year Clock for Filing an Inter Partes Review Petition

In Click-to-Call Technologies, LP v. Oracle Corporation, No.2015-1242 (en banc), the Federal Circuit has overturned the Patent Trial and Appeal Board’s longstanding interpretation of 35 U.S.C. §315(b)’s time bar for inter partes review (“IPR”) petitions, finding that the service of any civil complaint for patent infringement— even if later dismissed—starts the clock on the statute’s one-year window for filing an IPR. Continue Reading

ITC Temporarily Rescinds Remedial Orders Based On District Court Invalidity Judgment

In yet another twist in the saga of Certain Beverage Brewing Capsules, Components Thereof, and Products Containing Same, Inv. No. 337-TA-929, the U.S. International Trade Commission (ITC) has issued an order temporarily rescinding the extant remedial orders in that investigation pending appeal of a district court judgment finding the claims of the patent-in-suit invalid.  The ITC cites its 2011 decision in Certain Composite Wear Components and Products Containing the Same, Inv. No. 337-TA-644 as involving analogous facts. Continue Reading

ITC Doubles Down On Its Interpretation Of Section 337’s Domestic Industry Requirement

Just one month after the U.S. International Trade Commission (ITC) issued an important decision in Certain Solid State Storage Drives, Stacked Electronics Components, and Products Containing Same, Inv. No. 337-TA-1097 holding that labor, capital, and employment investments in non-manufacturing activities, such as engineering and research and development, can satisfy Section 337’s domestic industry requirement (see our prior post), it has gone out of its way to issue another opinion reinforcing its earlier reasoning. Continue Reading

GDPR’s Impact on Use of Employee Images in Marketing Campaigns – How to Protect Yourself!

The practise of employers using their employees’ images and names within marketing materials (from graduate recruitment materials and internal-only promotions, to nationally distributed campaigns) has become a riskier strategy in light of the consent requirements under the General Data Protection Regulation (GDPR), which recently came fully into force across the EU.  Even where employers have obtained an employee’s consent to process personal data for the purposes of these types of campaign, the inclusion – in Article 7(3) of the GDPR – of an express and absolute right for a data subject to withdraw his or her consent “at any time” presents a commercial risk.  Continue Reading

EU Court Ruling Keeps Shoe Designers On Their Toes

Last month, on the heels of the ruling from the District Court of The Hague, the Court of Justice of the European Union (CJEU) ruled that Christian Louboutin’s red high-heeled soles are protectable as a trademark.

As previously discussed, Louboutin decided to sue to protect its hue.  Louboutin has owned a registered Benelux trademark for the red sole since 2010, and in 2013, Louboutin sued Van Haren Schoenen BV (Van Haren), alleging that Van Haren’s blue high heels with red soles infringed Louboutin’s trademark.  In rebuttal, Van Haren argued that Louboutin’s trademark is invalid because the red color is part of the “shape” of the shoe, and shapes are not protectable as trademarks under the EU equivalent of the US “functionality doctrine.”  The functionality doctrine does not protect aspects of trade dress that serve a utilitarian purpose.  If a product feature is essential to the use or purpose of the article, or affects the cost or quality of the article, then the product feature is deemed functional and cannot be trademarked. Continue Reading

ALJ Cheney Grants Motion To Terminate Based On Arbitration Agreement

Just a few days after denying a motion to terminate in Certain Color Intraoral Scanners and Related Hardware and Software, Inv. No. 337-TA-1091, Order No. 23 (May 18, 2018) that was based on a forum selection clause in a prior agreement between private parties (see our prior post), Administrative Law Judge Cheney granted a motion to terminate in another investigation based on an arbitration clause contained in a license agreement.  Certain Wafer-Level Packaging, Semiconductor Devices And Products Containing Same (Including Cellular Phones, Tablets, Laptops, And Notebooks) And Components Thereof, Inv. No. 337-TA-1080, Order 26, (May 21, 2018).

As highlighted in our prior post, Judge Cheney had explained some distinctions between forum selection and arbitration clauses in Intraoral Scanners, including that arbitration is a policy expressly favored by law.  Now, Judge Cheney has made the distinction between the two types of clauses even more explicit by expressly distinguishing his decision in Intraoral Scanners as involving “different facts.”  According to Judge Cheney, “a prior agreement between private parties selecting a court in another country [Denmark] to resolve contractual disputes presents different considerations than a prior agreement to arbitrate.”

Takeaway:  Section 337(c)’s authority to terminate an investigation “on the basis of an agreement between the private parties” is discretionary.  Judge Cheney’s recent decisions on motions to terminate illustrate that the issue is fact-specific and may require a detailed look at both the agreement in question and the policy behind the discretionary authority to terminate.