IP Law Daily, PATENT—USPTO: Director’s review decision clarifies how patentee admissions may be used in IPRs, (Jun 13, 2023)

By Thomas Long, J.D.

The Board incorrectly decided that the patentee forfeited the right to argue that prior art cited in the specification was not “well-known,” but the Board otherwise acted properly in looking to the admissions to supply missing claim limitations.

A sua sponte review decision by USPTO Director Kathi Vidal represents another attempt to illuminate the somewhat murky matter of what kinds of prior art may be considered in administrative patent reviews under the America Invents Act, and for what purposes. The Director has modified in part a decision of the Patent Trial and Appeal Board in an inter partes review (IPR) finding invalid as obvious 10 challenged claims of a patent related to photo-voltaic technology. Although her decision did not disturb the Board’s ultimate conclusion that the challenged claims were unpatentable—which it reached in a decision on rehearing after initially deciding that the review failed because it was improperly based on admissions made by the patentee in the patent’s specification—the Director made it clear that as long as a review petition cites one or more prior patents or written publications as the foundation of the challenge, admissions by the patentee may be used for certain purposes, such as supplying missing claim limitations. The Director modified the Board’s final decision to reflect its improper determination that the patentee had waived its right to assert that the prior art mentioned in the specification was not “well-known”—as required for such prior art to be considered in an IPR—although she decided that the patentee failed to make its case in that respect, as it offered only conclusory evidence (SolarEdge Technologies Ltd. v. SMA Solar Technology AG, June 8, 2023, Vidal, K.).

Initial Board decision. SolarEdge Technologies Ltd filed a petition seeking to institute an IPR of claims 1–10 of U.S. Patent No. 8,922,048, titled “PV [Photo Voltaic] Sub-generator Junction Box, PV Generator Junction Box, and PV Inverter for a PV System, and PV System.” The patent was owned by SMA Solar Technology AG. The stated basis for the IPR was obviousness in light of four prior patents, as well as prior art disclosed in the patent’s specification. On March 19, 2021, the Board issued a Final Written Decision finding that SolarEdge had not shown that the challenged claims are unpatentable because its petition improperly relied on “applicant admitted prior art” (AAPA) as the basis for the challenges. The Board determined that (1) the petition improperly used AAPA as the “basis” for its unpatentability argument because the AAPA formed the “foundation” or “starting point” of the unpatentability argument and (2) the petitioner failed to establish that the AAPA was “well-known” or “conventional.”

2020 guidance memo on AAPA. The Board based its decision on a 2020 USPTO Memorandum titled “Treatment of Statements of the Applicant in the Challenged Patent in Inter Partes Reviews Under § 311.” According to the guidance memo, the term AAPA refers to statements in the specification of the challenged patent. The 2020 guidance memo explains that Section 311 of the Patent Act provides that the focus or basis of IPRs must be “prior art consisting of patents or printed publications.” The USPTO’s longstanding practice has been that statements of the applicant in the challenged patent do not qualify as prior art consisting of patents or printed publications. However, the Board may consider this evidence “for more limited purposes.”

The memo further explained that “the Board can rely on the general knowledge of a person with ordinary skill in the art in assessing the patentability of the patent claims at issue. Statements made in the specification of the patent that is being challenged in an IPR can be used as evidence of such general knowledge.” Therefore, as long as the basis of the IPR is one or more prior art patents or printed publications, AAPA can be used to (1) supply missing claim limitations that were generally known in the art (2) support a motivation to combine particular disclosures; or (3) demonstrate the knowledge of the ordinarily-skilled artisan for any other purpose related to patentability.

Rehearing request. On April 19, 2021, SolarEdge requested a rehearing, arguing that the Board mistakenly found that AAPA was the “basis” of the petition and that the Board should not have considered whether the AAPA was “well-known” because SMA had not made this argument in a timely manner.

2022 updated guidance memo. On June 9, 2022, the USPTO released another guidance memo titled “Updated Guidance on the Treatment of Statements of the Applicant in the Challenged Patent in Inter Partes Reviews Under § 311.” The updated memo came in the wake of the Federal Circuit’s decision in Qualcomm Inc. v. Apple Inc., 24 F.4th 1367 (Fed. Cir. 2022), discussing the use of admissions in IPR proceedings. In that case, the Federal Circuit held that it is appropriate to rely on admissions in a patent’s specification when assessing whether that patent’s claims would have been obvious in an IPR. Admissions in the specification regarding the prior art are binding on the patentee for purposes of a later inquiry into obviousness. According to the court, the use of AAPA in an IPR is consistent with the intention of Congress to create a streamlined administrative proceeding that avoided some of the more challenging types of prior art, such as commercial sales and public uses, by restricting the prior art that may form a basis of a ground to prior art documents. Applying the holding in Qualcomm, the updated guidance memo stated, “If an IPR petition relies on admissions in combination with reliance on one or more prior art patents or printed publications, those admissions do not form ‘the basis’ of the ground and must be considered by the Board in its patentability analysis.” The memo further explains that admissions regarding the scope and content of the prior art can be used to supply missing claim limitations that were generally known, and for other purposes.

Rehearing decision. On October 25, 2022, the Board decided that, under the 2022 guidance memo and Qualcomm, SolarEdge had shown that the petition’s use of AAPA in combination with prior art patents was not improper. Specifically, the Board concluded that the prior art patents formed the basis of the IPR, and the AAPA was used merely to provide the missing limitations. The Board also agreed with SolarEdge that SMA forfeited the ability to argue that the AAPA was not “known.” The Board additionally determined that all of the challenged claims were unpatentable. SMA then filed a request for Precedential Opinion Panel (POP) review, contending that the 2022 guidance memo misinterpreted Qualcomm, that the Board’s reversal of its original decision was arbitrary and capricious, and that the 2022 guidance memo was an improper substantive rulemaking. The POP request was dismissed, but USPTO Director Kathi Vidal conducted a sua sponte review of the filings and other documents in the IPR, deeming that the case raised issues of particular importance to the USPTO and the patent community.

Director review. After conducting her review, the Director said that she disagreed with the Board’s finding that SMA forfeited the ability to dispute that the AAPA was “known.” However, the Director ultimately determined that SolarEdge’s use of AAPA was appropriate in view of the 2022 updated guidance memo and Qualcomm.

AAPA as “basis” for IPR. First, the Director concluded that the Board correctly determined that SolarEdge’s obviousness ground based on AAPA in combination with prior art patents was not improper. Although the petition cited AAPA, it also relied on prior art patents. According to the Director, “This interpretation is consistent with the decision in Qualcomm, which did not specifically define ‘basis,’ but stated that because AAPA may not form the basis of an IPR, ‘it is … impermissible for a petition to challenge a patent relying on solely AAPA without also relying on a prior art patent or printed publication’” (emphasis in Director’s decision).

Forfeiture of argument that AAPA was not “well-known.” The question of whether the AAPA was or was not well-known, such that it qualified for consideration for purposes permitted by Qualcomm was first explored during the IPR at the oral hearing. In the Director’s view, SMA did not forfeit its right to raise that argument because of its lack of timeliness because the Board itself had brought up the question. “Here, the record reflects that the Board sua sponte raised the issue of whether the AAPA was well-known through questions posed to counsel in the oral hearing and made determinations on this issue in its First Final Written Decision,” the Director said. “Accordingly, because the Board sua sponte raised the AAPA issue in its First Final Written Decision, the Board subsequently should not have found that Patent Owner was precluded from making this argument in opposition to Petitioner’s rehearing request.”

Validity of AAPA as prior art. In its First Final Written Decision, the Board applied the 2020 Guidance Memo and determined that SolarEdge did not demonstrate that “systems similar to the AAPA were … ‘well-known.’” However, the Director explained, the 2022 guidance memo and Qualcomm made it clear that the use of the phrase “prior art” in connection with AAPA is sufficient to support its use in an IPR petition. The updated 2022 memo did not require that the admission in the specification reflect what is well-known, conventional, or general knowledge.

Although SMA contended that there was no evidence that the asserted AAPA was generally known in the prior art or was within the knowledge of an ordinarily-skilled artisan at the time of the invention, the challenged patent’s reference to the “prior-art” system qualified that system as AAPA available for use in the petition to supply a missing claim element. “Patent Owner did not dispute that the statements in its patent were an admission,” the Director said. “Thus, whether the substance of the admission was ‘known’ in the art is an inquiry that does not impact the use of this admission as AAPA.”

“However,” Director Vidal added, “I also find that the arguments and evidence the Board relied upon in its First Final Written Decision are insufficient to support a determination that the AAPA was not ‘known’ in the art.” The Board cited statements by SMA’s counsel, but arguments of counsel cannot stand in for objective evidence. Moreover, testimony by SMA’s expert was not persuasive because nothing indicated that the expect conducted an extensive prior art search, making the expert’s views on the issue conclusory testimony that was entitled to little weight. Accordingly, there was insufficient evidence to support SMA’s contention that the AAPA was not “known” in the art.

Modification in part. The Director modified the Board’s Decision Granting Rehearing of Final Written Decision by eliminating the Board’s determination that SMA forfeited the ability to argue that the AAPA was not “known” in the art, and she determined that, regardless, the AAPA was available for use in this IPR. The modification did not change the Board’s ultimate conclusion that the challenged claims were invalid for obviousness.

The case is No. IPR2020-00021.

Attorneys: Frederic Meeker (Banner & Witcoff, Ltd.) for SolarEdge Technologies Ltd. Steven H. Slater (Slater Matsil, LLP) for SMA Solar Technology AG.

Companies: SolarEdge Technologies Ltd.; SMA Solar Technology AG

Cases: Patent USPTO GCNNews