Timothy Maier

Federal Circuit Upholds Subject Matter Eligibility Review for Substitute Claims In IPR Proceedings

The Federal Circuit ruled that the PTAB May review all aspects of patentability for substitute claims in inter partes review (IPR) proceedings in Uniloc 2017 LLC v. Hulu, LLC last month.

At the PTAB, Hulu petitioned for IPR on Uniloc’s patent “System and Method for Adjustable Licensing of Digital Products”.  In the course of the proceeding, Uniloc offered substitute claims under $ 316(d). Hulu challenged these substitute claims as obvious under § 103, as enlarging the claim scope in violation of § 316(d), and as claiming non-statutory subject matter under § 101. The Board rejected the first two grounds, but agreed that the substitute claims were ineligible under § 101. Based solely on its ineligibility under § 101, the Board then rejected Uniloc’s proposed substitute claims.

After a failed rehearing at the PTAB arguing that substitute claims could not be reviewed under § 101, Uniloc appealed the decision to the Federal Circuit. The Federal Circuit upheld the Board’s ruling with Judge Wallach authoring the decision. The Federal Circuit found that the Board is to find “patentability” of substitute claims in IPR cases, based on legislative history and structure of the statute the court found this to require a full analysis of proposed substitute changes, and is not limited by § 311(b) for these purposes. The Federal Circuit accordingly reasoned that the Board was correct in including § 101 in its patentability analysis for substitute claims.

This is a significant development and should be noted with caution for patent owners and petitioners alike at the PTAB to factor into their decisions in any IPR proceeding with substitute claims.

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