PublishedApril 26, 2024

Incremental Progress on Valve

In March, U.S. Patent and Trademark Office Director Kathi Vidal vacated earlier Patent Trial and Appeal Board (PTAB) decisions that denied patent validity challenges brought by Honda Motor Co., General Motors LLC, Nissan North America Inc, and Ford Motor Co. The patents in question, held by Neo Wireless and related to wireless communications technology, were originally denied review as the automakers were deemed to have had a “significant relationship” with Volkswagen AG, which had previously petitioned the same patent. 

The PTAB’s decision was borne out of the Valve precedent, a 2019 PTAB decision under which validity reviews are denied if a petitioner is thought to have a “significant relationship” with a prior petitioner. As the cases involving Neo Wireless indicate—and Director Vidal seems to recognize—what constitutes a “significant relationship” is subjective, demonstrating the issues that arise when the agency implements guidance that tilts too far in the direction of avoiding repeat challenges instead of ensuring patents that are likely invalid are properly reviewed.

Valve built on the prior General Plastic precedential decision, which included a list of seven factors for consideration when the PTAB makes discretionary denial determinations. The first General Plastic factor is whether the same petitioner previously filed a petition directed at the same claims of the same patent, which Valve expanded to include petitioners with a “significant relationship” to a prior petitioner. While the guidance was intended to mitigate redundancies and address purported patent holder harassment, it has had the perverse effect of denying legitimate patent challenges, while sidestepping the original mandate of PTAB outlined in the America Invents Act.

That is exactly what we see happening in the case of automakers initially being denied access to validity review. The PTAB denied petitions by Honda, General Motors, Nissan, and Ford, challenging the validity of two different Neo Wireless patents because their competitor, Volkswagen AG, had previously challenged the patents. However, as Director Vidal noted in her March decision, not only did the automakers make no deliberate contact regarding the validity petitions, but they were challenging the patent for different product applications altogether. As Vidal put it resoundingly, “Honda and Volkswagen are accused of infringing the challenged patent with different products in different court proceedings, and there is no evidence that they had any interactions or agreements regarding the accused wireless standard or the accused products.” Indeed, Vidal found that the PTAB’s rationale for denying review—the fact that the petitioners’ cases were combined into multi-district litigation—was not grounds enough to constitute a significantly close relationship between the automakers. 

It’s not just the automakers who have seen an aggressive use of the Valve precedent.  In another case—again vacated by Director Vidal—Videndum, a cinema special effects company filed for an IPR.  Another special effects company, unrelated to Videndum, had previously filed an IPR against the patent.  Despite finding that there was no relationship between the two companies—and over a dissenting opinion—the PTAB still denied the petition under Valve.  Director Vidal correctly noted that if there is no significant relationship between petitioners, the other factors cannot overcome that fact.

Director Vidal’s decisions are a welcome step for not just the petitioners, who will now be granted the review process afforded to them by the AIA, but for the principle of inherent fairness which lies at the heart of the PTAB.  The USPTO’s recent Notice of Proposed Rulemaking also addresses Valve and General Plastic, to mixed results. The proposed rule would codify five of the seven General Plastic factors, while also explicitly stating that real parties in interest and privy standards are sufficient to determine whether petitioners have a “significant relationship.”  It also contains a catch-all clause that calls into question whether it even overrules Valve, allowing patent owners to request discretionary denial based on “any issue that the patent owner believes, based on Office rules, precedent, or guidance, warrants discretionary denial of the petition.”

Director Vidal’s review decision and the NPRM appear to acknowledge that Valve’s “significant relationship” standard was overly-broad and counterproductive, but don’t go far enough. It is still worth revisiting General Plastic to ensure that all meritorious challenges are able to proceed regardless of discretionary factors, and the NPRM must be modified to close the catch-all loophole it introduces, but recent actions to put guardrails around Valve at least appear to take incremental steps in the right direction. 

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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