May the PTAB uphold a patent in an IPR when the patent owner doesn’t defend itself? FANDUEL v. INTERACTIVE GAMES

After a patent is granted, if a member of the public discovers prior art which would render a patented invention obvious, that member of the public can request an inter partes review of the patent. Inter partes review is a trial proceeding conducted at the Patent Trial and Appeal Board to review the patentability of one or more claims in a patent only on a ground that could be raised under §§ 102 or 103. When a petitioner requests an inter partes review, they may submit several grounds to justify the inter partes review. Each ground must cite evidence and explain how the evidence is relevant. The evidence that can be submitted is limited to patents or printed publications which would qualify under §§ 102 or 103 and expert testimony to explain those publications. Institution of an inter partes review is not automatic, a petitioner must demonstrate a likelihood they would prevail with respect to at least one claim challenged.

Obviousness is a question of law based on underlying findings of fact. Those underlying findings of fact include: (1) “the scope and content of the prior art,” (2) “differences between the prior art and the claims at issue,” (3) “the level of ordinary skill in the pertinent art,” and (4) the presence of evidence of secondary considerations, such “as commercial success, long felt but unsolved needs, failure of others,” and unexpected results.

The institution of an inter partes review does not mean that a patent is doomed. While the definition of obviousness does not change, the way the Patent Trial and Appeal Board scrutinizes the claims does change during the course of an inter partes review. The decision to institute an inter partes review and the final written decision are two very different analyses, and each applies a qualitatively different standard. The difference between the definition of obviousness at the institution of an inter partes review and the final decision can be confusing. Therefore it is helpful to review case law to clear up that confusion.

FANDUEL, INC. v. INTERACTIVE GAMES LLC, 19-1393 (C.A.F.C. 2020) is an example of an inter partes review was instituted but the PTAB later concluded that the patent was not obvious.

Respondent in this case owns U.S. Patent No. 8,771,058 which describes a gaming system wherein a gaming service
provider—such as a casino—wirelessly communicates with users’ mobile devices, allowing them to gamble remotely.

FanDuel petitioned for inter partes review (IPR) of the ʼ058 patent on several grounds of obviousness. Petitioner challenged claim 6’s validity based on the combination of three references: U.S. Patent App. Pub. 2002/0147049 (Carter); U.S. Patent App. Pub. 2004/0005919 (Walker); and an archived copy of a webpage (the Slot Payouts Webpage).

The dispute in this case centers on whether the combination of these three references renders obvious claim 6’s limitation of determining the “game configuration” by “accessing a lookup table which contains an ordered list of locations and associated game configurations.”

The PTAB issued a final written decision finding several claims unpatentable but upholding the patentability of claim 6. The PTAB found that Petitioner failed to prove claim 6 obvious in view of the prior art because there was no motivation to combine the prior art. Respondent did not raise the issue of motivation to combine in its patent owner brief. Petitioner appealed the PTAB’s decision to the Court of Appeal for the Federal Circuit.

The Federal Circuit found that the PTAB did not err in finding claim 6 was not obvious and that the PTAB’s decision was supported by substantial evidence. Petitioner argued that the PTAB instituted the inter partes review, and that the patent owner did not raise the issue of motivation to combine in its brief, therefore the PTAB introduced a “new theory” which violates the Administrative Procedure Act. The Federal Circuit noted that the Petitioner has the burden of persuading the PTAB that a patent is obvious even after the inter partes review is instituted.

The Federal Circuit concluded the burden of persuasion stays with the Petitioner after the institution of an inter partes review. A patent owner’s responses to an inter partes review does not limit the PTAB.

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