October 7, 2020
In a consolidated appeal from the USPTO’s Patent Trial and Appeal Board, Apple, Inc. challenged the Patent Trial and Appeal Board’s (“Board”) determination that Voip-Pal.com, Inc.’s patents were not obvious over the prior art. Further, Apple, Inc. (“Apple”) contended that the Board abused its discretion by issuing a non-enumerated sanction against Voip-Pal.com (“Voip-Pal”), in violation of both the Administrative Procedures Act (“APA”) and Apple’s due process rights. In reviewing the record before the Board, the Federal Circuit held that the Board did not err in holding that Voip-Pal’s patents were non-obvious and did not abuse its discretion with its sanction order. However, the Federal Circuit did hold that several of Voip-Pal’s asserted claims were moot in light of its recent decision in Voip-Pal.com, Inc. v. Twitter, Inc., 798 F. App’x 644 (Fed. Cir. 2020). Accordingly, the Federal Circuit: 1) vacated and remanded the Board’s decision with respect to the moot claims; 2) affirmed the Board’s sanction order; and 3) affirmed the Board’s determination of non-obviousness with respect to remaining patent claims.
In February 2016, Voip-Pal filed a patent infringement suit against Apple in the U.S. District Court for the District of Nevada, asserting that Apple infringed U.S. Patent Nos. 8,542,815 (“‘815 patent”) and 9,179,005 (“‘005 patent”) (collectively, “Asserted Patents”). Both Asserted Patents are entitled “Producing Routing Messages for Voice Over IP Communications” and disclose “methods and apparatus for routing and billing” over both public and private networks by using “voice over IP communications.”1 In response, Apple petitioned the USPTO Patent Trial and Appeal Board to institute Inter Partes Review (“IPR”) proceedings against the Asserted Patents, arguing that the claims were obvious when U.S. Patent No. 7,486,684 is combined with U.S. Patent No. 8,036,366 (collectively “the Chu Patents”). The Board instituted IPR proceedings on both Asserted Patents and the district court litigation was subsequently stayed.
While the proceedings were pending, Voip-Pal’s CEO sent six letters to the Board, numerous politicians, and various other parties criticizing the Inter Partes Review process and requesting judgment in favor of Voip-Pal. Although the letters did not mention the merits of the IPR proceedings, Voip-Pal did not serve copies of the letters on Apple. On November 20, 2017, the Board determined that none of Voip-Pal’s asserted claims were obvious in light of the Chu Patents, holding that Apple did not provide evidence to support its motivation to combine argument. Following the Board’s ruling, Apple moved for sanctions against Voip-Pal based on the ex parte letters sent to the Board and requested that the Board either enter an adverse judgment against Voip-Pal or vacate the decision and assign the IPR proceedings to a new panel. The Board rejected Apple’s requested relief, but did hold that it would allow Apple to file a petition for a rehearing in light of Voip-Pal’s sanctionable conduct. Ultimately, Apple’s petition for a rehearing was denied resulting in Apple appealing the Board’s decision to the Federal Circuit.
In its appeal, Apple asserted that the Board erred in its determination that Voip-Pal’s patents were not obvious over the prior art and that the Board abused its discretion by issuing a non-enumerated sanction against Voip-Pal, in violation of both the APA and Apple’s due process rights. Apple also submitted a motion, suggesting that the court no longer had jurisdiction over the appeal because Voip-Pal’s asserted claims were moot in light of the Federal Circuit’s decision in Voip-Pal.com, Inc. v. Twitter, Inc., 798 F. App’x 644 (Fed. Cir. 2020). The Federal Circuit first reviewed the jurisdictional issue and found that 19 assert claims were moot because they were previously found to be patent ineligible under 35 U.S.C. § 101 in Voip-Pal.com, Inc. v. Twitter, Inc.2 With respect to the remaining 15 asserted claims, the Federal Circuit rejected Apple’s argument that the claims were moot under claim preclusion because they were not at issue in Voip-Pal.com, Inc. v. Twitter, Inc.
Having concluded that the Voip-Pal’s remaining claims were not moot, the court turned its attention to Apple’s assertion that the Board’s sanction order violated both the APA and Apple’s due process rights. Apple argued that the Board violated the APA by not issuing one of the eight enumerated sanctions listed in 37 C.F.R. § 42.12.3 The court quickly rejected this argument stating that 37 C.F.R. § 42.12’s use of the terms “may” and “include” indicates that the list of sanctions is non-exhaustive. Further, the court rejected Apple’s due process claim as Apple did not identify any property interest affected by the Board’s sanction order. Thus, the court concluded that the Board did not abuse its discretion in allowing Apple to petition for a rehearing because the sanction reasonably “provide[d] Apple with a meaningful opportunity to respond to Voip-Pal’s letters.”4
Lastly, the court addressed Apple’s argument that the Board erred in holding that Voip-Pal’s patents were non-obvious. Upon review, the Federal Circuit maintained that Apple offered only “‘conclusory and insufficient’ rationales for combining the Chu Patents” and did not provide “articulated reasoning … to support the legal conclusion of obviousness.”5 The court therefore concluded that the Board did not err in finding Voip-Pal’s patent not obvious and affirmed the Board’s decision with respect to the 15 remaining claims.
1Apple Inc. v. Voip-Pal.com, Inc., No. 18-1456, 2020 U.S. App. LEXIS 30820, at *2 (Fed. Cir. Sept. 25, 2020).
2The Federal Circuit recognized “that these appeals did not arise from a civil case in a federal court but rather from proceedings before an administrative agency. This difference in procedural history does not merit a different remedy.” See, e.g., PNC Bank Nat'l Ass'n v. Secure Axcess, LLC, 138 S. Ct. 1982 (2018) (mem.) (ordering remand for Board to vacate order for mootness).
3(a) The Board may impose a sanction against a party for misconduct, . . . .
(b) Sanctions include entry of one or more of the following:
(1) An order holding facts to have been established in the proceeding;
(2) An order expunging or precluding a party from filing a paper;
(3) An order precluding a party from presenting or contesting a particular issue;
(4) An order precluding a party from requesting, obtaining, or opposing discovery;
(5) An order excluding evidence;
(6) An order providing for compensatory expenses, including attorney fees;
(7) An order requiring terminal disclaimer of patent term; or
(8) Judgment in the trial or dismissal of the petition.
4Apple Inc. v. Voip-Pal.com, Inc., No. 18-1456, 2020 U.S. App. LEXIS 30820, at *14 (Fed. Cir. Sept. 25, 2020).
5Id. at *17-18 (internal citation omitted).