Court: District Court, District of Columbia; March 27, 2019; Federal District Court
In a patent infringement case, Palomar Technologies, Inc. has sued MRSI Systems, LLC over the '327 patent, which pertains to a method for high-accuracy placement of semiconductor devices onto circuit bodies. Palomar claims MRSI infringes on this patent, which was issued on August 17, 2004, and is particularly relevant to the manufacturing processes in various high-tech industries, such as LED and medical devices.
MRSI previously sought inter partes review of the '327 patent, arguing it was anticipated and obvious based on prior art. The Patent Trial and Appeal Board allowed the review but upheld the validity of all claims except one. Palomar is now moving for partial summary judgment to prevent MRSI from raising any invalidity defenses due to statutory estoppel under 35 U.S.C. 315(e)(2).
The '327 patent describes a two-step automated placement method for attaching semiconductor dies to circuit bodies, enhancing placement accuracy significantly compared to previous techniques. The method involves initially moving the die to an intermediate location before placing it onto the circuit body, addressing the accuracy limitations of existing automated systems. The court's decision will grant Palomar's motion in part and deny it in part, though specific details of the ruling are not included in the excerpt.
MRSI Systems, LLC specializes in designing and manufacturing automated, ultra-high precision die-attach and epoxy dispensing tools, notably the MRSI-M3 Assembly Work Cell, which employs a "double-pick and place" technique for die placement. Palomar alleges that this method infringes its '327 patent.
On July 6, 2015, Palomar initiated legal action against MRSI in the Southern District of California, leading MRSI to file for inter partes review (IPR) on October 13, 2015, challenging all 48 claims of the patent on multiple grounds, including anticipation and obviousness based on prior art references such as Isaacs, Mori, Bauks, Ginsberg, and Taguchi. The PTAB instituted the review, ultimately upholding claims 1-47 while invalidating claim 48 in a decision issued on March 29, 2017, which MRSI did not appeal.
Subsequently, the legal proceedings were transferred to a different court, where a scheduling order required both parties to file preliminary invalidity and non-infringement contentions by August 3, 2018. MRSI contended that all asserted claims by Palomar were invalid, presenting prior art references categorized into patents, publications, and knowledge or uses that allegedly anticipate the claims of the '327 patent.
Table 1D enumerates documents and a video that serve as evidence for the features and functionalities of the systems detailed in Table 1C, including various manuals and a video demonstration related to MRSI products, each identified by a Bates number. MRSI also presents prior art references to support its claim that certain patent claims are obvious, categorized into two tables: Table 2A lists nine U.S. patents, and Table 2B includes three publications, totaling 17 references when excluding duplicates and non-prior art documents from Table 1D. Among these, ten references were previously submitted to the PTAB during an inter partes review (IPR), five of which were specifically asserted as grounds for invalidation.
Palomar filed a motion for partial summary judgment, arguing that MRSI is barred from contesting the validity of the patent claims under 35 U.S.C. § 315(e)(2), which prohibits a petitioner from asserting invalidity claims once a final decision is made in an IPR if those claims were raised or could have been raised during the review. The America Invents Act established this IPR process, including the estoppel provision to prevent redundant challenges in court. The application of this statute has been complicated by the PTAB's previous practice of only instituting reviews on select grounds, as clarified by the Federal Circuit in cases like Shaw Industries Group v. Automated Creel Systems, which determined that estoppel does not apply to grounds not reviewed by the PTAB.
In 2018, the Supreme Court ruled in SAS Inst. Inc. v. Iancu that the PTAB must address all claims challenged by a petitioner, although it did not mandate the PTAB to institute review on every ground asserted. The Federal Circuit noted that SAS supports equal treatment of claims and grounds for instituting review. Following this decision, the Patent and Trademark Office issued guidance stating that all claims and grounds raised in a petition must be instituted if any part of the petition is accepted. The Federal Circuit endorsed this view, requiring a straightforward yes-or-no decision on petitions that encompasses all challenges. They confirmed that remanding non-instituted claims and grounds back to the PTAB for consideration is appropriate, and that parties have not waived their right to seek SAS-based relief due to failing to argue against partial institution.
Palomar argues that MRSI should be prohibited from using any of the 17 prior art references for invalidity claims, categorizing them into three groups: (1) five references the PTAB discussed, (2) five raised but not discussed, and (3) seven not raised at all. MRSI is estopped from pursuing grounds for which the PTAB issued a final decision, per 35 U.S.C. 315(e)(2). However, it failed to articulate why the grounds considered by the PTAB should not be subject to this estoppel. Consequently, summary judgment will favor Palomar regarding the six grounds based on the five prior art references.
As for the five references that were part of the IPR petition but not addressed by the PTAB, the Federal Circuit previously held that non-instituted grounds are not subject to estoppel. However, the Supreme Court's decision against partial institution complicates the application of estoppel in such cases, leaving the precise implications of this ruling unclear.
The Federal Circuit has remanded cases to the PTAB to consider noninstituted grounds following the SAS decision, affirming that parties do not waive their right to seek relief based on SAS by failing to argue against partial institution. In this instance, MRSI voluntarily brought certain prior art references to the PTAB's attention but chose not to assert them as specific invalidity grounds in its petition, which was filed on October 13, 2015. MRSI's petition included six grounds based on five prior art references, supplemented by an appendix containing five additional references (Derby, Janisiewicz, Gamel, Fukui, and Lee) for background context rather than as grounds for invalidity. The PTAB, in its April 7, 2016 decision to institute inter partes review, acknowledged these references but focused on five other references for its unpatentability conclusions. By the time of the PTAB's Final Written Decision on March 29, 2017, MRSI was aware of the five background references but opted not to assert them formally. The court found that MRSI's strategic choice not to pursue these references as invalidity grounds justified applying the estoppel provisions of 35 U.S.C. 315(e)(2), which bar challenges based on grounds that could have reasonably been raised. Consequently, summary judgment was granted in favor of Palomar regarding any invalidity challenges linked to these five prior art references.
MRSI may be estopped from arguing invalidity based on grounds it could have raised during the Inter Partes Review (IPR) but did not. Following the SAS decision, only grounds that were not included in the IPR petition but could have been reasonably included are relevant for estoppel considerations. The standard for determining if a ground could have been raised includes any patents or publications known to the petitioner or those that a diligent searcher would likely discover. The court will adopt the standard articulated by Senator Kyl during congressional debates, which emphasizes the knowledge of the petitioner and the capabilities of a skilled searcher.
Palomar has not provided sufficient evidence, such as expert affidavits, to demonstrate that a diligent search would not have found the references MRSI is now presenting. MRSI has shown that it employed patent search firms, raising a genuine question of material fact regarding the effectiveness of the searches conducted. Consequently, the motion for summary judgment regarding estoppel is denied.
The parties also dispute whether MRSI can assert its product manuals related to the MRSI 505 and MRSI 5005 systems as prior art. Palomar argues MRSI should have raised these manuals in the IPR since MRSI was aware of them. Conversely, MRSI claims it intends to rely on the actual products as prior art, asserting that the manuals merely provide evidence of the products' features rather than serving as prior art themselves.
Palomar's memorandum asserts that MRSI is statutorily barred from contesting the validity of the '327 Patent claims based on specific prior art references listed in Tables 1A, 1B, 1D, 2A, and 2B of MRSI's disclosures. Palomar does not oppose MRSI's use of its products, specifically the MRSI 505 and 5005, as prior art to demonstrate invalidity. Consequently, the court grants Palomar's motion for partial summary judgment in part, affirming that MRSI is estopped from arguing invalidity for anticipation or obviousness using the listed prior art references, which include eight U.S. patents and two publications. The motion is denied in all other respects. The court also notes the parties' timeline following the PTAB's decision and mentions MRSI's motion to strike portions of Palomar’s attorney's declaration, which is rendered moot because the court will not grant summary judgment on the contested prior art references. Additionally, the court clarifies that product manuals cited by Palomar are not in Table 2B, but in Table 1D, which it will consider for the summary judgment purposes.
