Facebook Inc. v. Skky LLC.

NOTICE
Pursuant to the Patent Trial and Appeal Board (PTAB) Standard Operating
Procedure 2, the PTAB designates Section II.B.2 of the Decision in Facebook, Inc.
v. Skky, LLC, Case CBM2016-00091 (Paper 12) Precedential.

Trials@uspto.gov 	Paper No. 12
571.272.7822 	Filed: September 28, 2017
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
FACEBOOK, INC. and INSTAGRAM, LLC,
Petitioner,
v.
SKKY, LLC,
Patent Owner.
Case CBM2016-00091
Patent 9,037,502 B2
Before DAVID P. RUSCHKE, Chief Administrative Patent Judge,
SCOTT R. BOALICK, Deputy Chief Administrative Patent Judge,
JUSTIN T. ARBES, GLENN J. PERRY, and KEVIN W.
CHERRY, Administrative Patent Judges.
PERRY, Administrative Patent Judge.
DECISION ON PETITIONER’S REQUEST FOR REHEARING
37 C.F.R. § 42.71
Designated: December 21, 2017

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I. INTRODUCTION
Petitioner requests rehearing (Paper 8, “Req. Reh’g”), under 37 C.F.R.
§ 42.71(c), of our Decision (Paper 7, “Dec. on Inst.”) denying its Petition
(Paper 1, “Pet.”). Petitioner’s Request includes a request that its arguments
be heard by an expanded panel. Req. Reh’g 1.
On April 19, 2017, Petitioner requested a conference with the Board
seeking authorization to file supplemental briefing pertaining to Rembrandt
Wireless Techs., LP v. Samsung Elecs. Co., 853 F.3d 1370 (Fed. Cir. 2017),
decided by the U.S. Court of Appeals for the Federal Circuit after Petitioner
filed its Request for Rehearing. We held a telephone conference on April
24, 2017, which was attended by counsel for both Petitioner and Patent
Owner. We authorized supplemental briefing regarding Rembrandt, and
have received and considered briefs from both Petitioner and Patent Owner.
See Papers 9 (“Pet. Br.”), 10 (“PO Br.”).
II. ANALYSIS
A. Petitioner’s Request for an Expanded Panel
Our governing statutes and regulations do not provide for parties to
request, or panels to authorize, an expanded panel. See generally 35 U.S.C.
§ 6; 37 C.F.R. §§ 41.1–42.412. Our standard operating procedures,
however, provide the Chief Judge with discretion to expand a panel to
include more than three judges. PTAB SOP 1, 1–3 (§§ II, III) (Rev. 14); see
id. at 1 (introductory language explaining that the Director has delegated to
the Chief Judge the authority to designate panels under 35 U.S.C. § 6); see
also In re Alappat, 33 F.3d 1526, 1532 (Fed. Cir. 1994) (providing that
Congress “expressly granted the [Director] the authority to designate
expanded Board panels made up of more than three Board members.”). The

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Chief Judge may consider panel expansions upon a “suggestion” from a
judge, panel, or party. Id. at 3–4; see also Apple Inc. v. Rensselaer
Polytechnic Inst., Case IPR2014-00319, slip op. at 2 n.1 (PTAB Dec. 12,
2014) (Paper 20) (expanded panel) (per curiam).
The standard operating procedure exemplifies some of the reasons for
which the Chief Judge may expand a panel. PTAB SOP 1, 3 (§ III.A). For
example, an expanded panel may be appropriate when “[t]he proceeding or
AIA Review involves an issue of exceptional importance” or when
“[c]onsideration by an expanded panel is necessary to secure and maintain
uniformity of the Board’s decisions.” Id. (§ III.A.1, 2).
In this case, the Chief Judge has considered whether expansion is
warranted, and has decided to exercise his discretion to expand the panel due
to the nature of the issue Petitioner presents. The effect of a pre-institution
statutory disclaimer on covered business method (“CBM”) patent review has
been at issue in multiple cases before the Board. The Chief Judge has
determined that an expanded panel is warranted to provide guidance
regarding the effect of such disclaimers on CBM patent review eligibility.
B. Petitioner’s Request for Rehearing
On June 15, 2016, Petitioner filed a Petition for CBM patent review of
claims 1í11 of U.S. Patent No. 9,037,502 B2 (Ex. 1001, “the ’502 patent”).
Three months later, Patent Owner filed, on the day before its Preliminary
Response, a statutory disclaimer of claims 6 and 8í11 pursuant to 37 C.F.R.
§ 1.321(a), and argued that the disclaimer rendered those claims “irrelevant”
to the CBM patent review eligibility determination. See Paper 6, 4–5
(“Prelim. Resp.”); Ex. 2001. Petitioner subsequently asked the Board for
leave to file a reply limited to addressing the impact of the disclaimer, which

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was denied. See Dec. on Inst. 2. On November 23, 2016, the panel denied
institution on the sole ground that the ’502 patent is not eligible for CBM
patent review. Id. at 14. The panel “treat[ed] the disclaimed claims as if
they never existed” and, thus, Petitioner’s arguments that the ’502 patent is
eligible for CBM patent review based on claims 6 and 8í11 were not
considered. Id. at 9í10.
1. Standard of Review
In determining whether to institute a CBM patent review, “the Board
may deny some or all grounds for unpatentability for some or all of the
challenged claims.” 37 C.F.R. § 42.208(b). When rehearing a decision on
petition, the Board will review the decision for an abuse of discretion.
37 C.F.R. § 42.71(c). “An abuse of discretion occurs if a decision is based
on an erroneous interpretation of law, if a factual finding is not supported by
substantial evidence, or if the decision represents an unreasonable judgment
in weighing relevant factors.” Arnold P’ship v. Dudas, 362 F.3d 1338, 1340
(Fed. Cir. 2004). The party requesting rehearing bears the burden of
showing an abuse of discretion, and “[t]he request must specifically identify
all matters the party believes the Board misapprehended or overlooked.”
37 C.F.R. § 42.71(d).
2. 	A “Time-of-Filing” Rule Does Not Apply When Assessing
Pre-Institution Statutory Disclaimers
Petitioner argues that the panel committed a “fundamental legal error”
which, “if not corrected, threatens to undermine the efficacy of the CBM
patent review procedure.” Req. Reh’g 1. The alleged error is “the Board’s
decision to allow the Patent Owner to unilaterally strip the Board of its
authority to institute a CBM patent review by filing a statutory disclaimer
after the filing of the CBM petition.” Id. Petitioner urges that the Board

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should adopt a “time-of-filing” rule in assessing the impact of post-filing
statutory disclaimers on CBM patent review eligibility. Id. at 3. Petitioner
explains that a “time-of-filing” rule is used for determining federal court
jurisdiction and argues that it should be extended to CBM patent review
because it is consistent with Congressional intent in creating the CBM patent
review program. Id. at 4. Adoption of a “time-of-filing” rule would prevent
a “postfiling salvage operation” attempting to divest this Board of its CBM
patent review jurisdiction, according to Petitioner. Id. at íWe decline to
adopt a “time-of-filing” rule, as suggested.
Although Petitioner is correct that federal courts apply the rule that
“the jurisdiction of the court depends upon the state of things at the time of
the action brought,” Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S.
567, 570 (2004) (citation omitted), we are not a federal court, but an
administrative agency whose authority to act has been granted by Congress,
Kilip v. Office of Pers. Mgmt., 991 F.2d 1564, 1569 (Fed. Cir. 1993) (“An
agency is but a creature of statute. Any and all authority pursuant to which
an agency may act ultimately must be grounded in an express grant from
Congress.”); see also id. (“Though an agency may promulgate rules or
regulations pursuant to authority granted by Congress, no such rule or
regulation can confer on the agency any greater authority than that conferred
under the governing statute.”).
The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat.
284 (2011) (“AIA”), created a transitional program for the Board to conduct
post-grant reviews of a limited set of patents designated as “covered
business method patents.” AIA § 18(a). The AIA provides that “[t]he
Director may institute a transitional proceeding only for a patent that is a

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covered business method patent.” Id. § 18(a)(1)(E) (emphasis added). The
AIA defines a “covered business method patent” as “a patent that claims a
method or corresponding apparatus for performing data processing or other
operations used in the practice, administration, or management of a financial
product or service.” Id. § 18(d)(1) (emphasis added). Thus, the statute
permits institution only for a patent that is a covered business method patent,
and requires a patent that claims a particular type of method or apparatus.
See Secure Axcess, LLC v. PNC Bank Nat’l Ass’n, 848 F.3d 1370, 1381
(Fed. Cir. 2017) (“Necessarily, the statutory definition of a CBM patent
requires that the patent have a claim that contains, however phrased, a
financial activity element.” (emphasis added)); Unwired Planet, LLC v.
Google Inc., 841 F.3d 1376, 1382 (Fed. Cir. 2016) (CBM patents “are
limited to those with claims that are directed to methods and apparatuses of
particular types and with particular uses ‘in the practice, administration, or
management of a financial product or service’” (emphasis added)); Blue
Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340 (Fed. Cir. 2016) (citing
previous Board decisions that “properly focuse[d] on the claim language at
issue” (emphasis added)).
The decision whether to institute a CBM patent review is based on
whether a patent “is” a covered business method patent, which in turn is
based on what the patent “claims” at the time of the institution decision, not
as the claims may have existed at some previous time. See AIA
§§ 18(a)(1)(E) (using the present tense “is”), 18(d)(1) (using the present
tense “claims”); 35 U.S.C. § 324(a); 37 C.F.R. § 42.207(e) (when a patent
owner files a statutory disclaimer, “[n]o post-grant review will be instituted
based on disclaimed claims”). For example, where a reexamination

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certificate amending the claims of a patent issues subsequent to the filing of
a petition but prior to a decision on institution, the Board’s decision whether
to institute is based on the claims of the patent as amended in the
reexamination certificate. See Eizo Corp. v. Barco N.V., Case
IPR2014-00358, slip op. at 5 (PTAB July 23, 2014) (Paper 11); GEA
Process Eng’g, Inc. v. Steuben Foods, Inc., Case IPR2014-00051, slip op. at
2–3, 10–11 (PTAB Mar. 10, 2014) (Paper 14). Petitioner’s proposed
“time-of-filing” rule is inconsistent with these principles.
Petitioner’s Request for Rehearing raises the further issue of whether,
when a patent owner files a statutory disclaimer after the filing of the
petition but before institution, CBM patent review eligibility can be based on
the disclaimed claims. Specifically, Petitioner relies upon limitations of
disclaimed claims 6 and 8í11 as supporting its contention that the ’502
patent qualifies for CBM patent review. See Pet. 4–8 (citing claim 6, for
example, which recites “charging a fee, to the user”). Patent Owner,
however, statutorily disclaimed claims 6 and 8í11, pursuant to 35 U.S.C.
§ 253(a) and 37 C.F.R. § 1.321(a). See Prelim. Resp. 4; Ex. 2001. In the
Decision on Institution, for purposes of establishing CBM patent review
eligibility and in accordance with Federal Circuit case law, we treated the
’502 patent as though these claims never existed. Dec. on Inst. 8–10.
Petitioner’s “time-of-filing” rule would require that we ignore
35 U.S.C. § 253(a) and its effect, as interpreted by the Federal Circuit.
Statutory disclaimer of claims is authorized under 35 U.S.C. § 253(a), which
provides in part:
A patentee, whether of the whole or any sectional interest therein,
may, on payment of the fee required by law, make disclaimer of
any complete claim, stating therein the extent of his interest in

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such patent. Such disclaimer shall be in writing, and recorded in
the Patent and Trademark Office; and it shall thereafter be
considered as part of the original patent to the extent of the
interest possessed by the disclaimant and by those claiming
under him.
The Federal Circuit has held consistently that claims disclaimed under
§ 253(a) should be treated as though they never existed. See Vectra Fitness,
Inc. v. TWNK Corp., 162 F.3d 1379, 1383 (Fed. Cir. 1998) (“This court has
interpreted the term ‘considered as part of the original patent’ in section 253
to mean that the patent is treated as though the disclaimed claims never
existed.”); Guinn v. Kopf, 96 F.3d 1419, 1422 (Fed. Cir. 1996) (“A statutory
disclaimer under 35 U.S.C. § 253 has the effect of canceling the claims from
the patent and the patent is viewed as though the disclaimed claims had
never existed in the patent.”); see also Genetics Inst., LLC v. Novartis
Vaccines & Diagnostics, Inc., 655 F.3d 1291, 1299 (Fed. Cir. 2011) (holding
that the Board’s interference jurisdiction under 35 U.S.C. § 291 required
“the existence of an interference, and a claim that ‘never existed’ [due to a
statutory disclaimer] cannot form the basis for an interference”).
Under Petitioner’s proposed rule, the disclaimed claims would be
treated as if they never existed, except for purposes of the CBM patent
review program. We see no basis for writing an exception into the statutory
disclaimer statute by adopting a “time-of-filing” rule, as suggested.
Petitioner’s proposed rule also could result in the Board conducting a CBM
patent review of a patent that is no longer a “covered business method
patent” as defined in the AIA. See AIA §§ 18(a), 18(d)(1). Petitioner’s
arguments regarding claims DQGí, therefore, are not persuasive, and
Petitioner has not shown an abuse of discretion in the Decision not to
institute a CBM patent review.

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3. 	Rembrandt Does not Require a “Time-of-Filing” Rule
We are not persuaded that Rembrandt requires a “time-of-filing”
determination of CBM patent review eligibility. According to Petitioner,
Rembrandt clarified that disclaimers under 35 U.S.C. § 253(a) extinguish
only a patent owner’s legal rights—not the rights of others—with regard to
the disclaimed claims, pointing to the following language in the decision:
[W]hile we have held that a disclaimer relinquishes the rights of
the patent owner, we have never held that the patent owner’s
disclaimer relinquishes the rights of the public. 	Indeed, our
precedent and that of other courts have not readily extended the
effects of disclaimer to situations where others besides the
patentee have an interest that relates to the relinquished claims.
Rembrandt, 853 F.3d at 1383–84; see Pet. Br. 1–2. Petitioner argues that the
principle annunciated in Rembrandt “squarely applies to the rights Congress
and the PTO granted to accused infringers under the Covered Business
Method patent review program.” Pet. Br. 2. We disagree.
Rembrandt did not involve the issue of CBM patent review
jurisdiction. Rather, it involved the patent marking statute, which pertains to
giving “notice to the public” that an article is patented. See 35 U.S.C.
§ 287(a); Rembrandt, 853 F.3d at 1382–84. In Rembrandt, the plaintiff
disclaimed claims to avoid a limitation on damages due to a failure to mark
in accordance with the marking statute. Id. The Federal Circuit vacated and
remanded the district court’s denial of the defendant’s motion to bar
recovery of pre-notice damages based on the disclaimer, emphasizing the
purpose of the marking statute—to protect the public from liability for
unknown infringement. Id. Because the purpose of marking is to provide
public notice, the court reasoned that it was “irreconcilable” for a disclaimer
to extinguish the right of the public to utilize unmarked features of a product

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until receiving notice. Id. Protecting the public’s rights was central to the
decision, as reflected in the court’s narrow holding: “the marking statute’s
focus is not only the rights of the patentee, but the rights of the public . . . .
Considering these rights held by the public, we hold that disclaimer cannot
serve to retroactively dissolve the § 287(a) marking requirement for a
patentee to collect pre-notice damages.” Id. at 1384.
We agree with Patent Owner that there is no basis to expand this
holding to the Board’s limited jurisdiction related to CBM patent review,
especially given that the court did not discuss post-grant review proceedings
at all in its decision, or the potential impact of statutory disclaimers on such
proceedings. 1 See PO Br. 1–2. In contrast to the patent marking statute at
issue in Rembrandt, which expressly pertains to rights of the “public,” as
well as a defendant’s statutory right to patent infringement defenses and
counterclaims (also cited by the Court in Rembrandt), there is no analogous
right to institution of a CBM patent review for the public generally. See
Rembrandt, 853 F.3d at 1383–84. Although certain individuals or entities
who meet the statutory requirements may petition for CBM patent review,
institution by the Board is discretionary. See AIA § 18(a)(1); 35 U.S.C.
§ 324(a) (“The Director may not authorize a post-grant review to be
instituted unless the Director determines that the information presented in
the petition filed under section 321, if such information is not rebutted,
would demonstrate that it is more likely than not that at least 1 of the claims
1 We also note that, although discussed in a concurrence and dissent, the
issue of the effect that a pre-institution statutory disclaimer has on a CBM
patent review was not decided by the Federal Circuit in Secure Axcess, LLC
v. PNC Bank Nat’l Ass’n, 859 F.3d 998, 1003 n.5 (Fed. Cir. 2017) (Taranto,
J., concurring); id. at 1005 (Lourie, J., dissenting).

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challenged in the petition is unpatentable.” (emphasis added)); 37 C.F.R.
§§ 42.4(a) (“The Board institutes the trial on behalf of the Director.”),
42.208(a) (“[T]he Board may authorize the review to proceed.”), 42.208(b)
(“At any time prior to institution of post-grant review, the Board may deny
some or all grounds for unpatentability for some or all of the challenged
claims.”); Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016)
(the AIA does not impose a “mandate to institute review”); Harmonic Inc. v.
Avid Tech., Inc., 815 F.3d 1356, 1367 (Fed. Cir. 2016) (explaining that
under § 314(a) (which is worded similarly to § 324(a)), “the PTO is
permitted, but never compelled, to institute an [inter partes review]
proceeding”); PO Br. 3–4. Thus, we are not persuaded that Rembrandt
requires statutorily disclaimed claims to be considered when determining
whether a patent is eligible for CBM patent review.
4. Conclusion
As explained above, CBM patent review eligibility is determined
based on the claims of the challenged patent as they exist at the time of the
decision whether to institute, and statutorily disclaimed claims must be
treated as if they never existed. Petitioner has not carried its burden of
demonstrating that we abused our discretion in not considering disclaimed
claims 6 and 8–11 and denying institution in this proceeding.
III. ORDER
For the above reasons, Petitioner’s Request for Rehearing is denied,
and our order stands as set forth in our Decision Denying Institution of
Covered Business Method Patent Review (“Dec. on Inst.”).

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Petitioner:
Heidi Keefe
Andrew Mace
COOLEY LLP
hkeefe@cooley.com
amace@cooley.com
Patent Owner:
Ryan Schultz
Andrew Kabat
ROBINS KAPLAN LLP
rschultz@robinskaplan.com
akabat@robinskaplan.com