To recap, the Regents of the University of Minnesota, an "arm of the state," sued separately LSI Corp. (a semiconductor chipmaker) and customers of Ericsson Inc. (a telecommunications company that intervened on its customers' behalf) for infringement of U.S. Patent Nos. 5,859,601 ('601 patent; LSI)) and 7,251,768 ('768 patent), 7,292,647 (RE45,230 patent), 8,588,317 ('317 patent), 8,718,185 ('185 patent), and 8,774,309 ('309 patent; Ericsson), and each defendant separately filed inter partes review (IPR) petitions against each asserted patent.  Before the Board instituted the IPRs, the University of Minnesota filed a motion to dismiss on State sovereign immunity grounds.  The PTAB, in an expanded panel, ruled that while State sovereign immunity applied, Minnesota had waived the immunity by filing suit.  The Federal Circuit affirmed, in an expansive decision holding that State sovereign immunity did not immunize Minnesota from IPR proceedings for the same reasons that tribal sovereign immunity did not preclude IPR proceedings involving the St. Regis Mohawk Indian Tribe (see "Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2018)").

Back before the PTAB, the University disclaimed all challenged patent claims except claims 13, 14, and 17 of the '601 patent.  The Board considered LSI's IPR petition for anticipation of these claims by two prior art references:  U.S. Patent Nos. 5,392,270 ("Okada") in Ground 1 and 5,731,768 ("Tsang") in Ground 2.

Claim 13 is set forth in the opinion expressly:

A method for encoding m-bit binary datawords into n-bit binary codewords in a recorded waveform, where m and n are preselected positive integers such that n is greater than m, comprising the steps of:
    receiving binary datawords; and producing sequences of n-bit codewords;
    imposing a pair of constraints (j;k) on the encoded waveform;
    generating no more than j consecutive transitions of said sequence in the recorded waveform such that j≧2; and
    generating no more than k consecutive sample periods of said sequences without a transition in the recorded waveform.

Dependent claim 14 recites the additional limitation "wherein the consecutive transition limit is defined by the equation 2≦j<10" and claim 17 further limits claim 14 with "limitations directed to an additional format for representing data and transitions."  The Board found claim 13 to be unpatentable over the Okada reference but that claims 14 and 17 were not, and that the Tsang reference was not prior art because it was not an invention "by another."  Specifically the Board held that claims 14 and 17 were not anticipated by the Okada reference because the reference did not disclose the limitation that "2≦j<10" and that a second argument in support of this ground (based on disclosure in Tables 8 and 9 of the reference) was not timely presented (although the Board also held that LSI did not establish anticipation by this disclosure either).

Regarding LSI's second ground based on the Tsang '768 patent, the panel recognized that LSI's anticipation argument relied on disclosure found in the Tsang patent that had been previously disclosed in a document called the Seagate Annual Report (prepared for an industry collaborator on the '601 patent inventors' research; the opinion notes that the Seagate Annual Report cannot be prior art to the '601 patent because it is not "of another").  The Tsang patent was the result of a patent application filed by a Seagate employee before the earliest filing date of the '601 patent and thus (according to LSI) was an anticipatory reference.  But because the subject matter in the Tsang patent relied upon by LSI was the same as was found in the Seagate Annual Report by the named inventors of the '601 patent, the Board held the Tsang patent was not prior art under the pre-America Invents Act statute, 35 U.S.C. § 102(e).

The Federal Circuit affirmed the PTAB's decision regarding claims 14 and 17 appealed by LSI, in an opinion by Judge Dyk joined by Judges Reyna and Hughes.  With regard to the Board's determination that LSI had not established that the Okada reference anticipated claims 14 and 17 of the '601 patent because the argument was presented untimely, the panel relied upon in Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1369–70 (Fed. Cir. 2016).  There the Court had held that "the Board's rejection of arguments on the ground that they were newly raised in a reply brief was not an abuse of discretion even though the Board went on to address the merits" (the very argument LSI raised here); accord, Gen. Access Sols., Ltd. v. Sprint Spectrum L.P., 811 F. App'x 654, 659 n.3 (Fed. Cir. 2020), and more generally Gen. Access Sols., Ltd. v. Sprint Spectrum L.P., 811 F. App'x 654, 659 n.3 (Fed. Cir. 2020).

Turning to the Tsang patent and its availability as prior art, the Court applied the test set forth in Duncan Parking Techs., Inc. v. IPS Grp., Inc., 914 F.3d 1347, 1357 (Fed. Cir. 2019):

[T]he Board must (1) determine what portions of the reference patent were relied on as prior art to anticipate the claim limitations at issue, (2) evaluate the degree to which those portions were conceived "by another," and (3) decide whether that other person's contribution is significant enough, when measured against the full anticipating disclosure, to render him a joint inventor of the applied portions of the reference patent.

The panel rejected LSI's argument that because it relied upon the Tsang patent and not the Seagate Annual Report it had satisfied the first prong of the Duncan Parking test, saying LSI "misunderstands" the test.  The question was not merely whether the disclosure would anticipate, but Tsang's reliance in the '768 patent upon the University inventors' earlier work as set forth in the Seagate Annual Report.  "Tsang's summary of, and reliance on, the earlier work of [University inventors] Dr. Moon and Dr. Brickner does not make Tsang an inventor of the earlier work" was dispositive here, according to the opinion.  The portions of the '768 patent that did not rely on the University inventors' work were not relevant to the scope of the challenged claims according to the opinion (the Court having arrived at this conclusion from LSI's arguments regarding the distinctiveness of the invention disclosed in the '768 patent).  Thus, the Tsang '768 patent did not anticipate claims 14 and 17 of the '601 patent because the portions disclosed therein that could anticipate were not "of another" (because they were taken from the University inventors' work disclosed earlier in the Seagate Annual Report) and the portions "by another" (i.e., contributed solely by Inventor Tsang) were did not provide an anticipating disclosure.

Accordingly the Federal Circuit affirmed the PTAB regarding claims 14 and 17, granting costs to the University.  Presumably patent infringement litigation over these claims will now ensue (or recommence).

LSI Corp. v. Regents of the University of Minnesota (Fed. Cir. 2022)
Panel: Circuit Judges Dyk, Reyna, and Hughes
Opinion by Circuit Judge Dyk