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In re Affinity Labs of Texas, LLC

United States Court of Appeals, Federal Circuit

May 5, 2017

IN RE: AFFINITY LABS OF TEXAS, LLC, Appellant

         Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. 95/001, 266.

          William Manske, Robins Kaplan LLP, Minneapolis, MN, argued for appellant. Also represented by Ryan Michael Schultz.

          Robert McBride, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Michelle K. Lee. Also represented by Thomas W. Krause, Joseph Matal, Scott Weidenfeller.

          Before TARANTO, Chen, and Stoll, Circuit Judges.

          CHEN, CIRCUIT JUDGE.

         This appeal arises from the inter partes reexamination of all claims, claims 1-42, of U.S. Patent No. 7, 440, 772 (the '772 patent), owned by Affinity Labs of Texas, LLC (Affinity). Apple Inc. (Apple) requested the present reexamination after Affinity brought an action against it in district court, asserting infringement of claims 1, 4, and 11-13 of the '772 patent. While the reexamination was pending, the parties settled their dispute and filed a joint stipulation of dismissal with the district court. Affinity's infringement action was dismissed with prejudice and Apple's invalidity counterclaims were dismissed without prejudice. Apple also filed a notice of non-participation in the reexamination. Affinity petitioned the United States Patent and Trademark Office (PTO) to terminate the patent reexamination that had been requested by Apple in view of the dismissal of Apple's district court counterclaims pursuant to pre-America Invents Act (AIA) 35 U.S.C. § 317(b).[1] That statutory section prohibits the PTO from maintaining an inter partes reexamination after the party who requested the reexamination has received a final decision against it in a civil action concluding "that the party has not sustained its burden of proving the invalidity of any patent claim in suit."[2] The PTO dismissed Affinity's termination request because it did not view the district court's dismissal, without prejudice, of Apple's invalidity counterclaims as meeting section 317(b)'s required condition for terminating the reexamination. The Examiner ultimately rejected all of the patent's claims, [3] and Affinity appealed to the Patent Trial and Appeal Board (Board), which upheld the Examiner's rejection.

         Affinity now appeals the Board's decision. The Director of the United States Patent and Trademark Office (Director) has intervened. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A) to review the Board's decision. Affinity argues that the PTO improperly maintained the reexamination in view of § 317(b) and, on that basis, the Board's decision upholding the rejection of the '772 patent's claims should be reversed. Affinity also argues that the Board's finding that all claims are unpatentable is based on an improper claim construction of three related limitations, the so-called dual download feature.

         Because we conclude the estoppel provision of § 317(b) did not prohibit the PTO from maintaining the reexamination of the '772 patent's claims and the Board's construction of the dual download feature is consistent with the broadest reasonable interpretation, we affirm the Board's decision.

         Discussion

         I. 35 U.S.C. § 317(b)

         We first address Affinity's argument that the reexamination was improperly maintained over the estoppel provision of pre-AIA 35 U.S.C. § 317(b).

         Pursuant to the joint stipulation filed by Affinity and Apple in the concurrent district court litigation, the district court dismissed Apple's invalidity counterclaims without prejudice. The estoppel provision of section 317(b), however, is expressly conditioned upon the entry of a "final decision" "that the party has not sustained its burden of proving the invalidity of any patent claim in suit." Because Affinity presents no evidence of a final decision that Apple has not sustained its burden of proving invalidity, we reject its argument based on section 317(b).

         Under the plain language of section 317(b), the district court's dismissal without prejudice of Apple's invalidity counterclaims does not reflect a "final decision" that Apple failed to "sustain[] its burden of proving the invalidity" of the asserted claims. The dismissal without prejudice of Apple's claims neither reflects an assessment by the district court of Apple's invalidity challenge nor a concession by Apple that it did not or could not meet its burden of proving the asserted claims' invalidity. Nor does the dismissal without prejudice prevent Apple from again challenging the validity of the '772 patent's claims in subsequent litigation. See, e.g., Jet, Inc. v. Sewage Aeration Sys.,223 F.3d 1360, 1364 (Fed. Cir. 2000) ("Dismissal without prejudice indicates that judgment is not on the merits and will have no preclusive effect."); Rivera v. PNS Stores, Inc.,647 F.3d 188, 194 (5th Cir. 2011) ("'Without prejudice' indicates that the suit is dismissed without a decision on the merits and ...


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