Facebook, Inc. v. Windy City Innovations, LLC

• Decision Date: 18 March 2020
• Docket Number: 2018-1540,2018-1403,2018-1402,2018-1537,2018-1401,2018-1541,2018-1400
• Parties: FACEBOOK, INC., Appellant v. WINDY CITY INNOVATIONS, LLC, Cross-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

953 F.3d 1313

FACEBOOK, INC., Appellant

v.WINDY CITY INNOVATIONS, LLC, Cross-Appellant

2018-1400

2018-1401

2018-1402

2018-1403

2018-1537

2018-1540

2018-1541

United States Court of Appeals, Federal Circuit.

Decided: March 18, 2020

Heidi Lyn Keefe, Cooley LLP, Palo Alto, CA, argued for appellant. Also represented by Andrew Carter Mace, Lowell D. Mead, Mark R. Weinstein. Also argued by Phillip Edward Morton, Washington, DC.

Vincent J. Rubino, III, Brown Rudnick, LLP, New York, NY, argued for cross-appellant. Also represented by Alfred Ross Fabricant, Enrique William Iturralde, Peter Lambrianakos.

Jeremy Cooper Doerre, Tillman Wright PLLC, Charlotte, NC, as amicus curiae, pro se.

Jeffrey Eric Sandberg, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, for amicus curiae United States. Also represented by Scott R. Mcintosh, Joseph H. Hunt; Thomas W. Krause, Joseph Matal, Farheena Yasmeen Rasheed, Molly R. Silfen, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA.

David E. Boundy, Cambridge Technology Law LLC, Newton, MA, as amicus curiae, pro se.

Before Prost, Chief Judge, Plager and O'Malley, Circuit Judges.

Additional views by Prost, Chief Judge, Plager and O'Malley, Circuit Judges.

Prost, Chief Judge.

Windy City Innovations, LLC ("Windy City") filed a complaint accusing Facebook, Inc. ("Facebook") of infringing U.S. Patent Nos. 8,458,245 ("the '245 patent") ; 8,694,657 ("the '657 patent") ; 8,473,552 ("the '552 patent") ; and 8,407,356 ("the '356 patent"). In June 2016, exactly one year after being served with Windy City's complaint, Facebook timely petitioned for inter partes review ("IPR") of several claims of each patent. At that time, Windy City had not yet identified the specific claims it was asserting in the district court proceeding. The Patent Trial and Appeal Board ("Board") instituted IPR of each patent. In January 2017, after Windy City had identified the claims it was asserting in the district court litigation, Facebook filed two additional petitions for IPR of additional claims of the '245 and '657 patents, along with motions for joinder to the already instituted IPRs on those patents. By the time of that filing, the one-year time bar of § 315(b) had passed. The Board nonetheless instituted Facebook's two new IPRs, and granted Facebook's motions for joinder.

In the final written decisions, the Board delivered a mixed result, holding that Facebook had shown by a preponderance of the evidence that some of the challenged claims are unpatentable as obvious but had failed to show that others were unpatentable as obvious. Importantly, many of the claims the Board found unpatentable were claims only challenged in the later-joined proceedings. Facebook appealed, and Windy City cross-appealed on the Board's obviousness findings. In its cross-appeal, Windy City also challenges the Board's joinder decisions allowing Facebook to join its new IPRs to its existing IPRs and to include new claims in the joined proceedings.

For the reasons explained below, we hold that the Board erred in allowing Facebook to join itself to a proceeding in which it was already a party, and also erred in allowing Facebook to add new claims to the IPRs through that joinder. We also hold that the Board's obviousness determinations on the originally instituted claims are supported by substantial evidence. We therefore affirm-in-part and vacate-in-part the Board's final written decisions on the '245 and '657 patents, affirm the Board's final written decision on the '552 patent, and affirm-in-part the Board's final written decision on the '356 patent. We dismiss as moot Facebook's appeal of the Board's final written decision on the '356 patent with respect to claims 14 and 33.

I

A

The '245, '657, '552, and '356 patents share a common specification and claim priority to a patent application filed on April 1, 1996.¹ The patents are generally related to methods for communicating over a computer-based network. The specification discloses a system with a "controller computer [1]," a plurality of "participator computers 5," and a "connection 13," linking the controller computer with each of the participator computers, as shown in Figure 1 below.

'245 patent at col. 4 l. 65–col. 5 l. 18, fig. 1. The specification describes "provid[ing] a chat capability suitable for handling graphical, textual, and multimedia information." Id. at col. 2 ll. 15–17.

Two features described in the specification are relevant to this appeal: (1) the ability to handle "out-of-band" multimedia information, i.e., information that a receiving computer may be unable to present on its own; and (2) the ability to control the dissemination of information among participator computers, which is referred to in the patents as "censorship" of content. The '245 patent claims relate to the "out-of-band" feature, and the '657, '552, and '356 patent claims relate to the "censorship" features. These features are discussed in more detail in Part II.B when addressing the technical merits of the appeal and cross-appeal.

B

On June 2, 2015, Windy City filed a complaint against Facebook alleging infringement of the '245, '657, '552, and '356 patents ("the asserted patents") in the U.S. District Court for the Western District of North Carolina. Windy City's complaint did not specify which claims of the four asserted patents (collectively having a total of 830 claims) Facebook allegedly infringed. See J.A. 7996–8006 (alleging infringement of "claims of the patents-in-suit"). Facebook was served with the complaint on June 3, 2015, starting the statutory one-year clock for Facebook to file petitions for IPR of the asserted patents. See 35 U.S.C. § 315(b).

On July 24, 2015, Facebook filed a motion to dismiss, arguing that the complaint did not provide adequate notice of Windy City's infringement allegations because it did not identify which claims were asserted against which Facebook products. On August 25, 2015, Facebook filed a motion to transfer the case to the U.S. District Court for the Northern District of California. The North Carolina district court did not rule on either motion for several months. On March 16, 2016, the North Carolina district court granted Facebook's motion to transfer but did not rule on Facebook's motion to dismiss.

Upon transfer to the Northern District of California, the district court issued a scheduling order on April 6, 2016, setting a case management conference for July 7, 2016.² Under Northern District of California Patent Local Rule 3-1, Windy City would be required to identify its asserted claims 14 days later—more than one month after the expiration of the one-year time bar to file petitions for IPR of the asserted patents. On May 4, 2016, with the one-year bar date approaching, Facebook filed a motion asking the district court to order Windy City to identify no more than 40 asserted claims by May 16, 2016. The district court denied the motion on May 17, 2016.

On June 3, 2016, the last day of the one-year window, Facebook filed a petition for IPR of each of the four asserted patents. The petitions challenged some, but not all, of the claims of each patent. Specifically, Facebook challenged claims 1–15, 17, and 18 of the '245 patent ; claims 189, 334, 342, 348, 465, 580, 584, and 592 of the '657 patent ; claims 1–61 and 64 of the '552 patent ; and claims 1–9, 12, 14–28, 31, and 33–37 of the '356 patent. The Board instituted review of all of the challenged claims and grounds in the petitions, except for claims 60 and 61 of the '552 patent.³

More than four months after the one-year deadline to file IPRs, on October 19, 2016, Windy City identified the claims of each patent that it was asserting in the district court case. Some of the claims of the '245 and '657 patents that Windy City asserted were claims that Facebook had not challenged in its petitions for IPR of those patents. Facebook then prepared two additional petitions for IPR challenging these additional asserted claims. Specifically, these petitions challenged claims 19 and 22–25 of the '245 patent and claims 203, 209, 215, 221, 477, 482, 487, and 492 of the '657 patent. Because the petitions would otherwise have been time-barred under 35 U.S.C. § 315(b), Facebook filed the petitions along with motions asking the Board to join each new proceeding to the already instituted IPR on the same patent under § 315(c). Windy City opposed the motions for joinder.

The Board granted Facebook's motions for joinder and allowed the newly challenged claims to be added to the proceedings. See J.A. 7385–402, 8162–76. In considering whether to grant the motions for joinder, the Board reasoned that "although the newly challenged claims are not identical" to those challenged in the original petitions, "the substance is very similar such that the addition of [the new] claims ... is not likely to affect the scope of the trial significantly." J.A. 7393; see also J.A. 8168–69. The Board also noted that joinder would not significantly disrupt the trial schedule, briefing, or discovery. J.A. 7394, 8169. In addition, the Board determined that Facebook did not unduly delay in challenging the new claims in the second petitions filed with the motions for joinder. J.A. 7394–97, 8169–71. The Board agreed with Facebook that Windy City's district court complaint generally asserting the "claims" of the asserted patents "cannot reasonably be considered an allegation that Petitioner infringes all 830 claims of the several patents asserted." J.A. 7395; see also J.A. 8170. The Board therefore found that Facebook could not have reasonably determined which claims were asserted against it within the one-year time bar. See J.A. 7395–96, 8170. Once Windy City identified the asserted claims after the one-year time bar, the Board found that Facebook did not delay in challenging the newly asserted claims by filing the second petitions with the motions for joinder. J.A. 7397, 8170. For each new petition,...