Vivint v. Alarm.com Inc.

• Decision Date: 13 April 2021
• Docket Number: 2019-2438,2019-2439
• Parties: VIVINT, Appellant v. ALARM.COM INC., Appellee ANDREW HIRSHFELD, PERFORMING THE FUNCTIONS AND DUTIES OF THE UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor
• Court: U.S. Court of Appeals — Federal Circuit

VIVINT, Appellant v. ALARM.COM INC., AppelleeANDREW HIRSHFELD, PERFORMING THE FUNCTIONS AND DUTIES OF THE UNDERSECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OFTHE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor

2019-2438

2019-2439

United States Court of Appeals for the Federal Circuit

April 13, 2021

NOTE: This disposition is nonprecedential.

Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2016-00116, IPR2016-00173.

ROBERT GREENE STERNE, Sterne Kessler Goldstein & Fox, PLLC, Washington, DC, argued for appellant. Also represented by JASON DANIEL EISENBERG, WILLIAM MILLIKEN.

RICHARD J. STARK, Cravath Swaine & Moore LLP, New York, NY, argued for appellee. Also represented by MARC KHADPE; DAVID PHILLIP EMERY, WILLIAM MANDIR, Sughrue Mion PLLC, Washington, DC.

MAI-TRANG DUC DANG, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor. Also represented by THOMAS W. KRAUSE, FARHEENA YASMEEN RASHEED.

Before O'MALLEY, REYNA, and HUGHES, Circuit Judges.

Opinion for the court filed by Circuit Judge O'MALLEY.

Dissenting opinion filed by Circuit Judge Reyna.

O'MALLEY, Circuit Judge.

Vivint appeals from final written decisions in two underlying inter partes review ("IPR") proceedings. This is the second appeal relating to these IPRs. Vivint does not object to the substance of the rulings at issue in this appeal. Vivint only asks that we vacate and remand the Patent Trial and Appeal Board's ("Board's") decisions in light of Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). We have already held that Vivint forfeited this constitutional challenge. See Order Denying Vivint Inc.'s Mot. to Vacate and Remand, Vivint, Inc. v. Alarm.com Inc., No. 19-2438 (Fed. Cir. Jan. 16, 2020), ECF No. 29. For the reasons explained below, we reiterate that conclusion and affirm the Board's decisions.

I. BACKGROUND

This appeal arises out of Alarm.com's IPR petitions asserting that certain claims of U.S. Patent Nos. 6,147,601 ("the '601 patent") and 6,717,513 ("the '513 patent") are invalid on obviousness grounds. The Board initially found that Alarm.com had demonstrated that some (but not all) of the challenged claims were unpatentable. Vivint appealed the Board's unpatentability determinations, and Alarm.com cross-appealed the Board's patentability determinations.

In Vivint's first appeal, our court affirmed the Board's unpatentability determinations but only affirmed certain of its patentability determinations. See Vivint, Inc. v. Alarm.com Inc., 754 F. App'x 999 (Fed. Cir. 2018). As for the other patentability determinations, we reversed the Board's construction of one claim term, vacated the Board's patentability conclusions concerning claims containing that term, and remanded for further proceedings. Id. On remand, the Board concluded that the remanded claims were also unpatentable as obvious. See Alarm.com Inc. v. Vivint, Inc., No. IPR2016-00116, 2019 WL 3331444 (P.T.A.B. July 24, 2019); Alarm.com Inc. v. Vivint, Inc., No. IPR2016-00173, 2019 WL 3330466 (P.T.A.B. July 24, 2019).

Vivint appealed the Board's decisions on remand. Approximately six weeks after Vivint filed its second appeal, we issued our decision in Arthrex, holding that Administrative Patent Judges ("APJs") constitute "principal officers" within the meaning of the Appointments Clause and, thus, must be appointed by the President and confirmed by the Senate. Arthrex, Inc., 941 F.3d at 1327. Since the America Invents Act does not follow this appointments scheme, we remedied this constitutional infirmity by severing part of Title 35. Id. at 1338. As a practical consequence of this severance, we vacated the Board's decision in Arthrex and remanded it to a different panel of APJs who had been constitutionally appointed. Id. at 1338-1339.

After Arthrex issued, Vivint filed a motion to vacate the Board's decisions on remand, arguing that the APJs who had rendered the opinion were unconstitutionally appointed. See Vivint Inc.'s Mot. to Vacate and Remand, Vivint, Inc., No. 19-2438 (Fed. Cir. Nov. 26, 2019), ECF No. 18. Alarm.com opposed Vivint's motion, contending that Vivint had forfeited its Appointments Clause challenge by failing to raise it in the first appeal and that the mandate rule barred Vivint's request. See Alarm.com Opp'n to Vivint Inc.'s Mot. to Vacate and Remand, Vivint, Inc., No. 19-2438 (Fed. Cir. Dec. 4, 2019), ECF No. 21. The Director of the United States Patent and Trademark Office appeared as an intervenor and requested that we hold our decision in Vivint's second appeal pending the outcome of our en banc consideration of Arthrex. See USPTO Director's Opp'n to Vivint Inc.'s Mot. to Vacate and Remand, Vivint, Inc., No. 19-2438 (Fed. Cir. Dec. 27, 2019), ECF No. 24.

We denied Vivint's motion. Order Denying Vivint Inc.'s Mot. to Vacate and Remand, Vivint, Inc., No. 19-2438 (Fed. Cir. Jan. 16, 2020), ECF No. 29. We found that Vivint had forfeited its constitutional argument by failing to raise an Appointments Clause challenge in its first appeal. Id. at 2. We also rejected Vivint's argument that we should excuse its forfeiture on grounds that Arthrex constituted an intervening change in law. Id. (citing Customedia Techs., LLC v. Dish Network Corp., 941 F.3d 1174 (Fed. Cir. 2019) and Sanofi-Aventis Deutschland GMBH v. Mylan Pharm. Inc., 791 F. App'x 916, 928 n.4 (Fed. Cir. 2019), cert. denied, 141 S. Ct. 266 (2020) for the proposition that the arguments Vivint raised had "been squarely raised and rejected by this court").

In its second appeal, Vivint submits arguments that are almost identical to those it made unsuccessfully in its motion to vacate and remand. Vivint again argues that, in light of Arthrex, we should remand this case to constitutionally appointed APJs. Vivint again also contends that it did not forfeit its Appointments Clause challenge because Arthrex constituted a significant change in law. It now also contends that forfeiture should not apply to its first appeal because Vivint only partially prevailed in the underlying IPR proceedings that were the subject of that appeal. Vivint alternatively argues that, if we do not vacate and remand, we should hold this case in abeyance pending Supreme Court resolution of the constitutional issues Arthrex raised.

II. DISCUSSION

We review constitutional questions de novo. See Schaeffler Grp. USA, Inc. v. United States, 786 F.3d 1354, 1358 (Fed. Cir. 2015).

Vivint raises two arguments on appeal: (1) Vivint did not forfeit its Appointments Clause challenge; and (2) we should hold this case in abeyance pending Supreme Court review of the Board's APJ appointment scheme. We address each argument in turn.¹

A. Vivint forfeited its Appointments Clause challenge by

not raising it in its first appeal

Vivint argues that, because the APJs who rendered the Board's decisions on remand were unconstitutionally appointed, we should remand this case to a new, constitutionally appointed panel. Acknowledging that we have already ruled that it has forfeited this constitutional challenge, Vivint attempts to distinguish this case from Customedia, 941 F.3d 1174, and Sanofi-Aventis, 791 F. App'x 916—the cases we cited in our previous order to support our forfeiture conclusion. According to Vivint, Customedia and Sanofi-Aventis "dealt with forfeiture where a party failed to raise an Appointments Clause challeng[e] in its opening brief on appeal; here, Vivint made its Appointments Clauseargument before even filing its opening brief." Appellant's Br. 6 n.1.

We disagree with Vivint. Vivint failed to raise an Appointments Clause challenge in its first appeal, in which it contested the Board's findings of invalidity. This constitutes a forfeiture in light of our positions in Customedia and Sanofi-Aventis. See Customedia Techs., 941 F.3d at 1175 ("Customedia did not raise any semblance of an Appointments Clause challenge in its opening brief or raise this challenge in a motion filed prior to its opening brief."); see also Sanofi-Aventis, 791 F. App'x at 928 n.4 ("Our precedent holds that failure to raise the Arthrex Appointments Clause issue in the opening brief forfeits the challenge.") (citations omitted). That Vivint raised an Appointments Clause challenge in its second appeal, in which it disputed the Board's decisions on remand, does not revive its already forfeited challenge. As we explained in Arthrex, it was Vivint's obligation to raise its Appointments Clause challenge before the first court who could have provided it relief. Arthrex, 941 F.3d at 1339.

We are sympathetic to the fact that, at the time Vivint filed its first appeal, we had not yet held that the Board's APJs were unconstitutionally appointed. Such a situation, however, does not "hold parties to a standard of clairvoyance" as Vivint argues. Appellant's Br. 8. Rather, parties in these circumstances are free to raise constitutional arguments based on any good faith argument available to it, including one under the Appointments Clause. Indeed, Vivint raised a constitutional argument based on the then-pending Oil States Energy Services, LLC v. Greene's Energy Group, LLC, 138 S. Ct. 1365 (2018) case. Vivint notes that it did this "out of an abundance of caution to preserve its rights, given that the issue was being actively litigated in the Supreme Court." Appellant's Br. 10 n.2. While failure to raise a constitutional challenge where similar challenges are already being litigated presents the most obvious circumstance in which to find forfeiture, it is not the only such circumstance. As Arthrex did, Vivint could have been among the first to press such a challenge before us.

Once its first appeal was decided, all matters which could have been raised then—but were not—were foreclosed. The remand after that first appeal was on one very narrow ground, and that ground is all that remains to be litigated in this subsequent appeal. See Amado v. ...