Uniloc 2017 LLC v. Hulu, LLC, Netflix, Inc., Appeal No. 2019-1686 (Fed. Cir., July 22, 2020).
Uniloc owned a patent entitled “System and Method for Adjustable Licensing of Digital Products.” In an IPR, petitioners Hulu and Netflix successfully challenged Uniloc’s claims. Uniloc, however, also filed a motion to amend to add substitute claims. Petitioner Hulu challenged the substitute claims under section 101 grounds.
Uniloc responded by arguing that Hulu could not raise section 101 in an IPR, but did not address Hulu’s arguments on the merits. Ultimately, the PTAB determined that the substitute claims were patent ineligible on Section 101 grounds and denied Uniloc’s motion to amend.
On appeal, the Federal Circuit affirmed in a 2-1 decision. Writing for the majority, Judge Wallach wrote:
The PTAB correctly concluded that it is not limited by § 311(b) in its review of proposed substitute claims in an IPR, and that it may consider § 101 eligibility. The determination is supported by the text, structure, and history of the IPR Statutes, which indicate Congress’s unambiguous intent to permit the PTAB to review proposed substitute claims more broadly than those bases provided in § 311(b). See Chevron, 467 U.S. at 842. First, the text of the IPR Statutes supports the conclusion that the PTAB may consider § 101 eligibility when reviewing substitute claims. The IPR Statutes plainly and repeatedly require the PTAB to determine the “patentability” of proposed substitute claims. Section 318 requires the PTAB “issue a final written decision with respect to the patentability of . . . any new claim added under [§] 316(d).” 35 U.S.C. § 318(a) (emphasis added). It further provides that “the Director shall issue and publish a certificate . . . incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable.” Id. § 318(b) (emphasis added). Moreover, it states that “[a]ny proposed amended or new claim determined to be patentable and incorporated into a patent following an [IPR]” will “have the same effect as” if it had been originally granted. Id. § 318(c) (emphasis added) (incorporating by reference 35 U.S.C. § 252). As we have concluded, a § 101 analysis constitutes a “patentability” determination. See Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1329–31 (Fed. Cir. 2015) (explaining that the use of the phrase “conditions of patentability” in the AIA extends to § 101 challenges); see also id. at 1330 (“[B]oth our opinions and the Supreme Court’s opinions over the years have established that § 101 challenges [are] . . . patentability challenges.”); Aristocrat Techs. Austl. Ltd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008) (“It has long been understood that the Patent Act sets out the conditions for patentability in three sections: [§§] 101, 102, and 103.” (citing Graham v. John Deere, 383 U.S. 1, 12 (1966))). The plain language of the IPR Statutes demonstrates Congress’s intent for the PTAB to review proposed substitute claims for overall “patentability”—including under § 101—of the claims.
Slip op. at 15-16.
Judge O’Malley dissented on the grounds that the PTAB lacks statutory authority to consider Section 101 in an IPR.