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Shaw Industries Group, Inc. v. Automated Creel Systems, Inc.

United States Court of Appeals, Federal Circuit

March 23, 2016

SHAW INDUSTRIES GROUP, INC., Appellant
v.
AUTOMATED CREEL SYSTEMS, INC., Cross-Appellant

Page 1294

          Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2013-00132, IPR2013-00584.

         THAD CHARLES KODISH, Fish & Richardson, P.C., Atlanta, GA, argued for appellant. Also represented by ERIN ALPER; JOHN A. DRAGSETH, Minneapolis, MN.

         SCOTT D. SMILEY, The Concept Law Group, P.A., Fort Lauderdale, FL, argued for cross-appellant. Also represented by MARK C. JOHNSON.

         MONICA BARNES LATEEF, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Michelle K. Lee. Also represented by NATHAN K. KELLEY, SCOTT WEIDENFELLER, WILLIAM LAMARCA.

         Before MOORE, REYNA, and WALLACH, Circuit Judges. OPINION filed by Circuit Judge MOORE. Opinion concurring specially in the judgment filed by Circuit Judge REYNA.

          OPINION

Page 1295

          Moore, Circuit Judge.

         Shaw Industries Group, Inc. appeals from the United States Patent and Trademark Office's (" PTO" ) Patent Trial and Appeal Board's (" Board" ) final written decision in consolidated inter partes reviews (" IPR" ) of claims 1-21 of U.S. Patent No. 7,806,360. Shaw also petitions for writ of mandamus. Automated Creel Systems (" ACS" ) cross-appeals. We affirm-in-part, vacate-in-part, and remand. We deny Shaw's petition for writ.

         Background

         ACS is the owner of the '360 patent, which relates to " creels" for supplying yarn and other stranded materials to a manufacturing process. '360 patent, col. 1, ll. 14-17. An exemplary creel supply system of the patent comprises creel magazines with a stationary frame and two movable carts. Id. at figs. 1, 12; col. 3, ll. 18-19, 59-61. The carts carry multiple levels of spools (or packages) of stranded material that can be routed using guides. Id. at col. 3, ll. 62-63. Continuous runtime can be achieved by (1) tying the material from various packages together, and (2) replenishing empty packages on one cart while packages on the opposite cart are used. Id. at col. 8, ll. 32-41; col. 9, l. 64 to col. 10, l. 16; col. 11, l. 1 to col. 12, l. 16.

         Claims 1-5, 8-12, 14, 19, and 20 (" the non-interposing claims" ) involve creel magazines with two packages of stranded material

Page 1296

at each level. They allow for transfer of stranded material from one package to another across the frame. For example, claim 5 recites:

5. A creel magazine for feeding stranded material to a manufacturing process comprising:
a magazine having a stationary magazine frame comprising a common guide for said stranded material;
a first and a second removable cartridge positioned adjacent said magazine frame on respective opposite sides of said magazine frame,
said first removable cartridge having at least one support arm supporting an active package of stranded material thereon;
said second removable cartridge having at least one support arm supporting a ready package of stranded material thereon wherein a trailing end of said stranded material carried by said active package is connected to a leading end of said stranded material carried by said ready package;
wherein said common guide is an annular turning surface and said stranded material is sequentially fed to said common guide from said active package then from said ready package.

         Claims 6, 7, 13, 15-18, and 21 (" the interposing claims" ) involve creel magazines with more than two packages of stranded material at each level. They allow for transfer of stranded material from one package to another across the frame (like the non-interposing claims), as well as on the same side of the frame. For example, claim 6 recites:

6. The creel magazine of claim 5, further comprising an additional support arm supported adjacent to said at least one support arm for supporting an additional ready package on said removable cartridge, to be selectively interposed between said active package and said ready package on said second removable cartridge to feed said stranded material.

         In February 2012, ACS sued Shaw for infringement of the '360 patent in the U.S. District Court for the Northern District of Georgia. Automated Creel Sys., Inc. v. Shaw Indus. Grp., Inc., No. 1:12-cv-00424-RWS (N.D.Ga. 2012). ACS voluntarily dismissed the suit without prejudice. Within one year of service of the complaint, see 35 U.S.C. § 315(b), Shaw petitioned for IPR of all twenty-one of the '360 patent claims. Shaw proposed fifteen grounds of rejection. Most of the grounds were directed to the non-interposing claims. There were only three grounds directed at the interposing claims: (1) ground 3, alleging that all of the interposing claims would have been obvious over German Patent Application Publication DE 3429153 A1 (" Munnekehoff" ) in view of U.S. Patent No. 5,624,082 (" Ligon" ); (2) ground 8, alleging that all of the interposing claims would have been obvious over German Patent DE 7413531 (" Barmag" ) in view of Ligon; and (3) ground 11, alleging that all of the interposing claims were anticipated by U.S. Patent No. 4,515,328 (" Payne" ) (" the Payne-based ground" ). The Board instituted IPR on all claims except claim 4.[1] It did not, however, institute IPR on all fifteen grounds argued by Shaw. With regard to the interposing claims, the Board instituted IPR on the grounds that these claims would have been obvious over Munnekehoff or Barmag in view of Ligon (grounds 3 and 8, respectively). Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc.,

Page 1297

No. IPR2013-00132, 2013 WL 8563792 (P.T.A.B. July 25, 2013) (" First Institution Decision" ). The Board denied Shaw's petition on the Payne-based ground. The Board explained that the Payne-based ground was " denied as redundant in light of [its] determination that there is a reasonable likelihood that the challenged claims are unpatentable based on the grounds of unpatentability on which we institute an inter partes review." Id. at *20 (citing 37 C.F.R. § 42.108). There were no substantive determinations of the Payne-based ground in the Board decision.

         In September 2013 (over one year after service of the complaint), Shaw filed a second petition, requesting IPR of claim 4. The Board instituted IPR based on two of the six grounds proposed by Shaw--alleged obviousness over Munnekehoff in view of U.S. Patent No. 4,572,458 (" Bluhm" ) (ground 3) and alleged obviousness over Barmag in view of Bluhm (ground 6). Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., No. IPR2013-00584, 2013 WL 8595536 (P.T.A.B. Dec. 31, 2013) (" Second Institution Decision" ). It denied the other proposed grounds, writing that it " exercise[d] [its] discretion under 37 C.F.R. § 42.108 to institute an inter partes review based solely on the asserted grounds directed to combinations with Bluhm and deny the remaining grounds as redundant." [WL] at *12-13. It rejected ACS's argument that 35 U.S.C. § 315(b) precluded it from instituting IPR. It determined that because ACS had voluntarily dismissed the suit without prejudice, it " nullifie[d] the effect of the alleged service of the complaint on Petitioner." Id. at *6.

         The two IPRs proceeded in parallel. The Board then consolidated them and issued one final written decision, concluding that Shaw (1) had not shown by a preponderance of the evidence that the interposing claims were unpatentable based on the instituted grounds, and (2) had shown by a preponderance of the evidence that the non-interposing claims (including claim 4) were unpatentable based on the instituted grounds. Shaw Indus. Group, Inc. v. Automated Creel Sys., Inc., Nos. IPR2013-00132, IPR2013-00584, 2014 WL 3725531 (P.T.A.B. July 24, 2014) (" Final Decision" ). Shaw appeals as to the interposing claims and ACS appeals as to claim 4. The PTO submitted a brief (" PTO Br." ) and presented oral argument as intervenor. See 35 U.S.C. § 143.

         Discussion

         I.Shaw's Appeal and ...


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