Final Written Decision IPR2013-00034

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Takeaway: Patent Owner is not permitted to disavow claim scope within the proceeding itself – referred to by the Board as “same proceeding disavowal.”

In a Final Written Decision primarily driven by claim construction, the Board held that the Petitioner had met its burden of proof with respect to challenged claims 15 and 17 under 35 U.S.C. § 102(b) and claims 2, 5-11, 13, 14, 16, 26, 28-33, 35-37, 39, and 40 under 35 U.S.C. § 103(a). However, the Board held that Petitioner did not meet its burden with respect to claims 12, 27, 34, and 38.
Claim Construction

U.S. Patent 7,970,674 (the ‘674 patent) is related to systems and methods for valuing real estate property.

With regard to the construction of “automatic valuation of a distinguished home,” the Patent Owner argued a narrow interpretation, asserting that automatic valuation was limited to the Automated Valuation Model (AVM) used in assessing property value. The Board disagreed, siding with the Petitioner that the term was not so limited.

In an interesting attempt to hedge its bets, the Patent Owner alternatively indicated that it would expressly disavow “any claim scope of ‘automatic valuation’ that is broader than an AVM, and that the Board should take this express disavowal into account and construe ‘automatic valuation’ as an AVM” – what the Board referred to as “same proceeding disavowal.” The Board, however, agreed with the Petitioner that the proposed same proceeding disavowal would be unfair and confusing especially where the claims could still be amended as in the IPR proceeding.

The Board stated that even if it were permitted to take such disavowals into account, same proceeding disavowals would not be proper “because when claim amendments are available, a patent owner has an opportunity to amend claims to a scope it desires, so as to have the substance of any purported same proceeding disavowal reflected in the claim language expressly.” Such a disavowal together with the ability to amend would deprive the public of adequate notice concerning the scope of the claims.

The Board was not persuaded by the Patent Owner’s citations to cases where a district court relied on statements of disavowal made in pending re-examination proceedings. In those cases, the patent owner could not amend the claims in the same proceeding, whereas in front of the PTAB in an IPR proceeding, claim amendments are possible. The Patent Owner’s citations to other cases concerning pending examination appeals and re-examination proceedings were not persuasive. The Board stated that according to the Federal Circuit, “the PTO is under no obligation to accept a claim construction proffered as a prosecution history disclaimer, which generally only binds the patent owner.” Tempo Lighting, Inc. v. Patent of Tivoli LLC, ___ F.3d ___, 2014 WL 503128, at *4 (Fed. Cir. 2014). In addition, the Board noted that although claim amendments are possible during re-examination, once the re-examination reaches the Board, prosecution is closed and no amendments are allowed.

Thus, the Board held that even if Patent Owner does not avail itself of the opportunity to amend the claims, “it is reasonable to resolve any claim ambiguity against Patent Owner, notwithstanding any same proceeding disavowal.” In the end, the Board essentially held the Patent Owner to the choice it had made as a strategic litigation decision, quoting an exchange that occurred during the oral hearing. According to the Patent Owner, it did not seek to amend the claims because the amendment would amount to an admission that the claims “would not already be construed in that manner,” and that the “claims are in litigation.”

With regard to the term “user knowledgeable about the distinguished home,” the Patent Owner again tried unsuccessfully to disavow broader constructions in attempting to limit the user to an owner or someone with equivalent knowledge. The Board did, however, revisit its earlier construction of that term in light of the specification, revising it to exclude appraisers from the definition.

Board’s Findings Regarding Patentability

Based on the claim constructions, the Board found challenged claims 15 and 17 unpatentable under 35 U.S.C. § 102(b) and claims 2, 5-11, 13, 14, 16, 26, 28-33, 35-37, 39, and 40 unpatentable under 35 U.S.C. § 103(a) – with many of the Patent Owner’s arguments relying upon its unsuccessful claim construction positions. However, the Board held that Petitioner did not meet its burden with respect to claims 12, 27, 34, and 38.

With regard to claim 27, the Board simply held that the Petitioner failed to demonstrate that the prior art disclosed every claim limitation. Concerning claim 12, the Petitioner failed to meet its burden by improperly arguing the function/way/result test to establish the presence of a claim limitation in the prior art when that claim limitation was not a means-plus-function limitation. With respect to claims 34 and 38, the Petitioner failed to meet its burden regarding how the cited references could be combined to meet the claim limitation or why such a combination would be desirable.

Microstrategy, Inc. v. Zillow, Inc., IPR2013-00034
Paper 42: Final Written Decision
Dated: March 27, 2014
Patent 7,970,674
Before: Jameson Lee, Josiah C. Cocks, and Michael W. Kim
Written by: Kim
Related Proceedings: Zillow, Inc. v. Trulia, Inc., Case No. 2:12-cv-1549 (W.D. Wash) and CBM2013-00056