QFO Labs, Inc.

Patent Trials and Appeals Board

Aug 11, 2020

IPR2018-01690 (P.T.A.B. Aug. 11, 2020)

Trials@uspto.gov Paper 42
571-272-7822 Entered: August 11, 2020

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

PARROT S.A., PARROT DRONES S.A.S. and PARROT INC.,
Petitioner,

v.

QFO LABS, INC.,
Patent Owner.
____________

IPR2018-01690
Patent 9,904,292 B2
____________

Before MEREDITH C. PETRAVICK, HYUN J. JUNG, and
SCOTT C. MOORE, Administrative Patent Judges.

JUNG, Administrative Patent Judge.

DECISION
Denying Patent Owner’s Request on Rehearing of Final Written Decision
37 C.F.R. § 42.71(d)

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I. INTRODUCTION
QFO Labs, Inc. (“Patent Owner”) requests rehearing of our Final
Written Decision (Paper 40, “Decision” or “Final Dec.”) in IPR2018-01690,
in which we (1) determined that Parrot S.A., Parrot Drones S.A.S., and
Parrot Inc. (collectively, “Petitioner”) had shown by a preponderance of the
evidence that claims 13–17 of U.S. Patent No. 9,904,292 B2 (Ex. 1001, “the
’292 patent”) are unpatentable, (2) granted Patent Owner’s motion to amend
to cancel claims 1–10, and (3) denied Patent Owner’s contingent motion to
amend to substitute claims 21–23. See Paper 41 (“Rehearing Request” or
“Req. Reh’g”).
In its Rehearing Request, Patent Owner contends (1) the Board’s
finding of unpatentability of substitute claims 21–23 is based on an
erroneous construction of the claim term “orientation control scheme” and
(2) the Board erred in evaluating the testimony of Patent Owner’s expert,
Mr. Condon. See id. at 1. In addition, Patent Owner attempts to raise
Appointments Clause challenges implicated by the Federal Circuit’s
decision in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir.
2019).
II. ANALYSIS
The party challenging a decision in a request for rehearing bears the
burden of showing the decision should be modified as set forth in 37 C.F.R.
§ 42.71(d), which provides in relevant part:
A party dissatisfied with a decision may file a single request for
rehearing without prior authorization from the Board. The
burden of showing a decision should be modified lies with the
party challenging the decision. The request must specifically
identify all matters the party believes the Board misapprehended
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or overlooked, and the place where each matter was previously
addressed in a motion, an opposition, or a reply.
See also Req. Reh’g. 4 (quoting, in part, 37 C.F.R. § 42.71(d)). With this in
mind, we address Patent Owner’s arguments below.
A. Construction of “Orientation Control Scheme”
In Patent Owner’s Motion to Amend (Paper 24, “Mot.”), Patent
Owner proposed substitute claims 21–23, which each include, inter alia, “an
orientation control scheme.” See Mot. 26–30 (Claims App.); see also Final
Dec. 64–66. According to Patent Owner, “[t]he Board overlooked and did
not address the plain and ordinary meaning of . . . the claimed ‘orientation
control scheme.’” Req. Reh’g. 1. Specifically, Patent Owner contends that
“the Board ignored express claim limitations and, as a result, construed the
‘orientation control scheme’ of the substitute claims too broadly,” which
resulted in the erroneous conclusion that “the proposed combination would
arrive at the claimed invention.” Id. at 4–5.
Patent Owner argues that the claims “expressly require the claimed
‘orientation control scheme’ be limited to a scope that requires the control
system of the RC flying hovercraft craft to automatically and dynamically”
achieve and maintain an orientation. Req. Reh’g. 5. Specifically, Patent
Owner asserts:
A proper BRI construction of the claimed “orientation control
scheme” requires that the craft is automatically stabilized to
“achieve and selectively maintain” … [the craft] “in a position
that mimics the position of the handheld structure” … “without
any additional communications from the controller being
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required for the user to control moment-to-moment balance and
stabilization of the RC flying hovercraft.
Id.
Patent Owner contends that “the Board used an unreasonably broad
interpretation of ‘position,’” because the Board construed “position” as a
verb, not a noun. Id. at 6 (citing Final Dec. 33). Patent Owner argues that
“[t]he proper scope of ‘orientation control scheme’ under the BRI standard
does not include [Louvel’s] pilot-in-the-loop rate control scheme,” and
instead “accomplishes what the Summary of Invention of the ’292 patent
states: ‘The homeostatic hover control system removes the need for the pilot
to be concerned with moment-to-moment balance/stabilization and control
of the craft and focus instead only on the intended motion in which the craft
is to be directed.’” Id. at 7 (citing Paper 23 at 6; Ex. 1001, 6:41–45).
Patent Owner essentially repeats several arguments from its Patent
Owner’s Motion to Amend in its Rehearing Request. Compare Mot. 11–12,
with Req. Reh’g. 7. We considered these arguments in our Decision, and
Patent Owner’s arguments express disagreement with our interpretation of
“orientation control scheme” but do not show how an argument was
overlooked or misapprehended. See Final Dec. 74, 84–86.
Patent Owner supplements its prior arguments with contentions that
we construed “position” as a verb, not a noun. See Req. Reh’g. 6. Patent
Owner does not identify where these additional contentions were previously
presented, as required under 37 C.F.R. § 42.71(d). Thus, Patent Owner has
failed to show that we misapprehended or overlooked these arguments. See
id.
Even if the additional contentions had been previously presented, our
Decision considered Patent Owner’s proposed interpretation of “orientation
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control scheme.” See Final Dec. 85 (“Even under Patent Owner’s proposed
interpretation of ‘orientation control scheme’ (Mot. 11–12), Petitioner
persuades us that Louvel and Nagamitsu teach the final recitation of
proposed substitute claim 21.”). Patent Owner’s arguments do not show
how an argument was overlooked or misapprehended. In any event, we
remain convinced that “Patent Owner’s proposed interpretations are not the
broadest reasonable interpretation in view of the Specification of the ’292
patent because the Specification does not use these terms or describe state
vectors.” See Final Dec. 74.
Patent Owner also contends that “the Board’s judgment that the
proposed combination arrives at the claimed ‘orientation control scheme’ of
the substitute claims is an unreasonable and unsupported judgment.” Req.
Reh’g. 7–8. Patent Owner asserts that Louvel’s pilot-in-the-loop rate-
control loop “necessarily requires additional communications from the
controller” and that the Board “never addressed whether the craft control
system must automatically keep the craft balanced and stable in a single
position without any additional communications being required . . . for
stabilization.” Id. at 8 (citing Final Dec. 83–84). According to Patent
Owner, “[b]ecause the proposed combination admittedly does not modify
Louvel’s control loop, it cannot arrive at the claimed invention of the
substitute claims as properly construed that require an ‘orientation control
scheme,’ not a pilot-in-the-loop control scheme.” Id. at 10.
Patent Owner does not identify where it previously presented an
argument that an “orientation control scheme” necessarily includes keeping
the craft stable and balanced “without any additional communications being
required,” as required under 37 C.F.R. § 42.71(d). We could not have
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misapprehended or overlooked an argument Patent Owner failed to make.
See id.; see also Paper 24, 11–13. Even if this argument had been
previously presented, we “credit[ed] the testimony of Petitioner’s declarant
regarding how the asserted references teach [these] limitations . . . because
the record supports it.” Final. Dec. 27. In particular, proposed substitute
claim 21 proposed to add limitations to claim 1 as follows, with newly added
limitations underlined:
causing the control system in the RC flying hovercraft to
automatically and dynamically control a thrust produced by each
of said thrusters to achieve and selectively maintain the actual
orientation of the RC flying hovercraft in a position that mimics
the position of the handheld structure in response to the desired
orientation communicated to the RC flying hovercraft by the RC
controller and the actual orientation determined by the sensor
system in the RC flying hovercraft without any additional
communications being required for the user to control moment-
to-moment balance and stabilization of the RC flying hovercraft,
such that the control system in the RC flying hovercraft and the
RC controller implement an orientation control scheme.
Mot. 27–28. The first underlined limitation above was added to claim
limitation 21[i], which Petitioner’s declarant, Mr. Chowdhary, discussed in
paragraphs 99–102 of his declaration. Ex. 1003 ¶¶ 99–102; see also Final
Dec. 27. There, Mr. Chowdhary declared that Louvel’s “closed loop
control” automatically and dynamically controlled the thrust of each
thruster, to maintain moment-to-moment balance and stabilization “without
additional communication by the user.” Id. In the Final Decision, we
pointed to where Mr. Chowdhary’s declaration finds support. Final Dec. 27
(citing Ex. 1004, Abstract, ¶¶ 29, 30, 38, 42–46, 75–78, 91, 96–121, Figs. 1–
3, 13, claim 9; Ex. 1006, 17–20, 24–26, Figs. 2, 5; Ex. 1010, 12:10–30,
15:25–46, Fig. 4; Ex. 1012, Fig. 50; Ex. 1013, Figs. 1–7; Ex. 1015). The
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second underlined limitation refers to the “orientation control scheme”
addressed above.
B. Evaluation of Testimony
Patent Owner further contends that the Board erred in evaluating the
testimony of Patent Owner’s expert, Mr. Condon, because (1) “the Board
evaluated his testimony under the wrong standard,” (2) “the Board ignored
. . . objective record evidence that corroborates Mr. Condon’s testimony,”
and (3) the Board’s treatment of Mr. Condon’s testimony is contrary to that
“in previous IPRs without any notice or explanation for this change in
position, and therefore violates due process.” Req. Reh’g. 10.
As to the first contention, Patent Owner presents arguments that the
Board improperly evaluated Mr. Condon’s “testimony under the standards
for a fact witness (requiring corroboration under FRE 701), instead of for an
expert witness (requiring analysis of underlying facts and data under FRE
702).” Id. at 11. According to Patent Owner, this resulted in the Board
attributing little or no weight to certain portions of Mr. Condon’s testimony.
Id. (citing Final Dec. 63–64).
FRE Rule 702 provides, in part, “[a] witness who is qualified as an
expert by knowledge, skill, experience, training, or education may testify in
the form of an opinion or otherwise if: . . . (b) the testimony is based on
sufficient facts or data.” Fed. R. Evid. 702. Our consideration of Mr.
Condon’s testimony is consistent therewith, because we stated that “when
objective record evidence does not sufficiently corroborate Mr. Condon’s
testimony, we attribute little or no weight to his testimony, but when
objective record evidence sufficiently corroborates Mr. Condon’s testimony,
we consider it in our analysis.” Final Dec. 63–64. Thus, Mr. Condon’s
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testimony was considered to the extent that it was based on sufficient facts
or data. Patent Owner’s arguments indicate disagreement with our
consideration of Mr. Condon’s testimony but do not show how we
overlooked or misapprehended any argument.
Patent Owner further contends that we “improperly ignored or
overlooked substantial portions of Mr. Condon’s declaration . . . that provide
supporting evidence for his opinions of non-obviousness.” Req. Reh’g. 12
(citing ¶¶ 165, 171, 172). Patent Owner asserts that “the Board
acknowledged that Patent Owner cited to these portions of Mr. Condon’s
declaration and the exhibits,” in other parts of the Final Decision. Id. at 13
(citing Final. Dec. 44 (“[Paper 34] 10–11 (citing Ex. 2015 ¶¶ 27–40;
Ex. 2017; Ex. 2021; Ex. 2022; Ex. 2023; Ex. 2031; Ex. 2032; Ex. 2033;
Ex. 2037, 45, 56, 59–60, 102, 134, 138).”)). Patent Owner’s apparently
contradictory assertions as to our consideration of Mr. Condon’s testimony
do not show how we overlooked or misapprehended any argument.
Patent Owner further contends that even though the potential bias of
Mr. Condon’s expert testimony was previously raised, whether Mr. Condon
was an “interested witness” whose testimony should be discounted was not
an issue in related proceedings. Req. Reh’g. 13–14 (citing Parrot S.A. v.
QFO Labs, Inc., IPR2016-01550, Paper 41 at 5 (Aug. 21, 2017) (Petitioners’
Reply); Parrot S.A., Paper 43 at 7 (Sept. 15, 2017) (Patent Owner’s Reply to
Opposition to Motion to Amend); Parrot S.A., Paper 60 at 22, 23, 30, 31, 36,
53–55, 57, 59 (PTAB Feb. 15, 2018) (Final Written Decision)). According
to Patent Owner, had this issue previously been raised, “Patent Owner could
have engaged a different expert witness in this proceeding,” and that raising
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the issue now “is fundamentally unfair and a violation of due process.” Id.
at 14.
The critical question for compliance with the Administrative
Procedure Act and due process is whether a party received “‘adequate notice
of the issues that would be considered, and ultimately resolved, at that
hearing.’” Genzyme Therapeutic Prods. Ltd. P’ship v. Biomarin Pharm.
Inc., 825 F.3d 1360, 1367 (Fed. Cir. 2016) (quoting Pub. Serv. Comm’n of
Ky. v. FERC, 397 F.3d 1004, 1012 (D.C. Cir. 2005)). We find Petitioner’s
Reply argument that Patent Owner’s declarant is “biased” and that his
testimony should be given little “weight,” adequately put Patent Owner on
notice of Petitioner’s arguments on this issue. See Paper 29 at 6. Indeed,
this issue was fairly raised and Patent Owner was given a fair opportunity to
address its import in this proceeding, and employed that opportunity in its
Sur-Reply. See Paper 34 at 4. Patent Owner, thus, received adequate notice
that bias in Mr. Condon’s testimony would be considered.
Moreover, the mere fact that in five previous decisions the Board did
not address whether Mr. Condon’s testimony might be biased is of no
moment. Patent Owner has not alleged that our determination here was
unclear or incomprehensible.
In view of the foregoing, we find that our determination did not
amount to an arbitrary and capricious action, but instead followed the basic
principles of fairness and due process towards a “just, speedy, and
inexpensive resolution.” 37 C.F.R. § 42.1(b).
C. Appointments Clause
Patent Owner contends that this proceeding should be reheard by
another, duly appointed panel. Req. Reh’g. 14. Patent Owner correctly
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notes that “the issue . . . was briefly raised and then stricken during oral
argument because it was not properly presented to the Board under the
Rules.” Id. (citing Paper 39, 29:22–24).
According to Patent Owner, “the F[inal] W[ritten] D[ecision] exceeds
the scope of the Patent Trial and Appeal Board’s authority and violates the
Constitution’s Appointments Clause.” Id. (citing U.S. Const. art. II, § 2,
cl. 2). Thus, Patent Owner raises the Appointments Clause challenges
implicated by the Federal Circuit’s decision in Arthrex, 941 F.3d at 1335 “to
preserve the issue for appeal.” Id.
We decline to consider Patent Owner’s constitutional challenge
because the issue has been addressed by the Federal Circuit in Arthrex, 941
F.3d at 1328 (expressly limiting its holding “to those cases where final
written decisions were issued (prior to Arthrex)”). See also Caterpillar
Paving Prod. Inc. v. Wirtgen Am., Inc., 957 F.3d 1342, 1342–1343 (May 6,
2020) (“The court in Arthrex considered and rejected that argument,
expressly limiting its holding ‘to those cases where final written decisions
were issued.’”) (quoting 941 F.3d at 1340). Our Decision was entered
February 20, 2020, after the Federal Circuit issued its October 2019 decision
in Arthrex (see 941 F.3d at 1320).
III. CONCLUSION
For the foregoing reasons, Patent Owner has not shown that the Final
Written Decision misapprehended or overlooked any matters. 37 C.F.R.
§ 42.71(d). Accordingly, Patent Owner’s Request for Rehearing is denied.

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Final Outcome of Final Written Decision after Rehearing:

Claim(s)

35
U.S.C. §
References/Basis Claim(s)
Shown
Unpatentable
Claim(s)
Not shown
Unpatentable
1, 6 103 Louvel, Kroo,
Nagamitsu

2, 3, 7, 8 103 Louvel, Kroo,
Nagamitsu, Talbert

4, 9 103 Louvel, Kroo,
Nagamitsu, Gabai

5, 10 103 Louvel, Kroo,
Nagamitsu,
Rehkemper

13 103 Louvel, Kroo,
Nagamitsu, Hall
13
15, 17 103 Louvel, Kroo,
Nagamitsu, Hall,
Talbert
15, 17
14 103 Louvel, Kroo,
Nagamitsu, Hall,
Gabai
14
16 103 Louvel, Kroo,
Nagamitsu, Hall,
Rehkemper
16
13 103 Louvel, Kroo, Hall
15, 17 103 Louvel, Kroo,
Hall, Talbert

14 103 Louvel, Kroo,
Hall, Gabai

16 103 Louvel, Kroo,
Hall, Rehkemper

Overall
Outcome
13–17
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Motion to Amend Outcome Claims
Original Claims Cancelled by Amendment 1–10
Substitute Claims Proposed in the Amendment 21–23
Substitute Claims: Motion to Amend Granted
Substitute Claims: Motion to Amend Denied 21–23
Substitute Claims: Not Reached

IV. ORDER
Accordingly, it is ORDERED that Patent Owner’s Request for
Rehearing is denied.

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For PETITIONER:
James M. Glass
Matthew A. Traupman
Sean T. Gloth
QUINN EMANUEL URQUHART & SULLIVAN LLP
jimglass@quinnemanuel.com
matthewtraupman@quinnemanuel.com
seangloth@quinnemanuel.com

For PATENT OWNER:
Brad D. Pedersen
QFO LABS, INC.
pedersen@ptslaw.com

Charles A. Lemaire
Jonathan M. Rixen
LEMAIRE PATENT LAW FIRM
clemaire@lemairepatent.com
jrixen@lemairepatent.com