Background
Uniloc 2017 LLC owns U.S. Patent No. 8,566,960, directed to a method for adjusting a license that permits a digital product to be used on multiple devices — an “adjustable license” system. Hulu, LLC filed an inter partes review (IPR) petition challenging the patent’s claims for invalidity based on anticipation and obviousness. During the IPR, Uniloc filed a motion to amend its claims, proposing substitute claims to overcome Hulu’s prior art challenges.
Hulu opposed Uniloc’s proposed substitute claims on multiple grounds, including that the substitute claims were directed to patent-ineligible subject matter under 35 U.S.C. § 101. The PTAB denied Uniloc’s motion to amend, concluding both that the substitute claims were not patentable over prior art and that they were directed to an abstract idea without an inventive concept. Uniloc appealed, arguing that the PTAB lacked authority to consider § 101 eligibility in an IPR proceeding because the IPR statute limits invalidity grounds to anticipation (§ 102) and obviousness (§ 103).
The Court’s Holding
The Federal Circuit affirmed and held that the PTAB may consider patent eligibility under § 101 when adjudicating a patent owner’s motion to amend claims in an IPR. Writing for the majority, Judge O’Malley reasoned that the IPR statute’s limitation of invalidity grounds to §§ 102 and 103 applies only to the petitioner’s challenges to existing patent claims. When a patent owner proposes new substitute claims via a motion to amend, the PTAB is not limited to the same grounds available to the petitioner; it must determine whether the substitute claims are “patentable” in a broader sense.
The majority held that the PTAB’s authority to determine patentability of substitute claims encompasses eligibility under § 101. Because the PTAB functions as a quasi-judicial body granting new patent rights when it allows substitute claims, it would be anomalous to permit the PTAB to grant claims that are facially ineligible simply because § 101 is not an IPR “ground.” The court found no statutory or constitutional bar to the PTAB’s consideration of § 101 in this context.
Judge Newman dissented, arguing that the statutory scheme for IPR does not authorize the PTAB to go beyond the stated grounds of anticipation and obviousness, and that expanding PTAB authority in this way creates procedural unfairness for patent owners who propose amendments in good faith.
Key Takeaways
- The PTAB may consider § 101 patent eligibility when evaluating substitute claims proposed in a motion to amend during IPR proceedings.
- Patent owners proposing substitute claims in IPR must be prepared to defend against § 101 challenges, even though the original IPR petition was limited to anticipation and obviousness grounds.
- The restriction of IPR grounds to §§ 102 and 103 applies to petitioners’ challenges to existing claims, not to the PTAB’s broader patentability determination over newly proposed substitute claims.
- This decision significantly complicates the motion-to-amend strategy in IPR, as patent owners must now anticipate not just prior art challenges but also § 101 scrutiny of their substitute claims.
Why It Matters
The Uniloc v. Hulu decision reshaped IPR strategy in a meaningful way. Before this ruling, patent owners proposing substitute claims via motion to amend could focus their drafting efforts on overcoming the prior art identified in the IPR petition, without worrying about § 101 challenges. After Uniloc, those substitute claims are also vulnerable to patent eligibility attacks at the PTAB level, not just in district court.
This creates a more complex risk calculus for patent owners in IPR proceedings, particularly those in software, fintech, and biotechnology — areas where § 101 is already a major vulnerability. A patent owner who amends claims to avoid prior art may simultaneously open the door to a § 101 challenge that was never part of the original IPR petition. Practitioners must now vet proposed substitute claims for eligibility just as carefully as for novelty and non-obviousness.