Claims Survive IPR Challenge Under Narrow Construction Because It Was The Broadest Reasonable Interpretation

QUANERGY SYSTEMS, INC. v. VELODYNE LIDAR USA, INC.

Before Newman, Lourie, and O’Malley. Appeal from the Patent Trial and Appeal Board.

Summary: Despite applying the standard of broadest reasonable construction, a claim term’s narrowed construction to refer to a specific detection method was proper in view of its exclusive use in the written description as referring to the specific method as well as its foundational relationship to the claims.  

Quanergy filed two petitions for inter partes review challenging claims relating to a laser imaging detection and ranging (“lidar”) system. Velodyne markets products incorporating time-of-flight (ToF) lidar systems that derive distance from the time it takes for light to return to a detector. In both petitions, Quanergy argued that the claims were obvious over prior art that derived distance by the location of the detection of reflected light.  Despite applying the broadest reasonable construction to the term “lidar,” the PTAB construed the term to mean ToF lidar and concluded that the challenged claims were not obvious over the prior art’s description of lidar that relied upon location of detection rather than time to detection.  Additionally, the PTAB found that objective indicia of nonobviousness outweighed any presumed showing of obviousness and emphasized a nexus between this evidence and Velodyne’s marketed products.  Quanergy appealed to the Federal Circuit, arguing, inter alia, that the PTAB erred in its claim construction and presumption of a nexus.

The Federal Circuit affirmed the PTAB’s decision. With respect to the PTAB’s construction of “lidar,” the Federal Circuit reasoned that it was proper for the PTAB to interpret this term as ToF lidar because the written description focused “exclusively” on pulsed ToF lidar and such a method was “foundational to the claimed invention.”  Furthermore, the Federal Circuit rejected the argument that this was limiting the term to a preferred embodiment because the written description introduced ToF lidar right from the start and the concept underlies the entire description. 

The Federal Circuit also held that substantial evidence supported the PTAB’s conclusion that the prior art did not disclose or suggest ToF lidar and concluded that substantial evidence supported the PTAB’s presumption of a nexus and “thorough” analysis of objective indicia of nonobviousness.  The Federal Circuit agreed with the PTAB that Velodyne’s products embodied the claimed invention, that a presumption of nexus was proper, and that Quanergy did not rebut this presumption with its “skeletal, undeveloped argument to the Board.”

Editor: Paul Stewart

Written by: Cesar A. Estrada and Andrew Morrell, Ph.D.