In a pair of recently issued companion decisions, the Federal Circuit awarded Causam Enterprises, Inc. a victory on patent ownership (Causam v. ITC (ITC appeal)) only to pull the rug out from under the company by declaring the very patent claims at issue unpatentable (Causam v. ecobee (IPR appeal)). Unfortunately for Causam, this is a shining example of winning the battle but losing the war.

The saga centers on U.S. Patent No. 10,394,268, which relates to demand response functionality for electric power grids designed to help utilities balance supply and demand. Causam filed a complaint with the International Trade Commission alleging that respondents Resideo Smart Homes Technology, its domestic affiliate Ademco, Inc., and other respondents imported smart thermostats that infringed the ʼ268 patent. At the same time, ecobee Technologies, which also had been named as a respondent in the ITC complaint, petitioned for inter partes review of the patent claims before the Patent Trial and Appeal Board (PTAB) (IPR2022-01339). The two proceedings wound their way through the system in parallel, ultimately landing before the Federal Circuit on the same day for oral argument.

Causam has asserted the patent against a range of smart thermostat and energy management companies, including ecobee Technologies ULC and Resideo Smart Homes Technology (Tianjin).

Round One: The ʼ268 Patent Ownership Drama

In the ITC proceeding, the respondents challenged whether Causam even owned the ʼ268 patent — a threshold question intended to defeat Causam’s standing to even bring the ITC case. The ownership dispute turned on a series of agreements involving inventor Joseph Forbes. In 2007, Forbes assigned the ancestor application (the ʼ909 application) to America Connect, which later became Consert. That assignment covered “all divisions, reissues, continuations and extensions thereof” but conspicuously omitted continuation-in-part applications.  

So, here is where it gets interesting. The ʼ268 patent claimed priority to the ʼ909 application through a continuation-in-part — the ʼ761 application, which was filed in 2012. A 2013 settlement between Forbes and Consert listed the ʼ761 application as an “Excluded Patent.” Forbes then assigned the ʼ268 patent to Causam in 2014.

Despite the lack of any reference to continuation-in-part applications in the 2007 assignment to Consert, the administrative law judge (ALJ) ruled that the assignment to Consert from Forbes covered “all progeny” and, thus, Causam could not and did not own the ʼ268 patent.  The ALJ also found that accused smart thermostats did not infringe the asserted claims of the ʼ268 patent. The full commission adopted the ALJ’s infringement finding, but punted on the ownership issue.

On appeal, the Federal Circuit addressed whether Causam had Article III standing to challenge the commission’s decision — which required determining if Causam actually owned the patent. The court held that at this stage (after a full evidentiary record), Causam needed to provide evidence of ownership, not just assert it. Citing its tandem decision in the IPR appeal, the appellate panel explained that the burden is “the same as that of a plaintiff moving for summary judgment in the district court.”

The panel then dove right in to contract interpretation. Despite intervenors arguing that “continuations” in the 2007 assignment should be read to include continuations-in-part, the Federal Circuit explained that continuations and continuations-in-part are “widely understood to be different” and have been treated separately in the Manual of Patent Examining Procedure since 1948. Critically, a continuation may not add new matter to the parent application, while a continuation-in-part does include new matter. Indeed, an inventor “might well wish to assign away continuations of an invention and keep the rights to continuations-in-part (and the included new matter).”

The panel further opined that reading “continuations” to include continuations-in-part would amount to “insert[ing] words into the contract that the parties never agreed to.” On this basis, the court concluded that the 2007 assignment unambiguously excluded the ʼ761 application, so Forbes had good title when he assigned the ʼ268 patent to Causam in 2014. Victory for Causam, right? Well, not so fast.

Round Two: The IPR Appeal Delivered the Knock-Out Punch

While Causam won on the ownership issue, the holding in the companion IPRappeal mooted the noninfringement issue in the ITC appeal. In this aspect, the panel declined to address Causam’s challenge to the commission’s noninfringement determination in the ITC appeal based on its affirmation of the PTAB’s holding that all challenged claims of the ʼ268 patent — including claim 1 (the only claim at issue in the ITC appeal) — were unpatentable as obvious in the IPR appeal. Claim 1 reads as follows:

1. A method for managing an electric power flow within an electric power grid, comprising:

a client device receiving a power control message from a load management server, the power control message indicating at least one of an amount of electric power to be reduced and an identification of at least one controllable device to be instructed to disable the electric power flow to at least one associated power consuming device;

the client device issuing a power management command to the at least one controllable device, the power management command causing the at least one controllable device to disable the electric power flow to the at least one associated power consuming device to provide a reduction in consumed power; and

generating measurement and verification data corresponding to the reduction in consumed power.  

The italicized claim limitation was front and center in the IPR appeal. During the IPR, Causam argued this required generating data during the demand response event. But, the PTAB disagreed, construing the limitation to encompass both actual measurements during the event and estimates based on device power usage measured before the event. 

The Federal Circuit sided with the PTAB explaining that the claim language itself imposed no temporal restriction and that adopting Causam’s narrow construction would exclude embodiments disclosed in the specification. For example, one embodiment described a system that determines “the amount of steady-state power each device consumes when turned on” and uses that known consumption data when deciding which loads to turn off during high-demand periods.  Those “known” power-consumption loads are estimates obtained before any demand response event occurs — directly contradicting Causam’s proposed limitation. Another embodiment described accessing a database after a power savings event ends to find “the actual amount (or average amount) of power that would have been used” during the event. With the panel’s finding that claim 1 of the ʼ268 patent had been properly construed by the PTAB, Causam’s obviousness challenge collapsed and the PTAB’s unpatentability determination stood.

Because Section 337 — the basis for the ITC action — requires infringement of a “valid and enforceable” patent, Causam had no right to an exclusion order. The panel thus proceeded to dismiss the ITC appeal as moot, leaving Causam with nothing but an empty victory on the ownership question.

The Takeaways

Parallel proceedings can create strategic nightmares. Causam fought hard to establish ownership in the ITC case, only to watch the patent claims evaporate in the IPR. The company ended up with clear title to an unpatentable patent — a trophy nobody wants. However, these companion appeals at least offer several drafting lessons:

• Be careful what you disclose in your specification. Causam’s broad embodiments — using estimates and measurements taken before or after demand response events — undermined its attempt to narrow the claims during litigation. The Federal Circuit will not let you exclude what you have already clearly described as within the scope of the invention without something more in the prosecution history.

• When preparing assignment agreements, be specific. The distinction between continuations and continuations-in-part matters, and courts will not read one term to include the other. If you want comprehensive coverage, say so explicitly.