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Federal Circuit Overturns PTAB Order Finding Patent Obviousness Absent Motivation to Combine References

The Court of Appeals for the Federal Circuit reversed and remanded a final order by the Patent Trial and Appeal Board (PTAB) invalidating PersonalWeb’s patent (due to an inter partes review  (IPR) by Apple, Inc.)  holding that “the Board did not adequately support its findings that the prior art disclosed all elements of the challenged claims and that a relevant skilled artisan would have had a motivation to combine the two cited prior-art references to produce the claimed ’310 inventions with a reasonable expectation of success.” Personal Web Technologies, Inc. v. Apple Inc., Case No. 2016-1174 (Fed. Cir. Feb. 14, 2017) (Available here).

The ’310 patent describes and claims methods (and devices for carrying out methods) of locating data and controlling access to data by giving a data file a substantially unique name that depends on the file’s content—a so-called “True Name,” which sometimes is a hash function of the content of the data file.  The patent calls for comparing that name with a plurality of values in a network, determining whether a user is authorized to access the data, and providing or denying access.  In the patent claims under scrutiny, a user demonstrates authorization to access a digital work through a “digital ticket,” which identifies the ticket holder as having access to the digital file because the holder has paid for access or is otherwise entitled to access.

The prior art Woodhill reference focuses on a system for backing up or restoring data. The second prior art Stefik reference focuses on a system for managing rights to access data.  Woodhill uses its content based binary object identifiers for file-management purposes, including in a backup/restore system.  Stefik discloses an authentication system designed to control access to digital works stored in a repository. Each digital work is assigned a “unique identifier.”

The PTAB applied the broadest-reasonable-interpretation standard in construing several phrases referring to “content-based identifiers,” contested claim language. PersonalWeb challenged the PTAB’s construction of the claim terms “content-dependent name,” “content based identifier,” and “digital identifier.” The PTAB construed the terms to mean “an identifier for a data item being based, at least in part, on a given function of at least some of the bits in the particular sequence of bits of the particular data item.”   PersonalWeb argues that the terms require the identifier to rely on “‘all of the data in the data item.’”

The Federal Circuit affirmed the PTAB’s claim construction because the patent specification refers to “at least some” content in three (3) locations and only once does the spec require “all the content” to generate the date file name.  

Turning to the PTAB’s obviousness conclusion, PersonalWeb did not deny that Woodhill discloses the required content-based identifier under the PTAB’s claim construction.

The Appeals Court stated: “Determination of obviousness de novo and its underlying factual determinations for substantial evidence. In re Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000). On the factual components of the inquiry, we ‘ask[] ‘whether a reasonable fact finder could have arrived at the agency’s decision,’‘ which ‘requires examination of the ‘record as a whole, taking into account evidence that both justifies and detracts from an agency’s decision.’ Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1366 (Fed. Cir. 2016) (quoting Gartside, 203 F.3d at 1312).”

“First, the Board had to find in Woodhill and Stefik all of the elements of the ’310 patent claims at issue. But that would not be enough. See In re Kotzab, 217 F.3d 1365, 1371 (Fed. Cir. 2000) (explaining that a finding of obviousness ‘cannot be predicated on the mere identification in [the prior art] of individual components of claimed limitations’). Second, the Board had to find that a person of ordinary skill in the art would have been motivated to combine the prior art in the way claimed by the ’310 patent claims at issue and had a reasonable expectation of success in doing so. See In re NuVasive, Inc., 842 F.3d 1376, 1381–82 (Fed. Cir. 2016); In re Warsaw Orthopedic, Inc., 832 F.3d 1327, 1333–34 (Fed. Cir. 2016).”

The Supreme Court in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), stated that “it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does.” Id. at 418–19. The required “expansive and flexible approach,” id. at 415, may look at a variety of facts, including prior-art teachings and marketplace demands and artisans’ background knowledge, “in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue,” id. at 418; see also id. at 420–421. The Supreme Court further stated: “To facilitate review, this analysis should be made explicit.” Id. at 418.

The Federal Circuit reviewed the PTAB’s IPR decision to ensure that it was not “arbitrary, capricious, an abuse of discretion, . . . otherwise not in accordance with law . . . [or] unsupported by substantial evidence.” 5 U.S.C. § 706(2)(A), (E); see Pride Mobility Prods. Corp. v. Permobil, Inc., 818 F.3d 1307, 1313 (Fed. Cir. 2016).

The Appeals Court found that the PTAB’s reasoning was deficient in finding that a relevant skilled artisan would have had a motivation to combine Woodhill and Stefik in the way claimed in the ’310 patent claims at issue and would have had a reasonable expectation of success in doing so. The PTAB’s most substantial discussion of this issue merely agrees with Apple’s contention that “a person of ordinary skill in the art reading Woodhill and Stefik would have understood that the combination of Woodhill and Stefik would have allowed for the selective access features of Stefik to be used with Woodhill’s content-dependent identifiers feature.” But that reasoning seems to say no more than that a skilled artisan, once presented with the two references, would have understood that they could be combined.

The Federal Circuit stated: “[T]hat is not enough: it does not imply a motivation to pick out those two references and combine them to arrive at the claimed invention.  See Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1073 (Fed. Cir. 2015) (‘[O]bviousness concerns whether a skilled artisan not only could have made but would have been motivated to make the combinations or modifications of prior art to arrive at the claimed invention.’); InTouch Techs., Inc. v. VGO Communications, Inc., 751 F.3d 1327, 1352 (Fed. Cir. 2014).”  The PTAB nowhere clearly explained, or cited evidence showing, how the combination of the two references was supposed to work.

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