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IP News

By Jeff Ginsberg and George Soussou
November 01, 2018
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Obviousness Determination Can Be Different for Apparatus and Method Claims

On Sept. 13, 2018, a Federal Circuit panel of Judges O'Malley, Reyna, and Taranto issued a per curium decision in ParkerVision, Inc. v. Qualcomm Inc. et al., No. 2017-2012 (Fed. Cir. 2018). The Federal Circuit affirmed the decision of the U.S. Patent Trial and Appeals Board (the Board) that the apparatus claims of U.S. Patent No. 6,091,940 (the '940 patent) were unpatentable as obvious under 35 U.S.C. §103. In addition, the Federal Circuit affirmed the Board's determination that the method claims of the '940 patent were not unpatentable.

ParkerVision, Inc. (ParkerVision) owns the '940 patent, titled “Method and System for Frequency Up-Conversion.” Id. at 2. The invention relates to “telecommunications devices, such as cellular phones, in which low-frequency electromagnetic signals are 'up-converted' to higher-frequency signals by various means.” Id. The invention sought to improve the efficiency of up-conversion by “modulating the amplitude of the baseband signal with the help of an 'oscillating signal.'” Id. at 3.

Both apparatus and method claims were at issue in the appeal. See, id. at 4. Qualcomm Inc. and Qualcomm Atheros, Inc. (collectively, Qualcomm) filed three petitions for inter partes review. See, id. The first two petitions cited three prior art references: Nozawa, Philips, and Maas (collectively, the Nozawa IPRs). The third petition also cited three prior art references: Ariie, Maas, and Krauss (the Ariie IPR). See, id. at 5-6. In the Nozawa IPRs, the Board found the apparatus claims obvious over the cited prior art references. See, id. at 7. The Board found “it was undisputed that 'the structure of Nozawa is capable of producing a signal that satisfies the limitations of the claim.'” Id. (emphasis in original). However, with respect to the method claims, the Board found that Qualcomm “impermissibly had changed its theory of unpatentability.” Id. Although Qualcomm asserted “that Nozawa taught a plurality of harmonics,” the Board found that, in its petitions, Qualcomm “failed to provide any argument or evidence as to why a person of ordinary skill would have selected operating conditions that would cause Nozawa to generate a plurality of integer-multiple harmonics.” Id. In the Ariie IPR, the Board found the claims unpatentable as obvious over the cited prior art. Id. at 7-8.

ParkerVision appealed, and Qualcomm filed a cross-appeal. See, id. at 8. The Federal Circuit affirmed the findings of unpatentability of the apparatus claims and patentability of the method claims. See, id. at 16. With respect to the apparatus claims in the Nozawa IPRs, the Federal Circuit found that Qualcomm effectively explained how the prior art references describe “the plurality of harmonics” limitation. See, id. at 9. The court reiterated its holding that “apparatus claims cover what a device is, not what a device does.” Id. at 9 (quoting Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1468 (Fed. Cir. 1990)) (emphasis in original). In addition, the Federal Circuit noted that “depending on the claims, 'an accused device may be found to infringe if it is reasonably capable of satisfying the claim limitations, even though it may also be capable of noninfringing modes of operation.'” Id. at 10 (quoting Intel Corp. v. U.S. Int'l Trade Comm'n, 946 F.2d 821, 832 (Fed. Cir. 1991)). The court noted that claims can recite “capability” or “configuration.” See, id. Here, the Federal Circuit found that the claims of the '940 patent are claims of “capability” that “recite no structural limitations that would preclude a prior art references that discloses a different structure from performing the claimed function.” Id. at 10-12. Therefore, the Federal Circuit agreed that “Nozawa's circuit is capable of producing a 'plurality of harmonics'” and affirmed the Board's decision that the apparatus claims were unpatentable. Id.

With respect to the method claims, the Federal Circuit found that they “present a different story.” Id. at 13. The court found that “[w]hile Qualcomm was only required to identify a prior art reference that discloses an apparatus 'capable of' performing the recited functions to prove that the apparatus claims would have been obvious, more was required with respect to the method claims.” Id. Qualcomm “needed to present evidence and argument that a person of ordinary skill would have been motivated to operate Nozawa in a manner that satisfied the 'plurality of harmonics' limitation.” Id. (quoting InTouch Techs., Inc. v. VGO Commc'ns, Inc., 751 F.3d 1327, 1346-47 (Fed. Cir. 2014)). The Federal Circuit agreed with the Board's determination that Qualcomm did not explain whether a person of skill in the art would have a reason to “operate Nozawa with inputs that would produce the required 'plurality of harmonics.'” Id. The court found that “Qualcomm failed to put forth any argument or evidence in its petitions as to whether Nozawa's device, even if capable of doing so, actually would output a periodic signal with a plurality of integer-multiple harmonics” in its petition and did not explain “why a person of ordinary skill in the art would have been motivated to use the particular inputs that would result in such an output.” Id. at 14.

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Petitioner “Bears the Burden” On Demonstrating Real Parties in Interest

On Sept. 7, 2018, a Federal Circuit panel of Judges Prost, O'Malley, and Taranto issued a per curium decision in Worlds Inc. v. Bungie, Inc., No. 2017-1481 et al. (Fed. Cir. 2018). The Federal Circuit vacated the final written determination of the Patent Trial and Appeals Board (the Board) invalidating three patents and remanded the case to address a “real-party-in-interest issue.” Id. at 20.

Worlds Inc. (Worlds) owns U.S. Patent Nos. 7,945,856; 8,082,501; and 8,145,998 (collectively, “the patents-in-suit”). See, id. at 2. These patents relate generally “to the computer-generated display of avatars in a virtual world.” Id. In 2012, Worlds filed a lawsuit against Activision Publishing, Inc. (Activision), alleging patent infringement of the patents-in-suit. Bungie, Inc. (Bungie), a separate videogame developer, was not sued in Worlds' lawsuit against Activision. See, id. Bungie developed “the Destiny products,” which were distributed by Activision. See, id. At the time the complaint was filed, the Destiny products were not at issue in the litigation. See, id. at 3.

In November 2014, Worlds notified Activision that it intended to include the Destiny products as another accused product. See, id. Six months after that notification, Bungie filed inter partes review (IPR) petitions, challenging the validity of the patents-in-suit. See, id. Worlds sought discovery to determine whether Activision should have been named as a real party in interest in the IPR. See, id. If Activision was a real party in interest, the petitions would be time barred under 35 U.S.C. §315(b). See, id. Worlds noted that Bungie and Activision had a “Software Publishing and Development Agreement,” where, for example, Bungie was responsible for legal review of the products. See, id. at 3-4.

Worlds argued in its pre-institution, preliminary response that Activision should have been named a real-party-in-interest. Id. at 4. The Board disagreed, finding that “Patent Owner has not demonstrated that Activision is an unnamed real party in interest in this proceeding.” Id. In its subsequent appeal to the Federal Circuit, Worlds stated that “the Board placed the burden of persuasion on the patent owner” regarding the real party in interest, which Worlds argued was error. Id. at 6.

The Federal Circuit addressed the “burden framework the Board used to analyze the evidence presented in these IPRs, including an identification of which party the Board viewed as bearing the burden of persuasion.” Id. The court cited Atlanta Gas Light v. Bennett Regulator Guards, Inc., IPR2013-00453, Paper 88 (P.T.A.B. Jan. 6, 2015) for the proposition that the petitioner has the burden to “establish that it has complied with the statutory requirement to identify all the real parties in interest.” Id. at 7. The Federal Circuit “largely concurred” with that framework, and found that “the IPR petitioner bears the burden of persuasion to demonstrate that its petitions are not time-barred under §315(b) based on a complaint served on a real party in interest more than a year earlier.” Id. at 7-8. Although the Federal Circuit agreed that “a patent owner must produce some evidence to support its argument that a particular third party should be named a real party in interest,” the burden of persuasion does not shift to the patent owner. Id. at 8.

After determining that the petitioner has the burden of persuasion, the Federal Circuit next addressed “the proper procedure for analyzing whether a petition should be time-barred based on a complaint served on a real party in interest more than a year earlier.” Id. at 9. The Federal Circuit found that “an IPR petitioner's initial identification of the real parties in interest should be accepted unless and until disputed by a patent owner.” Id. at 11.

The Federal Circuit next addressed what a patent owner must do to sufficiently raise an issue with a petitioner's identification of the real parties in interest. See id. The court found that “a patent owner must produce some evidence that tends to show that a particular third party should be named a real party in interest.” Id. at 11-12 (emphasis in original). The Board, in its decision, had rejected Worlds' argument that the “Software Publishing and Development Agreement” demonstrated that Activision was a real party in interest. See, id. at 14-15. On appeal, the court found this to be improper, because Worlds “presented evidence sufficient to put Bungie's identification of itself as the sole real party in interest into dispute.” Id. at 15. The Federal Circuit therefore vacated the Board's decision and remanded the case for further consideration on the real party in interest issue, with the burden of persuasion on the petitioner. See, id. at 16-17.

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 Jeff Ginsberg is a Partner of Patterson Belknap Webb & Tyler LLP and Assistant Editor of this newsletter. George Soussou is an associate at the firm.

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