IP Law Daily Issue preclusion applies to PTAB decision over communications interface device
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Tuesday, May 28, 2019

Issue preclusion applies to PTAB decision over communications interface device

By Brian Craig, J.D.

The Federal Circuit held that issue preclusion bars a challenge to the PTAB’s decision that patent claims concerning a communications interface device are invalid based on obviousness.

Issue preclusion applies to a final and essential Patent Trial and Appeal Board decision in an inter partes review (IPR) of claims of related patents sharing a specification, the U.S. Court of Appeals for the Federal Circuit has held in a precedential opinion, affirming the Board’s conclusion that patent claims for a communications interface device owned by Papst Licensing GMBH & Co. KG are invalid based on obviousness. The Federal Circuit held that issue preclusion principles apply even when the first "action" was before the Board, the decision was essential, and the party fully litigated the case. The Federal Circuit also ruled in the alternative that the challenge fails on the merits because substantial evidence supports the Board’s finding of obviousness based on prior art references and claim construction (Papst Licensing GMBH & Co. KG v. Samsung Electronics America, Inc., May 23, 2019, Taranto, R.).

Papst Licensing GMBH & Co. KG owns U.S. Patent No. 9,189,437. The ’437 patent is entitled "Analog Data Generating and Processing Device Having a Multi-Use Automatic Processor," which describes an interface device for communication between a data device (on one side of the interface) and a host computer (on the other). Samsung Electronics America, Inc. and Samsung Electronics Co., Ltd. (collectively, Samsung) petitioned for an inter partes review (IPR) of the ’437 patent. The Board determined that the claims are unpatentable for obviousness based on a combination of U.S. Patent No. 5,758,081 (Aytac), a publication setting forth standards for the Small Computer System Interface-2 (SCSI), and "admitted prior art." Papst appealed.

Issue preclusion. The Federal Circuit first ruled that Papst’s challenge fails based on issue preclusion. The U.S. Supreme Court has made clear that issue preclusion principles apply in a court case even when the first "action" was before an agency if the agency proceeding meets certain standards. B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1303 (2015). The issue preclusion doctrine can apply in the Federal Circuit to a Patent Trial and Appeal Board’s decision in an IPR once it becomes final.

Here, the key piece of prior art of relevance is the Aytac patent. Aytac describes connecting a personal computer to an interface device that would in turn connect to (and switch between) various other devices, such as a scanner, fax machine, or telephone. The interface device includes the "CaTbox," which is "connected to a PC via SCSI cable, and to a telecommunications switch." Six weeks before the Board rendered its decision concerning the ’437 Patent, the Board issued final written decisions in two other IPRs involving two other Papst-owned patents which share a specification with the ’437 patent and contain claim terms related to those involved in the disputes before the court. In the two Board decisions, the Board found unpatentability based on Aytac, SCSI, and the admitted prior art. Specifically, the Board concluded that that Aytac, in combination with the SCSI Specification and admitted prior art, "teaches or suggests transferring a file from the storage memory of the interface device to the computer without requiring any user-loaded file transfer enabling software."

The Federal Circuit also recognized that an exception to issue preclusion exists if the amount in controversy in the first action was so small in relation to the amount in controversy in the second that preclusion would be plainly unfair. But here, Papst litigated all the way through to final written decisions involving the two other patents and Aytac. Such pursuit through nearly all of the available process undermines any assertion of relevantly low incentives in the IPRs. As the Board’s finding on Aytac was essential to its decision, the challenge fails based on the issue preclusion doctrine.

Substantial evidence. Apart from issue preclusion, the Federal Circuit also ruled that the challenge fails on the merits because substantial evidence supports the Board’s finding of obviousness. The Federal Circuit agreed with the Board’s claim construction of "without requiring" limitations of the ’437 patent claims. The appeals court also agreed with the Board’s inclusion of SCSI inter-face software in the claim construction as a form of permitted software. Finally, the Federal Circuit agreed with the Board that Aytac teaches an automatic file transfer that can take place with only the SCSI drivers, without the assistance of the user-added CATSYNC software. Samsung’s expert testified that only the SCSI protocol and the ASPI drivers are needed to transfer a file in Aytac, similar to the function of the ’437 patent. Thus, the Federal Circuit affirmed the Board’s conclusion that the patent claims are invalid based on obviousness.

The Case is No. 2018-1777.

Attorneys: Kayvan B. Norooz (Noroozi PC) for Wireless Protocol Innovations, Inc. TCT Mobile, Inc. and TCT Mobile (US) Inc.

Companies: Wireless Protocol Innovations, Inc.; TCT Mobile, Inc.; TCT Mobile (US) Inc.

MainStory: TopStory Patent FedCirNews

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