By Cheryl Beise, J.D.
The Patent Trial and Appeal Board did not err in rejecting several claims of Affinity Labs of Texas’s patent for connecting a portable media player to another device, the U.S. Court of Appeals for the Federal Circuit has held. After a Texas jury found that two claims of the patent-in-suit were valid and infringed by Volkswagen during the pendency of consolidated reexamination proceedings, the USPTO properly severed the Volkswagen inter partes reexamination proceeding and correctly terminated that reexamination as to only the two claims at issue in the litigation. The final decision in the Volkswagen litigation, however, had no preclusive effect on the remaining consolidated reexamination, and the Board was not estopped from reexamining all challenged claims (In re Affinity Labs of Texas, LLC, May 5, 2017, Chen, R.).
Affinity Labs owns U.S. Patent No. 7,324,833 (the ’833 patent). The ’833 patent relates to a system and method for connecting a portable media player, such as an MP3 player, to a different electronic device, such as a car audio system.
Reexamination proceedings. Richard King filed a request for ex parte reexamination of all claims of the ’833 patent on November 7, 2008. After being sued by Affinity, Volkswagen and Apple each filed requests for inter partes reexamination of all claims of the ’833 patent, in September and November, 2009, respectively. The USPTO granted all three requests, and merged the reexaminations into a single proceeding. Apple and Affinity reached a settlement and Apple filed a notice of nonparticipation in its reexamination proceeding in October 2011. Affinity’s case against Volkswagen proceeded to trial and a Texas jury found that claims 28 and 35 were valid and infringed. Volkswagen filed an appeal, but after reaching a settlement with Affinity, Volkswagen voluntarily dismissed the appeal and withdrew from the reexamination proceeding in June 2012.
Affinity then petitioned the USPTO to terminate the entire merged reexamination proceedings under 35 U.S.C. §317(b). Instead of dismissing the reexamination, the USPTO severed the Volkswagen reexamination and held that the estoppel provision of pre-AIA section 317(b) applied in the severed proceeding only as to independent claims 28 and 35. In the severed Volkswagen reexamination, the Examiner rejected claims 1–5, 8–20, and 22–27 as unpatentable based on various prior art references and combinations. In the merged King/Apple reexamination proceeding, the Examiner rejected claims 1–27 and new claims 37–42, 45, and 46, added during reexamination. In two final written decisions, the Board affirmed the Examiners’ rejections, and added additional grounds for rejection of certain claims in the Volkswagen reexamination. Affinity appealed.
Affinity’s petition to terminate. Affinity first argued that the USPTO erred in denying its petition to terminate the reexaminations in light of the final decision that Volkswagen failed to prove invalidity of two of the patent’s claims. Citing the policy goal of preventing duplicative, harassing actions, Affinity argued that the pre-AIA estoppel provision, 35 U.S.C. §317(b), required the USPTO to terminate both the Volkswagen reexamination and the merged King/Apple reexamination.
The Federal Circuit disagreed. The pre-AIA section 317(b) prohibited reexamination on "any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action." Estoppel was accordingly limited in two ways: (1) to the specific claims that were actually at issue in the district court proceeding; and (2) to challenges to thoseclaims that were raised or could have been raised. In addition, the pre-AIA inter partes reexamination regime emphasized examination on a claim-by-claim basis.
The Federal Circuit also declined to read Section 317(b) "in an incongruous way" that would cause the statutory estoppel provision to apply differently to a request for an inter partes reexamination, compared to a pending inter partes reexamination. The court accordingly held that "section 317(b) plainly limited the scope of estoppel in all circumstances to only those claims actually challenged and for which the requesting party received an adverse final decision in the district court proceeding."
In this case, the USPTO correctly terminated the Volkswagen reexamination as to only the claims in which a final decision in the civil action had been entered—claims 28 and 35. The Board also properly determined that the final decision in the Volkswagen litigation had no preclusive effect on the reexaminations requested by King or Apple because neither was a party in the Volkswagen case. Affinity’s policy argument could not override the plain language of the statute, the court said.
Merits of invalidity findings. Affinity also argued that the Board erred in upholding the Examiner’s unpatentability rejections in both decisions. However, the Federal Circuit held that substantial evidence supported the Board’s unpatentability findings as to all challenged claims in the merged King/Apple reexamination. The court did not need to address the additional grounds for invalidity at issue in the appeal of the Volkswagen decision.
The Board found that claims 1–27, 39, and 45 were anticipated by U.S. Patent No. 6,671,567 (Dwyer) or obvious over Dwyer in view of additional secondary references. Dwyer generally relates to the field of portable digital recorders and the "effective and convenient interaction between a portable digital recorder and a personal computer." The Board reasonably found that Dwyer’s portable electronic device (1) displayed name information on the graphical interface to allow the user to meaningfully navigate the digital files stored on the device; (2) taught communicating information from the portable recorder device to the user’s personal computer; and (3) disclosed information (including a name) associated with audio files displayed in the graphical user interface for selection and playback by the user.
The Board also did not err in finding that claims 1–26, 37–42, and 45–46 were obvious over U.S. Patent Nos. 6,694,200 (Naim) and 6,728,531 (Lee), or obvious over Naim and Lee in combination with additional secondary references. Naim teaches a system where recorded audio files can be transferred from a portable electronic device to a different electronic device. The Board reasonably concluded that Naim disclosed a portable electronic device graphical interface item comprising a name because uploaded content was stored in memory as a digital data file and would necessarily include identifying information such as file name. Lee discloses an Internet radio system that can be incorporated into a car. Contrary to Affinity’s contention, under the broadest reasonable interpretation, substantial evidence supported the Board’s finding that Lee taught the claimed "mounting location ... that includes a physical interface." Even under Affinity’s narrow construction, substantial evidence supported the Board’s finding that the combination of Naim and Lee disclosed the claimed physical interface, the court found.
The Board also did not err in refusing to give dispositive weight to Affinity’s objective indicia of nonobviousness. Affinity pointed to (1) a $25 billion industry developed around in-vehicle device integration, which it says was covered by the claims of the ’833 patent; and (2) Affinity’s licensing of the ’833 patent and its siblings to a number of entities for more than $50 million. However, Affinity failed to present evidence to establish a nexus between the commercial success of in-vehicle device integration technology generally and the claims of the ’833 patent specifically. Regarding its licenses, Affinity failed to explain the terms of the licenses, the nature and number of the other licensed patents, or what percentage of this revenue—if any—was attributed specifically to the ’833 patent.
The Federal Circuit accordingly affirmed the Board decision in the King/Apple reexamination that claims 1–27, 37–42, and 45–46 were unpatentable. In addition, because claim 36 was rejected by the Examiner and Affinity made no independent argument regarding claim 36, the court remanded the case to the Board for the limited purpose of correcting the record to reflect that claim 36 is rejected as unpatentable before issuing a reexamination certificate. The court dismissed the Volkswagen appeal as moot.
The case is Nos. 2016-1092 and 2016-1172.
Attorneys: William Manske (Robins Kaplan LLP) for Affinity Labs of Texas, LLC. Robert McBride, Office of the Solicitor, USPTO, for intervenor Michelle K. Lee.
Companies: Affinity Labs of Texas, LLC
MainStory: TopStory Patent FedCirNews
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