Federal Circuit Review – October 2023 | Knobbe Martens
Substantial Evidence in Determining Obviousness
In Schwendimann v. Neenah, Inc, Appeal No. 22-1335, the Federal Circuit held that the PTAB’s finding on obviousness is supported by substantial evidence that a skilled artisan would be motivated to combine references and have a reasonable expectation of success in making the proposed combination.
Neenah petitioned for inter partes review of Schwendimann’s patents relating to transferring images onto dark-colored fabrics arguing obviousness over various combinations of references. The Board instituted and found the claims unpatentable as being obvious because a skilled artisan would have been motivated to combine the teachings of references Kronzer and Oez, and would have had a reasonable expectation of success in making such a combination. Regarding motivation to combine, the Board found both Kronzer and Oez were directed to improving the image transfer quality of transfer sheets and there were sufficient rational underpinnings to explain why a skilled artisan would be motivated to combine Kronzer and Oez. The Board explained that Kronzer did not need to solve the specific problem addressed by Schwendimann’s patents for a skilled artisan to have a reason to combine the teachings of Kronzer and Oez, and reiterated that both references were aligned with a common goal of improving the quality of transferred images. Regarding a reasonable expectation of success in combining Kronzer and Oez, the Board concluded Oez did not teach away from the proposed combination and there was no evidence to support that the proposed combination would lead to unpredictable results. The Board held that differing “peel” methods used by Kronzer and Oez would not dissuade a skilled artisan from making the proposed combination because the skilled artisan does not abandon common sense when considering the combination of references.
The Federal Circuit affirmed the Board’s decision on appeal. The Federal Circuit held relevant factual determinations supporting the Board’s obviousness conclusions are clear. The Federal Circuit concluded Kronzer’s and Oez’s disclosures as well as testimonies are substantial evidence supporting the Board’s finding that a skilled artisan would be motivated to combine the references. Regarding a reasonable expectation of success, the Court found that Oez’s disclosure is substantial evidence that Oez does not teach away from the proposed combination. The Court found substantial evidence supports the Board’s conclusion that making the proposed combination would not lead to unpredictable results and a skilled artisan would use their common sense when making the proposed combination to arrive at an operable transfer sheet.
The Court held Schwendimann forfeited her argument – that the Board erred by not explaining why a skilled artisan would have chosen Kronzer as the “primary reference” for the proposed combination – by failing to present the argument to the Board. The Court explained that Schwendimann did not cite any exceptional circumstances that could warrant consideration of the argument. The Court further opined that the argument has no basis in case law because characterizing references as primary and secondary is merely a matter of presentation with no legal significance. Accordingly, the Federal Circuit affirmed the decision of the Board.
It’s Noah Group Two: Software Protocol Names in Specification May Remove Bar on PTAB’s Consideration of Expert Testimony
In Sisvel Int’l S.A. v. Sierra Wireless, Inc., Appeal No. 22-1493, the Federal Circuit held that analyzing computer-implemented means-plus-function claims, the Board must consider expert testimony on a POSITA’s knowledge when software protocol names mentioned in the specification connote specific structures to a POSITA.
Sierra requested an Inter Partes Review of a patent owned by Sisvel. The patent at issue discloses methods and systems of channel coding when transmitting data in radio systems. Claim 5 of the patent recites a “means for detecting” limitation. Sierra argued that this limitation should be construed as a means-plus-function limitation, relying on certain software protocols mentioned by name in the specification and agreement between both parties’ experts that these protocols were well-known to a POSITA.
The Board construed this limitation as “means-plus-function” but determined that Sierra failed to identify “[sufficient] algorithmic structure.” In particular, the Board appeared to categorize this case as a “group one” case under Noah Systems, Inc. v. Intuit, Inc., 675 F.3d 1302 (Fed. Cir. 2012) where the specification discloses absolutely no algorithm and the knowledge of a POSITA is irrelevant, as the Board found it not a Noah “group two” case where Sierra’s expert testimony could remedy the insufficient structure disclosed in the specification itself.
The Federal Circuit overturned the Board’s decision as to the “means for detecting” limitation. The Federal Circuit went over both its Noah group one and group two precedents. The Federal Circuit concluded that the explicit references to the names of software protocols in the specification was sufficient to bring this case out of the “absolutely no disclosure” group one in Noah. Accordingly, The Federal Circuit held that this case was in fact a “Noah group two” case that required the Board to consider expert testimony on the knowledge of a POSITA to access whether the protocol name sufficiently discloses an understood algorithm.
Definite Articles in Claim Construction: Drafter Beware
In Finjan LLC V. Sonicwall, Inc., Appeal No. 22-1048, the Federal Circuit held that the Court ruled on several issues and held that Sonicwall did not infringe the Finjan’s patent which required several functions to be performed by the same computer not one or more computers.
Finjan asserted that Sonicwall infringed two groups of patents: U.S. Patent Nos. 8,677,494, 6,154,844, 6,804,780, and 7,613,926 (collectively the “Downloadable patents”) and U.S. Patent No. 8,225,408 (the “ARB Patent”). The Downloadable patents describe methods of screening files to protect users from malware that may be included in a seemingly innocuous download. The ARB patent relates to a similar technology that scan incoming code to identify potential exploits. Finjan appealed several orders entered by the District Court at summary judgment including: (1) Sonicwall did not infringe the ARB patents because the claimed functions were performed by more than one computer; (2) Sonicwall did not infringe the Downloadable patents because the accused product did not reconstitute incoming packets into an “executable” file; (3) the ’780 and ’844 patents were invalid based on collateral estoppel; and (4) striking Finjan’s expert’s apportionment analysis.
First, the Federal Circuit relied on its recent decision in Salazar v. AT&& Mobility, Inc. and affirmed the District Court’s holding that Sonicwall did not infringe the ARB Patent because the claimed steps were performed by more than one computer. 64 F.4th 1311 (Fed. Cir. 2023). The claims of the ARB patent recited “a computer” and a series of steps performed by “the computer.” Relying on Salazar, the Court held that using “the” to refer back to a single computer supported the conclusion that the recited steps are performed by the same computer rather than one or more computers. Further the Court differentiated the claims at issue from those in 01 Communique Laboratory, Inc. v. LogMeIn, Inc., explaining that the use of “a,” “its,” and “the” by themselves did not limit the scope of the term “the locator server” to one computer because the specification provided the server could comprise “multiple computers.” 687 F.3d 1292 (Fed. Cir. 2012). Rather by referring back to “the computer,” claim 1 of the ARB patent required that the same computer perform each of the recited steps. Accordingly, because Sonicwall did not perform the recited steps on a single computer, the Court upheld the District Court’s judgement of non-infringement.
On the remaining issues, the Court affirmed that Sonicwall did not infringe the Downloadable patents. The court relied on the parties’ stipulated meaning of the term “downloadable” as “an executable application program” to hold that Sonicwall did not infringe the Downloadable patents because its systems scanned incoming packets rather than “executable” files. Judge Bryson dissented, arguing that while Finjan stipulated to the meaning of “downloadable,” it did not stipulate to the interpretation of the term “executable,” which could include incoming packets.
Finally, the Court reversed the District Court’s entry of judgment of invalidity as to the ’780 and ’844 patents because the related judgment relied on for collateral estoppel was vacated. The Court also affirmed the District Court’s exclusion of Finjan’s expert apportionment analysis because it did not take into account sub-elements of Sonicwall’s systems.
Magnetic Motivation to Combine
In Cyntec Co. Ltd. v. Chilisin Elecs. Corp., Appeal No. 22-1873, the Federal Circuit held that whether a motivation to combine references exists is a factual question which should be reserved for the jury.
Cyntec sued Chilisin for infringement of patents relating to the use of two magnetic powders with different particle size and hardness in the manufacture of molded choke inductors.
The district court granted Cyntec’s motion for judgment as a matter of law that the patents were not obvious. Chilisin’s expert testimony had combined two references, one of which disclosed the use of two magnetic powders for the manufacture of an inductor (Shafer reference), and the other disclosed the use of powders having different particle size and hardness (Nakamura reference). The district court granted Cyntec’s motion because the Shafer reference did not disclose the size or hardness of the magnetic powders, cutting against the motivation to combine.
The Federal Circuit reversed, noting that a skilled artisan’s motivation to combine is a question of fact ordinarily reserved for the jury. The Federal Circuit concluded that Chilisin’s expert evidence was sufficient to show that a skilled artisan would be motivated to look to Nakamura to improve the performance of the two powders disclosed by Shafer.
The Federal Circuit also reversed the district court’s decision denying Defendant Chilisin’s Daubert motion of Cyntec’s damages expert. It concluded that the expert’s calculations were based on revenue reports which included irrelevant products. Further, it affirmed the district ourt’s construction of the term “by means of the first hardness difference” to require the hardness difference “have an impact on” the subsequently recited limitations.
