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  • PTAB Institutes Its First Derivation Trial: Andersen Corp. v. GED Integrated Solutions, Inc.

    By Jim Lovsin —

    USPTO SealUnder the America Invents Act, the Patent Trial and Appeal Board has been busy handling inter partes review (IPR), covered business method review (CBM), and post-grant review (PGR) proceedings.  Petitioners have filed thousands of petitions (nearly all for IPRs), the Board has instituted thousands of trials, and the Board has rendered thousands of final written decisions.

    By contrast, another AIA proceeding, derivation (DER), has received less attention.  Since derivation proceedings became available in March 2013, petitioners have filed only fourteen derivation petitions and, until recently, the Board has not instituted any derivation trials, much less rendered a final written decision in one.

    That ended last month when the Board instituted its first derivation trial on March 21, 2018, in Andersen Corp v. GED Integrated Solutions, Inc., DER2017-00007, a dispute over a window component.  With the Board instituting the Andersen trial, practitioners have shown a renewed interest in derivation proceedings.  This post provides a background on derivation proceedings, summarizes the Board's Andersen institution decision, and outlines things to look for as the Andersen trial proceeds.

    Background on Derivation Proceedings

    Derivation proceedings address originality of claimed subject matter — who invented it.  The petitioner must have a pending patent application and file the petition within one year of the grant of the patent containing the challenged claim or one year of the publication of the earlier application containing that claim, whichever is earlier.

    In the proceeding, the petitioner must show that (1) the respondent derived the invention from the petitioner, and (2) the respondent filed an application without authorization.

    Derivation is not a new concept, but rather was an issue that could be raised in the Office's oldest (and now defunct) contested proceeding, the interference.  Interference proceedings addressed priority of claimed subject matter — who first invented it.  While the AIA shift to a first-to-file regime did away with interference proceedings for patents with more recent effective filing dates, the Board explained in its first decision denying institution of a derivation trial that it will apply derivation case law as it developed in the interference context to derivation proceedings.  Catapult Innovations Pty Ltd. v. adidas AG, DER2014-00002, Paper 19 (PTAB July 18, 2014).

    To establish derivation, the petitioner must prove (1) prior conception of the challenged claim, and (2) communication of the conception to the respondent.  The conception must include all limitations of the claim, and inventor testimony about conception and communication must be corroborated.  To remedy derivation, the Board may correct the naming of inventors in the challenged application or patent.

    Andersen Institution Decision

    AndersonOn December 16, 2016, Andersen filed a derivation petition asserting derivation by GED of subject matter recited in claims 60-81 of Andersen's U.S. Patent Application No. 15/058,862, filed March 2, 2016, and claims 1-22 of GED's U.S. Patent No. 9,428,953.  The '862 application and '953 patent relate to spacer frames for insulated glass units.

    The Board found Andersen's petition met the requirements for a derivation trial.  The Board also found that Andersen's petition was timely, as the application underlying the '953 patent was filed May 4, 2015, and published December 17, 2015.  The Board further found that Andersen made the threshold showing of derivation to institute a trial.  At the institution phase, the petitioner must provide substantial evidence of derivation, that is, "evidence which a reasonable person might accept as adequate to support a conclusion."  As part of its petition, Andersen submitted the affidavit of Mr. Oquendo, the named inventor of the '862 application.  The Board found that the Oquendo affidavit and supporting exhibits was substantial evidence of the two elements of derivation — prior conception and communication.

    With respect to conception, Mr. Oquendo testified that while he worked for Silver Line, an Andersen subsidiary, he conceived of the claimed spacer frame, developed a prototype of the frame in March 2009 (working with two spacer frames sold by GED), and developed CAD drawings of the frame by June 2009.  Mr. Opquendo also testified that he sent the CAD drawings to five other individuals associated with Silver Line.  With respect to communication, Mr. Oquendo testified that he had several interactions, including email correspondence, with GED beginning in March 2009 in which he communicated his spacer frame design.

    The Board also found that the Oquendo affidavit and one supporting exhibit were substantial evidence that GED filed the application that lead to the '953 patent without Andersen's authorization.  In this regard, Mr. Oquendo testified about an exhibit titled "Agreement on Confidentiality."

    Another requirement for a derivation petition is that at least one of the petitioner's pending claims be "the same or substantially the same," i.e., patentably indistinct, as the respondent's challenged claim, and that the challenged claim be "the same or substantially the same" as the invention disclosed by the petitioner to the respondent.

    The Board found Andersen met this requirement too.  Andersen asserted that claims 60-81 of the '862 application were identical to claims 1-22 of the '953 patent and the Board agreed.  Andersen also presented a mapping of Mr. Opqendo's evidence of conception and communication to claims 1-22 of the '953 patent.  With this mapping, the Board concluded that Andersen had made a sufficient showing of derivation for each of the 22 challenged claims.  Thus, in effect, the Board instituted 22 grounds of derivation.

    Things to Look for in the Andersen Trial

    On the same day that the Board instituted trial, the Board issued a scheduling order, which provides the dates for the Andersen trial through November:

    • April 17 Initial Conference Call
    • June 13 Respondent's response to the petition
    • September 5 Petitioner's reply to respondent's response
    • October 3 Observations regarding cross-examination, motion to exclude evidence, and request for oral argument
    • October 24 Response and opposition
    • November 7 Reply to opposition
    • November 14 Oral argument

    GED Integrated SolutionsThere are several things to look for as the Andersen trial proceeds.  First, it will be interesting to see how the parties' substantive arguments develop.  At the trial phase, Andersen must prove derivation and no authorization by a preponderance of the evidence.  Earlier in the case, the parties argued whether the Board should address Andersen's derivation claim now or wait until examination of the '862 application is complete.  In its brief, GED argued that the '862 claims were unpatentable over prior art and under 35 U.S.C. § 112, and that the subject matter at issue dates back to a GED patent that issued in 1994.  Will GED pursue either of these theories in the trial?

    Second, it will be interesting to see how much discovery the parties seek and how much discovery the Board permits in the proceeding.  Although derivation proceedings use many of the same trial procedures as other AIA proceedings, the Andersen trial is the first time any of these procedures will be used in the derivation context.  And the Andersen trial might provide insight to what extent, if at all, discovery in derivation proceedings will differ from discovery that occurred in interference proceedings that raised derivation.

    Andersen might also impact other derivation petitions.  There are currently three other derivation petitions pending before the Board, and Andersen could affect the disposition of them.  Also, now that the Board has given practitioners an example of a derivation petition that resulted in an instituted trial, it will be interesting to see if the number of derivation petitions increases.

    Patent Docs will monitor the Andersen trial and provide updates as the case progresses.

  • Conference & CLE Calendar

    CalendarApril 9, 2018 – "The Patent System: Transformative Times" (Federal Circuit Bar Association and Boston Patent Law Association) – 2:30 pm to 5:30 pm (ET), Northeastern University, Boston, MA

    April 10, 2018 – "Federal Circuit Practice & Insights: A Townhall with Federal Circuit Judge Kara Stoll" (Federal Circuit Bar Association and Michigan IP Inn of Court) – 4:30 pm to 6:30 pm (ET), University of Detroit Mercy School of Law, Detroit, MI

    April 11, 2018 – "Investing in American Innovation: Is the U.S. Patent Environment Promoting or Limiting Investment?" (U.S. Chamber of Commerce Global Innovation Policy Center and American Intellectual Property Law Association) – 9:00 am to 12:30 pm (EDT), Washington, DC

    April 12, 2018 – "Protecting Software as a Medical Device With Patents, Design Patents and Trade Secrets" (Strafford) – 1:00 to 2:30 pm (EDT)

    April 12, 2018 – "The Role of Facts in Patent Eligibility: Analysis and Strategy" (The Intellectual Property Owners Association) – 3:00 to 4:00 pm (ET)

    April 14, 2018 – "Court of Appeals for the Federal Circuit Practice & Procedure" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – 9:00 am to 4:30 pm (CT), John Marshall Law School, Chicago, IL

    April 19, 2018 – "Overcoming § 101 Rejections for Computer and Electronics Related Patents — Leveraging USPTO Guidance and Recent Decisions to Meet 101 Patent Eligibility Requirements" (Strafford) – 1:00 to 2:30 pm (EDT)

    April 19, 2018 – "When All Else Fails: How, When and Why to Terminate an IP License" (Technology Transfer Tactics) – 1:00 to 2:00 pm (ET)

    April 23-24, 2018 – Paragraph IV Disputes conference (American Conference Institute) – New York, NY

    April 24, 2018 – "Trade Secrets Update 2018: Year Two of the DTSA" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    April 26, 2018 – "Patent Eligibility, Duty to Disclose and More: USPTO Manual of Patent Examining Procedure New Guidance" (Strafford) – 1:00 to 2:30 pm (EDT)

  • MBHB Webinar on Trade Secrets

    MBHB Logo 2McDonnell Boehnen Hulbert & Berghoff LLP will be offering a live webinar entitled "Trade Secrets Update 2018: Year Two of the DTSA" on April 24, 2018 from 10:00 am to 11:15 am (CT).  In this presentation, Patent Docs contributor and MBHB attorney Joshua Rich will discuss what the Defend Trade Secrets Act means nearly two years after its enactment now that certain provisions have been clarified, and provide updates on other trade secret-related laws.  The webinar will also address the following topics:

    • Lessons learned on how to litigate a case under the DTSA from Waymo v. Uber
    •     The scope of potential criminal liability for trade secret misappropriation in light of New York v. Sergey Aleynikov on appeal to the New York Court of Appeals
    • What role the "inevitable disclosure" doctrine has in DTSA litigation
    • What happens when cases arise in part before the enactment of the DTSA
    • When to assert the DTSA, and when to assert other related Federal statutes

    While there is no fee to participate, attendees must register in advance.  Those wishing to register can do so here.  CLE credit is pending for the states of California, Illinois, New Jersey, New York, North Carolina, and Virginia.

  • IPO Webinar on the Role of Facts in Patent Eligibility

    IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "The Role of Facts in Patent Eligibility: Analysis and Strategy" on April 12, 2018 from 3:00 to 4:00 pm (ET).  Calvin Griffith of Jones Day, Daryl Joseffer of King & Spalding, and Corey Salsberg of Novartis will discuss a trio of patentee-friendly Federal Circuit opinions — Berkheimer, Aatrix, and Exergen –- that together can help preclude the early dismissal of suits and the grant of summary judgment motions on patent eligibility grounds on the basis that there are factual disputes that underlie the determination of patent eligibility under § 101.  The panel will discuss:

    • How to best leverage these decisions to your advantage.
    • What you need to know about how to handle issues that could arise on appeal.
    • Who is likely to decide patent eligibility issues going forward, using what evidence, and at what stage of litigation?
    • What model will prevail: Making the factual decision at trial or a Markman hearing-type model disposing of patent eligibility before trial?
    • How does the analogy to obviousness determinations hold up?

    The registration fee for the webinar is $135 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

  • Program on Investing in American Innovation

    U.S. Chamber of CommerceThe U.S. Chamber of Commerce Global Innovation Policy Center (GIPC) and the American Intellectual Property Law Association (AIPLA) will be offering a program entitled "Investing in American Innovation: Is the U.S. Patent Environment Promoting or Limiting Investment?" from 9:00 am to 12:30 pm (EDT) on April 11, 2018 at the U.S. Chamber of Commerce headquarters in Washington, DC.  The program, which will focus on the impact of U.S. patent policy on the domestic innovation ecosystem, will include a keynote address by U.S. Patent and Trademark Office Director Andrei Iancu and a fireside chat with U.S. Circuit Judge Kimberly Moore.  Those interested in registering for the program, can do so here.

  • Webinar on Terminating an IP License

    Technology Transfer Tactics will be offering a webinar entitled "When All Else Fails: How, When and Why to Terminate an IP License" on April 19, 2018 from 1:00 to 2:00 pm (ET). Seema Levy of the Stony Brook University Office of Technology Licensing and Industry Relations will address the following topics:

    • Drafting termination clauses with the how's, when's and why's in mind such as:
        – Non-performance
        – IP challenges
        – Bankruptcy
        – Breach of contract
        – Royalty payment issues
    • How to handle post- termination issues:
        – Sublicenses
        – Return of IP, research materials, data, inventory, etc.
    • Mitigating the risks to relationships with faculty, students, and companies when terminating a license

    The registration fee for the webinar is $197.  Those interested in registering for the webinar, can do so here.

    Technology Transfer Tactics

  • Webinar on MPEP Revisions

    Strafford #1Strafford will be offering a webinar entitled "Patent Eligibility, Duty to Disclose and More: USPTO Manual of Patent Examining Procedure New Guidance" on April 26, 2018 from 1:00 to 2:30 pm (EDT).  Thomas L. Irving, Adriana L. Burgy, and John M. Mulcahy of Finnegan Henderson Farabow Garrett & Dunner will examine the latest revisions to the USPTO Manual of Patent Examining Procedure (MPEP), including a discussion of patent eligibility, duty to disclose, and other changes to the MPEP, and explore the impact on patent prosecution and provide best practices for applying the new guidance.  The webinar will review the following issues:

    • How will examiners apply the revised MPEP?
    • How can patent counsel use the revised MPEP to bolster their arguments when patents are being examined?
    • How does the USPTO's disclosure standard differ from the courts' position?

    The registration fee for the webcast is $297.  Those interested in registering for the webinar, can do so here.

  • House Bill Would Establish National Security Commission on Artificial Intelligence

    By Aaron Gin –

    House of Representatives SealOn March 20, 2018, Rep. Elise Stefanik (R-NY) introduced a bill (H.R. 5356) in the United States House of Representatives in an effort to establish a new National Security Commission on Artificial Intelligence.  The Commission itself would be considered an independent establishment in the Executive Branch under 5 U.S.C. § 104.

    The bill, entitled the National Security Commission Artificial Intelligence Act of 2018, directs the Commission to review advances in "artificial intelligence, related machine learning developments, and associated technologies."  Specifically, the Commission will consider how to advance such technologies so as to "comprehensively address the national security needs of the Nation, including economic risk, and any other needs of the Department of Defense or the common defense of the Nation."

    Various officials, including the Secretary of Defense, the respective Chairpersons of the Committees on Armed Services of the House and Senate, as well as the ranking minority members of those Committees would be responsible for selecting the Commission's eleven appointed members.  Under the language of the bill, the Commission is tasked to provide an initial report no less than 180 days from enactment of the Act and a comprehensive report no later than one year from enactment.  The reports are to be submitted to the President and Congress and will include subject matter such as:

    (A) the competitiveness of the United States in artificial intelligence, machine learning, and other associated technologies, including matters related to national security, economic security, public-private partnerships, and investments;

    (B) means and methods for the United States to maintain a technological advantage in artificial intelligence, machine learning, and other associated technologies, including quantum computing and high performance computing;

    (C) developments and trends in international cooperation and competitiveness, including foreign investments in artificial intelligence, machine learning, and computer science fields;

    (D) means by which to foster greater emphasis and investments in basic and advanced research to stimulate private, public, academic and combined initiatives in artificial intelligence, machine learning, and other associated technologies, including quantum computing and high performance computing;

    (E) workforce and education incentives to attract and recruit leading talent in artificial intelligence and machine learning, including science, technology, engineering, and math programs;

    (F) risks associated with United States and foreign country advances in military employment of artificial intelligence and machine learning, including under the international law of armed conflict, international humanitarian law, and escalation dynamics;

    (G) associated ethical considerations related to artificial intelligence and machine learning as it will be used for future applications;

    (H) means to establish data standards and provide incentives for the sharing of open training data within related data-driven industries;

    (I) development of privacy- and security-protecting measures for data in artificial intelligence, machine learning, and associated technologies; and

    (J) any other matters the Commission deems relevant to the common defense of the Nation.

    The bill appropriates up to $10 million from the Department of Defense budget to fund the Commissions activities.  Upon introduction, the bill was referred to the Committee on Armed Services, as well as the Committees on Education and the Workforce, Foreign Affairs, Science, Space, and Technology, and Energy and Commerce for a period of consideration and comment.

    The bill defines "artificial intelligence" in very similar (and, in some cases, identical) terms as other pieces of proposed House and Senate AI legislation, namely:

    (1) Any artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight, or that can learn from experience and improve performance when exposed to data sets.

    (2) An artificial system developed in computer software, physical hardware, or other context that solves tasks requiring human-like perception, cognition, planning, learning, communication, or physical action.

    (3) An artificial system designed to think or act like a human, including cognitive architectures and neural networks.

    (4) A set of techniques, including machine learning, that is designed to approximate a cognitive task.

    (5) An artificial system designed to act rationally, including an intelligent software agent or embodied robot that achieves goals using perception, planning, reasoning, learning, communicating, decision making, and acting.

    Recent legislative activity in this technology area of seems to suggest increasing public interest in artificial intelligence and its potential for positive and negative effects on society.  Time will tell whether H.R. 5356 — and its national security focus — will enjoy increased traction as the bill is considered, as compared to similar AI legislation proposed under the Secretaries of Commerce (H.R. 4625 and S. 2217) and Labor (H.R. 4829).

    For additional information regarding this topic, please see:

    • H.R.5356 – National Security Commission Artificial Intelligence Act of 2018
    • GOP rep introduces bill to address national security risks of artificial intelligence (The Hill, March 21, 2018)
    • House lawmaker pitches new AI commission to brief Trump (Washington Examiner, March 21, 2018)
    • Multiple Artificial Intelligence Bills Introduced in House and Senate (Patent Docs, February 15, 2018)

  • Ex parte Gershfang (PTAB 2018)

    PTAB Affirms Patent Eligibility of Virtual Reality Advertising Claims

    By James Korenchan —

    USPTO SealIn a decision issued last month, the Patent Trial and Appeal Board reversed the final rejection of all the pending claims in U.S. Application No. 12/628,383.  The claims at issue are directed to evaluating an effectiveness of an advertisement in a virtual reality universe of a multiplayer online game.  In particular, the claimed invention involves evaluating whether a proximity and direction of a user's avatar enables the avatar to effectively view a virtual advertisement and, based on this evaluation, providing a virtual barrier (e.g., a virtual landscape element) that induces the avatar to navigate towards viewing the advertisement.  The claims had been rejected under 35 U.S.C. § 101 as reciting patent ineligible subject matter in the form of an abstract idea of organizing human activities.  Representative claim 1 is as follows:

    1.  A method for navigating an avatar into a proximity and directionality favorable for viewing advertising content in a Virtual Universe (VU) of a multiplayer online game managed by at least one server, the method comprising:
        registering, by the at least one server, a visit by the avatar to a region of the VU that includes a target advertising content;
        determining, by the at least one server, a proximity to the target advertising content by the avatar;
        determining, by the at least one server, an avatar directionality of the avatar with respect to the target advertising content;
        determining, by the at least one server, a time with respect to which the avatar may be exposed to the target advertising content in the region;
        assigning, by the at least one server, at least one score to the visit, the proximity, the directionality, and the time;
        calculating, by the at least one server, an effectiveness score based on the at least one score;
        evaluating, by the at least one server, an effectiveness of the target advertising content by comparing the effectiveness score to a predetermined scale;
        automatically constructing, by the at least one server, a barrier blocking the avatar from moving away from the target advertising content based on the evaluating, the barrier comprising a landscape element; and
        inducing, by the at least one server, using the barrier, the avatar to navigate in such a way that the proximity and the avatar directionality of the avatar favor viewing of the target advertising content.

    In considering the Alice framework and reversing the § 101 rejection, the Board summarized positions of both parties, first noting the Appellants' argument that the nature of virtual reality technology makes it so the claimed invention cannot be performed as an abstract idea in one's head.  The Board also noted the Examiner's conclusion that the claimed invention is directed towards a business model for advertising to force a video game user to view an advertisement.  In reaching this conclusion, the Examiner reasoned in his Answer that "the claimed virtual universe should be considered an environment for a video game on a generic computer network, using conventional technology" and that "[n]o specialized machinery is disclosed the specification or mandated in the claims."

    But the Board sided with the Appellant.  Citing the Federal Circuit's decision in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016), the Board concluded that the plain focus of the claims is "not on economic or other tasks for which a computer is used in its ordinary capacity," but rather "on an improvement to computer functionality itself," the improvement being navigation within the virtual universe.  The Board therefore refused to sustain the rejection of the claims under § 101.

    Interestingly, however, one Board member disagreed with the Board's conclusion and wrote a dissenting opinion in an attempt to emphasize alleged differences between the claimed invention in the present case and that in Enfish.  The dissent first addressed Enfish:

    The invention of Enfish was "directed to an innovative logical model for a computer database."  Enfish, 822 F.3d at 1330.  In contrast to prior-art databases that were based upon a relational model, Enfish's invention was directed to a self-referential model wherein all information of the database appears in a single table, and given rows of the table reference other rows of that same table.  Id. at 1332-33.

    Further, the dissent noted how "[t]he Enfish court expressly noted various technological improvements to the computer functionality that the invention provided."

    But the dissent did not agree that the present invention provided any such improvements.  Addressing the claimed invention, the dissent noted Appellants' argument in the Appeal Brief that the invention is directed to tangible technology and that "embodiments of the invention overcome a problem specifically arising in computing technology, as only in a computerized virtual universe, could there be an issue as to how to induce an avatar to navigate in such a way that it views an electronic advertisement in such virtual universe," and concludes that this argument overlooks Appellants' admission that it was known to provide avatars and advertisements in virtual universes.  The dissent then went on:

    Appellants do not provide reasonable evidence that constructing barriers in virtual universes was technologically challenging in any way or that automatically evaluating the effectiveness of the advertisements provided any technological improvement either to the virtual universes or to the operation of the servers in which the virtual universes reside.  . . .  Appellants' invention is better characterized, then, as one that uses conventional navigation technology to improve upon the effectiveness of known virtual-universe advertising techniques.

    The dissent thus agreed with the Examiner and, despite acknowledging the inherent computerization of virtual reality technology, concluded that "the invention is directed to the abstract idea of improving the effectiveness of advertising" using conventional technology without significantly more.

    The Enfish court distinguished claims that focus on a specific improvement to computer functionality itself from those reciting economic or other tasks for which a computer is used in its ordinary capacity.  Here, the dissent believed the claims to be in the latter category.  To this point, perhaps most notable of the statements made in the dissenting opinion is the final one:  "[T]he record indicates that the invention is an improved advertising idea performed with a computer – not an improvement to the operation of a computer itself" (emphasis in opinion).  This is a compelling point, and one that inherently calls for a careful analysis when comparing claims with those in Enfish.

    Ex parte Gershfang (PTAB 2018)
    Before Administrative Patent Judges Carl W. Whitehead Jr., Bradley W. Baumeister, and Joseph P. Lentivech
    Decision on Appeal by Administrative Patent Judge Whitehead Jr.

  • DSS Technology Management, Inc. v. Apple Inc. (Fed. Cir. 2018)

    By Michael Borella —

    Federal Circuit SealApple filed two petitions for inter partes review (IPR) against DSS's U.S. Patent No. 6,128,290.  The Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office instituted the IPRs and issued final written decisions holding claims 1-4 and 9-10 of the '290 patent obvious.  DSS appealed.

    Claim 1 of the patent recites:

    A data network system for effecting coordinated operation of a plurality of electronic devices, said system comprising:
        a server microcomputer unit;
        a plurality of peripheral units which are battery powered and portable, which provide either input information from the user or output information to the user, and which are adapted to operate within short range of said server unit;
        said server microcomputer incorporating an RF transmitter for sending commands and synchronizing information to said peripheral units;
        said peripheral units each including an RF receiver for detecting said commands and synchronizing information and including also an RF transmitter for sending input information from the user to said server microcomputer;
        said server microcomputer including a receiver for receiving input information transmitted from said peripheral units;
        said server and peripheral transmitters being energized in low duty cycle RF bursts at intervals determined by a code sequence which is timed in relation to said synchronizing information.

    As described by the Federal Circuit, the claimed invention involves "bidirectional wireless data communications between a host or server microcomputer" and "a plurality of peripheral devices."  Furthermore, "the transmitters within the host or server microcomputer and the peripheral units in the data network operate in a low duty cycle pulsed mode of operation."  While in this mode, "when a peripheral unit is neither receiving nor transmitting, its reception and transmission circuitry may be powered down."  According to the specification, doing so significantly reduces power consumption of the system.

    The only claim element under dispute is italicized above.  Particularly, both the server and peripheral transmitters are required to be able to operate in the low duty cycle mode.  The PTAB concluded that one of ordinary skill in the art would be led to this element by the teachings of U.S. Patent No. 5,241,542 (Natarajan).

    The Natarajan reference is directed to mobile units communicating wirelessly with a base station.  Natarajan explicitly states that its focus is on reducing the battery consumption of mobile units.  Like DSS's system, when the transmitters and receivers of these mobile units are not actively transmitting or receiving, they are configured to not consume power.

    Apple argued before the PTAB that "because the mobile unit transmitters in Natarajan operated in low duty cycle RF bursts, it would have been plainly obvious to a person of ordinary skill in the art to have the base station operate in an analogous manner."  Apple further contended that "because the base and mobile stations have the same physical structure, it would have been no more than using a known technique to improve similar devices in the same way."

    DSS countered by observing that "Natarajan says nothing about [reducing power consumption] for the base station transmitter," and that "the stated goal of the Natarajan reference is to provide energy savings for the mobile units, not the base station."  DSS further stated that "the base station in Natarajan uses a different communications scheme than the mobile units [in which it] cannot be turned off at any point during [a critical] period."

    The PTAB sided with Apple, asserting that "Natarajan describes only the mobile units as battery-powered devices," but "the base units also are conventional microcomputers and contain similar wireless communication components as the mobile units."  Based on this observation, the PTAB held that "that a person of ordinary skill in the art would have been motivated by Natarajan to apply the same power-conserving techniques to base units as it is disclosed with respect to mobile units, as well as that it would have been within the skill of the ordinarily skilled artisan to do so."  The PTAB continued, remarking that there was "no persuasive evidence of record that it would have been uniquely challenging or difficult for one of ordinary skill in the art to do so."

    On review, the Federal Circuit noted that a "patent can be obvious in light of a single prior art reference if it would have been obvious to modify that reference to arrive at the patented invention."  The Court considered the PTAB's reasoning to be based on an invocation of "common sense" — that the skilled artisan would have used such an attribute to apply the power-saving features of Natarajan's mobile units to a base station (or, in this case, the claimed server).  The Court, however, raised three considerations that would limit such reasoning:

    First, common sense is typically invoked to provide a known motivation to combine, not to supply a missing claim limitation . . . .

    Second, we have invoked common sense to fill in a missing limitation only when the limitation in question was unusually simple and the technology particularly straightforward . . . .

    Third, our cases repeatedly warn that references to 'common sense'—whether to supply a motivation to combine or a missing limitation—cannot be used as a wholesale substitute for reasoned analysis and evidentiary support, especially when dealing with a limitation missing from the prior art references specified.

    Applying this framework, the Court observed that the technology at issue was not unusually simple or particularly straightforward.  The Court pointed to the PTAB's own difficulties with claim construction to support this notion.

    But the Court's primary issue with the PTAB was the latter body's conclusory reasoning:

    After acknowledging that Natarajan does not disclose a base unit transmitter that uses the same power conservation technique, the Board concluded that a person of ordinary skill would have been motivated to modify Natarajan to incorporate such a technique into a base unit transmitter and that such a modification would have been within the skill of the ordinarily skilled artisan.  In reaching these conclusions, the Board made no further citation to the record.  It referred instead to the "ordinary creativity" of the skilled artisan.  This is not enough.

    Apple's expert opined that "a person of skill in the art applying the exact design disclosed in Natarajan to an application exactly as described in Natarajan, . . . would have conceived a system in which . . . the transmitter and the receiver of the base station . . . operate in low duty cycle RF bursts."  But the Court found this testimony, like that of the PTAB, to lack supportive reasoning.  The Court went on to point out that Natarajan's mobile units and base station have different transmission requirements, and Apple and the PTAB both failed to explain how applying the mobile unit's duty cycle to the base station would work in practice.

    Finally, the Court stated that "this is not a case where a more reasoned explanation than that provided by the Board can be gleaned from the record."  Therefore, Apple failed to establish a prima facie case that the challenged claims were obvious, and the Court reversed the PTAB's ruling.

    Writing in dissent, Judge Newman took issue with two aspects of the decision.  First, she would have found that the PTAB did explain its reasoning regarding the obviousness of the claims in a sufficient fashion.  Essentially, Judge Newman believed that the PTAB incorporated parts of Apple's arguments by reference, and that these arguments were uncontested by DSS.  (At the end of the day, the majority seems to object to the PTAB's conclusion that the duty cycle of the mobile units would also work for the base station, while Judge Newman found such an outcome plausible.)  Second, she asserted that the proper remedy for finding the PTAB's reasoning to be inadequate was to vacate and remand the case for further review by the PTAB.

    DSS Technology Management, Inc. v. Apple Inc. (Fed. Cir. 2018)
    Panel: Circuit Judges newman, O'Malley, and Reyna
    Opinion by Circuit Judge O'Malley; dissenting opinion by Circuit Judge Newman