Affinity Labs of Texas Loses Reexamination Appeal; Reexamination Estoppel Does Not Apply

Federal Circuit, CAFCIn re Affinity Labs of Texas, LLC, Nos. 2016-1092, 2016-1172, 2017 U.S. App. LEXIS 7983 (Fed. Cir. May 5, 2017) (Before Taranto, Chen, and Stoll, J.) (Opinion for the court, Chen, J.)

The Federal Circuit affirmed a Patent Trial and Appeal Board (“Board”) decision to uphold the unpatentability of several claims of a patent owned by Affinity Labs of Texas, LLC (“Affinity”). An Examiner initially found the claims to be unpatentable during two inter partes reexaminations and an ex parte reexamination of Affinity’s patent.

Initially, Richard King filed a request for ex parte reexamination of Affinity’s patent, and subsequently, in response to Affinity suing Volkswagen (“VW”) for infringement, VW filed its own request for inter partes reexamination, relying on different grounds. Apple Inc. (“Apple”) also filed a request for inter partes reexamination after Affinity sued Apple. The PTO granted all three reexamination requests and merged them into a single proceeding.

Apple and Affinity settled and Apple withdrew from participation in the reexamination. In district court, a jury found that VW infringed Claims 28 and 35 of Affinity’s patent, which VW failed to prove are invalid. VW appealed, but then settled with Affinity, and VW withdrew from the reexamination.

Affinity petitioned the PTO to terminate the merged proceedings, under the estoppel provision of pre-AIA 35 U.S.C. § 317(b), which “bars a party from using the inter partes reexamination process after a final decision has been entered against that party in a civil action, finding ‘that the party has not sustained its burden of proving the invalidity of any patent claim in a suit.’” The PTO dismissed Affinity’s request, but severed the VW reexamination, noting that estoppel applied to VW with respect to its litigation of independent Claims 28 and 35 and their dependent claims.

In the severed VW reexamination, the Examiner rejected several claims as unpatentable in view of several prior art references and also found some claims to be patentable. In the merged King/Apple reexamination, the Examiner rejected several claims, including new claims offered by Affinity during the reexamination. The Examiner also found some claims to be patentable. On appeal, the Board affirmed all of the Examiner’s findings.

Affinity appealed to the Federal Circuit. First, Affinity argued that the PTO erred in maintaining the reexaminations in light of the final decision in co-pending litigation that VW failed to prove invalidity of Claims 28 and 35. This should have caused the reexaminations to be estopped under pre-AIA § 317(b). Second, Affinity argued that the Board’s decisions are based on misreading the asserted prior art. Third, Affinity argued that the Board erred by failing to properly consider Affinity’s objective indicia of nonobviousness.

“Section 317(b) bars a party from using the inter partes reexamination process after a final decision has been entered against that party in a civil action.” Affinity urged the Court to order the PTO to terminate all three reexamination proceedings — even though they involve several claims beyond the litigated claims 28 and 35. Furthermore, the other inter partes reexamination requester had no involvement or relationship to that prior litigation, and the third proceeding was an ex parte reexamination.

Affinity’s argument relied on the proposition that “the statute operates differently and has a much broader impact against a losing party’s active, pending inter partes reexamination compared to a losing party’s [subsequent] request for an inter partes reexamination.” According to Affinity, “the scope of the statutory estoppel is claim specific as to requests for inter partes reexamination, but is purely patent-as-a-whole for maintain[ing] a pending inter partes reexamination.”

[Troutman-Ad]

The Court disagreed with Affinity’s interpretation, and instead read “the estoppel provision’s claim-based approach [to] apply in the same way to both a request for inter partes reexamination and the maintenance of a pending inter partes reexamination.” Because pre-AIA § 317(b) applies only to inter partes reexaminations (and not ex parte reexaminations), the Court found that the estoppel provision did not apply to the ex parte King reexamination, and because the statute limits only a requester (or its privies) that was a party to the civil action, the Court found that the estoppel provision did not apply to the Apple reexamination. The Court thus affirmed the PTO’s decision to terminate the VW reexamination—and only the VW reexamination, “as to only the claims in which a final decision in the civil action has been entered—claims 28 and 35.”

Turning to the Board’s affirmation of the Examiner’s unpatentability rejections, the Court evaluated the unpatentability findings of the merged King/Apple reexamination, in which the Board found that several claims were anticipated by Dwyer or obvious over Dwyer in view of additional secondary references.

The Affinity patent relates to a system and method for connecting a portable media player (e.g., an MP3 player) to a different electronic device (e.g., a car audio system). When the portable media player connects to the different electronic device, the system provides a graphical user interface (“GUI”) on the display of the different electronic device. A user is able to select and play music stored on the portable media player using soft buttons that are displayed in the GUI of the different electronic device.

Dwyer relates to portable digital recorders and the “effective and convenient interaction between a portable digital recorder and a personal computer.” Dwyer discloses a recorder that stores audio files and comprises a touch screen with a variety of functions that allow a user to control recording, editing, and playback. Dwyer also discloses associating a title or other identifying information with each file. The Court found the Board to be reasonable in finding that Dwyer’s device necessarily displays name information on the GUI to allow the user to navigate stored digital files. Dwyer also discloses the ability to upload identification data to a personal computer, for use in a GUI display. This allows the user to view and manipulate the information stored on the portable device via the GUI on the personal computer. Thus, substantial evidence supports the Board’s finding that several claims of Affinity’s patent were anticipated by Dwyer.

The Board also found that certain claims were obvious in view of the combination of Naim and Lee. Naim describes transferring recorded audio files from a portable electronic device to a different device. The portable device has an interface to allow the transfer of file data to a PC. Lee discloses an Internet radio system that can be incorporated into a car. The multimedia device in the car includes a display that shows audio information to the user via the GUI and includes soft buttons that a user can manipulate to play audio files stored on a connected portable device. The Court concluded that substantial evidence supports the Board’s finding that several claims are unpatentable in view of Naim and Lee.

Regarding objective indicia of nonobviousness, Affinity argued that (i) a $25 billion industry has developed around in-vehicle device integration, which Affinity claimed to be covered by its patent and (ii) Affinity licensed the patent-at-issue and related patents to a number of entities in excess of $50 million. “Evidence of commercial success [, however,] is only relevant to the obviousness inquiry ‘if there is a nexus between the claimed invention and the commercial success,’” and the Court quickly rejected Affinity’s first objective indicia argument, finding that “Affinity provided no explanation or analysis that corroborates the relationship between the claims of [its] patent and the market for in-vehicle device integration technology generally.”

The Court then rejected Affinity’s second objective indicia argument, explaining that “the mere fact of licensing alone cannot be considered strong evidence of nonobviousness if it cannot also be shown that the licensees did so out of respect for the patent rather than to avoid the expense of litigation.” Affinity did not enter any actual licenses into the record, and “[b]ecause of the lack of specificity in Affinity’s licensing argument, the Board correctly afforded this evidence little weight.”

The Court declined to review the Board’s decision regarding the severed VW reexamination because the claims at issue in that reexamination comprise only a subset of the rejected claims in the King/Apple reexamination, which the Court affirmed. Accordingly, the Court dismissed that appeal as moot.

The estoppel provision of pre-AIA 35 U.S.C. § 317(b) for reexamination proceedings applies, claim-by-claim, to the party in the litigation, and does not trigger termination of reexamination proceedings involving other parties and other claims.

[Troutman-Ad]

[Troutman-About]

Share

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

No comments yet.