CAFC Delivers Blow to Apple in Appeal of PTAB Disputes with Smart Mobile

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued two decisions today in related appeals arising from inter partes review (IPR) proceedings between Apple Inc. and Smart Mobile Technologies LLC. In the case, Apple Inc. v. Smart Mobile Technologies LLC, the CAFC affirmed a Patent Trial and Appeal Board (PTAB) determination that Apple failed to prove certain claims of two Smart Mobile patents unpatentable as obvious, while vacating and remanding a separate portion of the same judgment that had found other claims obvious. In the companion appeal, the CAFC affirmed the PTAB’s decision rejecting Apple’s obviousness challenge to a third related patent. Circuit Judge Stark authored both opinions for a panel that included Circuit Judges Reyna and Hughes.

Smart Mobile owns a family of patents, including U.S. Patent Nos. 8,842,653, 9,019,946, and 9,319,075, which covers mobile wireless devices equipped with multiple transmitter and receiver components. Smart Mobile filed a lawsuit against Apple in the Western District of Texas in 2021, alleging infringement of 13 patents. The case was later transferred to the Northern District of California, where litigation remains pending resolution of the IPRs.

Apple petitioned for IPR of claims across all three patents, challenging them as obvious over the combination of two prior art references, a patent identified as Yegoshin and a patent identified as Bernard. Yegoshin discloses a cellular phone equipped with additional communication ports allowing use of both cellular and wireless local area network (WLAN) connections. Bernard describes an external cradle for a Personal Digital Assistant that allows the device to communicate across multiple networks through a shared interface.

The central dispute concerned the meaning of “multiplexed signals,” a term appearing in claim 1 of the ‘653 and ‘946 patents, and the related term “multiplexing signals” in the ‘075 patent. Apple argued for a broad construction covering any arrangement in which multiple signals share a physical pathway, even sequentially, a concept the opinion referred to as “switching.” The Board rejected that reading and instead adopted Smart Mobile’s narrower position, construing the term to mean “combining multiple signal streams into one,” which requires that signals be combined into a composite before simultaneous transmission over a shared pathway.

The CAFC agreed with the Board’s construction, finding support in the claim language itself, since the term describes multiplexing occurring to signals rather than to the paths carrying them. The court also found the specification consistent with that reading, noting that portions describing multiplexing referred to signals being combined at each end of a shared path rather than to the path functioning as the multiplexer. Applying that construction, the Board had found that neither Yegoshin nor Bernard disclosed multiplexed signals, and the CAFC held that substantial evidence supported that finding, including the Board’s determination that Bernard’s second embodiment, unlike its first, does not describe a multiplexer.

On that basis, the CAFC affirmed the Board’s judgment that Apple failed to prove claims 1-13 and 27-30 of the ‘653 patent and claims 1-13, 16, and 26 of the ‘946 patent unpatentable. In the companion appeal involving the ‘075 patent, the court incorporated its claim construction analysis from the opinion and affirmed the Board’s separate finding that Apple failed to prove claims 1-3 and 5 of the ‘075 patent unpatentable, since the same prior art combination and the construction of “multiplexing signals” applied.

Smart Mobile’s cross-appeal in the case concerned claim 17 of the ‘653 and ‘946 patents, along with their dependent claims, which the Board had found obvious based on a motivation to combine Yegoshin’s phone with Bernard’s cradle functionality. Smart Mobile argued that the Board violated the Administrative Procedure Act (APA) by failing to address its “bottlenecking” argument. Smart Mobile presented this argument through the testimony of its expert, Dr. Cooklev. He contended that incorporating Bernard’s serial interface into Yegoshin’s device would slow data transmission enough to deter a skilled artisan from making the proposed combination.

The Board’s final written decisions stated that “Neither [Smart Mobile] nor Dr. Cooklev addresses that explanation” when crediting Apple’s motivation to combine theory. The CAFC found this statement inaccurate, since Smart Mobile had raised the bottlenecking argument at length in its Patent Owner Responses in connection with claim 1, and Apple had relied on the same motivation to combine analysis for claim 17. The court determined that “we cannot reasonably discern the Board’s basis for siding with Apple” given the Board’s failure to engage with that evidence, and it noted that an obviousness analysis requires weighing the benefits and detriments of a proposed combination against one another. Accordingly, the CAFC vacated the Board’s finding that claims 17-21 and 23-26 of both patents are unpatentable and remanded for further proceedings addressing the bottlenecking evidence.

The CAFC rejected Apple’s alternative argument that the vacated judgment should be affirmed on the ground that Smart Mobile failed to respond to Apple’s stated benefits of the combination, finding that the Board’s consideration of the bottlenecking evidence could not be confirmed on the existing record.

Ultimately, the CAFC affirmed the Board’s judgment with respect to claims 1-13, 27-30 of the ‘653 patent and claims 1-13, 16, and 26 of the ‘946 patent, and vacated and remanded the Board’s judgment with respect to claims 17-21 and 23-26 of both patents. In the companion appeal, the CAFC affirmed the Board’s judgment with respect to claims 1-3 and 5 of the ‘075 patent.