In a unanimous opinion issued on February 14, 2017, a three-judge panel of the Federal Circuit vacated the Board’s obviousness determination in Apple’s inter partes review against PersonalWeb and remanded for further proceedings, “because the Board did not adequately support its findings that the prior art disclosed all elements of the challenged claims and that a relevant skilled artisan would have had a motivation to combine the prior-art references to produce the claimed [] inventions with a reasonable expectation of success.” Pers. Web Techs., LLC v. Apple, Inc., No. 2016-1174, 2017 WL 587132 (Fed. Cir. Feb. 14, 2017).

PersonalWeb’s U.S. Patent No. 7,802,310 (“the ’310 patent”) “describes and claims methods (or devices for carrying out methods) of locating data and controlling access to data by giving a data file a substantially unique name that depends on the file’s content—a so-called ‘True Name.’” Id. at *1. The Board instituted a review of claims 24, 32, 70, 81, 82, and 86 of the ’310 patent on March 26, 2014 in response to Apple’s petition which argued “unpatentability, under 35 U.S.C. § 103, for obviousness based on a combination of the Woodhill reference (U.S. Patent No. 5,649,196) and the Stefik reference (U.S. Patent No. 7,359,881).” Id. On March 25, 2015 the Board issued its Final Written Decision, holding all reviewed claims unpatentable as obvious based on a combination of the Woodhill and Stefik references. Id. at *2 (citing Apple Inc. v. PersonalWeb Technologies, LLC, IPR2013–00596, 2015 WL 1777147 (PTAB Mar. 25, 2015), at *7–13). PersonalWeb appealed the Final Written Decision, except as to claim 70, to the Federal Circuit. Id.

After discussing and dismissing PersonalWeb challenges to the Board’s claim construction and to its use of the broadest reasonable interpretation standard, the court moved to the analysis of PersonalWeb’s challenge to the Board’s finding of obviousness and “conclude[ed] that the Board has not done enough to support its conclusion.” Id. at *3. The court rooted its analysis of obviousness both on legal and statutory grounds. See id. at *4 (citing KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007); In re NuVasive, Inc., 842 F.3d 1376 (Fed. Cir. 2016); Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359 (Fed. Cir. 2015); 5 U.S.C. § 706(2)(A), (E)). The court concluded that “[t]he Board’s decision here is inadequate” because “[t]he Board did not sufficiently explain and support the conclusions that (1) Woodhill and Stefik disclose all of the elements recited in the challenged claims of the ’310 patent and (2) a relevant skilled artisan would have been motivated to combine Woodhill and Stefik in the way the ’310 patent claims and reasonably expected success.” Id. at *5.

The court provided an example of one element of claim 24 (“causing the content-dependent name of the particular data item to be compared to a plurality of values”) as not sufficiently explained by the Board. The court pointed out that in discussing this element, the Board cited with approval a particular section of Apple’s brief, but noted that this section only mentioned Stefik reference, while “Apple has made clear that it relies solely on Woodhill as disclosing this claim element.” Id. Elsewhere in the Board’s opinion, the Board refers to a part of column 17 of Woodhill, but even there “the Board’s discussion does not address, or at least does not clearly address, the ‘plurality of values’ comparison element.” Id. The court explained that it “might attempt on our own to parse Woodhill, and column 17 specifically, to find such a comparison, but this is not an issue on which we could confidently rely on our independent reading, without more help than we have received from the Board.” Id.

The court further concluded that “[t]he Board’s reasoning [was] also deficient in its finding that a relevant skilled artisan would have had a motivation to combine Woodhill and Stefik in the way claimed in the ’310 patent claims at issue and would have had a reasonable expectation of success in doing so.” Id. The court explained that the Board “merely agree[d] with Apple’s contention that a person of ordinary skill in the art reading Woodhill and Stefik would have understood that the combination of Woodhill and Stefik would have allowed for the selective access features of Stefik to be used with Woodhill’s content-dependent identifiers feature.” Id. (internal quotations omitted) (emphasis in original). According to the court, “that reasoning seems to say no more than that a skilled artisan, once presented with the two references, would have understood that they could be combined.” Id. (emphasis in original). This, however, “is not enough” because “it does not imply a motivation to pick out those two references and combine them to arrive at the claimed invention” and because “the Board nowhere clearly explained, or cited evidence showing, how the combination of the two references was supposed to work.” Id. (emphasis in original).

The court noted that “[t]he amount of explanation needed to meet the governing legal standards—to enable judicial review and to avoid judicial displacement of agency authority—necessarily depends on context.” Id. at *6. If “the technology is simple and familiar and the prior art is clear in its language and easily understood,” then “[a] brief explanation may do all that is needed.” Id. But “complexity or obscurity of the technology or prior-art descriptions may well make more detailed explanations necessary.” Id. In this case, the court found “the Board’s explanation [] wanting.” Id. Therefore, the court remanded the case “for the Board to reconsider the merits of the obviousness challenge, within proper procedural constraints.” Id.

Takeaway

The Federal Circuit continues to provide guidance to the PTAB on the amount of explanation needed in IPR decisions to enable judicial review while avoiding judicial displacement of agency authority. When the Board invalidates patent claims as obvious without a detailed explanation of a motivation to combine with a reasonable expectation of success, patent owners should consider an appeal to the Federal Circuit, especially when technology at issue is complex or obscure.