In Personal Web Technologies, LLC v. Apple, Inc., Appeal No. 2016-1174, the Federal Circuit held that when making a determination of obviousness in an IPR, the PTAB must make findings, supported by evidence and explanation, that (1) the cited prior art discloses all of the elements of the challenged claims and (2) that a person of ordinary skill in the art (“POSA”) would have been motivated to combine the cited prior art with a reasonable expectation of success.

Apple petitioned for inter partes review of a Personal Web Technologies (“PWT”) patent directed towards naming files based on mathematical functions. The Board instituted review and held the claims unpatentable as obvious over Apple’s cited references.

At the Federal Circuit, PWT asserted that the Board had not adequately supported its conclusion that the claims were obvious, arguing that the Board had not supported its finding that the cited references disclosed all the elements of the claims or its finding that a POSA would have been motivated to combine the references with a reasonable expectation of success. The Federal Circuit agreed, holding that the Board’s decision had several flaws. First, the Board’s decision cited one reference as disclosing a certain element of the claims, whereas Apple’s petition relied solely on the other reference. This discrepancy was not addressed by the Board. In addition, the Board’s decision did not explain how a cited passage from a reference met a claim limitation. Finally, the Board found the combination of cited references “would have allowed for” a POSA to arrive at the claimed invention. The Federal Circuit explained that the mere possibility of combining prior art references does not establish obviousness—a motivation to combine and a reasonable expectation of success are necessary. Based on these inadequacies, the Federal Circuit vacated the Board’s obviousness determination and remanded for reconsideration.

The Federal Circuit also declined to decide whether the broadest-reasonable-interpretation (“BRI”) or the district court claim-construction standard should be applied in an IPR when the patent at issue expires after the Final Written Decision but while a rehearing request is pending before the Board. Instead, the Federal Circuit held that the Board’s claim construction was correct under either standard because the meaning of the claim language was plain from the face of the claims. The Federal Circuit pointed out that the new 18-month rule allowing a party to request a district court-type construction, 37 C.F.R. § 42.100(b), did not apply because the rule was not in effect for this IPR and, in any event, the time from filing the petition to expiration of the patent exceeded 18 months.