The US Court of Appeals for the Federal Circuit reiterated the standard under which Patent Trial and Appeal Board (PTAB) decisions regarding obviousness are reviewed, concluding that substantial evidence supported the PTAB’s determination of how an artisan would understand the teachings of the prior art. IXI IP v. Samsung ElectronicsCase No. 17-1665 (Fed. Cir. Sept. 10, 2018) (Reyna, J).

Samsung Electronics and Apple (collectively, Samsung) filed a petition for inter partes review (IPR) challenging claims of IXI’s patent. The PTAB instituted review and found that the challenged claims were invalid as obvious. IXI appealed. 

The patent at issue is directed to a system that contains both a personal area network and a wide area network, connected via a cellphone, including “a first wireless device . . . having a software component to access information from the Internet . . . and, a second wireless device . . . to provide [a] first short-range radio signal, wherein [a] software component includes a network address translator software . . . a service repository software component to identify a service provided by the second wireless device.” During the proceeding, the PTAB determined that Samsung established by a preponderance of the evidence that prior art references taught every limitation such that all of the challenged claims were obvious.

The Federal Circuit reviews PTAB legal conclusions without deference and PTAB factual findings for substantial evidence. Issues relating to a motivation to combine prior art references and a reasonable expectation of success are both questions of fact. Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” As the Federal Circuit noted, “[w]here two different conclusions may be warranted based on the evidence of record, the Board’s decision to favor one conclusion over the other is the type of decision that must be sustained by this court as supported by substantial evidence.”

The stipulated (single) issue on appeal was whether a person of skill in the art (POSITA) would read a prior art reference relied on by the PTAB as implicitly describing an implementation in which a Java look-up service identifying network-provided services is located on the cellphone. Samsung conceded that there was no express statement to that effect, but argued that a POSITA would read the reference to understand that the look-up service may be co-located. IXI argued that the only express disclosure in the reference places the look-up in a laptop. Based on the prior art disclosure, expert statements that a POSITA would read the reference to include co-location (corroborated by the Java specification), implicit disclosure in view of the reference’s system methodology, and other expert testimony, the PTAB rejected IXI’s arguments for a narrow interpretation (citing a specific reference figure and inoperability).

The Federal Circuit agreed, concluding that “the Board’s determination that a POSITA reading [the prior art reference] would understand that the cellphone is the master of the ad-hoc network and contains the [look-up service] is reasonable and supported by substantial evidence.”