Two cases decided recently by the Court of Appeals for the Federal Circuit discuss the oft-problematic area of 35 U.S.C. §103, or the nonobviousness requirement. AC Technologies S.A. v. Amazon.com, Inc.,[1] decided on January 9, 2019, is the first case.
AC Technologies S.A. owns U.S. Patent No. 7,904,680 (‘680), directed to data access management, in which clients, such as PCs, store or request data in clusters, which themselves are composed of cells in a network environment.
Figure 1 illustrates the claimed invention:
Source: U.S. Patent No. 7,904,680 B2, Mar. 8, 2011, to Thomas Binzinger (inventor); AC Technologies S.A. (assignee)
Claim 1 was deemed representative:
1. A data management system comprising:
at least two data storage units;
at least one computer unit that stores at least one complete file, each file including a plurality of individual pieces, the pieces containing parts of the files, wherein at least one piece is stored in a redundant manner in the at least two data storage units;
a controller to enable data transmission between the data storage units and the computer unit;
wherein at least one of the data storage units and computer unit measures a data transmission performance between at least one of the data storage units and the computer unit, the at least one piece being stored by the computer unit in a redundant manner in the data storage units as a function of the measured data transmission performance, and the computer unit accessing the at least one of the data storage units as a function of the measured data transmission performance; and
wherein at least one of the at least two data storage units measures a data transmission performance between at least two of the at least two data storage units and the data storage units copy pieces that are redundantly stored in the system from one of the data storage units to another of the data storage units independently of an access of the computer unit based on the data transmission performance measured between the data storage units.
(Emphasis added to indicate relevant limitations.)
Amazon filed a petition for inter partes review challenging the ‘680 claims. The grounds were based on unpatentability of a single reference, Rabinovich,[2] which defines an algorithm for making and placing file copies across different hosts. The PTAB instituted review on Grounds 1 and 2, and adopted a broad construction of the term “computer unit.” In its final written decision, the PTAB rejected AC’s argument that the ‘680 claims require storage of distinct individual pieces of the file, noting that claim 1 recited “at least one piece” and “pieces,” inferring copy and storage of more than one piece of file. Further, the PTAB did not agree with Amazon’s Ground 1 of its petition, namely, that the Rabinovich client corresponded to “computer unit.” Notwithstanding, the PTAB held that Amazon’s Ground 2 – Rabinovich’s host corresponded to “computer unit” – meaning Rabinovich anticipated all ‘680 claims except claims 2, 4, and 6. However, the final written decision did not address whether claims 2, 4, and 6 were obvious if the Rabinovich host corresponded to “computer unit,” as argued in Amazon’s Ground 3.
Amazon sought reconsideration under Ground 3, and AC opposed since Ground 3 was never part of the IPR proceeding. The PTAB allowed further reconsideration of Ground 3, and after further review, found that claims 2, 4, and 6, were unpatentable as obvious over Rabinovich. AC appealed.
The Fed Circuit panel was composed of Judges Moore, Schall, and Stoll, with Judge Stoll writing for the court. The issue before the Fed Circuit was whether reconsideration of Ground 3, when it was not part of the original IPR proceeding, amounted to a denial of due process.
Judge Stoll immediately noted that the recent SAS Institute decision forecloses AC’s argument. This is because the Supreme Court, in its holding in SAS Institute, held that 35 U.S.C. §314(b) requires binary choice between instituting review on all of petitioner’s claims or not.[3]
This precedent forecloses AC’s argument that the Board exceeded its statutory authority when it reconsidered its final written decision and addressed non-instituted Ground 3. Indeed, it would have violated the statutory scheme had the Board not done so.
Addressing the due process issue, she wrote:
No due process violation occurred here. As AC admits, after the Board decided to accept Amazon’s rehearing request and consider Ground 3, it permitted AC to take discovery and submit additional briefing and evidence on that ground. Though AC did not receive a hearing specific to Ground 3, it never requested one. Had AC desired a hearing, it should have made a request before the Board.
Aside from the procedural issue, addressing the more substantive issue of whether the PTAB’s construction of “pieces” was not supported, Judge Stoll noted, using the broadest reasonable interpretation standard:
The claims themselves specifically contemplate storage and copying of multiple pieces of a file. They recite storing “at least one piece” and copying pieces” that are redundantly stored in the system . . . . The specification further supports the Bard’s claim construction. It contemplates “distribution of the entire data,” not merely specific pieces.
As for the question of obviousness, Ac had argued that Rabinovich did not explicitly disclose dependence on an access of a host, and therefore, could not disclose independent access to the data. If there is no independent access, ‘680 claims could not obvious over Rabinovich. However, Judge Stoll wrote:
T[his argument] misapprehends the law. Contrary to AC’s suggestion, a reference need not state a feature’s absence in order to disclose a negative limitation.
The Fed Circuit affirmed the PTAB decision in its entirety.
AC Technologies, based in Luxembourg, appears to be a patent assertion entity without a proper website. Its networking claims in the ‘680 patent were asserted against other companies, including Skype, Inc., in which the infringement suit was dismissed one month after the complaint was filed in 2011. Related litigation involving an AC Technologies-related licensee, Via Vadis, also based in Luxembourg, in Europe was also dismissed in 2013. Patent assertion entities, or non-practicing entities, are companies that do not practice or produce any products based on their IP, but rather use the IP to litigate against other companies, sometimes for profit. These companies are colloquially known as “patent trolls.” Amazon, as well as other companies, have successfully used the AIA-proceeding system, which includes IPRs, to invalidate several patent troll-owned patents.
[1] ___F.3d___ (Fed. Cir. 2019) (slip op.), aff’g Amazon.com, Inc. v. AC Techs. S.A., No. IPR2015-01802 (P.T.A.B. Mar. 6, 2017) (Final Written Decision).
[2] Michael Rabinovich, Dynamic Replication on the Internet, Work Project No. 3116-17-7006, Mar. 5, 1998, AT&T Labs Research.
[3] See SAS Inst. v. Iancu, 584 U.S.___, 138 S. Ct. 1348, 1355 (2018).