Trials@uspto.gov
`571-272-7822
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` Paper 11
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` Entered: August 12, 2020
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
`AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
`Petitioner,
`
`v.
`
`DYNAMICS, INC.,
`Patent Owner.
`_______________
`
`Case IPR2020-00504
`Patent 10,223,631 B2
`____________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`JEFFERSON, Administrative Patent Judge.
`
`
`DECISION
`Granting Institution of Inter Partes Review
`35 U.S.C. § 314
`
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`571-272-7822
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` Paper 11
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`
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` Entered: August 12, 2020
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`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
`AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
`Petitioner,
`
`v.
`
`DYNAMICS, INC.,
`Patent Owner.
`_______________
`
`Case IPR2020-00504
`Patent 10,223,631 B2
`____________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`JEFFERSON, Administrative Patent Judge.
`
`
`DECISION
`Granting Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`
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`IPR2020-00504
`Patent 10,223,631 B2
`
`INTRODUCTION
`I.
`Petitioner, Samsung Electronics Co., Ltd., Samsung Electronics
`America, Inc., and Samsung Research America, Inc., filed a Petition
`requesting inter partes review of claims 1–7, 9–13, 19, 21, and 22 of
`U.S. Patent No. 10,223,631 B2 (Ex. 1001, the “’631 Patent”). Paper 1
`(“Petition” or “Pet.”). Patent Owner, Dynamics Inc., filed a Preliminary
`Response to the Petition. Paper 8 (“Prelim. Resp.”).
`Per our email authorization (Ex. 3001), Petitioner filed a Reply to
`Patent Owner’s Preliminary Response. Paper 9 (“Pet. Reply”). Patent
`Owner filed a Sur-Reply to Petitioner’s Reply. Paper 10 (“PO Sur-Reply”).
`Under 35 U.S.C. § 314(a), an inter partes review may not be instituted
`unless the information presented in a petition and the preliminary response
`“shows that there is a reasonable likelihood that the petitioner would prevail
`with respect to at least 1 of the claims challenged in the petition.” Upon
`consideration of the Petition and Preliminary Response, and accompanying
`exhibits and evidence, we determine Petitioner has established a reasonable
`likelihood that it would prevail with respect to at least one challenged claim
`in the inter partes review. Based on the discussion below, we grant
`institution of an inter partes review as to all of the challenged claims and
`grounds of the ’631 Patent.
`
`II. BACKGROUND
`
`A. Related Proceedings
`Petitioner informs us of one pending district court proceedings based
`on the ’631 patent that involves Petitioner, Dynamics Inc. v. Samsung Elecs.
`Co., Ltd. et al., Case No. 1:19-cv-6479 (S.D.N.Y.), filed July 12, 2019,
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`Patent 10,223,631 B2
`which was stayed on September 4, 2019. Pet. 71–72. Petitioner also
`informs us of one proceeding pending before the International Trade
`Commission (“ITC”), In re Certain Mobile Devices With Multifunction
`Emulators, Inv. No. 337-TA-1170 (U.S.I.T.C.), filed July 12, 2019. Id.
`According to Petitioner, an initial determination in the ITC case is expected
`on or around August 14, 2020. Id. Petitioner further informs us it is
`concurrently filing inter partes review petitions for three other patents
`asserted in the above-referenced District Court and ITC cases. Id.
`Patent Owner informs us of the same pending proceedings listed
`above. Paper 6 (Patent Owner’s Mandatory Notices), 2–3.
`
`B. The ʼ631 Patent
`The ’631 Patent was filed on August 1, 2016 from a continuation filed
`July 25, 2012, issued on March 5, 2019, and is titled “Cards and Devices
`with Multifunction Magnetic Emulators and Methods for Using Same.”
`Ex. 1001, codes (22), (45), (54). The ’631 patent relates to
`A payment card (e.g., credit and/or debit card) is provided with
`a magnetic emulator operable of communicating information to
`a magnetic stripe reader. Information used in validating a
`financial transaction is encrypted . . . . Such dynamic information
`may be communicated using such an emulator such that a card
`may be swiped
`through a magnetic stripe reader—yet
`communicate different information based on time. An emulator
`may receive information as well as communicate information to
`a variety of receivers (e.g., an RFID receiver).
`Ex. 1001, Abstract. The ’631 patent discloses “a card is provided, such as a
`credit card or security card, that may transmit information to a magnetic
`stripe reader via a magnetic emulator.” Id. at 1:28–36.
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`Patent 10,223,631 B2
`The ’631 Patent states that “[t]he magnetic emulator may be, for
`example, a circuit that emits electromagnetic fields operable to electrically
`couple with a read-head of a magnetic stripe reader such that data may be
`transmitted from the circuit to the magnetic stripe reader.” Id. at 1:30–34.
`The ’631 Patent also states that the magnetic emulator may also “be operated
`to electrically couple, and transmit data to, a device using a Radio Frequency
`Identification (RFID) protocol.” Id. at 2:9–16. The ’631 patent
`specification further states that the magnetic emulator may be swiped
`through a magnetic stripe reader to communicate data, “placed outside and
`within the proximity of (e.g., 0.25 inches) the read-head.” See id. at 2:2–6,
`4:29–33.
`Figure 7 shows the electrical coupling between a card and a reader of
`the invention.
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`Patent 10,223,631 B2
`Figure 7 depicts “cards 720 and 730 as well as magnetic stripe reader 710.
`Read-head housing 711 may be included on a wall of a trough of magnetic
`stripe reader 710.” Id. at 8:24–27. Card 720 shows emulator 721 that
`provides electromagnetic field 791 capable of transmitting through the
`housing of the magnetic stripe reader 710, thus card 720 may be outside of
`the reader and operable to communicate through the outer wall of a
`thickness of a quarter inch or more. Id. at 8:29–39.
`The ’631 Patent describes that the invention could be implemented in
`devices other than cards, such as “a portable telephonic device, portable
`media player, or any type of electronic device.” Id. at 2:48–51, 12:32–34.
`Figure 12 shows a personal electric device in accordance with the invention.
`Id. at 3:35–37.
`
`
`Figure 12 shows personal electronic device 1200, with user inputs 1240,
`display 1210, and virtual card 1220. Id. at 12:37–40. “Personal electronic
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`device 1200 may communicate to a card reader such as . . . an RFID reader.”
`Id. at 12:45–46.
`
`C. Illustrative Claim
`Independent claim 1 is illustrative.
`1. An apparatus comprising;
`a structure for receiving manual input;
`a dynamic magnetic stripe communication device;
`
`and
`
`a processor for controlling the dynamic magnetic
`stripe communication device,
`stripe
`wherein
`the
`dynamic magnetic
`communication device is operable to electrically couple to
`a payment terminal when the dynamic magnetic stripe
`communication device is located outside and within
`proximity of the payment terminal and to serially
`communicate first magnetic stripe track data and second
`magnetic stripe track data while electrically coupled to the
`payment terminal.
`Ex. 1001, 14:45–57.
`D. Asserted Grounds of Unpatentability
`The information presented in the Petition sets forth the following
`proposed grounds of unpatentability for the challenged claims of the ’631
`Patent (Pet. 8):
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`Reference(s)/Basis
`Moullette2
`Zellner, 3 Moullette
`Doughty4
`Doughty, Zellner
`Doughty, Francini5
`
`35 U.S.C. §1
`103
`103
`103
`103
`103
`
`Claim(s) Challenged
`1–3, 9–10, 12–13, 19, 21
`1, 4–7, 10–11, 22
`1–3, 9, 12, 19, 21–22
`4–7, 10–11
`13
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`Petitioner supports its Petition challenges with the Declaration of Stephen G.
`Halliday, Ph.D. (“Mr. Halliday”) (Ex. 1002).
`
`III. PRELIMINARY MATTERS
`A. Analysis of Discretionary Denial Under 35 U.S.C. § 314(a)
`Patent Owner states that the ’631 Patent is the subject of a pending
`ITC proceeding and a stayed district court litigation. Prelim. Resp. 7–8.
`Patent Owner argues we should exercise discretion under 35 U.S.C. § 314(a)
`and deny institution based on the ITC proceeding because it involves the
`same parties, independent claim and prior art, and is at an advanced stage.
`Prelim. Resp. 3–10; PO Sur-Reply 1–10; see Apple Inc. v. Fintiv, Inc.,
`
`
`1 The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284
`(September 16, 2011) (“AIA”), included revisions to 35 U.S.C. §103 that
`became effective on March 16, 2013. Because the ’631 patent issued from
`an application filed before March 16, 2013, we apply the pre-AIA version of
`the statutory basis for unpatentability.
`2 U.S. Patent No. 7,114,652 B2, issued Oct. 3, 2006 (Ex. 1007, “Moullette”).
`3 U.S. Patent No. 7,097,108 B2, issued Aug. 29, 2006 (Ex. 1008,
`“Zellner”).
`4 U.S. Patent Application Publication No. 2006/0161789 Al, Published Jul.
`20, 2006 (Ex. 1012, “Doughty”).
`5 U.S. Patent No. 4,701,601, issued Oct. 20, 1987 (Ex. 1006, “Francini”).
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`IPR2020-00019, Paper 11 (PTAB March 20, 2020) (precedential) (Order).
`To the contrary, Petitioner argues that evaluation of the Apple v. Fintiv
`factors demonstrates we should not exercise discretion to deny institution of
`inter partes review. Pet. Reply 1–10. Having considered Petitioner and
`Patent Owner’s arguments, see Prelim. Resp. 3–11; Pet. Reply 1–10; PO
`Sur-Reply 1–10, and for the reasons stated below, we are not persuaded to
`exercise discretion to deny institution.
`Institution of an inter partes review is discretionary. See 35 U.S.C.
`§ 314(a) (authorizing institution of an inter partes review under particular
`circumstances, but not requiring institution under any circumstances);
`37 C.F.R. § 42.108(a) (“[T]he Board may authorize the review to proceed”).
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016) (“[T]he
`agency’s decision to deny a petition is a matter committed to the Patent
`Office’s discretion.”); SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1351 (2018)
`(“[Section] 314(a) invests the Director with discretion on the question
`whether to institute review . . . .” (emphasis omitted)); Harmonic Inc. v. Avid
`Tech., Inc., 815 F.3d 1356, 1367 (Fed. Cir. 2016) (“[T]he PTO is permitted,
`but never compelled, to institute an IPR proceeding.”).
`In the NHK case, the Board denied institution relying, in part, on
`§ 314(a), because a parallel district court proceeding was scheduled to finish
`before the Board reached a final decision. NHK Spring Co. v. Intri-Plex
`Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential).
`“Thus, NHK applies to the situation where the district court has set a trial
`date to occur earlier than the Board’s deadline to issue a final written
`decision in an instituted proceeding.” Apple Inc. v. Fintiv, Inc., IPR2020-
`00019, Paper 11, 3 (PTAB March 20, 2020) (precedential) (Order). When
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`determining whether to exercise discretion to deny institution due to an
`earlier trial date in a parallel proceeding, we consider the following factors
`(“Fintiv factors”):
`1. whether the court granted a stay or evidence exists that
`one may be granted if a proceeding is instituted;
`2. proximity of the court’s trial date to the Board’s
`projected statutory deadline for a final written decision;
`3. investment in the parallel proceeding by the court and
`the parties;
`4. overlap between issues raised in the petition and in the
`parallel proceeding;
`5. whether the petitioner and the defendant in the parallel
`proceeding are the same party; and
`6. other circumstances that impact the Board’s exercise of
`discretion, including the merits.
`Id. at 6. “These factors relate to whether efficiency, fairness, and the merits
`support the exercise of authority to deny institution in view of an earlier trial
`date in the parallel proceeding.” Id. In evaluating these factors, we take “a
`holistic view of whether efficiency and integrity of the system are best
`served by denying or instituting review.” Id. (citing Patent Trial and Appeal
`Board Consolidated Trial Practice Guide 58 (November 2019),
`https://www.uspto.gov/TrialPracticeGuideConsolidated). We address the
`Fintiv factors in seriatim and discuss in detail our reasons for not exercising
`discretion to deny institution based on § 314(a).
`1. Whether a Stay Exists or Is Likely to Be Granted
`if a Proceeding Is Instituted
`The district court has stayed its proceeding since September 4, 2019,
`pending an outcome of the ITC proceeding. PO Sur-Reply 2 (citing
`9
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`Ex. 2026). This factor weighs against exercising discretion to deny
`institution. The stay of the proceeding allays concerns about inefficiency
`and duplication of efforts as it relates to this proceeding. See Fintiv, Paper
`11 at 6. In the event that there may be duplicative efforts with the ITC
`proceeding, we continue our analysis and inquire further as to whether the
`ITC would render a decision before this proceeding as examined below
`under Fintiv factor 2, and the degree of overlap of the proceedings under
`Fintiv factor 4. Fintiv at 6 (explaining that there is some overlap among the
`factors).
`2. Proximity of the Court’s Trial Date to the Board’s Projected
`Statutory Deadline
`In the ITC proceeding, trial was set to be held on June 22–26, 2020,
`but was adjourned until further notice due to COVID-19 concerns. Prelim.
`Resp. 9 (citing Ex. 2001; Ex. 2002; Ex. 2025). Additionally, the ITC issued
`a new document timeline on June 29, 2020, that includes a witness statement
`deadline of August 14, 2020, and an objection deadline of August 21, 2020.
`See Ex. 3002, In re Certain Mobile Devices with Multifunction Emulators,
`Inv. No. 337-TA-1170, Order No. 21 at 2 (June 29, 2020). The Board’s
`Institution Decision is due by August 14, 2020, which is before the ITC’s
`initial determination (ID) that has been postponed indefinitely. Pet. Reply 2
`(citing Ex. 2002, 4; Ex. 2025, 2); Ex. 3002. Yet, even given the
`uncertainties involved with COVID-19, it is unlikely that a trial will be
`postponed by 14 months such that our final written decision will issue prior
`to the ITC trial. Accordingly, we weigh this factor in favor of discretionary
`denial. Accordingly, we weigh this factor in favor of institution.
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`3. Investment in the Parallel Proceeding by the Court and Parties
`The parties have significant investments in both this proceeding and
`the ITC proceeding. Specifically, in the ITC proceeding, a Markman
`hearing was held November 26, 2019; an order construing only some of the
`claims issued on January 31, 2020; fact discovery was completed January
`17, 2020; expert reports were exchanged and experts deposed; and motions
`for summary determination were filed on March 11, 2020. Prelim. Resp. 9.
`In this proceeding, the parties have submitted a Petition (Paper 1), an
`Expert Declaration (Exhibit 1002), a Preliminary Response (Paper 8), a
`Reply (Paper 9), and a Sur-Reply (Paper 10) in addition to other papers and
`exhibits. We note the instant proceeding here is further along than those in
`either the Fintiv case or the Sand Revolution case, where the parties in both
`cases had filed only one substantive paper each (i.e., the Petition and the
`Preliminary Response). See Fintiv, at 6; Sand Revolution II LLC v.
`Continental Intermodal Group, IPR 2019-01393, Paper 24, 10-11 (PTAB
`June 16, 2020) (informative, designated July 13, 2020). Thus, these case are
`distinguishable.
`It is evident that the parties’ investments in both proceedings are
`substantial. Thus, we find this factor is neutral in our analysis regarding
`institution.
`
`4. Overlap Between Issues Raised in the Petition and
`in the Parallel Proceeding
`The ITC proceeding involves only claims 1, 4, 6, and 22 of the ’631
`Patent whereas Petitioner’s challenges here involve claims 1–7, 9–13, 19,
`21, and 22 of the ’631 Patent. Thus, resolution of the ITC proceeding would
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`not resolve the parties’ dispute concerning patentability of all of claims 2, 3,
`5, 7, 9–13, 19, and 21 of the ’631 Patent.6 .
`Looking at the challenges before us, the dependent claims at issue in
`Petitioner’s challenge to the ’631 Patent addresses limitations not present in
`the ITC proceeding. In particular, the claims address processor limitations
`(claims 8 and 9) and RFID receiver limitations (claims 10 and 11) (see
`Ex. 1001, 15:3–14) that are not challenged in the ITC proceeding. These
`limitations are at issue in Petitioner’s challenges before the Board, but are
`not at issue in the ITC proceeding.
`Although there is overlap between the grounds asserted before the
`Board and the ITC proceeding (PO Sur-Reply 3), the challenge of claims
`that do not overlap combined with the lack of definitive resolution of these
`claims before the stayed district court, in balance, weigh in favor of
`institution.
`5. Whether the Petitioner and the Defendant in the Parallel
`Proceeding Are the Same Party
`The parties in the ITC proceeding, the district court proceeding, and
`this proceeding are the same. Prelim. Resp. 9. Petitioner does not dispute
`this fact. Pet. Reply 9. This factor weighs against institution.
`6. Other Circumstances that Impact the Board’s Exercise of
`Discretion, Including the Merits
`We find the merits of this case weigh in favor of Petitioner on the
`evidence presented thus far. For example, Petitioner presents evidence that
`
`6 We further note that the ITC does not have authority to invalidate patent
`claims in a manner that is binding upon the Board or district courts. See
`Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed.
`Cir. 1966).
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`two different combination of references, Zellner and Moullette (Ground 2)
`and Doughty and Zellner (Ground 4), teach the RFID-based limitations of
`dependent claims 10 and 11 (Pet. 41–43, 63–66). Petitioner provides
`persuasive rationales and reasoning to support the combination of Zellner
`and Moullette and Doughty and Zellner. Id. at 31–34, 56–59. Petitioner
`provides persuasive support on the merits that Zellner (in combination with
`either Moullette or Doughty) explicitly teaches the RFID receiver and
`transmitter circuitry. Id. at 41–42, 64. On the present record, we find
`Petitioner’s argument and evidence on the merits to be persuasive.
`Accordingly, this factor weighs in favor of institution.
`7. Balancing the Fintiv Factors
`The only case that Patent Owner relies upon that involves denial of
`institution of inter partes review based on a parallel ITC proceeding is Bio-
`Rad Labs., Inc. v. 10X Genomics, Inc., IPR2019-00568, Paper 22 at 2
`(PTAB Aug. 8, 2019). See, e.g., PO Sur-Reply 3. In Bio-Rad, the Board
`denied institution based on the ITC’s initial determination (ID) that the
`challenged patent claims were not invalid. Bio-Rad, Paper 22 at 22–24. The
`ITC ID issued before the Board rendered its institution decision. Id. In this
`case, our institution decision will precede the ITC’s ID, so Bio-Rad’s
`holding is inapposite to the facts of this case.
`We have considered the circumstances and facts before us in view of
`the Apple v. Fintiv factors. Because our analysis is fact driven, no single
`factor is determinative of whether we exercise our discretion to deny
`institution under § 314(a). Evaluating the Apple v. Fintiv factors with a
`holistic view of whether the efficiency and integrity of the system are best
`served by denying or instituting review, we determine that the specific facts
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`of this case weigh against exercising discretion under § 314(a) to deny
`institution of inter partes review.
`
`IV. ANALYSIS
`
`A. Level of Ordinary Skill in the Art
`In determining whether an invention would have been obvious at the
`time it was made, we consider the level of ordinary skill in the pertinent art
`at the time of the invention. Graham v. John Deere Co., 383 U.S. 1, 17
`(1966). “The importance of resolving the level of ordinary skill in the art
`lies in the necessity of maintaining objectivity in the obviousness inquiry.”
`Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 718 (Fed. Cir. 1991). Factors
`pertinent to a determination of the level of ordinary skill in the art include
`“(1) the educational level of the inventor; (2) type of problems encountered
`in the art; (3) prior art solutions to those problems; (4) rapidity with which
`innovations are made; (5) sophistication of the technology; and
`(6) educational level of active workers in the field.” Envtl. Designs, Ltd. v.
`Union Oil Co. of Cal., 713 F.2d 693, 696–697 (Fed. Cir. 1983) (citing
`Orthopedic Equip. Co. v. All Orthopedic Appliances, Inc., 707 F.2d 1376,
`1381–82 (Fed. Cir. 1983)). “Not all such factors may be present in every
`case, and one or more of these or other factors may predominate in a
`particular case.” Id.
`Petitioner argues that a person having ordinary skill in the art at the
`time of the alleged invention “would have had at least a Bachelor’s degree in
`Electrical Engineering, or an equivalent technical degree or equivalent work
`experience, and knowledge regarding the use of magnetic fields to transmit
`or otherwise convey information.” Pet. 13–14 (citing Ex. 1002 ¶¶ 33).
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`Petitioner further argues that “[a]dditional education might supplement
`practice experience and vice-versa.” Id. at 14.
`Patent Owner argues that a person having ordinary skill in the art at
`the time of the alleged invention would have had “an undergraduate degree
`in computer science, electrical engineering, or the equivalent (including
`computer engineering) and at least three years of experience with point of
`sale systems and the use of magnetic fields to convey information.” Prelim.
`Resp. 29.
`Based on our review of the ’631 Patent, the types of problems and
`solutions described in the ’631 Patent and cited prior art, and the testimony
`of Mr. Halliday, for purposes of this Decision, we adopt and apply
`Petitioner’s proposed level of ordinary skill in the art. Specifically, we find
`that a person of ordinary skill in the art at the time of the claimed invention
`“would have had at least a Bachelor’s degree in Electrical Engineering, or an
`equivalent technical degree or equivalent work experience, and knowledge
`regarding the use of wireless electromagnetic signals to transmit or
`otherwise convey information.”
`
`B. Claim Interpretation
`In an inter partes review for a petition filed on or after November 13,
`2018, a claim “shall be construed using the same claim construction standard
`that would be used to construe the claim in a civil action under
`35 U.S.C. 282(b).” 37 C.F.R. § 42.100(b) (2019); see Changes to the Claim
`Construction Standard for Interpreting Claims in Trial Proceedings Before
`the Patent Trial and Appeal Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018)
`(amending 37 C.F.R. § 42.100(b) effective November 13, 2018). In
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`applying this claim construction standard, we are guided by the principle
`that the words of a claim “are generally given their ordinary and customary
`meaning,” as understood by a person of ordinary skill in the art in question
`at the time of the invention. Phillips v. AWH Corp., 415 F.3d 1303,
`1312−13 (Fed. Cir. 2005) (en banc) (citation omitted). “In determining the
`meaning of the disputed claim limitation, we look principally to the intrinsic
`evidence of record, examining the claim language itself, the written
`description, and the prosecution history, if in evidence.” DePuy Spine, Inc.
`v. Medtronic Sofamor Danek, Inc., 469 F.3d 1005, 1014 (Fed. Cir. 2006)
`(citing Phillips, 415 F.3d at 1312–17). There is a “heavy presumption,”
`however, that a claim term carries its ordinary and customary meaning. CCS
`Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002)
`(citation omitted).
`Petitioner states that it does not believe any terms need be construed
`to resolve the prior art issues presented in this Petition. Pet. 14. Petitioner
`notes there were claim constructions proposed by the parties in the ITC
`proceeding. Id. at 14–16 (citing Ex. 1016, 7–10). Petitioner further states
`these terms need not be construed because they are disclosed by the prior art
`under either party’s proposed construction. Id. at 16. Patent Owner
`identifies the constructions raised by the parties, but is silent on whether any
`terms require construction to resolve the Petition’s challenges. Prelim. Resp.
`24–27.
`We agree with Petitioner that no express construction is needed to
`resolve any dispute in this proceeding and do not construe the identified
`claim limitations. See, e.g., Nidec Motor Corp. v. Zhongshan Broad Ocean
`Motor Co., 868 F.3d 1013, 1017 (Fed. Cir. 2017); Vivid Techs., Inc. v. Am.
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`Patent 10,223,631 B2
`Sci. & Eng’g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999) (“[O]nly those terms
`need be construed that are in controversy, and only to the extent necessary to
`resolve the controversy.”). A final determination as to claim construction
`will be made at the close of the proceeding, after any hearing, based on all
`the evidence of record. The parties are expected to assert all their claim
`construction arguments and evidence in the Petition, Patent Owner’s
`Response, Petitioner’s Reply, or otherwise during trial, as permitted by our
`rules.
`
`C. Principles of Law
`A patent claim is unpatentable under 35 U.S.C. § 103(a) if the
`differences between the claimed subject matter and the prior art are “such
`that the subject matter as a whole would have been obvious at the time the
`invention was made to a person having ordinary skill in the art to which said
`subject matter pertains.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
`(2007). The question of obviousness is resolved on the basis of underlying
`factual determinations, including (1) the scope and content of the prior art;
`(2) any differences between the claimed subject matter and the prior art;
`(3) the level of skill in the art; and (4) objective evidence of nonobviousness,
`i.e., secondary considerations. 7 Graham v. John Deere Co., 383 U.S. 1, 17–
`18 (1966).
`The Supreme Court has made clear that we apply “an expansive and
`flexible approach” to the question of obviousness. KSR, 550 U.S. at 415.
`
`
`7 Patent Owner presents arguments regarding secondary considerations
`applicable to each of Petitioner’s grounds (Prelim. Resp. 59–63) and we
`address this Graham factor below.
`
`17
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`IPR2020-00504
`Patent 10,223,631 B2
`Whether a patent claiming the combination of prior art elements would have
`been obvious is determined by whether the improvement is more than the
`predictable use of prior art elements according to their established functions.
`KSR, 550 U.S. at 417. Reaching this conclusion, however, requires more
`than a mere showing that the prior art includes separate references covering
`each separate limitation in a claim under examination. Unigene Labs., Inc.
`v. Apotex, Inc., 655 F.3d 1352, 1360 (Fed. Cir. 2011). Rather, obviousness
`requires the additional showing that a person of ordinary skill at the time of
`the invention would have selected and combined those prior art elements in
`the normal course of research and development to yield the claimed
`invention. Id.
`“In an [inter partes review], the petitioner has the burden from the
`onset to show with particularity why the patent it challenges is
`unpatentable.” Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed.
`Cir. 2016) (citing 35 U.S.C. § 312(a)(3) (requiring inter partes review
`petitions to identify “with particularity . . . the evidence that supports the
`grounds for the challenge to each claim”)). This burden of persuasion never
`shifts to Patent Owner. See Dynamic Drinkware, LLC v. Nat’l Graphics,
`Inc., 800 F.3d 1375, 1378 (Fed. Cir. 2015) (discussing the burden of proof in
`inter partes review). Furthermore, Petitioner cannot satisfy its burden of
`proving obviousness by employing “mere conclusory statements.” In re
`Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1380 (Fed. Cir. 2016).
`Thus, to prevail in an inter partes review, Petitioner must explain how
`the proposed prior art or combinations of prior art would have rendered the
`challenged claims unpatentable. At this preliminary stage, we determine
`whether the information presented in the Petition shows there is a reasonable
`18
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`IPR2020-00504
`Patent 10,223,631 B2
`likelihood that Petitioner would prevail in establishing that one of the
`challenged claims is unpatentable. Additionally, the Supreme Court held
`that a decision to institute under 35 U.S.C. § 314(b) may not institute review
`on less than all claims challenged in the petition. SAS, 138 S. Ct. at 1355–
`56. Moreover, in accordance with USPTO Guidance, “if the PTAB
`institutes a trial, the PTAB will institute on all challenges raised in the
`petition.” Guidance on the Impact of SAS on AIA Trial Proceedings (April
`26, 2018) (available at https://www.uspto.gov/patents-application-
`process/patent-trial-and-appeal-board/trials/guidance-impact-sas-aia-trial)
`(“USPTO Guidance”).
`
`D. Objective Indicia of Nonobviousness
`Patent Owner raises secondary considerations of non-obviousness
`applicable to each of the grounds Petitioner asserts. Prelim. Resp. 59–63.
`We address Patent Owner’s contentions below.
`For objective indicia of nonobviousness to be accorded substantial
`weight, its proponent must establish a nexus between the evidence and the
`merits of the claimed invention. ClassCo, Inc., v. Apple, Inc., 838 F.3d
`1214, 1220 (Fed. Cir. 2016). “[T]here is no nexus unless the evidence
`presented is ‘reasonably commensurate with the scope of the claims.’” Id.
`(quoting Rambus Inc. v. Rea, 731 F.3d 1248, 1257 (Fed. Cir. 2013)). A
`patentee is entitled to a presumption of nexus “when the patentee shows that
`the asserted objective evidence is tied to a specific product and that product
`‘embodies the claimed features, and is coextensive with them.’” Fox
`Factory, Inc. v. SRAM, LLC, 944 F.3d 1366, 1373 (Fed. Cir. 2019) (quoting
`Polaris Indus., Inc. v. Arctic Cat, Inc., 882 F.3d 1056, 1072 (Fed. Cir. 2018)
`
`
`
`
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`IPR2020-00504
`Patent 10,223,631 B2
`(quoting Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229
`F.3d 1120, 1130 (Fed. Cir. 2000))). “[T]he purpose of the coextensiveness
`requirement is to ensure that nexus is only presumed when the product tied
`to the evidence of secondary considerations ‘is the invention disclosed and
`claimed.’” Id. at 1374 (quoting Demaco Corp. v. F. Von Langsdorff
`Licensing Ltd., 851 F.2d 1387, 1392 (Fed. Cir. 1988)). “[T]he degree of
`correspondence between a product and the patent claim falls along a
`spectrum. At one end of the spectrum lies perfect or near perfect
`correspondence. At the other end lies no or very little correspondence.” Id.
`“A patent claim is not coextensive with a product that includes a ‘critical’
`unclaimed feature that is claimed by a different patent and that materially
`impacts the product’s functionality.” Id. at 1375.
`At this stage of the proceeding and based on the current record, Patent
`Owner does not provide an analysis demonstrating that any of its products
`are coextensive (or nearly coextensive) with the challenged claims. See
`Prelim. Resp. 60–61. Nor has it received a finding of infringement of the
`challenged claims from either a district court of the ITC. See id. (alleging
`infringing products). We, therefore, preliminarily find that a presumption of
`nexus is inappropriate at this time.
`“A finding that a presumption of nexus is inappropriate does not end
`the inquiry into secondary considerations,” however. Fox Factory, 944 F.3d
`at 1375. “To the contrary, the patent owner is still afforded an opportunity
`to prove nexus by showing that the evidence of secondary considerations is
`the ‘direct result of the unique characteristics of the claimed invention.’” Id.
`at 1373–74 (quoting In re Huang, 100 F.3d 135, 140 (Fed. Cir. 1996)).
`“Where the offered secondary consideration actually results from something
`20
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`IPR2020-00504
`Patent 10,223,631 B2
`other than what is both claimed and novel in the claim, there is no nexus to
`the merits of the claimed invention,” meaning that “there must be a nexus to
`some aspect of the c
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