The CAFC finds PTAB's obviousness reasoning in "Personal Web" inadequate; vacates and remands

The CAFC vacated and remanded in the precedential case Personal Web v. Apple :



Apple Inc. petitioned for inter partes review of various
claims of PersonalWeb Technologies, LLC’s U.S. Patent
No. 7,802,310, asserting unpatentability for obviousness
based on two prior-art references. After instituting review,
the Patent Trial and Appeal Board reviewed the
claims and agreed with Apple. PersonalWeb appeals the
Board’s construction of certain claim terms and the ultimate
obviousness determination. We affirm the Board’s
claim construction. We vacate the Board’s obviousness
determination as to the appealed claims, 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 ’310 inventions with a reasonable expectation
of success. We remand for further proceedings.


The CAFC criticized PTAB's discussion of obviousness:
" the Board has not done enough
to support its conclusion. " AND

On the factual components of the inquiry, we “ask[] ‘whether a
reasonable fact finder could have arrived at the agency’s
decision,’” which “requires examination of the ‘record as a
whole, taking into account evidence that both justifies and
detracts from an agency’s decision.’” Intelligent Bio-
Systems, Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359,
1366 (Fed. Cir. 2016) (quoting Gartside, 203 F.3d at
1312).



The CAFC set out what PTAB needed to have done:


Under the obviousness theory presented by Apple and
adopted by the Board, the Board had to make findings,
supported by evidence and explanation, on two points.
First, the Board had to find in Woodhill and Stefik all of
the elements of the ’310 patent claims at issue. But that
would not be enough. See In re Kotzab, 217 F.3d 1365,
1371 (Fed. Cir. 2000) (explaining that a finding of obviousness
“cannot be predicated on the mere identification
in [the prior art] of individual components of claimed
limitations”). Second, the Board had to find that a person
of ordinary skill in the art would have been motivated to
combine the prior art in the way claimed by the ’310
patent claims at issue and had a reasonable expectation of
success in doing so. See In re NuVasive, Inc., 842 F.3d
1376, 1381–82 (Fed. Cir. 2016); In re Warsaw Orthopedic,
Inc., 832 F.3d 1327, 1333–34 (Fed. Cir. 2016); Ariosa
Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1364–
67 (Fed. Cir. 2015).



And the CAFC pointed to a need for a record:


Our review of the Board is rooted not just in the law
of obviousness but in basic principles of administrative
law. We review the Board’s IPR decisions to ensure that
they are not “arbitrary, capricious, an abuse of discretion,
. . . otherwise not in accordance with law . . . [or]
unsupported by substantial evidence.” 5 U.S.C.
§ 706(2)(A), (E); see Pride Mobility Prods. Corp. v. Permobil,
Inc., 818 F.3d 1307, 1313 (Fed. Cir. 2016). Critically,
in order to “allow effective judicial review, . . . the agency
is obligated to ‘provide an administrative record showing
the evidence on which the findings are based, accompanied
by the agency’s reasoning in reaching its conclusions.’”
Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d
1309, 1322 (Fed. Cir. 2016) (quoting Lee, 277 F.3d at
1342); see Lee, 277 F.3d at 1342 (“For judicial review to be
meaningfully achieved within these strictures, the agency
tribunal must present a full and reasoned explanation of
its decision. The agency tribunal must set forth its findings
and the grounds thereof, as supported by the agency
record, and explain its application of the law to the found
facts.”). The Board, as an administrative agency, “must
articulate ‘logical and rational’ reasons for [its] decision[].”
Synopsys, 814 F.3d at 1322; see Power Integrations, Inc. v.
Lee, 797 F.3d 1318, 1326 (Fed. Cir. 2015).


Yes, the CAFC cited SEC v. Chenery Corp., 318 U.S. 80 (1943).

The PTAB decision was inadequate:


The Board’s decision here is inadequate. The 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.



Of the motivation point:


The Board’s reasoning is 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. The Board’s
most substantial discussion of this issue merely agrees
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. at *8 (emphasis added). But 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. And that is not enough: it
does not imply a motivation to pick out those two references
and combine them to arrive at the claimed invention.
See Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064,
1073 (Fed. Cir. 2015) (“[O]bviousness concerns whether a
skilled artisan not only could have made but would have
been motivated to make the combinations or modifications
of prior art to arrive at the claimed invention.”);



The wording of the CAFC conclusion is of interest:


We conclude that the Board’s reasoning does not meet
the requirements for a sustainable obviousness determination
in this case. We do not address whether the
Board’s ultimate obviousness determination would be
permissible, or should be made, on this record. We leave
such issues for the Board to consider on remand. The
remand is not for explanation or clarification of what the
Board meant in the decision we have under review now,
or what it considered in reaching that decision. The
remand is for the Board to reconsider the merits of the
obviousness challenge, within proper procedural constraints.
See id. at 1366–67.





Take note of footnote 1:


We recently held the broadest-reasonableinterpretation
standard inapplicable, outside the IPR
setting, where the patent at issue had expired in a reexamination
before the Board reviewed the examiner’s
decision. In re CSB–Sys. Int’l, Inc., 832 F.3d 1335, 1340–
41 (Fed. Cir. 2016). In the IPR setting, the PTO regulations
applicable to the present case stated simply that the
broadest-reasonable-interpretation standard applied to
“[a] claim in an unexpired patent.” 37 C.F.R. § 42.100(b)
(2015). A recent revision, not applicable to the present
case, now states that the broadest-reasonableinterpretation
standard applies to “[a] claim in an unexpired
patent that will not expire before a final written
decision is issued,” but allows an IPR party to “request a
district court-type claim construction approach to be
applied” if the patent will expire within 18 months of the
IPR petition’s filing (as further specified in the rule).
37 C.F.R. § 42.100(b) (2016). The 18-month rule, had it
been in effect, would not have applied here: the time from
the relevant filing date (September 27, 2013) to expiration
(April 11, 2015) was just over 18 months.