Realtime Data, LLC v. Iancu ( 2019 )

United States Court of Appeals
for the Federal Circuit
______________________
REALTIME DATA, LLC, DBA IXO,
Appellant
v.
ANDREI IANCU, UNDER SECRETARY OF
COMMERCE FOR INTELLECTUAL PROPERTY
AND DIRECTOR OF THE UNITED STATES
PATENT AND TRADEMARK OFFICE,
Intervenor
______________________
2018-1154
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2016-
00783.
______________________
Decided: January 10, 2019
______________________
KAYVAN B. NOROOZI, Noroozi PC, Santa Monica, CA,
argued for appellant.
SARAH E. CRAVEN, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA,
argued for intervenor. Also represented by THOMAS W.
KRAUSE, JOSEPH MATAL, FARHEENA YASMEEN RASHEED.
______________________
2 REALTIME DATA, LLC v. IANCU
Before DYK, TARANTO, and STOLL, Circuit Judges.
STOLL, Circuit Judge.
Hewlett Packard Enterprise Co., HP Enterprise Ser-
vices, LLC, and Teradata Operations, Inc. (collectively,
“HP”) sought inter partes review of claims 1–4, 8, 14–17,
21, and 28 of U.S. Patent No. 6,597,812 (the ’812 patent)
before the U.S. Patent and Trademark Office’s Patent
Trial and Appeal Board. The Board instituted review
and, in its final written decision, found that all of the
challenged claims would have been obvious over the prior
art. Realtime Data, LLC, owner of the ’812 patent, ap-
peals the Board’s decision. We affirm.
BACKGROUND
I
The ’812 patent discloses “[s]ystems and methods for
providing lossless data compression and decompres-
sion . . . [that] exploit various characteristics of run-length
encoding, parametric dictionary encoding, and bit pack-
ing.” ’812 patent Abstract. Run-length encoding is a form
of lossless data compression where a “run” of characters is
replaced with an identifier for each individual character
and the number of times it is repeated. For example,
using run-length encoding, the input string
AAABBBBBBCCCCAA could be represented as
3A6B4C2A, which contains seven fewer characters.
Dictionary encoding is a form of lossless data com-
pression that assigns a code word to a particular data
string, maps that code word to an index, and replaces
every matching data string with the corresponding code
word. For example, the same input string described
above could be assigned the code word “EASY123,” which
contains eight fewer characters. This assignment would
be mapped into an index, or dictionary, so that every time
the input string AAABBBBBBCCCCAA appeared, it
would be replaced with EASY123.
REALTIME DATA, LLC v. IANCU 3
Claim 1, which combines run-length and dictionary
encoding techniques, is illustrative of the challenged
claims:
1. A method for compressing input data compris-
ing a plurality of data blocks, the method compris-
ing the steps of:
detecting if the input data comprises a
run-length sequence of data blocks;
outputting an encoded run-length se-
quence, if a run-length sequence of data
blocks is detected;
maintaining a dictionary comprising a
plurality of code words, wherein each code
word in the dictionary is associated with a
unique data block string;
building a data block string from at least
one data block in the input data that is
not part of a run-length sequence;
searching for a code word in the dictionary
having a unique data block string associ-
ated therewith that matches the built data
block string; and
outputting the code word representing the
built data block string.
Id. at col. 16 l. 53–col. 17 l. 2.
Claim 4 is relevant to the claim construction dispute
raised by Realtime on appeal. The claim further limits
the “maintaining a dictionary” step and reads as follows:
4. The method of claim 1, wherein the step of
maintaining a dictionary comprises the steps of:
dynamically generating a new code word
corresponding to a built data block string,
4 REALTIME DATA, LLC v. IANCU
if the built data block string does not
match a unique data block string in the
dictionary; and
adding the new code word in the diction-
ary.
Id. at col. 17 ll. 17–23.
II
In April 2016, HP petitioned for inter partes review of
the ’812 patent, alleging that claims 1–4, 8, 14–17, 21,
and 28 would have been obvious under
35 U.S.C. § 103(a). In particular, HP argued that claims
1
1–4, 8, and 28 would have been obvious over U.S. Patent
No. 4,929,946 (“O’Brien”) in view of Nelson, a data com-
pression textbook, 2 and that claims 14–17 and 21 would
have been obvious over O’Brien in view of Nelson and
U.S. Patent No. 4,558,302 (“Welch”).
With respect to independent claim 1, HP argued that
O’Brien disclosed the preamble, the “detecting” step, and
the first “outputting” step, and that O’Brien and Nelson
both individually disclosed the “maintaining” step, the
“building” step, the “searching” step, and the second
“outputting” step. For the “maintaining” and “searching”
steps, HP clarified that even though O’Brien did not use
the specific claim term “dictionary,” a person of ordinary
1 Because the issue date of the ’812 patent is Ju-
ly 22, 2003, and neither the ’812 patent nor the applica-
tion from which it issued ever contained a claim with an
effective filing date on or after March 16, 2013, the ver-
sion of 35 U.S.C. § 103 that applies here is the one preced-
ing the changes made by the America Invents Act. See
Leahy-Smith America Invents Act, Pub. L. No. 112-29,
125 Stat. 284, 293, § 3(n) (2011).
2 Mark Nelson, The Data Compression Book (1992).
REALTIME DATA, LLC v. IANCU 5
skill in the art “would have recognized this and known, as
taught in Nelson, that O’Brien’s string compression is a
dictionary algorithm.” Pet. Requesting Inter Partes
Review, SAP Am. Inc. et al. v. Realtime Data LLC,
IPR2016-00783, Paper 1 at 41 (P.T.A.B. Apr. 1, 2016).
In its response, Realtime conceded that O’Brien’s
string compression was, in fact, dictionary encoding as
required by the claims. Instead of challenging O’Brien’s
teaching of dictionary encoding, Realtime primarily
focused its response on the “maintaining” step. Specifical-
ly, Realtime argued that O’Brien did not disclose “main-
taining a dictionary” because O’Brien generates a new
dictionary for each data segment, while the ’812 patent
processes an input data stream through a single diction-
ary that resets to its initial state only when full. Realtime
also argued that HP presented insufficient evidence of a
motivation to combine O’Brien and Nelson, and that HP
attempted instead to sidestep this requirement by argu-
ing Nelson as an alternative to O’Brien. As Realtime
noted, “[i]ndeed, Petitioner and its declarant allege
O’Brien in fact discloses all of the limitations of all claims
challenged in Ground 1.” Patent Owner Resp., Hewlett-
Packard Enter. Co. v. Realtime Data LLC, IPR2016-
00783, Paper 29 at 44 (P.T.A.B. Jan. 5, 2017) (emphasis in
original).
The Board agreed with Realtime’s statement, finding
that O’Brien discloses the “maintaining a dictionary”
limitation and every other limitation in independent
claim 1. While recognizing that there was a dispute as to
the construction of the phrase “maintaining a dictionary,”
the Board determined that no construction was necessary
as O’Brien taught every step for “maintaining a diction-
ary” identified in dependent claim 4. The Board also
determined that O’Brien teaches the limitations of claims
1–4, 8, and 28.
6 REALTIME DATA, LLC v. IANCU
The Board next addressed why “a person having ordi-
nary skill in the art would have had to turn to Nelson
after reading O’Brien when O’Brien allegedly teaches all
the limitations of all claims challenged in Ground 1.”
Hewlett-Packard Enter. Co. v. Realtime Data LLC,
IPR2016-00783, 2017 WL 4349409, at *9 (P.T.A.B.
Sept. 28, 2017). The Board noted that HP’s primary
obviousness argument established only that “Nelson
makes clear that O’Brien’s string encoding . . . is diction-
ary-based encoding” without using Nelson for the disclo-
sure of a particular claim limitation. Id. at *12.
According to the Board, HP’s other argument—that it
would have been obvious to a person of ordinary skill in
the art to substitute Nelson’s dictionary compression
techniques with O’Brien’s string compression—was an
“argument[] in the alternative.” Id.
Even though the Board agreed with HP’s primary ob-
viousness argument—that O’Brien alone teaches every
limitation in claims 1–4, 8, and 28—the Board neverthe-
less addressed the question of motivation to combine
O’Brien in view of Nelson. The Board compared the
compression techniques in O’Brien and Nelson and found
that they “share striking similarities.” Id. at *11. The
Board also found that O’Brien “suggests that a wide
variety of adaptive compression algorithms could be used
and encourages a person having ordinary skill in the art
to turn to ‘well known’ algorithms such as Nelson’s algo-
rithms for techniques of performing string compression in
O’Brien’s system, which would be a simple substitution
yielding predictable results.” Id. Thus, the Board con-
cluded, “Petitioner has established by a preponderance of
the evidence that a person having ordinary skill in the art
would have been motivated to turn to Nelson after read-
ing O’Brien even though O’Brien teaches all the limita-
tions of all claims challenged in ground 1.” Id. at *12.
As to claims 14–17 and 21, the Board found that
Welch taught the additional limitation that a software
REALTIME DATA, LLC v. IANCU 7
program be used to implement the claimed method. Id. at
*21. Consequently, the Board held that claims 1–4, 8,
and 28 would have been unpatentable under
35 U.S.C. § 103 in view of O’Brien alone, or alternatively,
in further view of Nelson, and claims 14–17 and 21 would
have been unpatentable under 35 U.S.C. § 103 in view of
O’Brien, Nelson, and Welch. Realtime appeals. We have
jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
DISCUSSION
Realtime makes two primary arguments on appeal:
(1) that the Board erred in its determination that a person
of ordinary skill in the art would have been motivated to
combine the teachings of O’Brien and Nelson; and (2) that
the Board erred by failing to construe the “maintaining a
dictionary” limitation and in finding that O’Brien dis-
closed the “maintaining a dictionary” limitation. We
address these issues in turn.
I
An invention cannot be patented, “though the inven-
tion is not identically disclosed or described as set forth in
section 102,” if, at the time of the invention, the differ-
ences between the claimed invention and the prior art
would have rendered the claimed invention “obvious” to a
person of ordinary skill in the art. 35 U.S.C. § 103(a). We
have long held that when a party claims that a combina-
tion of references renders a patented invention obvious,
the “factfinder must further consider the factual questions
of whether a person of ordinary skill in the art would be
motivated to combine those references.” Dome Patent L.P.
v. Lee, 799 F.3d 1372, 1380 (Fed. Cir. 2015); see also KSR
Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007) (“[A]
patent composed of several elements is not proved obvious
merely by demonstrating that each of its elements was,
independently, known in the prior art.”). This require-
ment is necessary because “claimed discoveries almost of
necessity will be combinations of what, in some sense, is
8 REALTIME DATA, LLC v. IANCU
already known,” and the mere existence of independent
elements in the prior art does not in itself foreclose the
possibility of an inventive combination. KSR,
550 U.S. at 418–19.
Here, HP’s primary argument to the Board was that
all of the elements of claims 1–4, 8, and 28 were disclosed
in O’Brien, a single reference. HP relied on Nelson simply
to demonstrate that a person of ordinary skill in the art
would have understood that the string compression dis-
closed in O’Brien was, in fact, a type of dictionary encoder,
the terminology used in the ’812 patent. As both the
Board and Realtime recognized, HP also argued in the
alternative that Nelson disclosed some of the elements in
the claims at issue.
We conclude that, in this case, the Board was not re-
quired to make any finding regarding a motivation to
combine given its reliance on O’Brien alone. Certainly,
had the Board relied on HP’s alternative argument, HP
would have been required to demonstrate a sufficient
motivation to combine the two references. In its primary
argument, however, HP relied on Nelson merely to ex-
plain that O’Brien’s encoder is a type of dictionary encod-
er. In addition, Realtime conceded the point HP sought to
use Nelson to prove: that O’Brien disclosed a dictionary
encoder. See Hewlett-Packard, 2017 WL 4349409, at *5
(“At the outset, we note that Petitioner, Patent Owner,
and their respective declarants all agree that O’Brien’s
encoder is a type of dictionary encoder.”).
Under these circumstances, the Board was free to
come to the very conclusion it reached: that O’Brien alone
disclosed every element of claims 1–4, 8, and 28. And
because the Board did not rely on Nelson for the disclo-
sure of a particular element or teaching, the Board had no
obligation to find a motivation to combine O’Brien and
Nelson. While Realtime argues that the use of O’Brien as
a single anticipatory reference would have been more
REALTIME DATA, LLC v. IANCU 9
properly raised under § 102, it is well settled that “a
disclosure that anticipates under § 102 also renders the
claim invalid under § 103, for ‘anticipation is the epitome
of obviousness.’” Connell v. Sears, Roebuck & Co., 722
F.2d 1542, 1548 (Fed. Cir. 1983) (quoting In re Fracalossi,
681 F.2d 792, 794 (CCPA 1982)); cf. Wasica Fin. GmbH v.
Cont’l Auto. Sys., Inc., 853 F.3d 1272, 1278 n.3 (Fed. Cir.
2017) (noting the Board’s conclusion that a prior art
reference rendered certain claims obvious “by virtue of its
anticipation of them”). The Board therefore did not err
when it concluded that claim 1 was invalid under § 103
based on O’Brien alone.
For this same reason, we are not persuaded by
Realtime’s argument that the Board violated 35 U.S.C.
§ 312(a)(3) or other notice requirements by relying on
O’Brien alone. Section 312(a)(3) requires a petition to
identify “in writing and with particularity, each claim
challenged, the grounds on which the challenge to each
claim is based, and the evidence that supports the
grounds for the challenge to each claim.” § 312(a)(3). And
we have held that the Board may not rely on a basis for
decision unless the party adversely affected by such
reliance had notice of the basis and an adequate oppor-
tunity to address it. See SAS Inst. Inc. v. Complemen-
tSoft, LLC, 825 F.3d 1341, 1351–52 (Fed. Cir. 2016)
(citing authorities), rev’d on other grounds, SAS Inst. Inc.
v. Iancu, 138 S. Ct. 1348 (2018).
HP’s petition identified O’Brien as disclosing every el-
ement of claim 1. The sole purpose for which HP relied on
Nelson, to demonstrate that O’Brien disclosed a diction-
ary encoder, was conceded by Realtime. Realtime cannot
now argue that its own admissions, which obviated the
need for any of Nelson’s teachings, deprived it of notice or
otherwise foreclosed HP from arguing obviousness based
on O’Brien’s disclosures without Nelson. The Board’s
decision rested solely on the arguments and grounds
proffered by HP in its petition, for which Realtime both
10 REALTIME DATA, LLC v. IANCU
had notice and the opportunity to respond. Accordingly,
we conclude that the Board did not violate § 312(a)(3) or
other notice requirements.
In any event, even if the Board were required to make
a finding regarding a motivation to combine O’Brien with
Nelson, its finding in this case is supported by substantial
evidence. 3 A motivation to combine may be found “explic-
itly or implicitly in market forces; design incentives; the
‘interrelated teachings of multiple patents’; ‘any need or
problem known in the field of endeavor at the time of
invention and addressed by the patent’; and the back-
ground knowledge, creativity, and common sense of the
person of ordinary skill.” ZUP, LLC v. Nash Mfg., Inc.,
896 F.3d 1365, 1371 (Fed. Cir. 2018) (quoting Plantronics,
Inc. v. Aliph, Inc., 724 F.3d 1343, 1354 (Fed. Cir. 2013)).
The Board specifically noted that HP “brings in Nelson to
provide a more explicit teaching of ‘dictionary,’” Hewlett-
Packard, 2017 WL 4349409, at *13, and that the motiva-
tion to combine was premised on “the rationale a person
having ordinary skill in the art would have had to turn to
Nelson after reading O’Brien when O’Brien allegedly
teaches all the limitations of all claims challenged in
Ground 1,” id. at *9. The Board found that a person of
ordinary skill in the art would have looked to Nelson
because Nelson is “well known,” the compression tech-
niques taught in Nelson that were described as dictionary
encoders “share striking similarities” to O’Brien’s com-
pression techniques, and O’Brien itself “suggests that a
wide variety of adaptive compression algorithms could be
used and encourages a person having ordinary skill in the
art to turn to ‘well known’ algorithms such as Nelson’s.”
3 We limit our review to HP’s primary obviousness
argument, which uses O’Brien to disclose every element of
claims 1–4, 8, and 28 and Nelson to demonstrate that
O’Brien teaches a dictionary encoder.
REALTIME DATA, LLC v. IANCU 11
Id. at *11. This is enough evidence to support a finding
that a person of ordinary skill in the art would have
turned to Nelson, a well-known data compression text-
book, to better understand or interpret O’Brien’s compres-
sion algorithms.
II
We now turn to whether the Board erred in finding
that O’Brien disclosed the “maintaining a dictionary”
limitation in independent claim 1. Realtime argues that
the Board erroneously failed to construe the term “main-
taining a dictionary” to include the requirement that the
dictionary be retained during the entirety of the data
compression unless and until the number of entries in the
dictionary exceeds a predetermined threshold, in which
case the dictionary is reset.
We review the ultimate question of the proper con-
struction of a patent de novo, with any underlying fact
findings reviewed for substantial evidence. Teva Pharm.
USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 838 (2015);
Praxair Distrib., Inc. v. Mallinckrodt Hosp. Prods. IP Ltd.,
890 F.3d 1024, 1031 (Fed. Cir. 2018) (citing HTC Corp. v.
Cellular Commc’ns Equip., LLC, 877 F.3d 1361, 1367
(Fed. Cir. 2017)). While the words of a claim “are general-
ly given their ordinary and customary meaning,” a claim
term is read “not only in the context of the particular
claim in which the disputed term appears, but in the
context of the entire patent, including the specification.”
Phillips v. AWH Corp., 415 F.3d 1303, 1312–13
(Fed. Cir. 2005) (en banc). Those claim construction
principles are important even in an inter partes review
proceeding like this one, in which the claims were proper-
ly given the “broadest reasonable interpretation” con-
12 REALTIME DATA, LLC v. IANCU
sistent with the specification. 4 In re Cuozzo Speed Techs.,
LLC, 793 F.3d 1268, 1279 (Fed. Cir. 2015), aff’d sub nom.
Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016).
The Board is required to construe “only those terms . . .
that are in controversy, and only to the extent necessary
to resolve the controversy.” Vivid Techs., Inc. v. Am. Sci.
& Eng’g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999).
The Board did not expressly construe the phrase
“maintaining a dictionary,” but found that O’Brien satis-
fied this limitation because it disclosed all of the steps in
dependent claim 4. As noted above, claim 4 depends from
claim 1 and recites:
4. The method of claim 1, wherein the step of
maintaining a dictionary comprises the steps of:
dynamically generating a new code word
corresponding to a built data block string,
if the built data block string does not
match a unique data block string in the
dictionary; and
adding the new code word in the diction-
ary.
’812 patent col. 17 ll. 17–23. In other words, the Board
found that the steps outlined in dependent claim 4 were
sufficient to satisfy the “maintaining a dictionary” limita-
tion in independent claim 1.
4 This standard has recently changed. For petitions
filed on or after November 13, 2018, the Board will apply
the Phillips claim construction standard. See Changes to
the Claim Construction Standard for Interpreting Claims
in Trial Proceedings Before the Patent Trial and Appeal
Board, 83 Fed. Reg. 51340 (Oct. 11, 2018) (to be codified
at 37 C.F.R. pt. 42).
REALTIME DATA, LLC v. IANCU 13
The Board’s interpretation is supported by both the
claim language itself and the specification. The term
“maintaining a dictionary” is not defined in claim 1, and
dependent claim 4 is the first of the claims to lend mean-
ing to the phrase. More tellingly, the language of claim 4
directly mimics the portion of the specification that teach-
es that:
the dictionary is dynamically maintained and up-
dated during the encoding process by generating a
new code word corresponding to a built data block
string, if the built data block string does not
match a unique data block string in the diction-
ary; and then adding the new code word in the
dictionary.
Id. at col. 3 ll. 31–36 (emphasis added). This passage,
with its “by” language, strongly suggests that the steps
outlined in claim 4 are one way of “maintaining a diction-
ary,” as the Board concluded.
Realtime does not contest that O’Brien discloses these
steps, but instead argues that because the claim recites
the word “comprising,” it does not foreclose the possibility
of additional unstated limitations in the interpretation of
“maintaining a dictionary.” Realtime notes that
“‘[c]omprising’ is a term of art used in claim language
which means that the named elements are essential, but
other elements may be added and still form a construct
within the scope of the claim.” Genentech, Inc. v. Chiron
Corp., 112 F.3d 495, 501 (Fed. Cir. 1997). Thus, Realtime
argues, the Board erred by failing to consider its proposed
construction, which would add further requirements to
satisfy the “maintaining a dictionary” limitation.
The word “comprising” does not mean that the claim
can be read to require additional unstated elements, only
that adding other elements to the device or method is not
incompatible with the claim. Id. Realtime points to no
law undermining the Board’s view in this case that the
14 REALTIME DATA, LLC v. IANCU
claim elements introduced in dependent claim 4 with
“comprising” language are properly understood as giving
details sufficient to constitute a particular embodiment of
the more general “maintaining a dictionary” term of
independent claim 1. That view, as already noted above,
is strongly supported by the specification.
Realtime’s other arguments in support of its proposed
construction do not alter our conclusion. Realtime points
to the portion of the specification that teaches that “[i]n
yet another aspect of the present invention, the dictionary
is initialized during the encoding process if the number of
code words (e.g., dictionary indices) in the dictionary
exceeds a predetermined threshold.” ’812 patent col. 3
ll. 37–40. We note that the specification contemplates
initializing (starting a new dictionary) only as a possible
embodiment. Nowhere does the specification state or
imply that this step is a mandatory part of the step of
“maintaining a dictionary.” This is confirmed by depend-
ent claim 5, which states:
5. The method of claim 4, wherein the step of
maintaining the dictionary further comprises the
step of initializing the dictionary if the number of
code words exceeds a predetermined threshold.
Id. at col. 17 ll. 24–27. The fact that claim 5 “further”
adds this step indicates that this step was neither a
necessary element of claim 4 nor required in the step of
“maintaining a dictionary” in independent claim 1. See
Phillips, 415 F.3d at 1315 (“[T]he presence of a dependent
claim that adds a particular limitation gives rise to a
presumption that the limitation in question is not present
in the independent claim.”). Because the intrinsic evi-
dence does not support Realtime’s proposed construction,
Realtime has not demonstrated that the Board committed
legal error by failing to adopt it.
REALTIME DATA, LLC v. IANCU 15
CONCLUSION
We conclude that the Board did not err in concluding
that the claims would have been obvious in view of a
single reference. Additionally, the Board did not err in
finding that O’Brien disclosed the “maintaining a diction-
ary” limitation in independent claim 1. We therefore
affirm.
AFFIRMED