Personal Web Technologies, LLC v. Apple, Inc. , 848 F.3d 987 ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
PERSONAL WEB TECHNOLOGIES, LLC,
Appellant
v.
APPLE, INC.,
Appellee
______________________
2016-1174
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2013-
00596.
______________________
Decided: February 14, 2017
______________________
LAWRENCE MILTON HADLEY, McKool Smith Hennigan,
PC, Los Angeles, CA, argued for appellant. Also repre-
sented by PHILLIP LEE; JOEL LANCE THOLLANDER, Austin,
TX.
MICHAEL JAY, Boies, Schiller & Flexner LLP, Santa
Monica, CA, argued for appellee. Also represented by
DONALD WILLIAM WARD, JOSEPH E. LASHER; WILLIAM A.
ISAACSON, Washington, DC.
JOSEPH MATAL, Office of the Solicitor, United States
Patent and Trademark Office, Alexandria, VA, argued for
2 PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC.
intervenor Michelle K. Lee. Also represented by THOMAS
W. KRAUSE, SCOTT WEIDENFELLER, KAKOLI CAPRIHAN.
______________________
Before TARANTO, CHEN, and STOLL, Circuit Judges.
TARANTO, Circuit Judge.
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 re-
view, 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 ulti-
mate 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.
I
The ’310 patent describes and claims methods (or de-
vices for carrying out methods) of locating data and con-
trolling access to data by giving a data file a substantially
unique name that depends on the file’s content—a so-
called “True Name.” ’310 patent, col. 3, lines 50–62; id.,
col. 6, lines 20–23; id., col. 37, lines 44–64. The patent
describes generating a True Name using mathematical
algorithms (called “hash functions” in the abstract and
some claims) that use contents of the file to generate a
comparatively small-size identifier for the file. Id., col.
12, line 21, through col. 13, line 9. As relevant here, the
patent calls for comparing that name with a plurality of
PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC. 3
values in a network, determining whether a user is au-
thorized to access the data, and providing or denying
access to the data based on that determination. See, e.g.,
id., col. 3, line 50, through col. 4, line 52; id., col. 37, lines
44–62.
Apple petitioned for inter partes review (IPR) of
claims 24, 32, 70, 81, 82, and 86, arguing unpatentability,
under 35 U.S.C. § 103, for obviousness based on a combi-
nation of the Woodhill reference (U.S. Patent No.
5,649,196) and the Stefik reference (U.S. Patent No.
7,359,881). Woodhill focuses on a system for backing up
or restoring data. Stefik focuses on a system for manag-
ing rights to access data.
More specifically, Woodhill discloses a system for us-
ing content-based identifiers in performing file-
management functions, such as backing up files. It
includes a distributed storage system that identifies data
items (called “binary objects”) using content-based identi-
fiers (called “binary object identifiers”). ’196 patent, col. 1,
line 66, through col. 2, line 11. A binary object identifier
is calculated using the contents of a data item. Id., col 8,
lines 38–42. Each binary object identifier is stored (with
certain other information) in a binary object identification
record. Id., col. 7, line 60–64. Woodhill uses its content-
based binary object identifiers for file-management pur-
poses, including in a backup/restore system, which checks
to see if binary objects have changed since the system’s
most recent backup. Id., col. 2, lines 11–46.
Stefik discloses an authentication system designed to
control access to digital works stored in a repository.
Each digital work is assigned a “unique identifier.” ’881
patent, col. 9, lines 47–50, 56–59. Each digital work also
has associated usage rights that control access to the
work. Id., col. 9, lines 52–53; id., col. 3, lines 58–65. A
user demonstrates authorization to access a digital work
through a “digital ticket,” which identifies the ticket
4 PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC.
holder as having access to the digital file because the
holder has paid for access or is otherwise entitled to
access. Id., col. 3, lines 58–65.
The Board instituted review on March 26, 2014. Ap-
ple Inc. v. PersonalWeb Technologies, LLC, IPR2013-
00596, 2014 WL 1477691 (PTAB Mar. 26, 2014). On
March 25, 2015, after conducting the review, the Board
issued its Final Written Decision, holding claims 24, 32,
70, 81, 82, and 86 unpatentable as obvious based on a
combination of the Woodhill and Stefik references. Apple
Inc. v. PersonalWeb Technologies, LLC, IPR2013-00596,
2015 WL 1777147 (PTAB Mar. 25, 2015), at *7–13 (here-
after “Apple v. PersonalWeb”). In doing so, the Board
applied the broadest-reasonable-interpretation standard
in construing several phrases referring to content-based
identifiers. Id. at *4. On April 24, 2015, thirteen days
after the ’310 patent expired, PersonalWeb sought rehear-
ing, but the Board denied the motion on August 3, 2015.
PersonalWeb appeals the Final Written Decision, un-
der 35 U.S.C. §§ 141(c), 319, except as to claim 70. We
have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
II
A
PersonalWeb challenges the Board’s construction of
the claim terms “content-dependent name,” “content-
based identifier,” and “digital identifier.” We use the term
“content-based identifier” to refer to all of those terms,
since no issue here turns on any differences among them.
Citing the broadest-reasonable-interpretation standard,
the Board construed the terms to mean “an identifier for a
data item being based, at least in part, on a given function
of at least some of the bits in the particular sequence of
bits of the particular data item.” Apple v. PersonalWeb,
2015 WL 1777147, at *4, *5. PersonalWeb argues that
the terms require the identifier to rely on “‘all of the data
PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC. 5
in the data item.’” Appellant’s Opening Br. at 51 (quoting
district court construction in separate litigation).
Based on the fact that the ’310 patent expired after
the Final Written Decision was issued but while the
rehearing request was pending before the Board, Person-
alWeb argues that the Board should not have relied on
the broadest-reasonable-interpretation standard in con-
struing the terms at issue or, in any event, that we should
not do so now. Apple disagrees, and so does the Director
of the Patent and Trademark Office, who intervened in
this appeal. 1 We need not and do not resolve that dispute.
PersonalWeb urges us to apply the principles governing
identification of the best construction of the claim terms,
see Phillips v. AWH Corp., 415 F.3d 1303, 1312–13 (Fed.
1 We recently held the broadest-reasonable-
interpretation standard inapplicable, outside the IPR
setting, where the patent at issue had expired in a reex-
amination 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 regula-
tions 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-reasonable-
interpretation standard applies to “[a] claim in an unex-
pired 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.
6 PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC.
Cir. 2005), but even under those principles, the Board’s
construction is clearly correct on the point at issue.
Claim construction is a legal issue reviewed de novo,
based on underlying factual findings that are reviewed for
substantial evidence. Perfect Surgical Techniques, Inc. v.
Olympus Am., Inc., 841 F.3d 1004, 1012 (Fed. Cir. 2016).
Here, the meaning of the language is plain from the face
of the claims. The content-based identifier need not be
generated from “all” of the information in a data item.
In claim 24, for example, the content-dependent name
is “based, at least in part, on at least a function of the
data in the particular data item” and “the data used by
the function to determine the content-dependent name
comprises at least some of the contents of the particular
data item.” ’310 patent, col. 40, lines 7–12. The “at least
some” language is mirrored in the other independent
claims containing the claim terms at issue. Id., col. 45,
lines 40–43 (claim 81); id., col. 46, lines 27–30 (claim 86).
The “at least some” language makes it impossible to
interpret the terms at issue to require use of “all” of the
data. And the absence of the argued “all” requirement in
the terms at issue is further confirmed by the patent’s
addition of such a requirement, through additional lan-
guage, in dependent claim 32. Id., col. 40, lines 54–57
(“the data used by the function to determine the content-
dependent name of the particular data item comprises of
all of the contents of the particular data item”).
We therefore affirm the Board’s claim construction.
PersonalWeb does not deny that Woodhill discloses the
required content-based identifier under the Board’s
construction.
B
PersonalWeb stands on firmer ground in challenging
the adequacy of the Board’s findings and explanations in
concluding that the claims of the ’310 patent here at issue
PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC. 7
would have been obvious to a relevant skilled artisan over
a combination of Woodhill and Stefik. We agree with that
challenge, concluding that the Board has not done enough
to support its conclusion.
1
The Board concluded that the claimed inventions at
issue would have been obvious based on a combination of
Woodhill and Stefik. We review the Board’s ultimate
determination of obviousness de novo and its underlying
factual determinations for substantial evidence. In re
Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000). 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).
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 obvi-
ousness “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
8 PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC.
Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1364–
67 (Fed. Cir. 2015).
The Supreme Court in KSR Int’l Co. v. Teleflex Inc.,
550 U.S. 398 (2007), explained that, “because inventions
in most, if not all, instances rely upon building blocks long
since uncovered, and claimed discoveries almost of neces-
sity will be combinations of what, in some sense, is al-
ready known,” “it can be important to identify a reason
that would have prompted a person of ordinary skill in
the relevant field to combine the elements in the way the
claimed new invention does.” Id. at 418–19. The required
“expansive and flexible approach,” id. at 415, may look at
a variety of facts, including prior-art teachings and mar-
ketplace demands and artisans’ background knowledge,
“in order to determine whether there was an apparent
reason to combine the known elements in the fashion
claimed by the patent at issue,” id. at 418; see also id. at
420–421. The Supreme Court added: “To facilitate re-
view, this analysis should be made explicit.” Id. at 418.
We have repeatedly applied those requirements in review-
ing the adequacy of the Board’s obviousness analysis,
noting that the amount of explanation needed will vary
from case to case, depending on the complexity of the
matter and the issues raised in the record. See NuVasive,
842 F.3d at 1381–82; Ariosa, 805 F.3d at 1364–66; In re
Lee, 277 F.3d 1338, 1343 (Fed. Cir. 2002).
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 discre-
tion, . . . 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. Permo-
bil, 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
PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC. 9
the evidence on which the findings are based, accompa-
nied by the agency’s reasoning in reaching its conclu-
sions.’” 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 find-
ings 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).
The Supreme Court set forth two rationales for this
approach in its pre-Administrative Procedure Act decision
in SEC v. Chenery Corp., 318 U.S. 80 (1943). Remanding
to the Securities and Exchange Commission for further
consideration, the Court explained: “[C]ourts cannot
exercise their duty of review unless they are advised of
the considerations underlying the [agency] action under
review. . . . [T]he orderly functioning of the process of
review requires that the grounds upon which the adminis-
trative agency acted be clearly disclosed and adequately
sustained.” Id. at 94. In addition to enabling needed
judicial review of agency action, the Court also explained
that the clear-explanation requirement prevents judicial
intrusion on agency authority to make factual, policy, and
discretionary determinations committed to the agency.
Id. at 88. We have applied those principles repeatedly, in
various settings. See, e.g., CS Wind Vietnam Co., Ltd. v.
United States, 832 F.3d 1367, 1380–81 (Fed. Cir. 2016);
Timken U.S. Corp. v. United States, 421 F.3d 1350, 1355
(Fed. Cir. 2005) (“[A]n agency must explain its action with
sufficient clarity to permit ‘effective judicial review.’”);
Mullins v. U.S. Dep’t of Energy, 50 F.3d 990, 992 (Fed.
10 PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC.
Cir. 1995) (“[A]gencies have a duty to provide reviewing
courts with a sufficient explanation for their decisions so
that those decisions may be judged against the relevant
statutory standards.”).
2
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.
For example, claim 24 requires “causing the content-
dependent name of the particular data item to be com-
pared to a plurality of values.” ’310 patent, col. 40, lines
16–17; see also id., col. 46, lines 3–4 (claim 81); id., col. 46,
lines 35–37 (claim 86). The Board found this element
satisfied. Apple v. PersonalWeb, 2015 WL 1777147, at *8
(“As discussed by Apple, the process of matching the
identifier for the work would involve comparing it with a
plurality of values, and providing for selective access.
Pet. 42.”). That discussion, however, mentions only
Stefik, not Woodhill, and yet Apple has made clear that it
relies solely on Woodhill as disclosing this claim element.
Appellee’s Br. at 25–29. The Board-cited page of Apple’s
petition does not explain Woodhill’s disclosure of this
element. J.A. 1045 (Pet. 42). The Board’s discussion does
not cite, let alone explain or analyze or adopt, an earlier
portion of Apple’s petition that refers to part of column 17
of Woodhill. J.A. 1036–37 (Pet. 33–34).
A later portion of the Board opinion, in responding to
an argument by PersonalWeb that Woodhill does not use
its binary object identifiers “to access, search for, or
address binary objects,” Apple v. PersonalWeb, 2015 WL
1777147, at *11, refers to a part of column 17 of Woodhill,
id. But the Board’s discussion does not address, or at
PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC. 11
least does not clearly address, the “plurality of values”
comparison element. Id. When referring to a determina-
tion “as to whether the content-based identifier for the
particular data item corresponds to an entry in a data-
base,” id., the Board’s opinion does not explicitly say, let
alone explain, how Woodhill shows that determination to
involve a comparison between the content-based identifier
and a plurality of values. We might attempt on our own
to parse Woodhill, and column 17 specifically, to find such
a comparison, but this is not an issue on which we could
confidently rely on our independent reading, without
more help than we have received from the Board. Neither
column 17 of Woodhill nor any other portion identified for
us is self-explanatory on this point.
The Board’s reasoning is also deficient in its finding
that a relevant skilled artisan would have had a motiva-
tion 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 under-
stood 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 refer-
ences and combine them to arrive at the claimed inven-
tion. 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.”); InTouch
12 PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC.
Techs., Inc. v. VGO Communications, Inc., 751 F.3d 1327,
1352 (Fed. Cir. 2014).
If the Board’s statement were read more broadly, it
would not be adequately explained and grounded in
evidence. Indeed, the Board nowhere clearly explained, or
cited evidence showing, how the combination of the two
references was supposed to work. At least in this case,
such a clear, evidence-supported account of the contem-
plated workings of the combination is a prerequisite to
adequately explaining and supporting a conclusion that a
relevant skilled artisan would have been motivated to
make the combination and reasonably expect success in
doing so.
The amount of explanation needed to meet the gov-
erning legal standards—to enable judicial review and to
avoid judicial displacement of agency authority—
necessarily depends on context. A brief explanation may
do all that is needed if, for example, the technology is
simple and familiar and the prior art is clear in its lan-
guage and easily understood. See Ariosa, 805 F.3d at
1365–66. On the other hand, complexity or obscurity of
the technology or prior-art descriptions may well make
more detailed explanations necessary. Here, the Board’s
explanation is wanting. Apple’s attempts in this court to
explicate both the Board’s explanation and the underlying
evidence do not persuade us otherwise.
We conclude that the Board’s reasoning does not meet
the requirements for a sustainable obviousness determi-
nation 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
PERSONAL WEB TECHNOLOGIES, LLC v. APPLE, INC. 13
obviousness challenge, within proper procedural con-
straints. See id. at 1366–67.
III
For the foregoing reasons, while we affirm the Board’s
claim construction, we vacate the Board’s Final Written
Decision regarding obviousness of the appealed claims
and remand for further proceedings.
No costs.
AFFIRMED IN PART, VACATED AND REMANDED
IN PART