In its Final Written Decision, the Board found that Petitioner had shown by a preponderance of the evidence that all challenged claims of the ’403 patent are unpatentable. The Board also determined Patent Owner had not met its burden on its contingent Motion to Amend and therefore, denied the motion. The ’403 patent relates to “an audio recording device that the specification terms a ‘music jukebox.’”
With regard to claim construction under the broadest reasonable interpretation in light of the specification, the Board adopted its preliminary constructions set forth in the Institution Decision. In particular, “master song list” was defined as “a list of sound tracks within a library”; “indicia of said master song list” was defined as “visible information that identifies a master song list”; and “manually operable function controllers” was defined as “controls that can be operated by hand.” The Board also revised its construction of “organizable,” defining the term to mean “capable of being put into a particular arrangement, by ordering by grouping.”
Turning to the asserted grounds of unpatentability, the Board first discussed the alleged anticipation of claims 1, 6, 7, 22, 29, 30, 43, and 45-47 by Nathan ’259. The Board noted in response to Patent Owner’s arguments that “the fact that a reference is silent regarding a particular feature only signifies exclusion of that feature if a person of ordinary skill would understand silence to imply exclusion.” In considering the parties’ arguments, the Board found that Petitioner had not shown by a preponderance of the evidence that Nathan ’259 disclosed all elements of claim 1 and its dependent claims.
The Board then discussed the alleged obviousness of claims 1, 6, 7, 22, 27, 29, 30, 35, 43, and 45-47 in view of Nathan ’259 and Nathan ’255, noting initially that Patent Owner had not contested the motivation to combine the prior art references but rather argued the alleged lack of disclosure in the references. The Board was persuaded by Petitioner’s arguments that the combination of references teaches all limitations of claim 1. The Board was similarly persuaded by Petitioner’s arguments with respect to the dependent claims, noting with respect to claim 30 that Patent Owner’s counsel had contradicted a position asserted by Patent Owner in its papers. Thus, the Board found claims 1, 6, 7, 22, 27, 29, 30, 35, 43, and 45-47 obvious over Nathan ’259 and Nathan ’255.
The Board next addressed alleged objective indicia of nonobviousness, and particularly Patent Owner’s arguments concerning alleged commercial success. Patent Owner relied upon “a number of confidential licenses which are said to have generated more than $10,000,000 of gross revenue,” and declaration testimony where the declarant “ensured that ‘at least one commercial product sold’ was covered by ‘at least one claim of at least on patent’ of the family.” The Board noted that, in the context of licensing, “there is a danger that the licenses may have been taken only because they were cheaper than defending an infringement suit.” Therefore, “nexus between the commercial success and the patent cannot be inferred; rather, ‘affirmative evidence of nexus’ is required.” The Board agreed with Petitioner that “the evidence provided by [Patent Owner] does not establish a sufficient link between the merits of the invention claimed in the ’403 patent and the taking of the licenses.” Thus, the Board concluded that the alleged indicia of nonobviousness did not overcome the evidence of obviousness.
As to the alleged obviousness of claims 1, 3, 6, 7, 11, 12, 16, 22, 24, 30, 35-37, 43, and 45-47 over Sound Blaster, Lucente, and Ozawa, the Board concluded that the preponderance of the evidence supports a finding that all limitations of the challenged claims are disclosed in the references.
The Board then addressed Patent Owner’s Motion to Exclude the Sound Blaster reference, denying the Motion. “Exhibit 1004 contains two related documents: (1) the Declaration of Kyle A. Miller, attesting to the public availability of the Sound Blaster reference; and (2) the Sound Blaster reference itself.” The Board noted that Patent Owner “does not identify where in the record its objections to evidence were made prior to their being the basis of the Motion to Exclude, in violation of Rule 42.64(c).” Thus, the Motion could be denied “on this basis alone.” Overlooking the deficiency, the Board found that it would nevertheless deny the Motion. First, Patent Owner objected to the declaration testimony as hearsay, but the Board explained that “direct testimony is typically provided via affidavit” in an inter partes review and is therefore distinguishable from affidavits in district court. Patent Owner also objected to the copyright date on Sound Blaster as hearsay. Again, Patent Owner had not previously raised this objection. Regardless, the Board did not rely upon the copyright date rendering the argument moot. Instead, the Board relied upon the declarant’s testimony as to public availability of Sound Blaster. The Board also found that Patent Owner’s argument regarding the business records exception to the hearsay rule to be irrelevant because “Sound Blaster is not offered for a hearsay purpose.” Finally, as to authenticity, the Board was persuaded that the declaration testimony established authenticity.
The Board next addressed the Motion to Amend, stating that Patent Owner bears the burden of establishing “that it is entitled to the relief requested” and must “demonstrate the patentability of the proposed substitute claims.” In the proposed substitute claims, Patent Owner introduced the term “customizable” without offering a proposed claim construction, arguing that the amendment “simply codifies the Board’s claim construction of the term ‘organizable.’” The Board found that Patent Owner’s failure to construe the claim term and arguments introduced confusion into the claim such that the Motion could be denied on this basis.
The Board continued under its own interpretation of the claim term, finding that Patent Owner did not demonstrate patentability of substitute claim 49 or any proposed dependent claim. Patent Owner discussed alleged patentability over references cited during prosecution as well as the Nathan references. However, Patent Owner did not address the Sound Blaster, Lucente, and Ozawa references, “other than to challenge the combinability of the references,” which the Board found unpersuasive. The Board found that Sound Blaster disclosed the features added in proposed claim 49, and that Patent Owner failed to demonstrate patentability of claim 49 or its dependent claims over the prior art of record.
The Board also took issue with Patent Owner’s argument that the proposed claims are patentable over prior art known to it. In particular, the Board stated that, with respect to the duty of candor and good faith, Patent Owner “fails to make any such prior art of record, even though it acknowledges that other patents in the same family as the ’403 patent ‘had hundreds of items of prior art cited against it.’” The Board further stated that “[e]ven if the large number of prior art references cited in related applications may excuse [Patent Owner’s] failure to discuss one or two material references, however, it does not excuse [Patent Owner] from, at the very least, making a good faith attempt to determine whether any prior art known to it discloses the additional limitations introduced in the proposed amended claim.” Thus, the Board denied the Motion to Amend.
HTC Corp. v. Advanced Audio Devices, LLC, IPR2014-01154
Paper 40: Final Written Decision
Dated: December 29, 2015
Patent: 6,587,403 B1
Before: Scott A. Daniels, Christopher L. Crumbley, and Georgianna W. Braden
Written by: Crumbley
Related Proceedings: IPR2014-01155; IPR2014-01156; IPR2014-01157; IPR2014-01158