In a nonprecedential opinion on remand from the US Court of Appeals for the Federal Circuit and a US Patent & Trademark Office (PTO) Director-granted request for review, the Patent Trial & Appeal Board (Board) reconstrued claim terms it had previously construed in consideration of the patent specification, prosecution history and Federal Circuit construction of similar terms in a related case. Apple Inc. v. Personalized Media Communications, LLC, IPR2016-00754, IPR2016-01520 (P.T.A.B. Sept. 8, 2022) (Turner, APJ.)
In March 2016, Apple filed a petition to institute an inter partes review (IPR) against a patent ('635 patent) owned by Personalized Media Communications, LLC (PMC). After PMC filed its Patent Owner Preliminary Response (POPR), the Board instituted the IPR on some, but not all, of Apple's requested grounds. Per Board procedure, PMC filed its Patent Owner Response (POR) and a contingent motion to amend its patent's claims. In response, Apple filed a reply and an opposition to the contingent motion, and PMC filed a reply to Apple's opposition. After oral argument the Board issued a Final Written Decision (754-FWD) finding all challenged claims unpatentable and denying the contingent motion to amend. PMC first sought rehearing of the Board's decision and, after rehearing was denied, appealed the Board's decision to the Federal Circuit.
Similarly, in July 2016, Apple filed another petition against the same PMC patent. After considering PMC's POPR, the Board instituted an IPR on some of Apple's requested grounds. PMC again filed a POR and a contingent motion to amend, to which Apple filed a reply and opposition (to which PMC filed its reply and Apple a sur-reply). Again, the Board held an oral hearing and issued a Final Written Decision (FWD) finding all challenged claims unpatentable and denying the contingent motion to amend. PMC again sought rehearing of the Board's decision and, after rehearing was denied, appealed the Board's decision to the Federal Circuit.
On appeal of each proceeding, PMC moved, and the Federal Circuit granted remand in light of and consistent with the 2021 Supreme Court decision in U.S. v. Arthrex, Inc., where a five-justice majority found that the appointment of Board administrative patent judges was unconstitutional and a seven-justice majority concluded that the remedy was to vest the PTO Director with authority to overrule Board decisions.
On remand to the PTO, PMC filed a request for director review, which the Commissioner for Patents (performing the functions and duties of the PTO Director) granted. The Commissioner's Granting Order agreed with PMC's argument that the Board, in these two cases, had construed the claim terms "encrypted" and "decrypted" in a manner that could include "scrambling and descrambling operations on digital information, but could also include ... on analog information" and was inconsistent with the Federal Circuit's partial reversal of the Board's construction in yet another IPR proceeding (755-IPR regarding another related PMC patent) between Apple and PMC. As to the related patent IPR, the Federal Circuit ultimately construed "encrypted digital information transmission including encrypted information" as "... limited to digital information." The Commissioner vacated both of the subject FWDs and remanded for the Board to address its claim constructions in light of the Federal Circuit's decision in the related patent IPR.
After remand, the Board set a briefing schedule for the parties to argue "the applicability of the grounds identified above in view of the claim construction set forth by the U.S. Court of Appeals for the Federal Circuit." Apple argued that the term that the Federal Circuit construed as to the related patent is different from the claim terms recited in the subject IPRs and the FWDs at issue. Apple also argued that the "Federal Circuit explicitly did not limit the basic concepts of 'encryption' and 'decryption' to digital-only operations," and thus altering the construction to be digital-only "would be flatly inconsistent with the Federal Circuit's holding and reasoning." Apple further argued that certain claims (and the art cited against them) already recite "all-digital" requirements, that other claims do not recite the disputed term and should not be affected, and that all but one of the challenged claims are unpatentable even under PMC's alternative constructions. PMC argued that Apple had agreed then that even under the Federal Circuit's construction [at least] claim 3 of the subject patent would survive, and more broadly argued that Apple misread the Federal Circuit's decision and that the Court "did not reject the Board's construction of 'decrypt' or re-construe that term" (emphasis in original).
The Board saw its task as quite clear: To issue new final written decisions that address the Federal Circuit's claim construction in the appeal of the [related patent] IPR/FWD. The Board gave weight to the fact that the subject patent and the related patent are both continuation applications of the same patent, and thus share the same specification. Deeming that it would be "myopic to construe only the identical claim term to those resolved by the Federal Circuit's decision," the Board considered that even the Court's decision referenced that the claim language itself did not preclude PMC's interpretation nor compel the Board's interpretation and that, based on multiple characteristics, the two constructions were equally plausible in view of the claim language.
However, just as in the other case where the Federal Circuit considered the prosecution history of the related patent and determined that certain statements did not reach the level of disavowal to inform the claim construction (e.g., the applicant repeatedly and consistently voiced its position that encryption and decryption require a digital process in the context of the patent and never abandoned that position), and with deference to the Granting Order's note that "[t]he Board's claim construction analysis for the terms 'encrypted' and 'decrypted' in the cases is substantially similar to the Board's related analysis of the term 'encrypted digital information transmission including encrypted information' at issue in the Federal Circuit case," the Board on remand reconstrued the claim terms. With acknowledgment of both parties' arguments and citations to the specification and prosecution history, the Board construed the claim terms "decryption," "encryption" and related terms to be applicable to digital signals, exclusive of scrambling and descrambling, unless the context of the claim makes clear that the decryption and/or encryption process is performed on an analog or a mixed analog and digital signal.
Applying this construction, and after reviewing anew the record developed during trial and considering the Federal Circuit's construction, the Board on remand found that Apple had sufficiently met its burden of persuasion such that considering all eight grounds, all but one (claim 3) of the challenged claims of the '635 patent are unpatentable. The Board denied PMC's contingent motions to amend in each case.
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