SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`809 F.3d 1307
`United States Court of Appeals,
`Federal Circuit.
`
`SIGHTSOUND TECHNOLOGIES, LLC, Appellant
`v.
`APPLE INC., Appellee
`
`Nos. 2015–1159, 2015–1160.
`|
`Dec. 15, 2015.
`
`Synopsis
`Background: Patentee appealed from final decision of
`Patent and Trademark Office, Patent Trial and Appeal
`Board, 2014 WL 5077171 and 2014 WL 5077172, in
`proceeding for covered business method (CBM) review
`of validity of patent claims, which found invalid on
`ground of obviousness the challenged claims in patents
`for methods for electronic sale and distribution of digital
`audio and video signals.
`
`Holdings: The Court of Appeals, Dyk, Circuit Judge, held
`that:
`
`[1] it lacked jurisdiction to review Patent Trial and Appeal
`Board's decision to initiate CBM review;
`
`[2] it had jurisdiction to review whether patents were CBM
`patents;
`
`[3] Patent Trial and Appeal Board determinations that
`patents for methods for electronic sale and distribution
`of digital audio and video signals were covered business
`method (CBM) patents, and thus were subject to Board's
`review for validity, were not arbitrary or capricious and
`were supported by substantial evidence;
`
`[4] Patent Trial and Appeal Board properly construed
`patents; and
`
`[5] challenged claims were
`obviousness.
`
`invalid on ground of
`
`Affirmed.
`
`Attorneys and Law Firms
`
`*1310 Matthew Wolf, Arnold & Porter LLP,
`Washington, DC, argued for appellant. Also represented
`by Jennifer Sklenar, Los Angeles, CA.
`
`Douglas Hallward–Driemeier, Ropes & Gray LLP,
`Washington, DC, argued for appellee. Also represented
`by Jon Steven Baughman, Sharon Lee, Megan Freeland
`Raymond, Paul Michael Schoenhard, Darrell Stark;
`Ching–Lee Fukuda, New York, N.Y.; James Richard
`Batchelder, Lauren Nicole Robinson, East Palo Alto, CA.
`
`Benjamin T. Hickman, United States Patent and
`Trademark Office, Office of the Solicitor, Alexandria, VA,
`argued for intervenor Michelle K. Lee. Also represented
`by Nathan K. Kelley, Scott C. Weidenfeller.
`
`Before LOURIE, DYK, and HUGHES, Circuit Judges.
`
`Opinion
`
`DYK, Circuit Judge.
`
`SightSound Technologies, LLC (“SightSound”) is the
`owner of U.S. Patent No. 5,191,573 (the “′573 patent”)
`and 5,966,440 (the “ ′440 patent”). Apple Inc. (“Apple”)
`petitioned the United States Patent and Trademark Office
`(“PTO”) for covered business method (“CBM”) review
`of claims 1, 2, 4, and 5 of the ′573 patent and claims 1,
`64, and 95 of the ′440 patent. The PTO granted Apple's
`petition and instituted *1311 CBM review. The Patent
`Trial and Appeal Board (“the Board”) issued a final
`decision finding all the challenged claims would have been
`obvious. SightSound appealed.
`
`We hold that we lack jurisdiction to review the PTO's
`decision to consider issues not explicitly raised in the
`petitions. We do, however, have jurisdiction to review
`whether the patents qualify as CBM patents. We affirm
`the Board's determination that the ′573 and ′440 patents
`qualify as CBM patents. Finally, we affirm the Board's
`final decision with respect to claim construction and
`obviousness.
`
`BACKGROUND
`
`The ′573 and ′440 patents owned by SightSound
`disclose methods for the electronic sale and distribution
`
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`of digital audio and video signals. Each of the relevant
`claims requires (1) forming a connection, through
`telecommunications lines, between a first party's first
`memory and a second party's second memory; (2) selling
`the desired digital video or digital audio signals to the
`second party for a fee through telecommunications lines;
`(3) transmitting the desired signal from the first memory
`to the second memory via telecommunications lines; and
`(4) storing the transmitted signal in the second memory.
`E.g., ′440 patent col. 8 ll. 44–64; ′573 patent col. 6 ll. 4–
`24. Dependent claim 2 of the ′573 patent adds the step of
`searching for and selecting a signal from the first memory
`after the signal has been transferred. ′573 patent col. 6 ll.
`25–29. Claims 4 and 5 of the ′573 patent are the same as
`claims 1 and 2 respectively, but substitute digital video for
`audio signals. Id. col. 6 ll. 36–59. Claims 64 and 95 of the ′
`440 patent recite additional limitations, including storing
`digital signals “in the second party hard disk.” U.S. Patent
`No. 5,966,440 C1 (re-examination certificate) (“′440 C1
`patent”) col. 8 ll. 14–44, col. 13 ll. 14–51.
`
`On May 6, 2013, Apple filed petitions with the Board
`seeking CBM review of the ′573 and ′440 patents under
`AIA § 18. See Leahy–Smith America Invents Act (“AIA”),
`Pub.L. 112–29, 125 Stat. 284, 329–31 (2011). 1 Apple
`argued that claims 1, 2, 4, and 5 of the ′573 patent and
`claims 1, 64, and 95 of the ′440 patent were invalid as
`anticipated under 35 U.S.C. § 102. The Board instituted
`CBM review. In instituting review, the Board applied
`the definition of CBM in the statute and regulations.
`See AIA § 18(d); 37 C.F.R. § 42.301. The Board first
`determined that the ′573 and ′440 patents are CBM
`patents because they recite the electronic movement of
`money between financially distinct entities, an activity
`that is “financial in nature,” and do not include novel and
`non-obvious technological features that would otherwise
`excluded them from CBM treatment. J.A. 556–59, 987–94.
`The Board then determined that there was a reasonable
`likelihood that the asserted claims were anticipated or
`rendered obvious by a series of disclosures relating to a
`computer system developed by CompuSonics in the 1980s.
`Although Apple's petitions included the grounds on which
`the PTO instituted review with respect to anticipation
`and alleged facts to support obviousness, the petitions
`did not specifically allege obviousness over CompuSonics.
`The Board nonetheless held that it was appropriate to
`initiate review on obviousness grounds: “[I]n addition to
`Petitioner's asserted ground of anticipation ... we exercise
`our discretion to institute a covered business method
`
`review ... on the *1312 ground of unpatentability over
`the CompuSonics publications under 35 U.S.C. § 103(a).”
`J.A. 571.
`
`1
`
`In general, the AIA is codified in various parts of Title
`35 of the U.S.Code. Section 18 of the AIA, however,
`is not codified; it is found in pages 329–31 of 125 Stat.
`References to § 18 in this opinion are to the statutes
`at large.
`
`During the CBM proceedings SightSound argued that it
`had been deprived of a fair opportunity to respond to
`the obviousness grounds on which the CBM review had
`been instituted. The Board granted SightSound additional
`time for argument and authorized it to file sur-replies and
`new declaration testimony on the issue of obviousness, “to
`ensure that Patent Owner has a full and fair opportunity
`to be heard on the issue of obviousness.” J.A. 709, 1003.
`
`the Board
`the merits,
`final decision on
`its
`In
`rejected SightSound's contention that the term “second
`memory” is limited to non-removable media, relying
`on the claim language, specification, and prosecution
`history to conclude that under the broadest reasonable
`interpretation standard the term encompasses any second
`storage space in a computer medium that is capable of
`retaining data or instructions and is not limited to hard
`disks. The Board reaffirmed the initiation decision that
`the Board did not exceed its jurisdiction when it initiated
`CBM review, explaining that, while Apple's petitions
`did not assert obviousness explicitly, they nevertheless
`“supported [such] a ground” based on their detailed
`explanation of the various CompuSonics references. J.A.
`25–27, 92–94. The Board held claims 1, 2, 4, and 5 of
`the ′ 573 patent and claim 1 of the ′440 patent invalid
`as obvious. It found that “Apple explains in detail in its
`Petition[s] how the CompuSonics publications teach every
`limitation” of the claims, J.A. 31, 98, and that the reason
`to combine was manifested by the references themselves.
`The Board also held claims 64 and 95 of the ′440
`patent invalid as obvious, finding that the CompuSonics
`publications would have suggested to an ordinary artisan
`the desirability of using a hard disk in connection with
`the other claimed aspects of the invention. SightSound
`appealed. The PTO intervened. We have jurisdiction to
`review the Board's final decision under 28 U.S.C. § 1295(a)
`(4)(A) and 35 U.S.C. § 329.
`
` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`DISCUSSION
`
`I
`
`[1]
` We first address the question of jurisdiction. CBM
`patents are governed by the special provisions of AIA §
`18. For purposes of conducting proceedings and appellate
`review, section 18 is considered part of the broader chapter
`32 provisions of title 35 of the U.S.Code, governing
`post-grant review (“PGR”). 2 Decisions relating to the
`institution of CBM review are not reviewable. “The
`determination by the Director whether to institute a
`post-grant review under this section shall be final
`and nonappealable.” 35 U.S.C. § 324(e). As noted,
`this provision is applicable to both PGR and CBM
`proceedings; the Board acts for the Director in deciding
`whether to institute a review. See AIA § 18(a)(1); 37
`C.F.R. § 42.4. After CBM review is instituted, CBM
`review proceeds before the Board, and concludes with the
`Board's “final written decision” pursuant to 35 U.S.C. §
`328(a). Section 329 provides for appeal of that decision
`to this court. Thus the decision whether to initiate is not
`appealable, but the final decision is subject to review.
`See In re Cuozzo Speed Techs., LLC, 793 F.3d 1268,
`1273(Fed.Cir.2015).
`
`2
`
`“The transitional proceeding implemented pursuant
`to this subsection shall be regarded as, and shall
`employ the standards and procedures of, a post-grant
`review under chapter 32 of title 35.” AIA § 18(a)(1).
`See also Versata Dev. Grp., Inc. v. SAP Am., Inc., 793
`F.3d 1306, 1315 (Fed.Cir.2015) (“Versata II ”).
`
`*1313 A
`
`[2]
` SightSound contends that we should set aside the
`final decision because the proceedings were improperly
`initiated since Apple did not explicitly raise the issue of
`obviousness in its petitions. 3 The Board rejected this
`argument, explaining that Apple's petitions supported
`review for obviousness because they explained in detail
`how the CompuSonics disclosures “teach every limitation
`of the claims ... and describe similar features and relate
`to each other.” J.A. 26. Because the CompuSonics
`references described various advantages of a system that
`would enable electronic music processing, “the references
`themselves demonstrate that a person of ordinary skill in
`
`the art would have been led to create a system for users
`to purchase and download music.” Id. at 40. The PTO
`and Apple argue that the statute and our prior decision in
`In re Cuozzo Speed Technologies., 793 F.3d at 1268, bars
`this Court from reviewing whether the Board properly
`initiated review when obviousness was not explicitly raised
`in the petitions. We agree.
`
`3
`
`SightSound relies on 35 U.S.C. § 322(a)(3), which
`requires that a petition must recite “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,” and 37 C.F.R. § 42.204(b), which
`requires a petition to include the “specific statutory
`grounds ... on which the challenge to [each] claim is
`based.”
`
`In Cuozzo we considered § 314(d), applicable to inter
`partes review proceedings, which mirrors the bar on
`appeal in § 324(e). It provides that “[t]he determination
`by the Director whether to institute an inter partes review
`under this section shall be final and nonappealable.” 35
`U.S.C. § 314(d). There, Cuozzo argued that the PTO
`improperly instituted inter partes review with respect to
`certain claims because it relied on prior art references not
`identified by the petitioner in its petitions contrary to the
`requirements of 35 U.S.C. § 312(a)(3). Cuozzo, 793 F.3d
`at 1272. We rejected Cuozzo's challenge as barred by the
`statute. Id. at 1274. We held that § 314(d) “bar[s] review
`of all institution decisions, even after the Board issues a
`final decision.” Id. at 1273. We explained that generally
`institution decisions are not reviewable, and in particular
`a challenge based on a defect in the initiation that could
`have been cured by a proper pleading is not reviewable.
`Id. at 1274. Only limitations on the Board's authority to
`issue a final decision are subject to review.
`
`In Achates Reference Publishing. Inc. v. Apple Inc., 803
`F.3d 652 (Fed.Cir.2015), we again considered alleged
`defects in the initiation of inter partes review. There,
`Achates argued that the Board improperly instituted inter
`partes review because the underlying petitions were time-
`barred under 35 U.S.C. § 315(b). Once again, we rejected
`the argument as barred by the statute. Achates, 803 F.3d
`at 658. We explained that just as the pleading in Cuozzo
`could have been made “sufficient by the inclusion of the
`missing prior art reference ... the [alleged] timeliness issue
`here could have been avoided if Apple's petition had been
`filed a year earlier or if a petition identical to Apple's were
`
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`filed by another party.” Id. at 657. Achates' argument thus
`challenged nothing more than the Board's determination
`to institute inter partes review.
`
`lacked jurisdiction to review the ′573 and ′440 patents
`because they are not CBM patents is not barred by §
`324(e).
`
`The same is true here. SightSound argues that the Board
`erred in considering obviousness because Apple failed to
`include such argument in its petitions. As in Cuozzo, the
`statute does not limit the Board's authority at the final
`decision stage to grounds alleged in the CBM petitions.
`*1314 The reasoning of Cuozzo and Achates applies
`not only to § 314(d), involved in Cuozzo and Achates,
`but also to § 324(e), the identical provision applicable
`to CBM review. SightSound argues that the “under this
`section” language in § 324(e) only bars review of challenges
`to institution decisions based on the grounds specified
`in § 324(a) and (b). We reject this argument. Section
`324(e) bars review of any institution decision. Cuozzo and
`Achates control, and the challenge is therefore barred by
`§ 324. 4 We also see no basis for mandamus relief on the
`Board's initiation decision, because “the situation here is
`far from satisfying the clear-and-indisputable requirement
`for mandamus.” Cuozzo, 793 F.3d at 1275.
`
`4
`
`We see no merit in SightSound's contention that
`the Board's approach deprived it of due process,
`particularly in light of the Board's care in giving
`SightSound multiple opportunities to comment on
`the obviousness issue beyond what was required.
`
`B
`
`[3]
` SightSound also contends that the ′573 and ′440
`patents are not CBM patents, and therefore the Board
`lacked authorization to review them. The PTO and Apple
`again argue that we are barred from reviewing this
`question. Here we disagree.
`
`We previously addressed our jurisdiction to review the
`Board's determination of whether patents are CBM
`patents in Versata II. There we held that the question
`of whether a patent falls within the scope of the Board's
`authority under AIA § 18 as a CBM patent is a limitation
`on the Board's authority to issue a final decision and
`may be reviewed on appeal from a final written decision
`of the Board. Id. at 1319. While Versata II is limited
`to our review of Board determinations of whether a
`patent falls within its § 18 authority as a CBM patent,
`that is precisely the issue here. Accordingly, Versata II
`controls, and SightSound's contention that the Board
`
`II
`
`CBM review is available only for patents that fall under
`the definition of a “covered business method patent.” The
`statute defines that term:
`
`For the purposes of this section,
`the term “covered business method
`patent” means a patent
`that
`claims a method or corresponding
`apparatus
`for performing data
`processing or other operations used
`in the practice, administration, or
`management of a financial product
`or service, except that the term does
`not include patents for technological
`inventions.
`
`AIA § 18(d). There are three sources of PTO rulemaking
`relevant to CBM review. First, 35 U.S.C. § 326, which is
`applicable to CBM review through the PGR provisions,
`grants the PTO authority to “prescribe regulations ...
`setting forth the standards for the showing of sufficient
`grounds to institute a review.” 35 U.S.C. § 326(a)(2).
`Second, AIA § 18 grants the PTO general authority
`to “issue regulations establishing and implementing a
`transitional post-grant review proceeding for the review of
`the validity of covered business method patents.” AIA §
`18(a)(1). Third, AIA § 18 grants the PTO specific authority
`with respect to the “technological inventions” element of
`the covered business method patent definition:
`
`the
`implementing
`in
`To assist
`transitional proceeding authorized
`by this subsection, the Director
`shall issue regulations *1315 for
`determining whether a patent is for
`a technological invention.
`
`AIA § 18(d)(2).
`
`A
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`[4]
` We need not decide whether Chevron deference
`applies because the only legal questions regarding
`application of AIA § 18 to the patents-at-issue were
`decided by Versata II. SightSound primarily contends that
`its patents are not CBM patents because to “relate to
`a financial product or service the invention as a whole
`must be directed to the management of money, banking,
`or investment or credit.” Appellant's Br. 30. Versata II
`foreclosed this interpretation: “as a matter of statutory
`construction, the definition of ‘covered business method
`patent’ is not limited to products and services of only
`the financial industry, or to patents owned by or directly
`affecting activities of financial institutions.” 793 F.3d
`at 1325. We explained that the interpretation proposed
`by SightSound would “require reading limitations into
`the statute that are not there.” Id. Here, the Board
`concluded that a “financial activity” not directed to
`money management or banking can constitute a “financial
`product or service” within the meaning of the statute.
`J.A. 988; accord J.A. 556. Versata II directly supports this
`conclusion.
`
`[5]
` SightSound also contends that its patents are not
`CBM patents because they claim technological inventions,
`since they “recite a computer to transmit, and a second
`memory to store, digital signals in a way that prior art
`hardware units did not.” Appellant's Br. 35 n. 9. Versata
`II again foreclosed this interpretation: “the presence of a
`general purpose computer to facilitate operations through
`uninventive steps” in a patent does not render it a
`technological invention within the meaning of the statute.
`Id. at 1327. Claiming a computer without “specific,
`unconventional software, computer equipment, tools or
`processing capabilities” is insufficient. Id. Here, the Board
`concluded that a combination of known technologies does
`not amount to a “technological invention” within the
`meaning of the statute. J.A. 559–60, 993–94. Versata II
`also directly supports this conclusion.
`
`B
`
`[7]
`[6]
` We next address the Board's determinations
`
`that the particular patents at issue are CBM patents.
`In this respect, we review the Board's reasoning under
`the arbitrary and capricious standard and its factual
`determinations under the substantial evidence standard.
`“A reviewing court reviews an agency's reasoning to
`determine whether it is ‘arbitrary’ or ‘capricious,’ or,
`
`if bound up with a record-based factual conclusion,
`to determine whether it is supported by ‘substantial
`evidence.’ ” Dickinson v. Zurko, 527 U.S. 150, 164, 119
`S.Ct. 1816, 144 L.Ed.2d 143 (1999). See also In re Gartside,
`203 F.3d 1305, 1313–14 (Fed.Cir.2000); Harry T. Edwards
`& Linda A. Elliot, Federal Standards of Review: Review
`of District Court Decisions and Agency Actions 167–169
`(2007). In concluding that the ′573 and ′ 440 patents
`claim a method used in a financial product or service,
`the Board explained that claim 1 of both the ′573 and
`′440 patents is “directed to activities that are financial
`in nature, namely the electronic sale of digital audio.”
`J.A. 554, 988. The Board looked to the specifications,
`which repeatedly refer to electronic “sale,” “purchase,”
`and “money,” e.g., ′573 patent col. 1 ll. 9–14; col. 2 ll.
`26–30; col. 2 ll. 51–58, and claims 3 and 4 of the ′573
`and ′440 patents respectively, which recite “providing
`a credit card number of the second party ... so the
`second party is charged money.” J.A. 555, 988. The Board
`concluded that “the *1316 electronic sale of something,
`including charging a fee to a party's account, is a financial
`activity, and allowing such a sale amounts to providing a
`financial service.” J.A. 988; accord J.A. 556. The Board's
`reasoning is not arbitrary or capricious and its findings are
`supported by substantial evidence.
`
`The Board next explained that the ′573 and ′440 patents
`do not claim a “technological invention.” J.A. 560, 994.
`It found that, while the claims of both the ′573 and
`′440 patents utilize technical components such as a “first
`memory,” “second memory,” “telecommunications line,”
`“transmitter,” and “receiver,” those components were all
`“generic hardware devices known in the prior art.” J.A.
`559, 992. The Board also found that the combination
`of steps recited in the ′573 and ′440 patents did not
`amount to a technological feature that is novel and non-
`obvious over the prior art, because the steps would have
`been obvious in light of the CompuSonics references.
`The Board explained that “while we agree with Patent
`Owner that the steps in claim 1 must be implemented using
`the recited hardware ... that does not mean necessarily
`that the patent is for a technological invention because
`the components themselves were known in the art.”
`J.A. 560, 993. Finding that the claims merely recited
`“known technologies to perform a method” and the
`“combination” of those technologies would have been
`obvious, the Board concluded that the ′ 573 and ′440
`patents did not claim a “technological invention.” J.A.
`559–60, 993–94. The Board's reasoning is not arbitrary or
`
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
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`capricious and substantial evidence supports its findings
`here.
`
`III
`
`[8]
` The next question is whether the Board here properly
`construed the relevant claims. The Board applied the
`broadest reasonable interpretation standard, the standard
`adopted by the PTO for AIA post-grant proceedings and
`approved by this court. See Cuozzo, 793 F.3d at 1278.
`We also apply the Supreme Court's decision in Teva
`Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., ––– U.S.
`––––, 135 S.Ct. 831, 841, ––– L.Ed.2d –––– (2015). We
`review intrinsic evidence and the ultimate construction
`of the claim de novo. See id. We review underlying
`factual determinations concerning extrinsic evidence for
`substantial evidence. Id.
`
` [10]
`[9]
` Claims 1 and 4 of the ′573 patent and claims
`1, 64, and 95 of the ′440 patent include the term “second
`memory,” as in “[a] method for transmitting a desired
`digital audio signal stored on a first memory of a first
`party to a second memory of a second party.” ′573
`patent col. 6 ll. 4–24 (emphasis added). See also id.
`col. 6 ll. 37–56; ′440 C1 patent col. 1 ll. 33–64, col.
`8 ll. 14–44, col. 13 ll. 14–51. The two patents have a
`common specification and trace their origin to the same
`parent application. Where multiple patents “derive from
`the same parent application and share many common
`terms, we must interpret the claims consistently across
`all asserted patents.” NTP, Inc. v. Research In Motion,
`Ltd., 418 F.3d 1282, 1293 (Fed.Cir.2005). Here the claim
`term “second memory” should be interpreted the same
`in the ′573 and ′440 patents. The Board construed
`“second memory” in both patents as meaning “a second
`storage space in a computer system or medium that is
`capable of retaining data or instructions.” J.A. 15, 82.
`The specification notes some disadvantages of the “three
`basic mediums (hardware units) of music” then available:
`“records, tapes, and compact discs.” E.g., ′ 573 patent
`col. 1 ll. 17–20; ′440 patent col. 1 ll. 24–26. Addressing
`the language in the specification, the Board appeared
`to conclude that “second memory” would not *1317
`exclude those three media based on the specification,
`because the Board required a “clear disclaimer” in the
`specification to overcome the ordinary meaning and to
`exclude records, tapes, and CDs. J.A. 13, 82.
`
`[11]
` The Board's analysis in this respect was incorrect.
`Claims “must be read in view of the specification, of
`which they are a part.” Phillips v. AWH Corp., 415 F.3d
`1303, 1315 (Fed.Cir.2005) (en banc). We have explained
`that the specification is “the single best guide to the
`meaning of a disputed term and that the specification acts
`as a dictionary when it expressly defines terms used in
`the claims or when it defines terms by implication.” Id.
`at 1321 (citation and internal quotation marks omitted)
`(emphasis added). Thus “a claim term may be clearly
`redefined without an explicit statement of redefinition.”
`Id. (quoting Bell Atl. Network Servs., 262 F.3d 1258, 1268
`(Fed.Cir.2001)). We followed this approach in In re Abbott
`Diabetes Care Inc., 696 F.3d 1142 (Fed.Cir.2012), where
`we held that the claim term “electrochemical sensor”
`excluded cables and wires based on critical language in
`the claims and specification, despite their having been no
`explicit disclaimer of cables or wires. See id. at 1149–50.
`See also Edwards Lifesciences LLC v. Cook Inc., 582 F.3d
`1322, 1329 (Fed.Cir.2009). The disadvantages identified
`by the specification of records, tapes, and CDs amount to
`implied disclaimer of those three media. See, e.g., ′573
`patent col. 1 ll. 17–20; ′440 patent col. 1 ll. 24–26. Thus
`we disagree with the Board's interpretation insofar as it
`included records, tapes, and CDs in its construction of
`“second memory.”
`
`in rejecting
`the Board did not err
`Nonetheless,
`SightSound's contention that floppy disks—a medium
`referenced in the CompuSonics prior art—should also
`be excluded. SightSound contends that the correct
`construction should exclude “all removable memory
`sharing the attributes of the prior art tapes and
`CDs distinguished in the specification and throughout
`prosecution,” i.e., that it should exclude floppy disks.
`Appellant's Br. 55 (emphasis added). SightSound argues
`that the specification and prosecution histories make clear
`that a removable “second memory” would not fulfill the
`purpose of the invention to overcome the disadvantages
`of records, tapes, and CDs, and therefore the patents
`expressly disclaimed all removable memory from the
`scope of “second memory,” limiting it to a non-removable
`hard disk.
`
`The Board rejected this argument. The Board found,
`and we agree, that the specification's description of
`the disadvantages of records, tapes, and CDs does not
`“indicate that the identified disadvantages extend to
`all removable media or that the disadvantages occur
`
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`specifically because the devices are removable.... To the
`contrary, some of the identified disadvantages, like limited
`capacity and playback capability, have nothing to do
`with whether the device can be removed.” J.A. 12, 81.
`The specification suggests that the patent's objective was
`not to overcome the alleged disadvantages associated
`with the removable nature of the three hardware units,
`as SightSound suggests, but rather to overcome the
`disadvantages associated with distributing the three
`types of units: “hardware units need to be physically
`[transferred] from the manufacturing facility to the
`wholesale warehouse to [the] retail warehouse to the
`retail outlet, resulting in [lengthy], lag time between music
`creation and music marketing.” ′573 patent col. 1 ll.
`39–43; ′440 patent col. 1 ll. 45–49. These disadvantages
`would not apply to storing digitally purchased music on
`a floppy disk, for example. See ′573 patent col. 1 ll. 39–
`49; ′440 patent col. 1 ll. 45–54. Accordingly, SightSound's
`reading of “secondary *1318 memory” to exclude all
`removable media is not supported by the specification.
`
`The Board also reviewed the prosecution history and
`found certain statements contradicting SightSound's
`proposed limitation, including one made by the named
`inventor, Arthur R. Hair, that “[a]ny suitable recording
`apparatus controlled and in possession of the second party
`can be used to record the incoming digital signals.” J.A.
`14. What is more, the original claims expressly recited a
`“hard disk,” but that language was removed in favor of
`the broader term “second memory.” J.A. 15. The Board
`concluded that this “deliberate choice” to use the broader
`term “second memory” instead of the narrower “hard
`disk” strongly supports that the two are not coextensive.
`Id.; see Arlington Indus., Inc. v. Bridgeport Fittings, Inc.,
`632 F.3d 1246, 1255 (Fed.Cir.2011).
`
`The doctrine of claim differentiation additionally
`supports the Board's construction that “second memory”
`is not limited to a non-removable hard disk. Claim 1 of
`the ′440 patent recites a method for transferring desired
`digital video or audio signals by “forming a connection
`through telecommunications lines between a first memory
`of a first party and a second memory of a second party
`control unit of a second party.” ′440 C1 patent col. 1
`ll. 34–37. Claim 64 of the ′440 patent contains nearly
`identical language, but adds the following limitation:
`“forming a connection through telecommunications lines
`between a first memory of a first party and a second
`memory of a second party control unit of a second party,
`
`the second memory including a second party hard disk.”
`′440 C1 patent col. 8 ll. 16–18 (emphasis added). This
`distinction further underscores that “second memory”
`must be different from a non-removable “hard drive,”
`because otherwise the additional language of claim 64
`would be redundant. J.A. 79; see Arlington Indus., Inc., 632
`F.3d at 1254–55. The intrinsic and extrinsic evidence both
`support construing “second memory” as not limited to a
`non-removable hard disk. We see no error in the Board's
`ultimate conclusion that the term “second memory”
`includes floppy disks.
`
`IV
`
`[13]
`[12]
` The final question is whether the Board
`
`properly determined that the claims would have been
`obvious. We review the Board's factual findings for
`substantial evidence and its legal conclusions de novo.
`Cuozzo, 793 F.3d at 1280 (citing In re Baxter Int'l,
`Inc., 678 F.3d 1357, 1361 (Fed.Cir.2012)). The ultimate
`determination of obviousness under § 103 is a question
`of law based on underlying factual findings. Id. (citing
`Graham v. John Deere Co., 383 U.S. 1, 17–18, 86 S.Ct. 684,
`15 L.Ed.2d 545 (1966)). What a reference teaches and the
`differences between the claimed invention and prior art are
`questions of fact which we review for substantial evidence.
`Id.
`
`[14]
` The Board found that “Apple explains in detail in
`its Petition[s] how the CompuSonics publications teach
`every limitation” of the primary claims. J.A. 31, 54, 98.
`SightSound conceded that the CompuSonics publications
`“describe prior art elements working according to their
`established functions in a predictable manner,” but argued
`that a skilled artisan would have had no reason to
`combine those elements. J.A. 38, 105. The Board rejected
`this argument, finding that the references “expressly
`contemplate that it would be commercially desirable to
`have a system that allowed users to buy” and store
`music and video electronically. J.A. 39, 55, 106. Finding
`that the reason to combine was manifested by the
`references themselves, see Brown & Williamson Tobacco
`Corp. v. *1319 Philip Morris Inc., 229 F.3d 1120, 1125
`(Fed.Cir.2000), the Board thus concluded that a person of
`ordinary skill in the art would have had reason to combine
`the teachings of the CompuSonics references.
`
` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
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`SightSound Technologies, LLC v. Apple Inc., 809 F.3d 1307 (2015)
`117 U.S.P.Q.2d 1341
`
`[15]
`[16]
` As for claim