Trials@uspto.gov
`571.272.7822
`
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`Paper No. 57
`Filed: March 29, 2016
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`AMAZON.COM, INC. and AMAZON WEB SERVICES, LLC,
`Petitioner,
`
`v.
`
`PERSONALIZED MEDIA COMMUNICATIONS, LLC,
`Patent Owner.
`_______________
`
`Case IPR2014-01532
`Patent 7,801,304 B1
`_______________
`
`Before KARL D. EASTHOM, TRENTON A. WARD, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`WARD, Administrative Patent Judge.
`
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 318 and 37 C.F.R. § 42.73
`
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`571.272.7822
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`Paper No. 57
`Filed: March 29, 2016
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`
`
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`AMAZON.COM, INC. and AMAZON WEB SERVICES, LLC,
`Petitioner,
`
`v.
`
`PERSONALIZED MEDIA COMMUNICATIONS, LLC,
`Patent Owner.
`_______________
`
`Case IPR2014-01532
`Patent 7,801,304 B1
`_______________
`
`Before KARL D. EASTHOM, TRENTON A. WARD, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`WARD, Administrative Patent Judge.
`
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 318 and 37 C.F.R. § 42.73
`
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`INTRODUCTION
`I.
`We have jurisdiction to hear this inter partes review under 35 U.S.C.
`§ 6(c), and this Final Written Decision is issued pursuant to 35 U.S.C.
`§ 318(a) and 37 C.F.R. § 42.73. For the reasons that follow, we determine
`that Petitioner has shown by a preponderance of the evidence that claims 1,
`11, 16, 18, 22, 23, and 24 of U.S. Patent No. 7,801,304 B1 (Ex. 1004,
`“the ’304 patent”) are unpatentable. We also determine that Patent Owner
`has not met its burden on its Motion to Amend regarding entry of the
`proposed substitute claims, and thus, we deny the Motion to Amend.
`A. Procedural History
`Amazon.Com, Inc. and Amazon Web Services, LLC (“Petitioner”)
`filed a Petition (Paper 1, “Pet.”) to institute an inter partes review of
`claims 1, 11, 16, 18, 22, 23, and 24 of the ’304 patent. Personalized Media
`Communications, LLC (“Patent Owner”) filed a Preliminary Response
`(Paper 6, “Prelim. Resp.”). Pursuant to 35 U.S.C. § 314(a), we instituted an
`inter partes review on three grounds: (1) claims 1, 11, 18, 23, and 24 as
`unpatentable under 35 U.S.C. § 103 in view of Guillou,1 (2) claim 22 as
`unpatentable under 35 U.S.C. § 103 in view of Guillou, Block,2 and
`Guillou ’011,3 and (3) claims 11 and 16 as unpatentable under 35 U.S.C.
`§ 103 in view Guillou and Block. See Paper 8 (“Dec. to Inst.”), 31.
`
`
`1 US Patent No. 4,337,483, filed Jan. 31, 1980 (Ex. 1007) (“Guillou”).
`2 US Patent No. 4,225,884, filed Jun. 30, 1978 (Ex. 1008) (“Block”).
`3 US Patent No. 4,352,011, filed Jan. 23, 1980 (Ex. 1009) (“Guillou ’011”).
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`After institution of trial, Patent Owner then filed a Patent Owner
`Response (Paper 24, “PO Resp.”), to which Petitioner filed a Reply (Paper
`35, “Reply”).
`In addition, Patent Owner also filed a Contingent Motion to Amend
`(Paper 25), to which Petitioner filed an Opposition (Paper 36). Patent
`Owner then filed a Reply to Petitioner’s Opposition to the Contingent
`Motion. Paper 43.
`Patent Owner filed observations on the cross-examination of
`Petitioner’s declarant (Paper 48), to which Petitioner filed a Response
`(Paper 51). Petitioner filed observations and amended observations on the
`cross-examination of Patent Owner’s declarant (Papers 49 and 53), to which
`Patent Owner filed a response (Paper 52).
`An oral argument was held on Dec. 8, 2015. A transcript of the oral
`argument is included in the record. Paper 56 (“Tr.”).
`B. Related Proceedings
`Petitioner informs us that the ’304 patent is the subject of a lawsuit:
`Personalized Media Commc’ns, LLC v. Amazon.com, Inc., No. 1:13-cv-
`1608-RGA (D. Del. Sept. 23, 2013). Pet. 1. According to Petitioner, the
`District Court’s judgment in the lawsuit has been appealed to the Court of
`Appeals for the Federal Circuit as Appeal No. 15-2008. Paper 38, 1. Six
`patents related to the ’304 patent are the subject of concurrently filed
`petitions for inter partes review. Pet. 1; Paper 38, 1; see IPR2014-01527,
`IPR2014-01528, IPR2014-01530, IPR2014-01531, IPR2014-01533, and
`IPR2014-01534.
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`C. The ’304 Patent
`The ’304 patent is titled “Signal Processing Apparatus and Methods”
`and generally relates to a unified system of programming communication.
`Ex. 1004, Abstr. The challenged claims relate to methods of controlling the
`decryption of programming at a subscriber station or receiver station.
`Claim 1 is reproduced below:
`1. A method for controlling the decryption of programming at a
`subscriber station, said method comprising the steps of:
`
`receiving programming, said programming having a first
`encrypted digital control signal portion and an encrypted digital
`information portion;
`
`detecting said first encrypted digital control signal portion of said
`programming;
`
`passing said first encrypted digital control signal portion of said
`programming to a decryptor at said subscriber station;
`
`decrypting said first encrypted digital control signal portion of
`said programming using said decryptor at said subscriber station;
`
`passing said encrypted digital information portion of said
`programming to said decryptor;
`
`decrypting said encrypted digital information portion of said
`programming using said decryptor at said subscriber station
`based on the decrypted control signal portion; and
`presenting said programming.
`
`
`Patent Owner describes the ’304 patent as directed to a system
`including doubly-encrypted content (e.g., digital video encrypted using two
`keys) and layered encryption (e.g., the content is encrypted with a key that is
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`itself encrypted). PO Resp. 4. The ’304 patent describes access control to
`transmitted content at a receiver station. Ex. 1004, 143:39–49. Figure 4 of
`the ’304 patent, reproduced below, illustrates a receiver station:
`
`
`
`As shown above in Figure 4, the ’304 patent discloses a receiver station
`having signal processor 200 to control tuners 214, 215, and 223, the
`switching of matrix switch 258, and decrypting by decryptors 107, 224, and
`231. Id. at 148:12–16. In one example described in the specification, the
`“Wall Street Week” program is transmitted to the receiver station by a cable
`television head end. Id. at 149:5–8. Prior to transmission, the cable head
`end “encrypts the digital audio information of said transmission, in a fashion
`well known in the art, using particular cipher algorithm C and cipher key Ca,
`then transmits the information of said program on cable channel 13.” Id. at
`149:8–12. Furthermore, a SPAM message consisting of a “01” header,
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`local-cable-enabling-message (#7), is transmitted with instructions that
`enable the “Wall Street Week” programming. Id. at 150:5–14. Executing
`the instructions at the receiver causes controller 20 (part of signal processor
`200, id. at Fig. 3) to receive the cable channel transmission, select the
`information of a cipher key Ca from among the information portion, and
`transfer the cipher key to decryptor 107. Once the cipher key is received by
`decryptor 107, decryptor 107 then decrypts “using said key information and
`selected decryption cipher algorithm C, and output[s] [the] decrypted
`information of the audio portion of the ‘Wall Street Week’ program
`transmission.” Id. at 151:58–63, 152:25–30.
`Subsequently, a second SPAM message that consists of an “01”
`header provides “1st-stage-enable-WSW-program” instructions as the
`information segment information. Id. at 153:19–24. Executing the “1st-
`stage-enable-WSW-program” instructions causes controller 20 to affect a
`first stage of decrypting the video information of the “Wall Street Week”
`program transmission. Id. at 153:47–50. Controller 20 selects the
`decryption cipher key Ba and transfers it to selected decryptor 224. Id. at
`153:47–65, 154:10–11. Controller 20 causes decryptor 224 to commence
`decrypting the received information using decryption cipher key Ba and
`decryption cipher algorithm B. Id. at 154:10–14.
`A third SPAM message provides “2nd-WSW-program enabling-
`message” instructions, causing the controller to affect a second stage of
`decrypting the digital video information of “Wall Street Week.” Id. at
`156:44–56. The second stage of decrypting the video information of the
`“Wall Street Week” program transmission is completed using the decryption
`
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`cipher key Aa. Id. at 158:4–35. Finally, controller 20 causes the receiver
`station to commence the transfer of the decrypted television information of
`the “Wall Street Week” program to microcomputer 205 and monitor 202M.
`Id. at 159:34–40.
`
`
`II. DISCUSSION
`A. Claim Construction
`In an inter partes review, claim terms in an unexpired patent are
`interpreted according to their broadest reasonable construction in light of the
`specification of the patent in which they appear. 37 C.F.R. § 42.100(b); see
`In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1275–79 (Fed. Cir. 2015)
`(“Congress implicitly approved the broadest reasonable interpretation
`standard in enacting the AIA,” and “the standard was properly adopted by
`PTO regulation”), cert. granted sub nom. Cuozzo Speed Techs. LLC v. Lee,
`136 S. Ct. 890 (mem.) (2016). Under that standard, and absent any special
`definitions, we give claim terms their ordinary and customary meaning, as
`would be understood by one of ordinary skill in the art at the time of the
`invention. In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir.
`2007)). With respect to this decision, our analysis would not be impacted by
`the application of the Phillips claim construction standard. See Phillips v.
`AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).
`1. “decrypt and decryptor”
`Patent Owner argues the Board should construe the term “decryptor”
`to mean “a device or method that uses a digital key in conjunction with an
`associated mathematical algorithm to decipher (render intelligible or usable)
`
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`digital data.” PO Resp. 9 (citing Ex. 2016 ¶¶ 47–48). Patent Owner argues
`that in the Decision on Institution, the Board incorrectly construed the term
`“decryptor” to include descramblers. PO Resp. 10 (citing Dec. to Inst. 25).
`Patent Owner notes that in discussing the construction of “decryptor” in the
`Decision on Institution, the Board relied upon the following express
`statement in the specification of the ’304 patent equating decryption and
`descrambling: “decryptors, 107, 224, and 231, may be conventional
`descramblers.” Dec. on. Inst. 25–26 (quoting Ex. 1004, 160:34–37)
`(emphases added)). “[T]here is a strong presumption against a claim
`construction that excludes a disclosed embodiment.” See In re Katz
`Interactive Call Processing Patent Litig., 639 F.3d 1303, 1324 (Fed. Cir.
`2011). Patent Owner argues that the Board’s reliance on this statement in
`the specification of the ’304 patent is misplaced for three reasons discussed
`below.
`First, Patent Owner argues that it disclaimed “decrypt” from
`encompassing analog descrambling during the reexamination of U.S. Patent
`No. 4,965,825 (“the ’825 patent”) and U.S. Patent No. 5,335,277 (“the ’277
`patent”).4 PO Resp. 10 (citing Ex. 2016 ¶¶ 52–53). Petitioner argues that
`during those reexamination proceedings, the Board incorrectly concluded
`that the “decryption” excludes descrambling based on of the specification of
`U.S. Patent No. 4,694,490, which does not include the passage relied upon
`
`
`4 The ’304 patent was filed on May 24, 1995 and is a continuation
`application of many applications, including both the ’825 patent and the
`’277 patent, all of which are a continuation-in-part of US Patent No.
`4,704,725, filed Feb. 14, 1986, which is a continuation of US Patent No.
`4,694,490, filed Nov. 3, 1981.
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`in the Decision on Institution, “decryptors . . . may be conventional
`descramblers,” because that passage was added in a later continuation-in-
`part application. Reply 2–3 (citing Ex. 2005, 53, Ex. 2001, 67). Regardless,
`in rendering its decision in both of the reexamination proceedings, the Board
`did not address the express statement set forth in the specification of the
`’304 patent at issue here that “the decryptors, 107, 224, and 231, may be
`conventional descramblers” (Ex. 1004, 160:34–37). See Ex. 2001, Ex. 2005.
`Therefore, we determine that any implication from the Board’s
`reexamination decisions is not applicable here in the context of construing
`the term “decryptor” with respect to the ’304 patent.
`Second, Patent Owner argues that the ordinary and customary
`meaning of “decrypt” is to use a digital key to unlock encoded digital data
`and “descrambling” involves operations on reordering analog information.
`PO Resp. 12–13. As an example, Patent Owner cites Mr. Wechselberger’s
`statement in a declaration in unrelated litigation, Broadcast Innovation, LLC
`v. Echostar Comm’s Corp., No. 01-WY-2201 (D. Col. Sept. 11, 2002), that
`“it is understood and accepted by those knowledgeable in the art that
`‘encryption’ is a digital process.” PO Resp. 13 (quoting Ex. 2037, 8). In
`that same declaration, however, Mr. Wechselberger further explained that
`“the evolution of digital encryption-based security systems ultimately
`resulted in more than one meaning for ‘scrambling’ in the TV security field”
`including to describe hard encryption processes performed on digital signals,
`but the “specific system described would typically indicate to one of skill in
`the art which meaning was intended.” Ex. 2037, 8 n.2 (emphasis added). In
`fact, the specification of the ’304 patent expressly states which meaning of
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`decryptor was intended with respect to the ’304 patent, “decryptors . . . may
`be conventional descramblers.” Ex. 1004, 160:34–37.
`Third, Patent Owner also attempts to explain away the express
`statement in the specification of the ’304 patent by arguing that this passage
`from column 160 discusses a different embodiment where descramblers
`replace decryptors because the digital television programming content has
`been replaced with analog television programming content. The relevant
`passage from column 160 of the specification of the ’304 patent is
`reproduced below:
`For example, the decryption cipher key information and/or
`algorithm instructions and/or the location or locations of said
`key information and/or instructions may be computed in other,
`more complex or less complex, fashions. And for example, the
`transmitted programming may be processed through fewer than
`three steps of decryption or more than three. And for example,
`the “Wall Street Week” transmission may be of conventional
`analog television, and the decryptors, 107, 224, and 231, may
`be conventional descramblers, well, known in the art, that
`descramble analog television transmissions and are actuated by
`receiving digital key information.
`Ex. 1004, 160:27–37 (emphasis added). Contrary to Patent Owner’s
`argument, the ’304 patent describes that even the analog television
`transmission can be actuated by receiving digital key information. See id.
`
`Despite Patent Owner’s many citations to related patents and related
`litigation, Patent Owner fails to cite to any evidence in the record directed
`specifically to the ’304 patent of a disavowal or waiver of the express
`statement in specification of the ’304 patent that decryptors may be
`descramblers. Accordingly, we construe the term “decryptor” with respect
`to the ’304 patent to include descramblers.
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`2. “processor”
`Petitioner argues that in the Decision on Institution, the Board
`correctly construed “processor” to mean “a device that operates on data.”
`Reply 5 (citing Dec. on Inst. 8). Petitioner argues that this construction
`matches Patent Owner’s proposed construction in the co-pending District
`Court litigation involving the ’304 patent. Pet Reply 5 (citing Ex. 1021, 2).
`In the related District Court litigation, Patent Owner proposed that
`“processor” be construed as “any device capable of performing operations
`on data.” Ex. 1021, 2 (emphasis added). Additionally, Mr. Wechselberger
`argues that the specification of the ’304 patent refers to many components as
`“processors” including components that perform a decrypting function.
`Ex. 1035 ¶¶ 34–37 (citing Ex. 1004, 75:30–34 (“A match results with
`particular comparison information that is the bit image of particular SPAM
`execution segment information that instructs URS signal processors, 200, to
`decrypt.”), 83:43–45 (“Said decryptor, 39K, is a conventional decryptor that
`is identical to decryptor, 10, of signal processor, 200.”)).
`Webster’s Ninth Collegiate Dictionary ©1988 defines “processor” as
`“the part of a computer system that operates on data.” Ex. 2002, 3. An
`earlier edition of Webster’s Collegiate Dictionary ©1979, provides the same
`definition for processor as “the part of a computer system that operates on
`data.” Ex. 3001, 3.
`Patent Owner argues that the term “processor” cannot be read so
`broadly as to ignore the teachings of the specification, and Patent Owner
`argues that the specification describes the processor as distinct and separate
`from a decryptor. PO Resp. 17 (citing Ex. 1004, 156:52–58). Patent Owner
`
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`fails to address, however, the portions of the specification in which
`“processors” include components that perform a decrypting function. See
`e.g., Ex. 1004, 75:30–34, 83:43–45 (quoted above).
`Accordingly, we maintain our construction from the Decision on
`Institution (Dec. to Inst. 8) and determine that the broadest reasonable
`construction of “processor” is “a device that operates on data.”5
`B. Principles of Law
`To prevail in its challenges to the patentability of the claims, a
`petitioner must establish facts supporting its challenges by a preponderance
`of the evidence. 35 U.S.C. § 316(e); 37 C.F.R. § 42.1(d). A claim is
`unpatentable under 35 U.S.C. § 103(a) if the differences between the subject
`matter sought to be patented and the prior art are such that the subject matter
`as a whole would have been obvious at the time the invention was made to a
`person having ordinary skill in the art to which said subject matter pertains.
`KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007). The question of
`obviousness is resolved on the basis of underlying factual determinations,
`including: (1) the scope and content of the prior art; (2) any differences
`between the claimed subject matter and the prior art; (3) the level of skill in
`the art; and (4) objective evidence of nonobviousness, i.e., secondary
`considerations. See Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966).
`
`
`5 This construction is consistent with the final written decision in related
`Case IPR2014-01534, wherein the Board determined that a “processor
`instruction” includes “a command or an instruction used or executed by a
`processor”; i.e., a “processor” is “a device that operates on data” (which
`operation may be pursuant to a processor instruction). See IPR2014-01534,
`Paper 55, 12.
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`We analyze the instituted grounds of unpatentability in accordance
`with the above-stated principles.
`C. Level of Ordinary Skill in the Art
`According to Petitioner’s declarant, Mr. Wechselberger, a person of
`ordinary skill in the art relevant to the ’304 patent would have had “a
`bachelor’s degree in electrical engineering” and would have had between
`two to four years of experience in “broadcast or cablecast television
`transmission fields.” Ex. 1006 ¶ 28. Patent Owner’s declarant, Dr. Alfred
`Weaver (“Dr. Weaver”) stated that a person of ordinary skill in the art
`relevant to the ’304 patent would have had at least the equivalent of a
`bachelor of science in digital electronics, electrical engineering, computer
`engineering, computer science, or related technical degree, and two to five
`years of post-degree experience in a similar field. Ex. 2016 ¶ 31. Thus, the
`parties’ assessments of the level of ordinary skill in the art are roughly
`equivalent.
`Based on our review of the ’304 patent, the types of problems and
`solutions described in the ’304 patent and cited prior art, and the testimony
`of Petitioner’s declarant and Patent Owner’s declarant, we adopt Patent
`Owner’s definition of a person of ordinary skill in the art at the time of the
`claimed invention. We note that the applied prior art also reflects the
`appropriate level of skill at the time of the claimed invention. See Okajima
`v. Bourdeau, 261 F.3d 1350, 1355 (Fed. Cir. 2001).
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`D. Asserted Obviousness In View of Guillou
`Petitioner argues that claims 1, 11, 18, 23, and 24 would have been
`obvious in view of Guillou. Pet. 13–37; Reply 8–18. Patent Owner disputes
`Petitioner’s position, arguing that the cited references fail to teach or suggest
`all the elements required by the challenged claims. PO Resp. 18–51. We
`have reviewed the Petition, the Patent Owner’s Response, and Petitioner’s
`Reply, as well as the relevant evidence discussed in those papers and other
`record papers. We determine the record supports Petitioner’s contentions
`and adopt Petitioner’s contentions discussed below as our own. For reasons
`that follow, we determine that Petitioner has shown by a preponderance of
`the evidence that claims 1, 11, 18, 23, and 24 would have been obvious in
`view of Guillou.
`1. Overview of Guillou
`Guillou is titled “Text Video-Transmission System Provided With
`Means For Controlling Access To The Information” and describes a system
`having an information-emitting center, including an encryption means using
`an operating key, and receiving stations, which provides a decryption means
`using the operating key. Ex. 1007, Abstr. Figure 7 of Guillou illustrates one
`embodiment of system, and is reproduced below:
`
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`As shown above in Figure 7, Guillou discloses emitting center 2, including
`automatic encryption means 24, and receiving station 4, including automatic
`decryption means 38. Id. at 10:3–42. Guillou discloses that automatic
`decryption means 38 includes discriminator 42, adapted to distinguish
`among coded octets, and logic circuit 46 to output the decoded octets dj to
`display means 20. Id. at 10:42–56. Additionally, Guillou discloses restoring
`circuit 110 for restoring the operating key K from message Mi. Id. at 16:1–
`7. The message forming circuit 102 forms messages Mi using the
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`subscriber’s keys Ci and the operating key K according to an algorithm,
`Mi = FCi(K). Id. at 15:51–57. Additionally, restoring circuit 110 in receiving
`station 4 receives the messages Mi and relies upon an algorithm,
`K = GCi(Mi), to restore the signal corresponding to the operating key K used
`in the emitting station. Id. at 16:1–10. Guillou also discloses that “[a]s soon
`as a distribution centre generates a new operating key K, it calculates, for
`each current subscribers’ key in use Ci for this service, a message Mi by
`means of an algorithm Mi = FCi(K), with the keys Ci acting as parameters.”
`Id. at 8:44–48.
`2. Analysis
`Claim 1
`a.
`Petitioner argues that Guillou teaches the method recited in claim 1 by
`teaching a digital encrypted key delivery process in which the encrypted
`digital data and the encrypted digital key are transmitted from an emitter
`center and received by a subscriber station. Pet. 17 (citing Ex. 1007, 2:8–14,
`6:62–68, 8:5–43, 9:60–64, Figs. 1, 2, 7, 9). Petitioner argues that the
`claimed “first encrypted digital control signal portion” is taught by the
`disclosure of Guillou’s message Mi, which contains the operating key K. Id.
`(citing Ex. 1007, 10, 8:55–58, 8:59–9:12, 15:42–16:17, 16:63–17:15, 18:19–
`59, 20:53–21:14, Figs. 2, 7, 8, 10). Furthermore, Petitioner argues that the
`claimed “encrypted digital information portion” is taught by the disclosure
`of Guillou’s coded octets Dj, which are transmitted from the emitter center
`and received by the subscriber station. Id. at 18 (citing Ex. 1007, 2:23–27;
`2:64–3:3; 5:53–57; 6:50–60; 7:33–42; 10:28–36; 11:3–10; Figs. 2, 7, 8).
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`Apple v. PMC
`IPR2016-00754
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`Patent Owner argues that Petitioner’s challenge is insufficient because
`Guillou fails to disclose the “decryptor,” recited in claim 1. PO Resp. 52.
`More particularly, Patent Owner argues that claim 1 requires a single
`decryptor to perform both decrypting of the “first encrypted digital control
`signal portion” and the “encrypted digital information portion.” Id.
`Petitioner contends, however, that Patent Owner improperly attempts to
`place arbitrary physical boundaries around Guillou’s circuits but that a
`person of ordinary skill in the art would understand that Guillou’s K-
`restoring circuit 110 and the automatic decryption means constitute a single,
`multi-stage decryptor. Reply 8–9 (Ex. 1035 ¶¶ 51–52). Furthermore,
`Petitioner argues that claim 1 merely requires a “decryptor,” not a “single-
`stage decryptor”; thus, the claimed decryptor can contain any number of
`stages. Reply 9.
`Petitioner also argues that to the extent that Guillou does not expressly
`disclose the claimed “decryptor,” it would have been obvious to a person
`having ordinary skill in the art to combine both Guillou’s K-restoring circuit
`110 and automatic decryption means 38 (discriminator 42 and logic circuit
`46) to constitute a single multipurpose decryptor. Pet. 24 (citing Ex. 1006 ¶¶
`58, 60–62, 67): Reply 10 (citing Ex. 1006 ¶ 61; Ex. 1035 ¶¶ 54–65). As a
`rationale for this modification, Petitioner states it would have been obvious
`for a person having ordinary skill in the art to consider or refer to both K-
`restoring circuit 110 and discriminator 42 logically as a single decryptor and
`that this would merely be a matter of design tradeoffs, such as signal
`processing requirements and cost. Id. Petitioner’s declarant, Mr.
`Wechselberger, states that if the expected sales for the device were
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`IPR2016-00754
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`sufficiently high, it would have been cost effective to design an Application
`Specific Integrated Circuit (“ASIC”) to implement K-restoring circuit 110
`and discriminator 42 in one semiconductor chip. Ex. 1006 ¶ 61.
`Mr. Wechselberger states that by 1981 the use of custom integrated circuits,
`such as ASICs, was common and there could have been significant cost
`savings by using a single integrated circuit over using discrete components
`to build the K-restoring circuit 110 and the automatic decryption means 38.
`Id. at ¶ 61.
`Patent Owner disagrees and states such a combination is beyond the
`skillset of a person with a bachelor’s degree and 2–5 years of post-degree
`work experience in the field of communications. PO Resp. 52–53 (citing
`Ex. 2016 ¶ 87). Specifically, Patent Owner argues that nothing in the prior
`art suggests how a single decryptor would be capable of performing two
`different forms of alleged decryption in parallel. Id. 53 (citing Ex. 2016 ¶¶
`87–95). Furthermore, Patent Owner argues that substantial engineering
`would be required to build a single semiconductor chip and the costs of
`designing and implementing a decryptor would be very high. Id. at 54
`(citing Ex. 2016 ¶¶ 95–101).
`We are not persuaded by Patent Owner’s arguments. While less cost
`may provide motivation, merely because something has a high cost does not
`show unobviousness. See Dystar Textilfarben GmbH & Co. Deutschland
`KG v. C.H. Patrick, 464 F.3d 1356, 1368 (Fed. Cir. 2006) (making
`something “stronger, cheaper, cleaner, faster, lighter, smaller, more durable,
`or more efficient” constitutes a “commonsensical . . . motivation”). Rather,
`“if a technique has been used to improve one device, and a person of
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`ordinary skill in the art would recognize that it would improve similar
`devices in the same way, using the technique is obvious unless its actual
`application is beyond his or her skill.” KSR, 550 U.S. at 417. Contrary to
`Patent Owner’s arguments regarding substantial engineering and similar
`arguments about an alleged lack of capability, as summarized above and as
`discussed further below, Petitioner establishes that an artisan of ordinary
`skill could have implemented Gillou’s decryptor as an ASIC using known
`methods and would have had ample reason for doing so.
`Even if the alleged high cost somehow shows unobviousness in
`designing an ASIC to implement Guillou’s K-restoring circuit 110 and the
`automatic decryption means 38, Patent Owner fails to address Mr.
`Wechselberger’s testimony that the decision to pursue a custom integrated
`circuit involves a cost analysis, such that if the “expected sales were
`sufficiently high and total cost (as explained above) was sufficiently low
`(tradeoffs I have made many times), one of ordinary skill would know that it
`would make commercial sense” to develop a custom integrated circuit.
`Ex. 1035 ¶ 56. Petitioner argues that this design choice would have been
`obvious to a person of ordinary skill in the art because it would offer
`significant cost savings over using discrete components. Reply 10 (citing
`Ex. 1006 ¶¶ 61–62; Ex. 1035 ¶¶ 56–58, 64). Thus, contrary to Patent
`Owner’s assertions, it may have cost less to implement an ASIC rather than
`the separate components of the K-restoring circuit 110 and the automatic
`decryption means 38. See id. Additionally, Patent Owner’s argument that
`nothing in the prior art suggests how a single decryptor would be capable of
`performing two different forms of alleged decryption in parallel is not
`
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`commensurate in scope with claim 1, because claim 1 recites a “decryptor,”
`not a single-stage decryptor and, as Mr. Wechselberger testifies, the inputs
`to, outputs from, and processing in the decryptor ASIC would be the same as
`that disclosed in Guillou, using the two different algorithms disclosed in
`Guillou, but integrated onto a single circuit. Ex. 1035 ¶ 54.
`An obviousness analysis “need not seek out precise teachings directed
`to the specific subject matter of the challenged claim, for a court can take
`account of the inferences and creative steps that a person of ordinary skill in
`the art would employ.” KSR, 550 U.S. at 418; see In Re Translogic
`Techs.504 F.3d at 1259. “The combination of familiar elements according
`to known methods is likely to be obvious when it does no more than yield
`predictable results.” KSR, 550 U.S. at 416. Petitioner sufficiently
`establishes that the combination of the decryptor logic in Guillou into a
`single device was a known method that would have yielded the predictable
`result of similar functionality in a single device. Pet. 24–25 (citing Ex. 1006
`¶¶ 58, 60–62, 67); Pet. Reply 10 (citing Ex. 1035 ¶¶ 54, 56–58.
`Accordingly, we determine the record supports these contentions by
`Petitioner and we adopt them as our own. Furthermore, even if making an
`ASIC would have been more costly, as compared to a relatively bulky
`decryptor, a “smaller . . . lighter [or] more durable” ASIC would have
`presented a universal motivator as a trade-off to cost. See Dystar, 464 F.3d
`at 1368.
`Based on the foregoing discussion and the record, including the
`purported secondary evidence of nonobviousness discussed below,
`
`
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