On Monday, August 7th, a judicial panel of the U.S. Court of Appeals for the Federal Circuit entered a decision in Personal Audio, LLC v. Electronic Frontier Foundation which is being widely hailed by the anti-patent crowd. The three judges on the panel issued a majority opinion, authored by Circuit Judge Pauline Newman, upheld a final written decision issued by the Patent Trial and Appeal Board (PTAB) which invalidated a series of claims from a patent covering a podcast technology.
Personal Audio appealed the case to the Federal Circuit after the PTAB invalidated claims of U.S. Patent No. 8112504, entitled System for Disseminating Media Content Representing Episodes in a Serialized Sequence. Issued in February 2012, it claimed a media player for acquiring and reproducing media program files which represent episodes in a series of episodes as those episodes become available. The media player includes a digital memory, a communications port coupled to the Internet for transmitting data requests and an output unit for reproducing the media files. The resulting invention addressed a need among Internet radio sources for a more practical system of delivering content to interested users on request than searching for the radio source via web browser, a difficulty which is exacerbated further while an interested user is driving.
According to information collected from legal data analytics service Lex Machina, the ‘504 patent has been asserted in a total of seven district court cases, all of which were filed in 2013. Most of the cases target large media entities like CBS Corporation (NYSE:CBS), NBCUniversal and Fox Broadcasting Corporation. A jury trial in the case against CBS led to a verdict that CBS infringed upon four claims of the ‘504 patent and that CBS did not prove invalidity of any of those claims. By a preponderance of evidence, the jury decided that $1.3 million was a fair and reasonable royalty to compensate Personal Audio for CBS’ infringement.
A look at the first amended complaint filed by Personal Audio in the case on June 10th, 2013, gives a closer look at the types of technologies which a jury determined as infringing on the ‘504 patent. Personal Audio had alleged that several shows podcasted by CBS, including 60 Minutes, Tech Talk and Face the Nation, use servers, data storage and other Internet hardware which directly infringe claims of the ‘504 patent. Personal Audio also alleged that CBS’ distribution of episodic video media for shows such as CSI: Crime Scene Investigation either literally infringed the ‘504 patent or constituted infringement under the doctrine of equivalents.
However, it only took one petition for inter partes review (IPR) proceedings at the PTAB to overturn the validity of a patent which one more than $1 million in district court after a jury found that it was infringed and that there was no invalidity. The IPR petition, filed in October 2013 courtesy of the patent nihilists over at the Electronic Frontier Foundation (EFF), notes a press release issued by Personal Audio in January 2013 which claimed that the firm had invented the technology covered by the ‘504 patent back in 1996. “Personal Audio, however, did not invent podcasting in 1996,” the EFF’s IPR petition reads. “What Personal Audio calls ‘podcasting’ — distributing episodes of media content on the Internet — had been known for at least three years at that point.” The EFF cited to an article published by The New York Times in March 1993 which discussed an Internet talk radio program developed by computer networking engineer and economist Carl Malamud. EFF cited evidence showing that Geek of the Week, the episodic Internet broadcast developed by Malamud, reached 100,000 listeners within its first year of existence. Personal Audio also alleged that CBC and CNN both provided Internet radio programs prior to 1996. Further, Personal Audio went into the prosecution history for the ‘504 patent, noting that the main reason for allowance given by the patent examiner was that the prior art didn’t suggest updating or downloading of “compilation files” which contained attribute data describing episodes and episode URLs identifying corresponding media files representing episodes. “Notably, the patent examiner’s reasons for allowance do not suggest that there was anything inventive about the computers or networks used to distribute the compilation file and the episodes,” the EFF’s IPR petition reads.
The PTAB’s panel of administrative patent judges (APJs) decided to institute the IPR trial in April 2014. The final written decision entered by the APJs in April 2015 found that petitioner EFF had proved by a preponderance of evidence that claims 31 through 35 of the ‘504 patent were invalid under 35 U.S.C. § 102 as anticipated by prior art and 35 U.S.C. § 103 as obvious subject matter.
In its appeal of the PTAB final written decision, Personal Audio argued to the Federal Circuit that the APJ panel misconstrued several claim terms and misapplied references, “erring in law and fact.” Personal Audio contended that the PTAB’s construction of “episode” improperly excluded a temporal limitation that episodes in the series release over time; the PTAB instead construed the term as “program segments” with the limitation referring to new episodes “becom[ing] avaialble.” Other claim constructions challenged by Personal Audio included “updated version of a compilation file” and “back-end configuration.” The Federal Circuit upheld the PTAB’s construction of those terms as well as its findings of obviousness and anticipation which rendered the challenged claims invalid.
The wider world of tech news is thumping its own chest over the recent Federal Circuit’s decision to invalidate a supposedly “bogus” patent which was asserted by what some people feel is a “patent troll.” But knowledgeable observers of the U.S. patent system will recognize that the case is a bit of a nightmare scenario. If Personal Audio is a “patent troll” for asserting the ‘504 patent in seven cases, where is the outcry over “patent trolls” like Rep. Darrell Issa (R-CA), an inventor of patents which have been asserted a few dozen times in U.S. district court. In the one trial which reached a jury verdict, Personal Audio was awarded $1.3 million, an amount which is more than four times the $300,000 amount which constitutes “nuisance litigation” in the eyes of the Federal Trade Commission, as was reflected in last year’s study on patent assertion entity (PAE) activities. In 13 cases where damages were awarded, Issa’s patent earned a total of $128,000 in damages, well below the “nuisance litigation” threshold. And yet Issa sits as the chairman of the House IP Subcommittee, engaging Congress in one-sided hearing after one-sided hearing, whereas Personal Audio is being forced to relinquish a supposedly Constitutionally-protected property right which was valid in an Article III federal court but invalidated by an Article I tribunal, which would seem to be unconstitutional.
If you listen closely, you may just hear the refrain of: “Where have all the patents gone? The PTAB nixed them, every one. When will they ever learn? When will they ever learn?”
For more on this case please see: Federal Circuit says non-profit EFF has standing in IPR appeal.