“Despite Samsung’s argument that the PTAB’s analysis was merely ‘a simpler path to invalidating claim 3’ that ‘was inherent in Samsung’s obviousness theory,’ the Federal Circuit said that the holding represented ‘a marked deviation’ from ‘the evidence and theories presented by the petition or institution decision, creating unfair surprise.’”
The U.S. Court of Appeals for the Federal Circuit (CAFC) on February 1 held in part that the United States Patent and Trademark Office’s (UPSTO) Patent Trial and Appeal Board (PTAB) erred in finding a claim anticipated when the petition for inter partes review (IPR) had only asserted obviousness as to the claim. M&K Holdings, Inc. v. Samsung Electronics Co. Ltd. (CAFC, Feb 1, 2020). The CAFC vacated the PTAB’s decision on that claim but affirmed the holding of unpatentability as to the rest of the asserted claims.
The patent at issue is M&K Holdings, Inc.’s U.S. Patent No. 9,113,163 (“the ’163 patent”), which is directed to “an efficient method for compressing video files.” Samsung Electronics filed for inter partes review (IPR) challenging all claims of the patent as unpatentable, and specifically said that “claims 1, 5, and 6 were anticipated by a reference known as ‘WD4-v3’”; “claim 2…was both anticipated by WD4-v3 and rendered obvious by the combination of WD4-v3 and a paper by Park et al. [and] claims 3 and 4…were rendered obvious by the combination of WD4-v3, Park, and a paper by Minhua Zhou.”
Public Accessibility Analysis
M&K argued that the references Samsung relied on did not constitute printed publications under 35 U.S.C. § 102. Specifically, M&K said that “none of the three references were publicly accessible, i.e., that interested persons of ordinary skill could not have accessed any of those references by exercising reasonable diligence.” The PTAB disagreed, finding that all of the references were publicly accessible, discussed at industry meetings, and posted on the Joint Collaborative Team on Video Coding (JCT-VC) website, which is a joint task force to establish industry standards for high-efficiency video coding.
M&K felt that, in order to find the references on the website, users must have known the date, title and number of the papers, cutting against a finding of truly public accessibility. However, the CAFC said that the Board’s holding that “interested users of the JCT-VC website could have located Park and Zhou through reasonable diligence” was supported by substantial evidence and thus affirmed that aspect of the PTAB decision. “The law regarding public accessibility is not as restrictive as M&K suggests—a website’s landing page is not required to have search functionality,” explained the CAFC.
However, in its ultimate ruling on the unpatentability of the claims, the PTAB held that “claims 1, 2, 5, and 6 were anticipated by WD4-v3, and that claim 4 was rendered obvious by the combination of WD4-v3, Park, and Zhou, as alleged in Samsung’s petition [and that] that claim 3 was anticipated by WD4-v3, although Samsung’s petition had asserted only obviousness as to that claim.”
Explaining that the Administrative Procedure Act “imposes particular procedural requirements on the Board” that mandate the PTAB must “timely inform the patent owner of ‘the matters of fact and law asserted’” and “give all interested parties the opportunity to submit and consider facts and arguments,” the CAFC agreed with M&K that “the Board deviated impermissibly from the invalidity theory set forth in Samsung’s petition when it held that claim 3 was anticipated by WD4-v3.” Despite Samsung’s argument that the PTAB’s analysis was merely “a simpler path to invalidating claim 3” that “was inherent in Samsung’s obviousness theory,” the CAFC said that the holding represented “a marked deviation” from “the evidence and theories presented by the petition or institution decision, creating unfair surprise.” Arthrex, Inc. v. Smith & Nephew, Inc., 935 F.3d 1319, 1328 (Fed. Cir. 2019). The court added:
Although M&K was aware of the prior art used to invalidate claim 3 given the obviousness combination asserted against that claim, M&K was not put on notice that the Board might find that WD4-v3 disclosed all of the limitations in claim 3 and might invalidate claim 3 based on anticipation.
The PTAB’s decision was thus vacated as to the unpatentability of claim 3 and remanded for further analysis consistent with the court’s opinion.