Federal Circuit Reverses PTAB’s Invalidity Decision Regarding a Wireless Communications Patent

In November, the Federal Circuit issued an opinion reversing the Patent Trial and Appeal Board’s (the PTAB or the Board) decision that claim 8 of IPR Licensing Inc.’s (IPRL) wireless communications patent—U.S. Patent No. 8,380,244 (the ‘244 Patent)—was unpatentable as obvious. The Board’s obviousness finding as to claim 8 was erroneous as it relied on a prior art reference that IPRL could neither anticipate nor rebut. Furthermore, its finding was, for the second time, unsupported by substantial evidence. See In re IPR Licensing, Inc. (Fed Cir. Nov. 22, 2019) (Before Newman, O’Malley, and Taranto, Circuit Judges) (Opinion for the Court, O’Malley, Circuit Judge).

The ’244 patent claims a “subscriber unit” such as a mobile device that can automatically select the best available wireless network – a wireless local area network if one is in range or, if not, a cellular network – and then connect to it. In addition to recognizing two types of wireless networks, the patent cites two different methods of allowing users to access the network: the Time Division Multiple Access (TMDA), which assigns the device a unique time slot during which it may transmit data to the base station, and Code Division Multiple Access (CDMA), which assigns devices unique codes so that they can all transmit data at the same time. Claim 8 requires the subscriber unit to communicate with a CDMA cellular wireless network via a CDMA transceiver.

From Jury to PTAB

After IPRL sued ZTE for infringement of the ’244 patent, the jury found all asserted claims infringed and the patent not invalid. The district court, however, stayed post-trial proceedings pending resolution of an inter partes review (IPR) filed by ZTE challenging a number of asserted claims, including claim 8 at issue in this appeal. While ZTE’s Petition challenged the claims on three separate grounds, the PTAB instituted review based only on one: a combination of three prior art references: Jawanda, General Packet Radio Service Standards (GPRS), and IEEE 802.11. The GPRS disclose a “Packet Data Protocol (PDP) Context feature” which “preserves information about the cellular communication session between the mobile devi[c]e and base station.” Importantly, ground three, which was not instituted, challenged all claims based on a combination of two other references, including the Universal Mobile Telecommunications System Standards (UMTS), which describe a version of the CDMA protocol that references the PDP Context feature.

Federal Circuit Reverses

The Board found the claims invalid, and IPRL appealed. The Federal Circuit affirmed the Board’s conclusion as to all claims except claim 8. The Court found no evidentiary support for the conclusion that a person of ordinary skill in the art (POSITA) would have applied the PDP Context feature from GPRS (relating to TDMA) in a DMA system like the one described in claim 8 and vacated the Board’s findings as to claim 8. The Court further remanded for the Board to assess “whether there was substantial evidence to support the conclusion that one of skill in the art would have ‘a motivation to combine the PDP Context feature of the GPRS standards with the CDMA network referenced in Jawanda.’” Although ZTE failed to present any additional evidence or argument, the Board again found claim 8 obvious. The only additional evidence the Board proffered to support its conclusion was a citation to UMTS. IPRL again appealed, and the Federal Circuit again reversed.

The Board improperly relied on prior art, UMTS, not asserted in support of the one instituted ground, said the Court. “[T]he Board must base its decision on arguments that were advanced by a party, and to which the opposing party was given a chance to respond.” Furthermore, “[t]he Board . . . cannot rely on evidence relating solely to grounds on which it never instituted. To hold otherwise would allow the Board’s final written decision to rest on arguments that a patent owner has no ability to rebut or anticipate.” Here, UMTS was never a part of the proceeding: ZTE’s petition did not mention UMTS in discussing the one ground on which the Board instituted review, and, in turn, IPRL’s response did not reference it. Furthermore, even after the Board asked ZTE to point to evidence supporting the conclusion that a motivation to combine the prior art references cited in ground one existed, ZTE failed to do so. The Board, nonetheless, discussed UMTS in its patentability analysis—its “decision to rely on the Draft UMTS Standards to fill the gap in its evidentiary finding was, thus, erroneous.”

The Final Word

Next, ZTE argued that the matter should be remanded as to the two non-instituted grounds. IPRL, in turn, argued that ZTEs failure to file a cross-appeal deprived the Court of jurisdiction for a remand. The Court first rejected IPRL’s argument that filing a cross-appeal is a jurisdictional requirement. As a court-promulgated rule rooted in the Federal Rules of Appellate Procedure rather than a statutory rule established by Congress, the cross-appeal rule lacked jurisdictional import. Thus, no jurisdictional barrier to remand existed. However, ZTE’s filing an unopposed Motion to Withdraw from the appeal, pursuant to a settlement agreement between the parties, constituted waiver of its request to institute an IPR on the non-instituted grounds. The Court thus vacated the Board’s final judgment of invalidity.